[Title 20 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2004 Edition]
[From the U.S. Government Printing Office]



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          20


          Parts 400 to 499

                         Revised as of April 1, 2004


          Employees' Benefits
          
          


________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of April 1, 2004
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2004



  For sale by the Superintendent of Documents, U.S. Government Printing 
                                  Office
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      Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 20:
          Chapter III--Social Security Administration                3
  Finding Aids:
      Table of CFR Titles and Chapters........................    1211
      Alphabetical List of Agencies Appearing in the CFR......    1229
      Chapter III Index.......................................    1239
      List of CFR Sections Affected...........................    1247

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                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 20 CFR 401.5 refers 
                       to title 20, part 401, 
                       section 5.

                     ----------------------------

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, April 1, 2004), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
volumes. For the period beginning January 1, 2001, a ``List of CFR 
Sections Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
[email protected].

SALES

    The Government Printing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call toll free, 
866-512-1800, or DC area, 202-512-1800, M-F 8 a.m. to 4 p.m. e.s.t. or 
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512-1803.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public Papers, Weekly Compilation of Presidential 
Documents and the Privacy Act Compilation are available in electronic 
format at www.gpoaccess.gov/nara. For more information, contact 
Electronic Information Dissemination Services, U.S. Government Printing 
Office. Phone 202-512-1530, or 888-293-6498 (toll-free). E-mail, 
[email protected].

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    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal--
register. The NARA site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

April 1, 2004.

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                               THIS TITLE

    Title 20--Employees' Benefits is composed of three volumes. The 
first volume, containing parts 1-399, includes all current regulations 
issued by the Office of Workers' Compensation Programs, Department of 
Labor and the Railroad Retirement Board. The second volume, containing 
parts 400-499, includes all current regulations issued by the Social 
Security Administration. The third volume, containing part 500 to End, 
includes all current regulations issued by the Employees' Compensation 
Appeals Board, the Employment and Training Administration, the 
Employment Standards Administration, the Benefits Review Board, the 
Office of the Assistant Secretary for Veterans' Employment and Training 
(all of the Department of Labor) and the Joint Board for the Enrollment 
of Actuaries. The contents of these volumes represent all current 
regulations codified under this title of the CFR as of April 1, 2004.

    An Index to chapter III appears in the second volume.

    For this volume, Cheryl E. Sirofchuck was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

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[[Page 1]]



                      TITLE 20--EMPLOYEES' BENEFITS




                  (This book contains parts 400 to 499)

  --------------------------------------------------------------------
                                                                    Part

chapter iii--Social Security Administration.................         401

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               CHAPTER III--SOCIAL SECURITY ADMINISTRATION




  --------------------------------------------------------------------
Part                                                                Page
400             [Reserved]
401             Privacy and disclosure of official records 
                    and information.........................           5
402             Availability of information and records to 
                    the public..............................          24
403             Testimony by employees and the production of 
                    reords and information in legal 
                    proceedings.............................          41
404             Federal old-age, survivors and disability 
                    insurance (1950- )......................          45
408             Special benefits for certain World War II 
                    veterans................................         583
410             Federal Coal Mine Health and Safety Act of 
                    1969, Title IV--Black lung benefits 
                    (1969- )................................         599
411             The Ticket to Work and Self-Sufficiency 
                    Program.................................         685
416             Supplemental security income for the aged, 
                    blind, and disabled.....................         723
422             Organization and procedures.................        1066
423             Service of process..........................        1099
424-428         [Reserved]
429             Administrative regulations..................        1100
430             Personnel...................................        1104
431-434         [Reserved]
435             Uniform administrative requirements for 
                    grants and agreements with institutions 
                    of higher education, hospitals, other 
                    non-profit organizations, and 
                    commericial organizations...............        1104
436             Governmentwide debarment and suspension 
                    (nonprocurement)........................        1132
437             Uniform administrative requirements for 
                    grants and cooperative agreements to 
                    State and local governments.............        1155
438             Restrictions on lobbying....................        1181
439             Governmentwide requirements for drug-free 
                    workplace (financial assistance)........        1191
440-497         [Reserved]

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498             Civil monetary penalties, assessments and 
                    recommended exclusions..................        1196
499             [Reserved]

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                           PART 400 [RESERVED]



PART 401_PRIVACY AND DISCLOSURE OF OFFICIAL RECORDS AND INFORMATION--Table 
of Contents




                            Subpart A_General

Sec.
401.5 Purpose of the regulations.
401.10 Applicability.
401.15 Limitations on scope.
401.20 Scope.
401.25 Terms defined.

                        Subpart B_The Privacy Act

401.30 Privacy Act responsibilities.
401.35 Your right to request records.
401.40 How to get your own records.
401.45 Verifying your identity.
401.50 Granting notification of or access to a record.
401.55 Special procedures for notification of or access to medical 
          records.
401.60 Access or notification of program records about two or more 
          individuals.
401.65 How to correct your record.
401.70 Appeals of refusals to correct or amend records.
401.75 Rights of parents or legal guardians.
401.80 Accounting for disclosures.
401.85 Exempt systems.
401.90 Contractors.
401.95 Fees.

        Subpart C_Disclosure of Official Records and Information

401.100 Disclosure of records with the consent of the subject of the 
          record.
401.105 Disclosure of personal information without the consent of the 
          subject of the record.
401.110 Disclosure of personal information in nonprogram records without 
          the consent of the subject of the record.
401.115 Disclosure of personal information in program records without 
          the consent of the subject of the record.
401.120 Disclosures required by law.
401.125 Disclosures prohibited by law.
401.130 Freedom of Information Act.
401.135 Other laws.
401.140 General principles.
401.145 Safeguards against unauthorized redisclosure or use.
401.150 Compatible purposes.
401.155 Law enforcement purposes.
401.160 Health or safety.
401.165 Statistical and research activities.
401.170 Congress.
401.175 General Accounting Office.
401.180 Courts.
401.185 Other specific recipients.
401.190 Deceased persons.
401.195 Situations not specified in this part.
401.200 Blood donor locator service.

Appendix A to Part 401--Employee Standards of Conduct

    Authority: Secs. 205, 702(a)(5), 1106, and 1141 of the Social 
Security Act (42 U.S.C. 405, 902(a)(5), 1306, and 1320b-11); 5 U.S.C. 
552 and 552a; 8 U.S.C. 1360; 26 U.S.C. 6103; 30 U.S.C. 923.

    Source: 62 FR 4143, Jan. 29, 1997, unless otherwise noted.



                            Subpart A_General



Sec. 401.5  Purpose of the regulations.

    (a) General. The purpose of this part is to describe the Social 
Security Administration (SSA) policies and procedures for implementing 
the requirements of the Privacy Act of 1974, 5 U.S.C. 552a and section 
1106 of the Social Security Act concerning disclosure of information 
about individuals, both with and without their consent. This part also 
complies with other applicable statutes.
    (b) Privacy. This part implements the Privacy Act by establishing 
agency policies and procedures for the maintenance of records. This part 
also establishes agency policies and procedures under which you can ask 
us whether we maintain records about you or obtain access to your 
records. Additionally, this part establishes policies and procedures 
under which you may seek to have your record corrected or amended if you 
believe that your record is not accurate, timely, complete, or relevant.
    (c) Disclosure. This part also sets out the general guidelines which 
we follow in deciding whether to make disclosures. However, we must 
examine the facts of each case separately to decide if we should 
disclose the information or keep it confidential.



Sec. 401.10  Applicability.

    (a) SSA. All SSA employees and components are governed by this part. 
SSA employees governed by this part include all regular and special 
government employees of SSA; experts and consultants whose temporary 
(not in

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excess of 1 year) or intermittent services have been procured by SSA by 
contract pursuant to 5 U.S.C. 3109; volunteers where acceptance of their 
services are authorized by law; those individuals performing gratuitous 
services as permitted under conditions prescribed by the Office of 
Personnel Management; and, participants in work-study or training 
programs.
    (b) Other entities. This part also applies to advisory committees 
and councils within the meaning of the Federal Advisory Committee Act 
which provide advice to: Any official or component of SSA; or the 
President and for which SSA has been delegated responsibility for 
providing services.



Sec. 401.15  Limitations on scope.

    The regulations in this part do not--
    (a) Make available to an individual records which are not retrieved 
by that individual's name or other personal identifier.
    (b) Make available to the general public records which are retrieved 
by an individual's name or other personal identifier or make available 
to the general public records which would otherwise not be available to 
the general public under the Freedom of Information Act, 5 U.S.C. 552, 
and part 402 of this title.
    (c) Govern the maintenance or disclosure of, notification about or 
access to, records in the possession of SSA which are subject to the 
regulations of another agency, such as personnel records which are part 
of a system of records administered by the Office of Personnel 
Management.
    (d) Apply to grantees, including State and local governments or 
subdivisions thereof, administering federally funded programs.
    (e) Make available records compiled by SSA in reasonable 
anticipation of court litigation or formal administrative proceedings. 
The availability of such records to the general public or to any subject 
individual or party to such litigation or proceedings shall be governed 
by applicable constitutional principles, rules of discovery, and 
applicable regulations of the agency.



Sec. 401.20  Scope.

    (a) Privacy. Sections 401.30 through 401.95, which set out SSA's 
rules for implementing the Privacy Act, apply to all agency records 
accessed by an individual's name or personal identifier subject to the 
Privacy Act.
    (b) Disclosure--(1) Program records. Regulations that apply to the 
disclosure of information about an individual contained in SSA's program 
records are set out in Sec. Sec. 401.100 through 401.200 of this part. 
These regulations also apply to the disclosure of other Federal program 
information which SSA maintains. That information includes:
    (i) Health insurance records which SSA maintains for the Health Care 
Financing Administration's (HCFA) programs under title XVIII of the 
Social Security Act. We will disclose these records to HCFA. HCFA may 
redisclose these records under the regulations applying to records in 
HCFA's custody;
    (ii) Black lung benefit records which SSA maintains for the 
administration of the Federal Coal Mine Health and Safety Act; (However, 
this information is not covered by section 1106 of the Social Security 
Act.) and
    (iii) Records kept by consultants. Information retained by a 
medical, psychological or vocational professional concerning an 
examination performed under contract in the social security program 
shall not be disclosed except as permitted by this part.
    (2) Nonprogram records. Section 401.110 sets out rules applicable to 
the disclosure of nonprogram records, e.g., SSA's administrative and 
personnel records.

[62 FR 4143, Jan. 29, 1997, as amended at 65 FR 16812, Mar. 30, 2000]



Sec. 401.25  Terms defined.

    Access means making a record available to a subject individual.
    Act means the Social Security Act.
    Agency means the Social Security Administration.
    Commissioner means the Commissioner of Social Security.
    Disclosure means making a record about an individual available to or 
releasing it to another party.
    FOIA means the Freedom of Information Act.

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    Individual when used in connection with the Privacy Act or for 
disclosure of nonprogram records, means a living person who is a citizen 
of the United States or an alien lawfully admitted for permanent 
residence. It does not include persons such as sole proprietorships, 
partnerships, or corporations. A business firm which is identified by 
the name of one or more persons is not an individual. When used in 
connection with the rules governing program information, individual 
means a living natural person; this does not include corporations, 
partnerships, and unincorporated business or professional groups of two 
or more persons.
    Information means information about an individual, and includes, but 
is not limited to, vital statistics; race, sex, or other physical 
characteristics; earnings information; professional fees paid to an 
individual and other financial information; benefit data or other claims 
information; the social security number, employer identification number, 
or other individual identifier; address; phone number; medical 
information, including psychological or psychiatric information or lay 
information used in a medical determination; and information about 
marital and family relationships and other personal relationships.
    Maintain means to establish, collect, use, or disseminate when used 
in connection with the term record; and, to have control over or 
responsibility for a system of records when used in connection with the 
term system of records.
    Notification means communication to an individual whether he is a 
subject individual. (Subject individual is defined further on in this 
section.)
    Program Information means personal information and records collected 
and compiled by SSA in order to discharge its responsibilities under 
titles I, II, IV part A, X, XI, XIV, XVI and XVIII of the Act and parts 
B and C of the Federal Coal Mine Health and Safety Act.
    Record means any item, collection, or grouping of information about 
an individual that is maintained by SSA including, but not limited to, 
information such as an individual's education, financial transactions, 
medical history, and criminal or employment history that contains the 
individual's name, or an identifying number, symbol, or any other means 
by which an individual can be identified. When used in this part, record 
means only a record which is in a system of records.
    Routine use means the disclosure of a record outside SSA, without 
the consent of the subject individual, for a purpose which is compatible 
with the purpose for which the record was collected. It includes 
disclosures required to be made by statutes other than the Freedom of 
Information Act, 5 U.S.C. 552. It does not include disclosures which the 
Privacy Act otherwise permits without the consent of the subject 
individual and without regard to whether they are compatible with the 
purpose for which the information is collected, such as disclosures to 
the Bureau of the Census, the General Accounting Office, or to Congress.
    Social Security Administration (SSA) means (1) that Federal agency 
which has administrative responsibilities under titles, I, II, X, XI, 
XIV, XVI, and XVIII of the Act; and (2) units of State governments which 
make determinations under agreements made under sections 221 and 1633 of 
the Act.
    Social Security program means any program or provision of law which 
SSA is responsible for administering, including the Freedom of 
Information Act and Privacy Act. This includes our responsibilities 
under parts B and C of the Federal Coal Mine Health and Safety Act.
    Statistical record means a record maintained for statistical 
research or reporting purposes only and not maintained to make 
determinations about a particular subject individual.
    Subject individual means the person to whom a record pertains.
    System of records means a group of records under our control from 
which information about an individual is retrieved by the name of the 
individual or by an identifying number, symbol, or other identifying 
particular. Single records or groups of records which are not retrieved 
by a personal identifier are not part of a system of records. Papers 
maintained by individual Agency employees which are prepared, 
maintained, or discarded at the discretion of the employee and which are 
not subject to the Federal Records Act, 44 U.S.C. 2901, are not part of 
a system of

[[Page 8]]

records; provided, that such personal papers are not used by the 
employee or the Agency to determine any rights, benefits, or privileges 
of individuals.
    We and our mean the Social Security Administration.



                        Subpart B_The Privacy Act



Sec. 401.30  Privacy Act responsibilities.

    (a) Policy. Our policy is to protect the privacy of individuals to 
the fullest extent possible while nonetheless permitting the exchange of 
records required to fulfill our administrative and program 
responsibilities, and responsibilities for disclosing records which the 
general public is entitled to have under the Freedom of Information Act, 
5 U.S.C. 552, and 20 CFR part 402.
    (b) Maintenance of Records. We will maintain no record unless:
    (1) It is relevant and necessary to accomplish an SSA function which 
is required to be accomplished by statute or Executive Order;
    (2) We obtain the information in the record, as much as it is 
practicable, from the subject individual if we may use the record to 
determine an individual's rights, benefits or privileges under Federal 
programs;
    (3) We inform the individual providing the record to us of the 
authority for our asking him or her to provide the record (including 
whether providing the record is mandatory or voluntary, the principal 
purpose for maintaining the record, the routine uses for the record, and 
what effect his or her refusal to provide the record may have on him or 
her). Further, the individual agrees to provide the record, if the 
individual is not required by statute or Executive Order to do so.
    (c) First Amendment rights. We will keep no record which describes 
how an individual exercises rights guaranteed by the First Amendment 
unless we are expressly authorized:
    (1) By statute,
    (2) By the subject individual, or
    (3) Unless pertinent to and within the scope of an authorized law 
enforcement activity.



Sec. 401.35  Your right to request records.

    The Privacy Act gives you the right to direct access to most records 
about yourself that are in our systems of records. Exceptions to this 
Privacy Act right include--
    (a) Special procedures for access to certain medical records (see 5 
U.S.C. 552a(f)(3) and Sec. 401.55);
    (b) Unavailability of certain criminal law enforcement records (see 
5 U.S.C. 552a(k), and Sec. 401.85); and
    (c) Unavailability of records compiled in reasonable anticipation of 
a court action or formal administrative proceeding.

    Note to Sec. 401.35: The Freedom of Information Act (see 20 CFR 
part 402) allows you to request information from SSA whether or not it 
is in a system of records.



Sec. 401.40  How to get your own records.

    (a) Your right to notification and access. Subject to the provisions 
governing medical records in Sec. 401.55, you may ask for notification 
of or access to any record about yourself that is in an SSA system of 
records. If you are a minor, you may get information about yourself 
under the same rules as for an adult. Under the Privacy Act, if you are 
the parent or guardian of a minor, or the legal guardian of someone who 
has been declared legally incompetent, and you are acting on his or her 
behalf, you may ask for information about that individual. You may be 
accompanied by another individual of your choice when you request access 
to a record in person, provided that you affirmatively authorize the 
presence of such other individual during any discussion of a record to 
which you are requesting access.
    (b) Identifying the records. At the time of your request, you must 
specify which systems of records you wish to have searched and the 
records to which you wish to have access. You may also request copies of 
all or any such records. Also, we may ask you to provide sufficient 
particulars to enable us to distinguish between records on individuals 
with the same name. The necessary particulars are set forth in the 
notices of systems of records which are published in the Federal 
Register.
    (c) Requesting notification or access. To request notification of or 
access to a record, you may visit your local social security office or 
write to the manager of the SSA system of records. The

[[Page 9]]

name and address of the manager of the system is part of the notice of 
systems of records. Every local social security office keeps a copy of 
the Federal Register containing that notice. That office can also help 
you get access to your record. You do not need to use any special form 
to ask for a record about you in our files, but your request must give 
enough identifying information about the record you want to enable us to 
find your particular record. This identifying information should include 
the system of records in which the record is located and the name and 
social security number (or other identifier) under which the record is 
filed. We do not honor requests for all records, all information, or 
similar blanket requests. Before granting notification of or access to a 
record, we may, if you are making your request in person, require you to 
put your request in writing if you have not already done so.



Sec. 401.45  Verifying your identity.

    (a) When required. Unless you are making a request for notification 
of or access to a record in person, and you are personally known to the 
SSA representative, you must verify your identity in accordance with 
paragraph (b) of this section if:
    (1) You make a request for notification of a record and we determine 
that the mere notice of the existence of the record would be a clearly 
unwarranted invasion of privacy if disclosed to someone other than the 
subject individual; or,
    (2) You make a request for access to a record which is not required 
to be disclosed to the general public under the Freedom of Information 
Act, 5 U.S.C. 552, and part 402 of this chapter.
    (b) Manner of verifying identity--(1) Request in person. If you make 
a request to us in person, you must provide at least one piece of 
tangible identification such as a driver's license, passport, alien or 
voter registration card, or union card to verify your identity. If you 
do not have identification papers to verify your identity, you must 
certify in writing that you are the individual who you claim to be and 
that you understand that the knowing and willful request for or 
acquisition of a record pertaining to an individual under false 
pretenses is a criminal offense.
    (2) Request by telephone. If you make a request by telephone, you 
must verify your identity by providing identifying particulars which 
parallel the record to which notification or access is being sought. If 
we determine that the particulars provided by telephone are 
insufficient, you will be required to submit your request in writing or 
in person. We will not accept telephone requests where an individual is 
requesting notification of or access to sensitive records such as 
medical records.
    (3) Requests not in person. Except as provided in paragraph (b)(2) 
of this section, if you do not make a request in person, you must submit 
a notarized request to SSA to verify your identity or you must certify 
in your request that you are the individual you claim to be and that you 
understand that the knowing and willful request for or acquisition of a 
record pertaining to an individual under false pretenses is a criminal 
offense.
    (4) Requests on behalf of another. If you make a request on behalf 
of a minor or legal incompetent as authorized under Sec. 401.40, you 
must verify your relationship to the minor or legal incompetent, in 
addition to verifying your own identity, by providing a copy of the 
minor's birth certificate, a court order, or other competent evidence of 
guardianship to SSA; except that you are not required to verify your 
relationship to the minor or legal incompetent when you are not required 
to verify your own identity or when evidence of your relationship to the 
minor or legal incompetent has been previously given to SSA.
    (5) Medical records--additional verification. You need to further 
verify your identity if you are requesting notification of or access to 
sensitive records such as medical records. Any information for further 
verification must parallel the information in the record to which 
notification or access is being sought. Such further verification may 
include such particulars as the date or place of birth, names of 
parents, name of employer or the specific times the individual received 
medical treatment.

[[Page 10]]



Sec. 401.50  Granting notification of or access to a record.

    (a) General. Subject to the provisions governing medical records in 
Sec. 401.55 and the provisions governing exempt systems in Sec. 
401.85, upon receipt of your request for notification of or access to a 
record and verification of your identity, we will review your request 
and grant notification or access to a record, if you are the subject of 
the record.
    (b) Our delay in responding. If we determine that we will have to 
delay responding to your request because of the number of requests we 
are processing, a breakdown of equipment, shortage of personnel, storage 
of records in other locations, etc., we will so inform you and tell you 
when notification or access will be granted.



Sec. 401.55  Special procedures for notification of or access to medical 
records.

    (a) General. In general, you have a right to notification of or 
access to your medical records, including psychological records, as well 
as to other records pertaining to you that we maintain. In this section, 
we set forth special procedures as permitted by the Privacy Act for 
notification of or access to medical records, including a special 
procedure for notification of or access to medical records of minors.
    (b) Medical records procedures--(1) Notification of or access to 
medical records. (i) You may request notification of or access to a 
medical record pertaining to you. Unless you are a parent or guardian 
requesting notification of or access to a minor's medical record, you 
must make a request for a medical record in accordance with this section 
and the procedures in Sec. Sec. 401.45 through 401.50 of this part.
    (ii) When you request medical information about yourself, you must 
also name a representative in writing. The representative may be a 
physician, other health professional, or other responsible individual 
who would be willing to review the record and inform you of its contents 
at your representative's discretion. If you do not designate a 
representative, we may decline to release the requested information. In 
some cases, it may be possible to release medical information directly 
to you rather than to your representative.
    (2) Utilization of the designated representative. You will be 
granted direct access to your medical record if we can determine that 
direct access is not likely to have an adverse effect on you. If we 
believe that we are not qualified to determine, or if we do determine, 
that direct access to you is likely to have an adverse effect, the 
record will be sent to the designated representative. We will inform you 
in writing that the record has been sent.
    (c) Medical records of minors--(1) Requests by minors; notification 
of or access to medical records to minors. A minor may request 
notification of or access to a medical record pertaining to him or her 
in accordance with paragraph (b) of this section.
    (2) Requests on a minor's behalf; notification of or access to 
medical records to an individual on a minor's behalf. (i) To protect the 
privacy of a minor, we will not give to a parent or guardian direct 
notification of or access to a minor's record, even though the parent or 
guardian who requests such notification or access is authorized to act 
on a minor's behalf as provided in Sec. 401.75 of this part.
    (ii) A parent or guardian must make all requests for notification of 
or access to a minor's medical record in accordance with this paragraph 
and the procedures in Sec. Sec. 401.45 through 401.50 of this part. A 
parent or guardian must at the time he or she makes a request designate 
a family physician or other health professional (other than a family 
member) to whom the record, if any, will be sent. If the parent or 
guardian will not designate a representative, we will decline to release 
the requested information.
    (iii) Where a medical record on the minor exists, we will in all 
cases send it to the physician or health professional designated by the 
parent or guardian. If disclosure of the record would constitute an 
invasion of the minor's privacy, we will bring that fact to the 
attention of the physician or health professional to whom we send the 
record. We will ask the physician or health professional to consider the 
effect that disclosure of the record to

[[Page 11]]

the parent or guardian would have on the minor when the physician or 
health professional determines whether the minor's medical record should 
be made available to the parent or guardian. We will respond in 
substantially the following form to the parent or guardian making the 
request:

We have completed processing your request for notification of or access 
to --------'s (Name of minor) medical records. Please be informed that 
if any medical record was found pertaining to that individual, it has 
been sent to your designated physician or health professional.

    (iv) In each case where we send a minor's medical record to a 
physician or health professional, we will make reasonable efforts to 
inform the minor that we have given the record to the representative.
    (d) Requests on behalf of an incapacitated adult. If you are the 
legal guardian of an adult who has been declared legally incompetent, 
you may receive his or her records directly.



Sec. 401.60  Access or notification of program records about two or 
more individuals.

    When information about two or more individuals is in one record 
filed under your social security number, you may receive the information 
about you and the fact of entitlement and the amount of benefits payable 
to other persons based on your record. You may receive information about 
yourself or others, which is filed under someone else's social security 
number, if that information affects your entitlement to social security 
benefits or the amount of those benefits.



Sec. 401.65  How to correct your record.

    (a) How to request a correction. This section applies to all records 
kept by SSA (as described in Sec. 401.5) except for records of 
earnings. (20 CFR 422.125 describes how to request correction of your 
earnings record.) You may request that your record be corrected or 
amended if you believe that the record is not accurate, timely, 
complete, relevant, or necessary to the administration of a social 
security program. To amend or correct your record, you should write to 
the manager identified in the notice of systems of records which is 
published in the Federal Register (see Sec. 401.40(c) on how to locate 
this information). The staff at any social security office can help you 
prepare the request. You should submit any available evidence to support 
your request. Your request should indicate--
    (1) The system of records from which the record is retrieved;
    (2) The particular record which you want to correct or amend;
    (3) Whether you want to add, delete or substitute information in the 
record; and
    (4) Your reasons for believing that your record should be corrected 
or amended.
    (b) What we will not change. You cannot use the correction process 
to alter, delete, or amend information which is part of a determination 
of fact or which is evidence received in the record of a claim in the 
administrative appeal process. Disagreements with these determinations 
are to be resolved through the SSA appeal process. (See subparts I and J 
of part 404, and subpart N of part 416, of this chapter.) For example, 
you cannot use the correction process to alter or delete a document 
showing a birth date used in deciding your social security claim. 
However, you may submit a statement on why you think certain information 
should be altered, deleted, or amended, and we will make this statement 
part of your file.
    (c) Acknowledgment of correction request. We will acknowledge 
receipt of a correction request within 10 working days, unless we can 
review and process the request and give an initial determination of 
denial or compliance before that time.
    (d) Notice of error. If the record is wrong, we will correct it 
promptly. If wrong information was disclosed from the record, we will 
tell all those of whom we are aware received that information that it 
was wrong and will give them the correct information. This will not be 
necessary if the change is not due to an error, e.g., a change of name 
or address.
    (e) Record found to be correct. If the record is correct, we will 
inform you in writing of the reason why we refuse to amend your record 
and we will also inform you of your right to seek a review

[[Page 12]]

of the refusal and the name and address of the official to whom you 
should send your request for review.
    (f) Record of another government agency. If you request us to 
correct or amend a record governed by the regulation of another 
government agency, e.g., Office of Personnel Management, Federal Bureau 
of Investigation, we will forward your request to such government agency 
for processing and we will inform you in writing of the referral.



Sec. 401.70  Appeals of refusals to correct or amend records.

    (a) Which decisions are covered. This section describes how to 
appeal a decision made under the Privacy Act concerning your request for 
correction of a record or for access to your records, those of your 
minor child, or those of a person for whom you are the legal guardian. 
We generally handle a denial of your request for information about 
another person under the provisions of the FOIA (see part 402 of this 
chapter). This section applies only to written requests.
    (b) Appeal of refusal to amend or correct a record. (1) If we deny 
your request to correct a record, you may request a review of that 
decision. As discussed in Sec. 401.65(e), our letter denying your 
request will tell you to whom to write.
    (2) We will review your request within 30 working days from the date 
of receipt. However, for a good reason and with the approval of the 
Commissioner, or designee, this time limit may be extended up to an 
additional 30 days. In that case, we will notify you about the delay, 
the reason for it, and the date when the review is expected to be 
completed. If, after review, we determine that the record should be 
corrected, the record will be corrected. If, after review, we also 
refuse to amend the record exactly as you requested, we will inform 
you--
    (i) That your request has been refused and the reason;
    (ii) That this refusal is SSA's final decision;
    (iii) That you have a right to seek court review of this request to 
amend the record; and
    (iv) That you have a right to file a statement of disagreement with 
the decision. Your statement should include the reason you disagree. We 
will make your statement available to anyone to whom the record is 
subsequently disclosed, together with a statement of our reasons for 
refusing to amend the record. Also, we will provide a copy of your 
statement to individuals whom we are aware received the record 
previously.
    (c) Appeals after denial of access. If, under the Privacy Act, we 
deny your request for access to your own record, those of your minor 
child, or those of a person for whom you are the legal guardian, we will 
advise you in writing of the reason for that denial, the name and title 
or position of the person responsible for the decision, and your right 
to appeal that decision. You may appeal the denial decision to the 
Commissioner of Social Security, 6401 Security Boulevard, Baltimore, MD 
21235, within 30 days after you receive the notice denying all or part 
of your request, or, if later, within 30 days after you receive 
materials sent to you in partial compliance with your request. If we 
refuse to release a medical record because you did not designate a 
representative (Sec. 401.55) to receive the material, that refusal is 
not a formal denial of access and, therefore, may not be appealed to the 
Commissioner. If you file an appeal, either the Commissioner or a 
designee will review your request and any supporting information 
submitted and then send you a notice explaining the decision on your 
appeal. We must make our decision within 20 working days after we 
receive your appeal. The Commissioner or a designee may extend this time 
limit up to 10 additional working days if one of the circumstances in 20 
CFR 402.140 is met. We will notify you in writing of any extension, the 
reason for the extension, and the date by which we will decide your 
appeal. The notice of the decision on your appeal will explain your 
right to have the matter reviewed in a Federal district court if you 
disagree with all or part of our decision.



Sec. 401.75  Rights of parents or legal guardians.

    For purposes of this part, a parent or guardian of any minor or the 
legal guardian of any individual who has

[[Page 13]]

been declared incompetent due to physical or mental incapacity or age by 
a court of competent jurisdiction is authorized to act on behalf of a 
minor or incompetent individual. Except as provided in Sec. 401.45, 
governing procedures for verifying an individual's identity, and Sec. 
401.55(c) governing special procedures for notification of or access to 
a minor's medical records, if you are authorized to act on behalf of a 
minor or legal incompetent, you will be viewed as if you were the 
individual or subject individual.



Sec. 401.80  Accounting for disclosures.

    (a) We will maintain an accounting of all disclosures of a record 
for five years or for the life of the record, whichever is longer; 
except that, we will not make accounting for:
    (1) Disclosures under paragraphs (a) and (b) of Sec. 401.110; and,
    (2) Disclosures of your record made with your written consent.
    (b) The accounting will include:
    (1) The date, nature, and purpose of each disclosure; and
    (2) The name and address of the person or entity to whom the 
disclosure is made.
    (c) You may request access to an accounting of disclosures of your 
record. You must request access to an accounting in accordance with the 
procedures in Sec. 401.40. You will be granted access to an accounting 
of the disclosures of your record in accordance with the procedures of 
this part which govern access to the related record. We may, at our 
discretion, grant access to an accounting of a disclosure of a record 
made under paragraph (g) of Sec. 401.110.



Sec. 401.85  Exempt systems.

    (a) General policy. The Privacy Act permits certain types of 
specific systems of records to be exempt from some of its requirements. 
Our policy is to exercise authority to exempt systems of records only in 
compelling cases.
    (b) Specific systems of records exempted. (1) Those systems of 
records listed in paragraph (b)(2) of this section are exempt from the 
following provisions of the Act and this part:
    (i) 5 U.S.C. 552a(c)(3) and paragraph (c) of Sec. 401.80 of this 
part which require that you be granted access to an accounting of 
disclosures of your record.
    (ii) 5 U.S.C. 552a (d) (1) through (4) and (f) and Sec. Sec. 401.35 
through 401.75 relating to notification of or access to records and 
correction or amendment of records.
    (iii) 5 U.S.C. 552a(e)(4) (G) and (H) which require that we include 
information about SSA procedures for notification, access, and 
correction or amendment of records in the notice for the systems of 
records.
    (iv) 5 U.S.C. 552a(e)(3) and Sec. 401.30 which require that if we 
ask you to provide a record to us, we must inform you of the authority 
for our asking you to provide the record (including whether providing 
the record is mandatory or voluntary, the principal purposes for 
maintaining the record, the routine uses for the record, and what effect 
your refusal to provide the record may have on you), and if you are not 
required by statute or Executive Order to provide the record, that you 
agree to provide the record. This exemption applies only to an 
investigatory record compiled by SSA for criminal law enforcement 
purposes in a system of records exempt under subsection (j)(2) of the 
Privacy Act to the extent that these requirements would prejudice the 
conduct of the investigation.
    (2) The following systems of records are exempt from those 
provisions of the Privacy Act and this part listed in paragraph (b)(1) 
of this section:
    (i) Pursuant to subsection (j)(2) of the Privacy Act, the 
Investigatory Material Compiled for Law Enforcement Purposes System, 
SSA.
    (ii) Pursuant to subsection (k)(2) of the Privacy Act:
    (A) The General Criminal Investigation Files, SSA;
    (B) The Criminal Investigations File, SSA; and,
    (C) The Program Integrity Case Files, SSA.
    (D) Civil and Administrative Investigative Files of the Inspector 
General, SSA/OIG.
    (E) Complaint Files and Log. SSA/OGC.
    (iii) Pursuant to subsection (k)(5) of the Privacy Act:

[[Page 14]]

    (A) The Investigatory Material Compiled for Security and Suitability 
Purposes System, SSA; and,
    (B) The Suitability for Employment Records, SSA.
    (iv) Pursuant to subsection (k)(6) of the Privacy Act, the Personnel 
Research and Merit Promotion Test Records, SSA/DCHR/OPE.
    (c) Notification of or access to records in exempt systems of 
records. (1) Where a system of records is exempt as provided in 
paragraph (b) of this section, you may nonetheless request notification 
of or access to a record in that system. You should make requests for 
notification of or access to a record in an exempt system of records in 
accordance with the procedures of Sec. Sec. 401.35 through 401.55.
    (2) We will grant you notification of or access to a record in an 
exempt system but only to the extent such notification or access would 
not reveal the identity of a source who furnished the record to us under 
an express promise, and prior to September 27, 1975, an implied promise, 
that his or her identity would be held in confidence, if:
    (i) The record is in a system of records which is exempt under 
subsection (k)(2) of the Privacy Act and you have been, as a result of 
the maintenance of the record, denied a right, privilege, or benefit to 
which you would otherwise be eligible; or,
    (ii) The record is in a system of records which is exempt under 
subsection (k)(5) of the Privacy Act.
    (3) If we do not grant you notification of or access to a record in 
a system of records exempt under subsections (k) (2) and (5) of the 
Privacy Act in accordance with this paragraph, we will inform you that 
the identity of a confidential source would be revealed if we granted 
you notification of or access to the record.
    (d) Discretionary actions by SSA. Unless disclosure of a record to 
the general public is otherwise prohibited by law, we may at our 
discretion grant notification of or access to a record in a system of 
records which is exempt under paragraph (b) of this section. 
Discretionary notification of or access to a record in accordance with 
this paragraph will not be a precedent for discretionary notification of 
or access to a similar or related record and will not obligate us to 
exercise discretion to grant notification of or access to any other 
record in a system of records which is exempt under paragraph (b) of 
this section.



Sec. 401.90  Contractors.

    (a) All contracts which require a contractor to maintain, or on 
behalf of SSA to maintain, a system of records to accomplish an SSA 
function must contain a provision requiring the contractor to comply 
with the Privacy Act and this part.
    (b) A contractor and any employee of such contractor will be 
considered employees of SSA only for the purposes of the criminal 
penalties of the Privacy Act, 5 U.S.C. 552a(i), and the employee 
standards of conduct (see appendix A of this part) where the contract 
contains a provision requiring the contractor to comply with the Privacy 
Act and this part.
    (c) This section does not apply to systems of records maintained by 
a contractor as a result of his management discretion, e.g., the 
contractor's personnel records.



Sec. 401.95  Fees.

    (a) Policy. Where applicable, we will charge fees for copying 
records in accordance with the schedule set forth in this section. We 
may only charge fees where you request that a copy be made of the record 
to which you are granted access. We will not charge a fee for searching 
a system of records, whether the search is manual, mechanical, or 
electronic. Where we must copy the record in order to provide access to 
the record (e.g., computer printout where no screen reading is 
available), we will provide the copy to you without cost. Where we make 
a medical record available to a representative designated by you or to a 
physician or health professional designated by a parent or guardian 
under Sec. 401.55 of this part, we will not charge a fee.
    (b) Fee schedule. Our Privacy Act fee schedule is as follows:
    (1) Copying of records susceptible to photocopying--$.10 per page.
    (2) Copying records not susceptible to photocopying (e.g., punch 
cards or

[[Page 15]]

magnetic tapes)--at actual cost to be determined on a case-by-case 
basis.
    (3) We will not charge if the total amount of copying does not 
exceed $25.
    (c) Other Fees. We also follow Sec. Sec. 402.155 through 402.165 of 
this chapter to determine the amount of fees, if any, we will charge for 
providing information under the FOIA and Privacy Act.



        Subpart C_Disclosure of Official Records and Information



Sec. 401.100  Disclosure of records with the consent of the subject 
of the record.

    (a) Except as permitted by the Privacy Act and the regulations in 
this chapter, or if required by the FOIA, we will not disclose your 
record without your written consent. The consent must specify the 
individual, organizational unit or class of individuals or 
organizational units to whom the record may be disclosed, which record 
may be disclosed and, where applicable, during which time frame the 
record may be disclosed (e.g., during the school year, while the subject 
individual is out of the country, whenever the subject individual is 
receiving specific services). We will not honor a blanket consent to 
disclose all your records to unspecified individuals or organizational 
units. We will verify your identity and, where applicable (e.g., where 
you consent to disclosure of a record to a specific individual), the 
identity of the individual to whom the record is to be disclosed.
    (b) A parent or guardian of a minor is not authorized to give 
consent to a disclosure of the minor's medical record. See Sec. 
401.55(c) for the procedures for disclosures of or access to the medical 
records of minors.



Sec. 401.105  Disclosure of personal information without the consent of 
the subject of the record.

    (a) SSA maintains two categories of records which contain personal 
information:
    (1) Nonprogram records, primarily administrative and personnel 
records which contain information about SSA's activities as a government 
agency and employer, and
    (2) Program records which contain information about SSA's clients 
that it keeps to administer benefit programs under Federal law.
    (b) We apply different levels of confidentiality to disclosures of 
information in the categories in paragraphs (a) (1) and (2) of this 
section. For administrative and personnel records, we apply the Privacy 
Act restrictions on disclosure. For program records, we apply somewhat 
more strict confidentiality standards than those found in the Privacy 
Act. The reason for this difference in treatment is that our program 
records include information about a much greater number of persons than 
our administrative records, the information we must collect for program 
purposes is often very sensitive, and claimants are required by statute 
and regulation to provide us with the information in order to establish 
entitlement for benefits.



Sec. 401.110  Disclosure of personal information in nonprogram records 
without the consent of the subject of the record.

    The disclosures listed in this section may be made from our 
nonprogram records, e.g., administrative and personnel records, without 
your consent. Such disclosures are those:
    (a) To officers and employees of SSA who have a need for the record 
in the performance of their duties. The SSA official who is responsible 
for the record may upon request of any officer or employee, or on his 
own initiative, determine what constitutes legitimate need.
    (b) Required to be disclosed under the Freedom of Information Act, 5 
U.S.C. 552, and 20 CFR part 402.
    (c) For a routine use as defined in Sec. 401.25 of this part. 
Routine uses will be listed in any notice of a system of records. SSA 
publishes notices of systems of records, including all pertinent routine 
uses, in the Federal Register.
    (d) To the Bureau of the Census for purposes of planning or carrying 
out a census or survey or related activity pursuant to the provisions of 
Title 13 U.S.C.
    (e) To a recipient who has provided us with advance written 
assurance that

[[Page 16]]

the record will be used solely as a statistical research or reporting 
record; Provided, that, the record is transferred in a form that does 
not identify the subject individual.
    (f) To the National Archives of the United States as a record which 
has sufficient historical or other value to warrant its continued 
preservation by the United States Government, or for evaluation by the 
Administrator of General Services or his designee to determine whether 
the record has such value.
    (g) To another government agency or to an instrumentality of any 
governmental jurisdiction within or under the control of the United 
States for a civil or criminal law enforcement activity if the activity 
is authorized by law, and if the head of such government agency or 
instrumentality has submitted a written request to us, specifying the 
record desired and the law enforcement activity for which the record is 
sought.
    (h) To an individual pursuant to a showing of compelling 
circumstances affecting the health or safety of any individual if a 
notice of the disclosure is transmitted to the last known address of the 
subject individual.
    (i) To either House of Congress, or to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, any joint 
committee of Congress or subcommittee of any such joint committee.
    (j) To the Comptroller General, or any of his authorized 
representatives, in the course of the performance of the duties of the 
General Accounting Office.
    (k) Pursuant to the order of a court of competent jurisdiction.



Sec. 401.115  Disclosure of personal information in program records 
without the consent of the subject of the record.

    This section describes how various laws control the disclosure or 
confidentiality of personal information which we keep. We must consider 
these laws in the following order:
    (a) Some laws require us to disclose information (Sec. 401.120); 
some laws require us to withhold information (Sec. 401.125). These laws 
control whenever they apply.
    (b) If no law of this type applies in a given case, then we must 
look to FOIA principles. See Sec. 401.130.
    (c) When FOIA principles do not require disclosure, we may disclose 
information if both the Privacy Act and section 1106 of the Social 
Security Act permit the disclosure.



Sec. 401.120  Disclosures required by law.

    We disclose information when a law specifically requires it. The 
Social Security Act requires us to disclose information for certain 
program purposes. These include disclosures to the SSA Office of 
Inspector General, the Federal Parent Locator Service, and to States 
pursuant to an arrangement regarding use of the Blood Donor Locator 
Service. Also, there are other laws which require that we furnish other 
agencies information which they need for their programs. These agencies 
include the Department of Veterans Affairs for its benefit programs, the 
Immigration and Naturalization Service to carry out its duties regarding 
aliens, the Railroad Retirement Board for its benefit programs, and to 
Federal, State, and local agencies administering Aid to Families with 
Dependent Children, Medicaid, unemployment compensation, food stamps, 
and other programs.



Sec. 401.125  Disclosures prohibited by law.

    We do not disclose information when a law specifically prohibits it. 
The Internal Revenue Code generally prohibits us from disclosing tax 
return information which we receive to maintain individual earnings 
records. This includes, for example, amounts of wages and contributions 
from employers. Other laws restrict our disclosure of certain 
information about drug and alcohol abuse which we collect to determine 
eligibility for social security benefits.



Sec. 401.130  Freedom of Information Act.

    The FOIA requires us to disclose any information in our records upon 
request from the public, unless one of several exemptions in the FOIA 
applies. When the FOIA requires disclosure (see part 402 of this 
chapter), the Privacy Act permits it. The public does not include 
Federal agencies, courts, or

[[Page 17]]

the Congress, but does include State agencies, individuals, 
corporations, and most other parties. The FOIA does not apply to 
requests that are not from the public (e.g., from a Federal agency). 
However, we apply FOIA principles to requests from these other sources 
for disclosure of program information.



Sec. 401.135  Other laws.

    When the FOIA does not apply, we may not disclose any personal 
information unless both the Privacy Act and section 1106 of the Social 
Security Act permit the disclosure. Section 1106 of the Social Security 
Act requires that disclosures which may be made must be set out in 
statute or regulations; therefore, any disclosure permitted by this part 
is permitted by section 1106.



Sec. 401.140  General principles.

    When no law specifically requiring or prohibiting disclosure applies 
to a question of whether to disclose information, we follow FOIA 
principles to resolve that question. We do this to insure uniform 
treatment in all situations. The FOIA principle which most often applies 
to SSA disclosure questions is whether the disclosure would result in a 
``clearly unwarranted invasion of personal privacy.'' To decide whether 
a disclosure would be a clearly unwarranted invasion of personal privacy 
we consider--
    (a) The sensitivity of the information (e.g., whether individuals 
would suffer harm or embarrassment as a result of the disclosure);
    (b) The public interest in the disclosure;
    (c) The rights and expectations of individuals to have their 
personal information kept confidential;
    (d) The public's interest in maintaining general standards of 
confidentiality of personal information; and
    (e) The existence of safeguards against unauthorized redisclosure or 
use.



Sec. 401.145  Safeguards against unauthorized redisclosure or use.

    (a) The FOIA does not authorize us to impose any restrictions on how 
information is used after we disclose it under that law. In applying 
FOIA principles, we consider whether the information will be adequately 
safeguarded against improper use or redisclosure. We must consider all 
the ways in which the recipient might use the information and how likely 
the recipient is to redisclose the information to other parties. Thus, 
before we disclose personal information we may consider such factors 
as--
    (1) Whether only those individuals who have a need to know the 
information will obtain it;
    (2) Whether appropriate measures to safeguard the information to 
avoid unwarranted use or misuse will be taken; and
    (3) Whether we would be permitted to conduct on-site inspections to 
see whether the safeguards are being met.
    (b) We feel that there is a strong public interest in sharing 
information with other agencies with programs having the same or similar 
purposes, so we generally share information with those agencies. 
However, since there is usually little or no public interest in 
disclosing information for disputes between two private parties or for 
other private or commercial purposes, we generally do not share 
information for these purposes.



Sec. 401.150  Compatible purposes.

    (a) General. The Privacy Act allows us to disclose information, 
without the consent of the individual, to any other party for routine 
uses.
    (b) Routine use. We publish notices of systems of records in the 
Federal Register which contain a list of all routine use disclosures.
    (c) Determining compatibility. We disclose information for routine 
uses where necessary to carry out SSA's programs. It is also our policy 
to disclose information for use in other programs which have the same 
purposes as SSA programs if the information concerns eligibility, 
benefit amounts, or other matters of benefit status in a social security 
program and is relevant to determining the same matters in the other 
program. For example, we disclose information to the Railroad Retirement 
Board for pension and unemployment compensation programs, to the 
Veterans Administration for its benefit program, to worker's 
compensation programs, to State general

[[Page 18]]

assistance programs, and to other income maintenance programs at all 
levels of government; we also disclose for health-maintenance programs 
like Medicare and Medicaid, and in appropriate cases, for 
epidemiological and similar research.



Sec. 401.155  Law enforcement purposes.

    (a) General. The Privacy Act allows us to disclose information for 
law enforcement purposes under certain conditions. Much of the 
information in our files is especially sensitive or very personal. 
Furthermore, participation in social security programs is mandatory, so 
people cannot limit what information is given to us. Therefore, we 
generally disclose information for law enforcement purposes only in 
limited situations. Paragraphs (b) and (c) of this section discuss the 
disclosures we generally make for these purposes.
    (b) Serious crimes. SSA may disclose information for criminal law 
enforcement purposes where a violent crime such as murder or kidnapping 
has been committed and the individual about whom the information is 
being sought has been indicted or convicted of that crime. The Privacy 
Act allows us to disclose if the head of the law enforcement agency 
makes a written request giving enough information to show that these 
conditions are met, what information is needed, and why it is needed.
    (c) Criminal activity involving the social security program or 
another program with the same purposes. We disclose information when 
necessary to investigate or prosecute fraud or other criminal activity 
involving the social security program. We may also disclose information 
for investigation or prosecution of criminal activity in other income-
maintenance or health-maintenance programs (e.g., other governmental 
pension programs, unemployment compensation, general assistance, 
Medicare or Medicaid) if the information concerns eligibility, benefit 
amounts, or other matters of benefit status in a social security program 
and is relevant to determining the same matters in the other program.



Sec. 401.160  Health or safety.

    The Privacy Act allows us to disclose information in compelling 
circumstances where an individual's health or safety is affected. For 
example, if we learn that someone has been exposed to an excessive 
amount of radiation, we may notify that person and appropriate health 
officials. If we learn that someone has made a threat against someone 
else, we may notify that other person and law enforcement officials. 
When we make these disclosures, the Privacy Act requires us to send a 
notice of the disclosure to the last known address of the person whose 
record was disclosed.



Sec. 401.165  Statistical and research activities.

    (a) General. Statistical and research activities often do not 
require information in a format that identifies specific individuals. 
Therefore, whenever possible, we release information for statistical or 
research purposes only in the form of aggregates or individual data that 
cannot be associated with a particular individual. The Privacy Act 
allows us to release records if there are safeguards that the record 
will be used solely as a statistical or research record and the 
individual cannot be identified from any information in the record.
    (b) Safeguards for disclosure with identifiers. The Privacy Act also 
allows us to disclose data for statistical and research purposes in a 
form allowing individual identification, pursuant to published routine 
use, when the purpose is compatible with the purpose for which the 
record was collected. We will disclose personally identifiable 
information for statistical and research purposes if--
    (1) We determine that the requestor needs the information in an 
identifiable form for a statistical or research activity, will use the 
information only for that purpose, and will protect individuals from 
unreasonable and unwanted contacts;
    (2) The activity is designed to increase knowledge about present or 
alternative social security programs or

[[Page 19]]

other Federal or State income-maintenance or health-maintenance 
programs, or consists of epidemiological or similar research; and
    (3) The recipient will keep the information as a system of 
statistical records, will follow appropriate safeguards, and agrees to 
our on-site inspection of those safeguards so we can be sure the 
information is used or redisclosed only for statistical or research 
purposes. No redisclosure of the information may be made without SSA's 
approval.
    (c) Statistical record. A statistical record is a record in a system 
of records which is maintained only for statistical and research 
purposes, and which is not used to make any determination about an 
individual. We maintain and use statistical records only for statistical 
and research purposes. We may disclose a statistical record if the 
conditions in paragraph (b) of this section are met.
    (d) Compiling of records. Where a request for information for 
statistical and research purposes would require us to compile records, 
and doing that would be administratively burdensome to ongoing SSA 
operations, we may decline to furnish the information.



Sec. 401.170  Congress.

    (a) We disclose information to either House of Congress. We also 
disclose information to any committee or subcommittee of either House, 
or to any joint committee of Congress or subcommittee of that committee, 
if the information is on a matter within the committee's or 
subcommittee's jurisdiction.
    (b) We disclose to any member of Congress the information needed to 
respond to constituents' requests for information about themselves 
(including requests from parents of minors, or legal guardians). 
However, these disclosures are subject to the restrictions in Sec. Sec. 
401.35 through 401.60.



Sec. 401.175  General Accounting Office.

    We disclose information to the General Accounting Office when that 
agency needs the information to carry out its duties.



Sec. 401.180  Courts.

    (a) General. The Privacy Act allows us to disclose information when 
we receive an order from a court of competent jurisdiction. However, 
much of our information is especially sensitive. Participation in social 
security programs is mandatory, and so people cannot limit what 
information is given to SSA. When information is used in a court 
proceeding, it usually becomes part of a public record, and its 
confidentiality cannot be protected. Therefore, we treat subpoenas or 
other court orders for information under the rules in paragraph (b) of 
this section.
    (b) Subpoena. We generally disclose information in response to a 
subpoena or other court order if--
    (1) Another section of this part would specifically allow the 
release; or
    (2) The Commissioner of SSA is a party to the proceeding; or
    (3) The information is necessary for due process in a criminal 
proceeding. In other cases, we try to satisfy the needs of courts while 
preserving the confidentiality of information.
    (c) Other regulations on testimony and production of records in 
legal proceedings. See Part 403 of this chapter for additional rules 
covering disclosure of information and records governed by this part and 
requested in connection with legal proceedings.

[62 FR 4143, Jan. 29, 1997, as amended at 66 FR 2809, Jan. 12, 2001]



Sec. 401.185  Other specific recipients.

    In addition to disclosures we make under the routine use provision, 
we also release information to--
    (a) The Bureau of the Census for purposes of planning or carrying 
out a census, survey, or related activity; and
    (b) The National Archives of the United States if the record has 
sufficient historical or other value to warrant its continued 
preservation by the United States Government. We also disclose a record 
to the Administrator of General Services for a determination of whether 
the record has such a value.



Sec. 401.190  Deceased persons.

    We do not consider the disclosure of information about a deceased 
person to be a clearly unwarranted invasion of

[[Page 20]]

that person's privacy. However, in disclosing information about a 
deceased person, we follow the principles in Sec. 401.115 to insure 
that the privacy rights of a living person are not violated.



Sec. 401.195  Situations not specified in this part.

    If no other provision in this part specifically allows SSA to 
disclose information, the Commissioner or designee may disclose this 
information if not prohibited by Federal law. For example, the 
Commissioner or designee may disclose information necessary to respond 
to life threatening situations.



Sec. 401.200  Blood donor locator service.

    (a) General. We will enter into arrangements with State agencies 
under which we will furnish to them at their request the last known 
personal mailing addresses (residence or post office box) of blood 
donors whose blood donations show that they are or may be infected with 
the human immunodeficiency virus which causes acquired immune deficiency 
syndrome. The State agency or other authorized person, as defined in 
paragraph (b) of this section, will then inform the donors that they may 
need medical care and treatment. The safeguards that must be used by 
authorized persons as a condition to receiving address information from 
the Blood Donor Locator Service are in paragraph (g) of this section, 
and the requirements for a request for address information are in 
paragraph (d) of this section.
    (b) Definitions. State means the 50 States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, the 
Commonwealth of Northern Marianas, and the Trust Territory of the 
Pacific Islands.
    Authorized person means--
    (1) Any agency of a State (or of a political subdivision of a State) 
which has duties or authority under State law relating to the public 
health or otherwise has the duty or authority under State law to 
regulate blood donations; and
    (2) Any entity engaged in the acceptance of blood donations which is 
licensed or registered by the Food and Drug Administration in connection 
with the acceptance of such blood donations, and which provides for--
    (i) The confidentiality of any address information received pursuant 
to the rules in this part and section 1141 of the Social Security Act 
and related blood donor records;
    (ii) Blood donor notification procedures for individuals with 
respect to whom such information is requested and a finding has been 
made that they are or may be infected with the human immunodeficiency 
virus; and
    (iii) Counseling services for such individuals who have been found 
to have such virus. New counseling programs are not required, and an 
entity may use existing counseling programs or referrals to provide 
these services.
    Related blood donor records means any record, list, or compilation 
established in connection with a request for address information which 
indicates, directly or indirectly, the identity of any individual with 
respect to whom a request for address information has been made pursuant 
to the rules in this part.
    (c) Use of social security number for identification. A State or an 
authorized person in the State may require a blood donor to furnish his 
or her social security number when donating blood. The number may then 
be used by an authorized person to identify and locate a donor whose 
blood donation indicates that he or she is or may be infected with the 
human immunodeficiency virus.
    (d) Request for address of blood donor. An authorized person who has 
been unable to locate a blood donor at the address he or she may have 
given at the time of the blood donation may request assistance from the 
State agency which has arranged with us to participate in the Blood 
Donor Locator Service. The request to the Blood Donor Locator Service 
must--
    (1) Be in writing;
    (2) Be from a participating State agency either on its own behalf as 
an authorized person or on behalf of another authorized person;
    (3) Indicate that the authorized person meets the confidentiality 
safeguards of paragraph (g) of this section; and
    (4) Include the donor's name and social security number, the 
addresses at

[[Page 21]]

which the authorized person attempted without success to contact the 
donor, the date of the blood donation if available, a statement that the 
donor has tested positive for the human immunodeficiency virus according 
to the latest Food and Drug Administration standards or that the history 
of the subsequent use of the donated blood or blood products indicates 
that the donor has or may have the human immunodeficiency virus, and the 
name and address of the requesting blood donation facility.
    (e) SSA response to request for address. After receiving a request 
that meets the requirements of paragraph (d) of this section, we will 
search our records for the donor's latest personal mailing address. If 
we do not find a current address, we will request that the Internal 
Revenue Service search its tax records and furnish us any personal 
mailing address information from its files, as required under section 
6103(m)(6) of the Internal Revenue Code. After completing these 
searches, we will provide to the requesting State agency either the 
latest mailing address available for the donor or a response stating 
that we do not have this information. We will then destroy the records 
or delete all identifying donor information related to the request and 
maintain only the information that we will need to monitor the 
compliance of authorized persons with the confidentiality safeguards 
contained in paragraph (g) of this section.
    (f) SSA refusal to furnish address. If we determine that an 
authorized person has not met the requirements of paragraphs (d) and (g) 
of this section, we will not furnish address information to the State 
agency. In that case, we will notify the State agency of our 
determination, explain the reasons for our determination, and explain 
that the State agency may request administrative review of our 
determination. The Commissioner of Social Security or a delegate of the 
Commissioner will conduct this review. The review will be based on the 
information of record and there will not be an opportunity for an oral 
hearing. A request for administrative review, which may be submitted 
only by a State agency, must be in writing. The State agency must send 
its request for administrative review to the Commissioner of Social 
Security, 6401 Security Boulevard, Baltimore, MD 21235, within 60 days 
after receiving our notice refusing to give the donor's address. The 
request for review must include supporting information or evidence that 
the requirements of the rules in this part have been met. If we do not 
furnish address information because an authorized person failed to 
comply with the confidentiality safeguards of paragraph (g) of this 
section, the State agency will have an opportunity to submit evidence 
that the authorized person is now in compliance. If we then determine, 
based on our review of the request for administrative review and the 
supporting evidence, that the authorized person meets the requirements 
of the rules in this part, we will respond to the address request as 
provided in paragraph (e) of this section. If we determine on 
administrative review that the requirements have not been met, we will 
notify the State agency in writing of our decision. We will make our 
determination within 30 days after receiving the request for 
administrative review, unless we notify the State agency within this 30-
day time period that we will need additional time. Our determination on 
the request for administrative review will give the findings of fact, 
the reasons for the decision, and what actions the State agency should 
take to ensure that it or the blood donation facility is in compliance 
with the rules in this part.
    (g) Safeguards to ensure confidentiality of blood donor records. We 
will require assurance that authorized persons have established and 
continue to maintain adequate safeguards to protect the confidentiality 
of both address information received from the Blood Donor Locator 
Service and related blood donor records. The authorized person must, to 
the satisfaction of the Secretary--
    (1) Establish and maintain a system for standardizing records which 
includes the reasons for requesting the addresses of blood donors, dates 
of the requests, and any disclosures of address information;
    (2) Store blood donors' addresses received from the Blood Donor 
Locator Service and all related blood donor

[[Page 22]]

records in a secure area or place that is physically safe from access by 
persons other than those whose duties and responsibilities require 
access;
    (3) Restrict access to these records to authorized employees and 
officials who need them to perform their official duties related to 
notifying blood donors who are or may be infected with the human 
immunodeficiency virus that they may need medical care and treatment;
    (4) Advise all personnel who will have access to the records of the 
confidential nature of the information, the safeguards required to 
protect the information, and the civil and criminal sanctions for 
unauthorized use or disclosure of the information;
    (5) Destroy the address information received from the Blood Donor 
Locator Service, as well as any records established in connection with 
the request which indicate directly or indirectly the identity of the 
individual, after notifying or attempting to notify the donor at the 
address obtained from the Blood Donor Locator Service; and
    (6) Upon request, report to us the procedures established and 
utilized to ensure the confidentiality of address information and 
related blood donor records. We reserve the right to make onsite 
inspections to ensure that these procedures are adequate and are being 
followed and to request such information as we may need to ensure that 
the safeguards required in this section are being met.
    (h) Unauthorized disclosure. Any official or employee of the Federal 
Government, a State, or a blood donation facility who discloses blood 
donor information, except as provided for in this section or under a 
provision of law, will be subject to the same criminal penalty as 
provided in section 7213(a) of the Internal Revenue Code of 1986 for the 
unauthorized disclosure of tax information.

          Appendix A to Part 401--Employee Standards of Conduct

    (a) General. All SSA employees are required to be aware of their 
responsibilities under the Privacy Act of 1974, 5 U.S.C. 552a. 
Regulations implementing the Privacy Act are set forth in this part. 
Instruction on the requirements of the Act and regulation shall be 
provided to all new employees of SSA. In addition, supervisors shall be 
responsible for assuring that employees who are working with systems of 
records or who undertake new duties which require the use of systems of 
records are informed of their responsibilities. Supervisors shall also 
be responsible for assuring that all employees who work with such 
systems of records are periodically reminded of the requirements of the 
Privacy Act and are advised of any new provisions or interpretations of 
the Act.
    (b) Penalties. (1) All employees must guard against improper 
disclosure of records which are governed by the Privacy Act. Because of 
the serious consequences of improper invasions of personal privacy, 
employees may be subject to disciplinary action and criminal prosecution 
for knowing and willful violations of the Privacy Act and regulation. In 
addition, employees may also be subject to disciplinary action for 
unknowing or unwillful violations, where the employee had notice of the 
provisions of the Privacy Act and regulations and failed to inform 
himself or herself sufficiently or to conduct himself or herself in 
accordance with the requirements to avoid violations.
    (2) SSA may be subjected to civil liability for the following 
actions undertaken by its employees:
    (a) Making a determination under the Privacy Act and Sec. Sec. 
401.65 and 401.70 not to amend an individual's record in accordance with 
his or her request, or failing to make such review in conformity with 
those provisions;
    (b) Refusing to comply with an individual's request for notification 
of or access to a record pertaining to him or her;
    (c) Failing to maintain any record pertaining to any individual with 
such accuracy, relevance, timeliness, and completeness as is necessary 
to assure fairness in any determination relating to the qualifications, 
character, rights, or opportunities of, or benefits to the individual 
that may be made on the basis of such a record, and consequently makes a 
determination which is adverse to the individual; or
    (d) Failing to comply with any other provision of the Act or any 
rule promulgated thereunder, in such a way as to have an adverse effect 
on an individual.
    (3) An employee may be personally subject to criminal liability as 
set forth below and in 5 U.S.C. 552a (i):
    (a) Willful disclosure. Any officer or employee of SSA, who by 
virtue of his employment or official position, has possession of, or 
access to, agency records which contain individually identifiable 
information the disclosure of which is prohibited by the Privacy Act or 
by rules or regulations established thereunder, and who, knowing that 
disclosure of the specific material is so prohibited, willfully 
discloses the material in any manner to any person or agency not 
entitled to

[[Page 23]]

receive it, shall be guilty of a misdemeanor and may be fined not more 
than $5,000.
    (b) Notice requirements. Any officer or employee of SSA who 
willfully maintains a system of records without meeting the notice 
requirements [of the Privacy Act] shall be guilty of a misdemeanor and 
may be fined not more than $5,000.
    (c) Rules governing employees not working with systems of records. 
Employees whose duties do not involve working with systems of records 
will not generally disclose to any one, without specific authorization 
from their supervisors, records pertaining to employees or other 
individuals which by reason of their official duties are available to 
them. Notwithstanding the above, the following records concerning 
Federal employees are a matter of public record and no further 
authorization is necessary for disclosure:
    (1) Name and title of individual.
    (2) Grade classification or equivalent and annual rate of salary.
    (3) Position description.
    (4) Location of duty station, including room number and telephone 
number.
    In addition, employees shall disclose records which are listed in 
SSA's Freedom of Information Regulation as being available to the 
public. Requests for other records will be referred to the responsible 
SSA Freedom of Information Officer. This does not preclude employees 
from discussing matters which are known to them personally, and without 
resort to a record, to official investigators of Federal agencies for 
official purposes such as suitability checks, Equal Employment 
Opportunity investigations, adverse action proceedings, grievance 
proceedings, etc.
    (d) Rules governing employees whose duties require use or reference 
to systems of records. Employees whose official duties require that they 
refer to, maintain, service, or otherwise deal with systems of records 
(hereinafter referred to as ``Systems Employees'') are governed by the 
general provisions. In addition, extra precautions are required and 
systems employees are held to higher standards of conduct.
    (1) Systems Employees shall:
    (a) Be informed with respect to their responsibilities under the 
Privacy Act;
    (b) Be alert to possible misuses of the system and report to their 
supervisors any potential or actual use of the system which they believe 
is not in compliance with the Privacy Act and regulation;
    (c) Disclose records within SSA only to an employee who has a 
legitimate need to know the record in the course of his or her official 
duties;
    (d) Maintain records as accurately as practicable.
    (e) Consult with a supervisor prior to taking any action where they 
are in doubt whether such action is in conformance with the Act and 
regulation.
    (2) Systems employees shall not:
    (a) Disclose in any form records from a system of records except (1) 
with the consent or at the request of the subject individual; or (2) 
where its disclosure is permitted under Sec. 401.110.
    (b) Permit unauthorized individuals to be present in controlled 
areas. Any unauthorized individuals observed in controlled areas shall 
be reported to a supervisor or to the guard force.
    (c) Knowingly or willfully take action which might subject SSA to 
civil liability.
    (d) Make any arrangements for the design, development, or operation 
of any system of records without making reasonable effort to provide 
that the system can be maintained in accordance with the Act and 
regulation.
    (e) Contracting officers. In addition to any applicable provisions 
set forth above, those employees whose official duties involve entering 
into contracts on behalf of SSA shall also be governed by the following 
provisions:
    (1) Contracts for design, or development of systems and equipment. 
The contracting officer shall not enter into any contract for the design 
or development of a system of records, or for equipment to store, 
service or maintain a system of records unless the contracting officer 
has made reasonable effort to ensure that the product to be purchased is 
capable of being used without violation of the Privacy Act or the 
regulations in this part. He shall give special attention to provision 
of physical safeguards.
    (2) Contracts for the operation of systems of records. The 
Contracting Officer, in conjunction with other officials whom he feels 
appropriate, shall review all proposed contracts providing for the 
operation of systems of records prior to execution of the contracts to 
determine whether operation of the system of records is for the purpose 
of accomplishing a Department function. If it is determined that the 
operation of the system is to accomplish an SSA function, the 
contracting officer shall be responsible for including in the contract 
appropriate provisions to apply the provisions of the Privacy Act and 
regulation to the system, including prohibitions against improper 
release by the contractor, his employees, agents, or subcontractors.
    (3) Other service contracts. Contracting officers entering into 
general service contracts shall be responsible for determining the 
appropriateness of including provisions in the contract to prevent 
potential misuse (inadvertent or otherwise) by employees, agents, or 
subcontractors of the contractor.
    (f) Rules governing SSA officials responsible for managing systems 
of records. In addition to the requirements for Systems Employees, SSA 
officials responsible for managing systems of records as described in 
Sec. 401.40(c) (system managers) shall:
    (1) Respond to all requests for notification of or access, 
disclosure, or amendment of

[[Page 24]]

records in a timely fashion in accordance with the Privacy Act and 
regulation;
    (2) Make any amendment of records accurately and in a timely 
fashion;
    (3) Inform all persons whom the accounting records show have 
received copies of the record prior to the amendments of the correction; 
and
    (4) Associate any statement of disagreement with the disputed 
record, and
    (a) Transmit a copy of the statement to all persons whom the 
accounting records show have received a copy of the disputed record, and
    (b) Transmit that statement with any future disclosure.



PART 402_AVAILABILITY OF INFORMATION AND RECORDS TO THE PUBLIC--Table 
of Contents




Sec.
402.5 Scope and purpose.
402.10 Policy.
402.15 Relationship between the FOIA and the Privacy Act of 1974.
402.20 Requests not handled under the FOIA.
402.25 Referral of requests outside of SSA.
402.30 Definitions.
402.35 Publication.
402.40 Publications for sale.
402.45 Availability of records.
402.50 Availability of administrative staff manuals.
402.55 Materials available at district offices and branch offices.
402.60 Materials in field offices of the Office of Hearings and Appeals.
402.65 Health care information.
402.70 Reasons for withholding some records.
402.75 Exemption one for withholding records: National defense and 
          foreign policy.
402.80 Exemption two for withholding records: Internal personnel rules 
          and practices.
402.85 Exemption three for withholding records: Records exempted by 
          other statutes.
402.90 Exemption four for withholding records: Trade secrets and 
          confidential commercial or financial information.
402.95 Exemption five for withholding records: Internal memoranda.
402.100 Exemption six: Clearly unwarranted invasion of personal privacy.
402.105 Exemption seven for withholding records: Law enforcement.
402.110 Exemptions eight and nine for withholding records: Records on 
          financial institutions; records on wells.
402.125 Who may release a record.
402.130 How to request a record.
402.135 Where to send a request.
402.140 How a request for a record is processed.
402.145 Responding to your request.
402.150 Release of records.
402.155 Fees to be charged--categories of requests.
402.160 Fees to be charged--general provisions.
402.165 Fee schedule.
402.170 Fees for providing records and related services for program 
          purposes pursuant to section 1106 of the Social Security Act.
402.175 Fees for providing information and related services for non-
          program purposes.
402.180 Procedure on assessing and collecting fees for providing 
          records.
402.185 Waiver or reduction of fees in the public interest.
402.190 Officials who may deny a request for records under FOIA.
402.195 How a request is denied.
402.200 How to appeal a decision denying all or part of a request.
402.205 U.S. District Court action.

    Authority: Secs. 205, 702(a)(5), and 1106 of the Social Security 
Act; (42 U.S.C. 405, 902(a)(5), and 1306); 5 U.S.C. 552 and 552a; 8 
U.S.C. 1360; 18 U.S.C. 1905; 26 U.S.C. 6103; 30 U.S.C. 923b; 31 U.S.C. 
9701; E.O. 12600, 52 FR 23781, 3 CFR, 1987 Comp., p. 235.

    Source: 62 FR 4154, Jan. 29, 1997, unless otherwise noted.



Sec. 402.5  Scope and purpose.

    The rules in this part relate to the availability to the public, 
pursuant to the Freedom of Information Act (FOIA) 5 U.S.C. 552, of 
records of the Social Security Administration (SSA). They describe how 
to make a FOIA request; who can release records and who can decide not 
to release; how much time it should take to make a determination 
regarding release; what fees may be charged; what records are available 
for public inspection; why some records are not released; and your right 
to appeal and then go to court if we refuse to release records. The 
rules in this part do not revoke, modify, or supersede the regulations 
of SSA relating to disclosure of information in part 401 of this 
chapter.



Sec. 402.10  Policy.

    As a general policy, SSA follows a balanced approach in 
administering FOIA. We not only recognize the right of public access to 
information in the possession of SSA, but also protect the

[[Page 25]]

integrity of internal processes. In addition, we recognize the 
legitimate interests of organizations or persons who have submitted 
records to SSA or who would otherwise be affected by release of records. 
For example, we have no discretion to release certain records, such as 
trade secrets and confidential commercial information, prohibited from 
release by law. This policy calls for the fullest responsible disclosure 
consistent with those requirements of administrative necessity and 
confidentiality which are recognized in the FOIA.



Sec. 402.15  Relationship between the FOIA and the Privacy Act of 1974.

    (a) Coverage. The FOIA and the rules in this part apply to all SSA 
records. The Privacy Act, 5 U.S.C. 552a, applies to records that are 
about individuals, but only if the records are in a system of records. 
``Individuals'' and ``system of records'' are defined in the Privacy Act 
and in 20 CFR 401.25.
    (b) Requesting your own records. If you are an individual and 
request records, then to the extent you are requesting your own records 
in a system of records, we will handle your request under the Privacy 
Act. If there is any record that we need not release to you under those 
provisions, we will also consider your request under the FOIA and this 
rule, and we will release the record to you if the FOIA requires it.
    (c) Requesting another individual's record. Whether or not you are 
an individual, if you request records that are about an individual 
(other than yourself) and that are in a system of records, we will 
handle your request under the FOIA and the rules in this part. However, 
if our disclosure in response to your request would be permitted by the 
Privacy Act's disclosure provision, (5 U.S.C. 552a(b)), for reasons 
other than the requirements of the FOIA, and if we decide to make the 
disclosure, then we will not handle your request under the FOIA and the 
rules in this part. For example, when we make routine use disclosures 
pursuant to requests, we do not handle them under the FOIA and the rules 
in this part. (``Routine use'' is defined in the Privacy Act and in 20 
CFR 401.25.) If we handle your request under the FOIA and the rules in 
this part and the FOIA does not require releasing the record to you, 
then the Privacy Act may prohibit the release and remove our discretion 
to release.



Sec. 402.20  Requests not handled under the FOIA.

    (a) We will not handle your request under the FOIA and the 
regulations in this part to the extent it asks for records that are 
currently available, either from SSA or from another part of the Federal 
Government, under a separate statute that provides specific activity for 
charging fees for those records. For example, we will not handle your 
request under the FOIA and the regulations in this part to the extent it 
asks for detailed earnings statements under the Social Security program.
    (b) We will not handle your request under the FOIA and the 
regulations in this part if you are seeking a record that is distributed 
by SSA as part of its regular program activity, for example, public 
information leaflets distributed by SSA.



Sec. 402.25  Referral of requests outside of SSA.

    If you request records that were created by, or provided to us by, 
another Federal agency, and if that agency asserts control over the 
records, we may refer the records and your request to that agency. We 
may likewise refer requests for classified records to the agency that 
classified them. In these cases, the other agency will process and 
respond to your request, to the extent it concerns those records, under 
that agency's regulation, and you need not make a separate request to 
that agency. We will notify you when we refer your request to another 
agency.



Sec. 402.30  Definitions.

    As used in this part,
    Agency means any executive department, military department, 
government corporation, government controlled corporation, or other 
establishment in the executive branch of the Federal Government, or any 
independent regulatory agency. A private organization is not an agency 
even if it is performing work under contract

[[Page 26]]

with the Government or is receiving Federal financial assistance. 
Grantee and contractor records are not subject to the FOIA unless they 
are in the possession or under the control of SSA or its agents. Solely 
for the purpose of disclosure under the FOIA, we consider records of 
individual beneficiaries located in the State Disability Determination 
Services (DDS) to be agency records.
    Commercial use means, when referring to a request, that the request 
is from or on behalf of one who seeks information for a use or purpose 
that furthers the commercial, trade, or profit interests of the 
requester or of a person on whose behalf the request is made. Whether a 
request is for a commercial use depends on the purpose of the request 
and the use to which the records will be put. The identity of the 
requester (individual, non-profit corporation, for-profit corporation) 
and the nature of the records, while in some cases indicative of that 
purpose or use, are not necessarily determinative. When a request is 
from a representative of the news media, a purpose or use supporting the 
requester's news dissemination function is not a commercial use.
    Duplication means the process of making a copy of a record and 
sending it to the requester, to the extent necessary to respond to the 
request. Such copies include paper copy, microfilm, audio-visual 
materials, and magnetic tapes, cards, and discs.
    Educational institution means a preschool, elementary or secondary 
school, institution of undergraduate or graduate higher education, or 
institution of professional or vocational education, which operates a 
program of scholarly research.
    Freedom of Information Act or FOIA means 5 U.S.C. 552.
    Freedom of Information Officer means an SSA official who has been 
delegated the authority to authorize disclosure of or withhold records 
and assess, waive, or reduce fees in response to FOIA requests.
    Non-commercial scientific institution means an institution that is 
not operated substantially for purposes of furthering its own or someone 
else's business, trade, or profit interests, and that is operated for 
purposes of conducting scientific research whose results are not 
intended to promote any particular product or industry.
    Records means any information maintained by an agency, regardless of 
forms or characteristics, that is made or received in connection with 
official business. This includes handwritten, typed, or printed 
documents (such as memoranda, books, brochures, studies, writings, 
drafts, letters, transcripts, and minutes) and material in other forms, 
such as punchcards; magnetic tapes; cards; computer discs or other 
electronic formats; paper tapes; audio or video recordings; maps; 
photographs; slides; microfilm; and motion pictures. It does not include 
objects or articles such as exhibits, models, equipment, and duplication 
machines, audiovisual processing materials, or computer software. It 
does not include personal records of an employee, or books, magazines, 
pamphlets, or other reference material in formally organized and 
officially designated SSA libraries, where such materials are available 
under the rules of the particular library.
    Representative of the news media means a person actively gathering 
information for an entity organized and operated to publish or broadcast 
news to the public. News media entities include television and radio 
broadcasters, publishers of periodicals who distribute their products to 
the general public or who make their products available for purchase or 
subscription by the general public, and entities that may disseminate 
news through other media (e.g., electronic dissemination of text). We 
will treat freelance journalists as representatives of a news media 
entity if they can show a likelihood of publication through such an 
entity. A publication contract is such a basis, and the requester's past 
publication record may show such a basis.
    Request means asking for records, whether or not you refer 
specifically to the FOIA. Requests from Federal agencies and court 
orders for documents are not included within this definition.
    Review means, when used in connection with processing records for a 
commercial use request, examining the records to determine what 
portions, if any, may be withheld, and any other

[[Page 27]]

processing that is necessary to prepare the records for release. It 
includes only the examining and processing that are done the first time 
we analyze whether a specific exemption applies to a particular record 
or portion of a record. It does not include examination done in the 
appeal stage with respect to an exemption that was applied at the 
initial request stage. However, if we initially withhold a record under 
one exemption, and on appeal we determine that that exemption does not 
apply, then examining the record in the appeal stage for the purpose of 
determining whether a different exemption applies is included in review. 
It does not include the process of researching or resolving general 
legal or policy issues regarding exemptions.
    Search means looking for records or portions of records responsive 
to a request. It includes reading and interpreting a request, and also 
page-by-page and line-by-line examination to identify responsive 
portions of a document. However, it does not include line-by-line 
examination where merely duplicating the entire page would be a less 
expensive and quicker way to comply with the request.

[62 FR 4154, Jan. 29, 1997, as amended at 63 FR 35132, June 29, 1998, 66 
FR 2809, Jan. 12, 2001]



Sec. 402.35  Publication.

    (a) Methods of publication. Materials we are required to publish 
pursuant to the provisions of 5 U.S.C. 552 (a)(1) and (a)(2), we publish 
in one of the following ways:
    (1) By publication in the Federal Register of Social Security 
Administration regulations, and by their subsequent inclusion in the 
Code of Federal Regulations;
    (2) By publication in the Federal Register of appropriate general 
notices;
    (3) By other forms of publication, when incorporated by reference in 
the Federal Register with the approval of the Director of the Federal 
Register; and
    (4) By publication in the ``Social Security Rulings'' of indexes of 
precedential social security orders and opinions issued in the 
adjudication of claims, statements of policy and interpretations which 
have been adopted but have not been published in the Federal Register. 
The ``Social Security Rulings'' may be purchased through the Government 
Printing Office (See Sec. 402.40).
    (b) Publication of rulings. Although not required pursuant to 5 
U.S.C. 552 (a)(1) and (a)(2), we publish the following rulings in the 
Federal Register as well as by other forms of publication:
    (1) We publish Social Security Rulings in the Federal Register under 
the authority of the Commissioner of Social Security. They are binding 
on all components of the Social Security Administration. These rulings 
represent precedent final opinions and orders and statements of policy 
and interpretations that we have adopted.
    (2) We publish Social Security Acquiescence Rulings in the Federal 
Register under the authority of the Commissioner of Social Security. 
They are binding on all components of the Social Security 
Administration, except with respect to claims subject to the 
relitigation procedures established in 20 CFR 404.984, 410.610, and 
416.1484. For a description of Social Security Acquiescence Rulings, see 
20 CFR 404.984(b), 410.610c(b), and 416.1484(b) of this title.
    (c) Availability for inspection. To the extent practicable and to 
further assist the public, we make available for inspection at the 
address specified in Sec. 402.135 those materials which are published 
in the Federal Register pursuant to 5 U.S.C. 552(a)(1).
    (d) Availability by Telecommunications. To the extent practicable, 
we will make available by means of computer telecommunications the 
indices and other records that are available for inspection.

[62 FR 4154, Jan. 29, 1997, as amended at 63 FR 35132, June 29, 1998; 65 
FR 16813, Mar. 30, 2000]



Sec. 402.40  Publications for sale.

    The following publications containing information pertaining to the 
program, organization, functions, and procedures of the Social Security 
Administration may be purchased from the Superintendent of Documents, 
Government Printing Office, Washington, DC 20402:

[[Page 28]]

    (a) Title 20, parts 400-499 of the Code of Federal Regulations.
    (b) Federal Register issues.
    (c) Compilation of the Social Security Laws.
    (d) Social Security Rulings.
    (e) Social Security Handbook. The information in the Handbook is not 
of precedent or interpretative force.
    (f) Social Security Bulletin.
    (g) Social Security Acquiescence Rulings.
    (h) SSA Publications on CD-ROM.

[62 FR 4154, Jan. 29, 1997, as amended at 63 FR 35132, June 29, 1998]



Sec. 402.45  Availability of records.

    (a) What records are available. 5 U.S.C. 552, also known as the 
FOIA, permits any person to see, and get a copy of, any Federal agency's 
records unless the material is exempt from mandatory disclosure as 
described in Sec. 402.70 of this part.
    (b) FOIA. Under the FOIA, we are also required to make available to 
the public the instructional manuals issued to our employees, general 
statements of policy, and other materials which are used in processing 
claims and which are not published in the Federal Register, and an index 
of these manuals and materials.
    (c) Record citation as precedent. We will not use or cite any record 
described in paragraph (b) of this section as a precedent for an action 
against a person unless we have indexed the record and published it or 
made it available, or unless the person has timely notice of the record.
    (d) Electronic Reading Room. We will prepare an index of records 
which have become or are likely to become the subject of subsequent 
requests. The index, and, to the extent practicable, the records will be 
made available on the Internet or by other computer telecommunications 
means.

[62 FR 4154, Jan. 29, 1997, as amended at 63 FR 35132, June 29, 1998]



Sec. 402.50  Availability of administrative staff manuals.

    All administrative staff manuals of the Social Security 
Administration and instructions to staff personnel which contain 
policies, procedures, or interpretations that affect the public are 
available for inspection and copying. A complete listing of such 
materials is published in the Index of Administrative Staff Manuals and 
Instructions. These manuals are generally not printed in a sufficient 
quantity to permit sale or other general distribution to the public. 
Selected material is maintained at district offices and field offices 
and may be inspected there. See Sec. Sec. 402.55 and 402.60 for a 
listing of this material.



Sec. 402.55  Materials available at district offices and branch offices.

    (a) Materials available for inspection. The following are available 
or will be made available for inspection at the district offices and 
branch offices:
    (1) Compilation of the Social Security Laws.
    (2) Social Security Administration regulations under the retirement, 
survivors, disability, and supplemental security income programs, i.e., 
20 CFR parts 401, 402, 404, 416, and 422; and the Social Security 
Administration's regulations under part B of title IV (Black Lung 
Benefits) of the Federal Coal Mine Health and Safety Act of 1969, 20 CFR 
part 410.
    (3) Social Security Rulings.
    (4) Social Security Handbook.
    (5) Social Security Acquiescence Rulings.
    (b) Materials available for inspection and copying. The following 
materials are available or will be made available for inspection and 
copying at the district offices and branch offices (fees may be 
applicable per Sec. Sec. 402.155 through 402.185):
    (1) SSA Program Operations Manual System.
    (2) SSA Organization Manual.
    (3) Handbook for State Social Security Administrators.
    (4) Indexes to the materials listed in paragraph (a) of this section 
and in this paragraph (b) and an index to the Hearings, Appeals and 
Litigation Law (HALLEX) manual.
    (5) Index of Administrative Staff Manuals and Instructions.



Sec. 402.60  Materials in field offices of the Office of Hearings and Appeals.

    (a) Materials available for inspection. The following materials are 
available

[[Page 29]]

for inspection in the field offices of the Office of Hearings and 
Appeals:
    (1) Regulations of the Social Security Administration (see Sec. 
402.55(a)(2)).
    (2) Title 5, United States Code.
    (3) Compilation of the Social Security Laws.
    (4) Social Security Rulings.
    (5) Social Security Handbook.
    (6) Social Security Acquiescence Rulings.
    (b) The Hearings, Appeals and Litigation Law (HALLEX) manual is 
available for inspection and copying in the field offices of the Office 
of Hearings and Appeals (fees may be applicable per Sec. Sec. 402.155 
through 402.185).



Sec. 402.65  Health care information.

    We have some information about health care programs under titles 
XVIII and XIX (Medicare and Medicaid) of the Social Security Act. We 
follow the rules in 42 CFR part 401 in determining whether to provide 
any portion of it to a requester.



Sec. 402.70  Reasons for withholding some records.

    Section 552(b) of the Freedom of Information Act contains nine 
exemptions to the mandatory disclosure of records. We describe these 
exemptions in Sec. Sec. 402.75 through 402.110 of this part and explain 
how we apply them to disclosure determinations. (In some cases more than 
one exemption may apply to the same document.) Information obtained by 
the agency from any individual or organization, furnished in reliance on 
a provision for confidentiality authorized by applicable statute or 
regulation, will not be disclosed, to the extent it can be withheld 
under one of these exemptions. This section does not itself authorize 
the giving of any pledge of confidentiality by any officer or employee 
of the agency.



Sec. 402.75  Exemption one for withholding records: National defense 
and foreign policy.

    We are not required to release records that, as provided by FOIA, 
are ``(a) specifically authorized under criteria established by an 
Executive Order to be kept secret in the interest of national defense or 
foreign policy and (b) are in fact properly classified pursuant to such 
Executive Order.'' Executive Order No. 12958 (1995) (3 CFR, 1987 Comp., 
p. 235) provides for such classification. When the release of certain 
records may adversely affect U.S. relations with foreign countries, we 
usually consult with officials of those countries or officials of the 
Department of State. Also, we may on occasion have in our possession 
records classified by some other agency. We may refer your request for 
such records to the agency that classified them and notify you that we 
have done so.



Sec. 402.80  Exemption two for withholding records: Internal personnel 
rules and practices.

    We are not required to release records that are ``related solely to 
the internal personnel rules and practices of an agency.'' Under this 
exemption, we may withhold routine internal agency practices and 
procedures. For example, we may withhold guard schedules and rules 
governing parking facilities or lunch periods. Also under this 
exemption, we may withhold internal records whose release would help 
some persons circumvent the law or agency regulations. For example, we 
ordinarily do not disclose manuals that instruct our investigators or 
auditors how to investigate possible violations of law, to the extent 
that this release would help some persons circumvent the law.



Sec. 402.85  Exemption three for withholding records: Records exempted 
by other statutes.

    We are not required to release records if another statute 
specifically allows or requires us to withhold them. We may use another 
statute to justify withholding only if it absolutely prohibits 
disclosure or if it sets forth criteria to guide our decision on 
releasing or identifies particular types of material to be withheld. We 
often use this exemption to withhold information regarding a worker's 
earnings which is tax return information under section 6103 of the 
Internal Revenue Code.

[[Page 30]]



Sec. 402.90  Exemption four for withholding records: Trade secrets and 
confidential commercial or financial information.

    We will withhold trade secrets and commercial or financial 
information that is obtained from a person and is privileged or 
confidential.
    (a) Trade secrets. A trade secret is a secret, commercially valuable 
plan, formula, process, or device that is used for the making, 
preparing, compounding, or processing of trade commodities and that can 
be said to be the end product of either innovation or substantial 
effort. There must be a direct relationship between the trade secret and 
the productive process.
    (b) Commercial or financial information. We will not disclose 
records whose information is ``commercial or financial,'' is obtained 
from a person, and is ``privileged or confidential.''
    (1) Information is ``commercial or financial'' if it relates to 
businesses, commerce, trade, employment, profits, or finances (including 
personal finances). We interpret this category broadly.
    (2) Information is ``obtained from a person'' if SSA or another 
agency has obtained it from someone outside the Federal Government or 
from someone within the Government who has a commercial or financial 
interest in the information. ``Person'' includes an individual, 
partnership, corporation, association, State or foreign government, or 
other organization. Information is not ``obtained from a person'' if it 
is generated by SSA or another Federal agency. However, information is 
``obtained from a person'' if it is provided by someone, including but 
not limited to an agency employee, who retains a commercial or financial 
interest in the information.
    (3) Information is ``privileged'' if it would ordinarily be 
protected from disclosure in civil discovery by a recognized evidentiary 
privilege, such as the attorney-client privilege or the work product 
privilege. Information may be privileged for this purpose under a 
privilege belonging to a person outside the government, unless the 
providing of the information to the government rendered the information 
no longer protectable in civil discovery.
    (4) Information is ``confidential'' if it meets one of the following 
tests:
    (i) Disclosure may impair the government's ability to obtain 
necessary information in the future;
    (ii) Disclosure would substantially harm the competitive position of 
the person who submitted the information;
    (iii) Disclosure would impair other government interests, such as 
program effectiveness and compliance; or
    (iv) Disclosure would impair other private interests, such as an 
interest in controlling availability of intrinsically valuable records, 
which are sold in the market by their owner.
    (c) Analysis under tests in this section. The following questions 
may be relevant in analyzing whether a record meets one or more of the 
above tests:
    (1) Is the information of a type customarily held in strict 
confidence and not disclosed to the public by the person to whom it 
belongs?
    (2) What is the general custom or usage with respect to such 
information in the relevant occupation or business?
    (3) How many, and what types of, individuals have access to the 
information?
    (4) What kind and degree of financial injury can be expected if the 
information is disclosed?
    (d) Designation of certain confidential information. A person who 
submits records to the government may designate part or all of the 
information in such records as exempt from disclosure under Exemption 4 
of the FOIA. The person may make this designation either at the time the 
records are submitted to the government or within a reasonable time 
thereafter. The designation must be in writing. Where a legend is 
required by a request for proposals or request for quotations, pursuant 
to 48 CFR 352.215-12, then that legend is necessary for this purpose. 
Any such designation will expire ten years after the records were 
submitted to the government.
    (e) Predisclosure notification. The procedures in this paragraph 
apply to records on which the submitter has designated information as 
provided in paragraph (d) of this section. They also apply to records 
that were submitted

[[Page 31]]

to the government where we have substantial reason to believe that 
information in the records could reasonably be considered exempt under 
Exemption 4. Certain exceptions to these procedures are stated in 
paragraph (f) of this section.
    (1) When we receive a request for such records, and we determine 
that we may be required to disclose them, we will make reasonable 
efforts to notify the submitter about these facts. The notice will 
include a copy of the request, and it will inform the submitter about 
the procedures and time limits for submission and consideration of 
objections to disclosure. If we must notify a large number of 
submitters, we may do this by posting or publishing a notice in a place 
where the submitters are reasonably likely to become aware of it.
    (2) The submitter has five working days from receipt of the notice 
to object to disclosure of any part of the records and to state all 
bases for its objections.
    (3) We will give consideration to all bases that have been timely 
stated by the submitter. If we decide to disclose the records, we will 
notify the submitter in writing. This notice will briefly explain why we 
did not sustain its objections. We will include with the notice a copy 
of the records about which the submitter objected, as we propose to 
disclose them. The notice will state that we intend to disclose the 
records five working days after the submitter receives the notice unless 
we are ordered by a United States District Court not to release them.
    (4) When a requester files suit under the FOIA to obtain records 
covered by this paragraph, we will promptly notify the submitter.
    (5) Whenever we send a notice to a submitter under paragraph (e)(1) 
of this section, we will notify the requester that we are giving the 
submitter a notice and an opportunity to object. Whenever we send a 
notice to a submitter under paragraph (e)(3) of this section, we will 
notify the requester of this fact.
    (f) Exceptions to predisclosure notification. The notice 
requirements in paragraph (e) of this section do not apply in the 
following situations:
    (1) We decided not to disclose the records;
    (2) The information has previously been published or made generally 
available;
    (3) Disclosure is required by a regulation, issued after notice and 
opportunity for public comment, that specifies narrow categories of 
records that are to be disclosed under the FOIA, but in this case a 
submitter may still designate records as described in paragraph (d) of 
this section, and in exceptional cases, we may, at our discretion, 
follow the notice procedures in paragraph (e) of this section; or
    (4) The designation appears to be obviously frivolous, but in this 
case we will still give the submitter the written notice required by 
paragraph (e)(3) of this section (although this notice need not explain 
our decision or include a copy of the records), and we will notify the 
requester as described in paragraph (e)(5) of this section.



Sec. 402.95  Exemption five for withholding records: Internal memoranda.

    This exemption covers internal government communications and notes 
that fall within a generally recognized evidentiary privilege. Internal 
government communications include an agency's communications with an 
outside consultant or other outside person, with a court, or with 
Congress, when those communications are for a purpose similar to the 
purpose of privileged intra-agency communications. Some of the most-
commonly applicable privileges are described in the following 
paragraphs:
    (a) Deliberative process privilege. This privilege protects 
predecisional deliberative communications. A communication is protected 
under this privilege if it was made before a final decision was reached 
on some question of policy and if it expressed recommendations or 
opinions on that question. The purpose of the privilege is to prevent 
injury to the quality of the agency decisionmaking process by 
encouraging open and frank internal policy discussions, by avoiding 
premature disclosure of policies not yet adopted, and by avoiding the 
public confusion that might result from disclosing reasons

[[Page 32]]

that were not in fact the ultimate grounds for an agency's decision. 
Purely factual material in a deliberative document is within this 
privilege only if it is inextricably intertwined with the deliberative 
portions so that it cannot reasonably be segregated, if it would reveal 
the nature of the deliberative portions, or if its disclosure would in 
some other way make possible an intrusion into the decisionmaking 
process. We will release purely factual material in a deliberative 
document unless that material is otherwise exempt. The privilege 
continues to protect predecisional documents even after a decision is 
made.
    (b) Attorney work product privilege. This privilege protects 
documents prepared by or for an agency, or by or for its representative 
(typically, our attorneys) in anticipation of litigation or for trial. 
It includes documents prepared for purposes of administrative 
adjudications as well as court litigation. It includes documents 
prepared by program offices as well as by attorneys. It includes factual 
material in such documents as well as material revealing opinions and 
tactics. Finally, the privilege continues to protect the documents even 
after the litigation is closed.
    (c) Attorney-client communication privilege. This privilege protects 
confidential communications between a lawyer and an employee or agent of 
the Government where there is an attorney-client relationship between 
them (typically, where the lawyer is acting as attorney for the agency 
and the employee is communicating on behalf of the agency) and where the 
employee has communicated information to the attorney in confidence in 
order to obtain legal advice or assistance.



Sec. 402.100  Exemption six: Clearly unwarranted invasion of personal privacy.

    (a) Documents affected. We may withhold records about individuals if 
disclosure would constitute a clearly unwarranted invasion of their 
personal privacy.
    (b) Balancing test. In deciding whether to release records to you 
that contain personal or private information about someone else, we 
weigh the foreseeable harm of invading a person's privacy against the 
public interest in disclosure. In determining whether disclosure would 
be in the public interest, we will consider whether disclosure of the 
requested information would shed light on how a Government agency 
performs its statutory duties. However, in our evaluation of requests 
for records we attempt to guard against the release of information that 
might involve a violation of personal privacy because of a requester 
being able to ``read between the lines'' or piece together items that 
would constitute information that normally would be exempt from 
mandatory disclosure under Exemption Six.
    (c) Examples. Some of the information that we frequently withhold 
under Exemption Six is: Home addresses, ages, and minority group status 
of our employees or former employees; social security numbers; medical 
information about individuals who have filed a claim for disability 
benefits; names and addresses of individual beneficiaries of our 
programs, or benefits such individuals receive; earnings records, claim 
files, and other personal information SSA maintains.

[62 FR 4154, Jan. 29, 1997, as amended at 63 FR 35132, June 29, 1998]



Sec. 402.105  Exemption seven for withholding records: Law enforcement.

    We are not required to disclose information or records that the 
government has compiled for law enforcement purposes. The records may 
apply to actual or potential violations of either criminal or civil laws 
or regulations. We can withhold these records only to the extent that 
releasing them would cause harm in at least one of the following 
situations:
    (a) Enforcement proceedings. We may withhold information whose 
release could reasonably be expected to interfere with prospective or 
ongoing law enforcement proceedings. Investigations of fraud and 
mismanagement, employee misconduct, and civil rights violations may fall 
into this category. In certain cases--such as when a fraud investigation 
is likely--we may refuse to confirm or deny the existence of records 
that relate to the violations in

[[Page 33]]

order not to disclose that an investigation is in progress, or may be 
conducted.
    (b) Fair trial or impartial adjudication. We may withhold records 
whose release would deprive a person of a fair trial or an impartial 
adjudication because of prejudicial publicity.
    (c) Personal privacy. We are careful not to disclose information 
that could reasonably be expected to constitute an unwarranted invasion 
of personal privacy. When a name surfaces in an investigation, that 
person is likely to be vulnerable to innuendo, rumor, harassment, and 
retaliation.
    (d) Confidential sources and information. We may withhold records 
whose release could reasonably be expected to disclose the identity of a 
confidential source of information. A confidential source may be an 
individual; a State, local, or foreign government agency; or any private 
organization. The exemption applies whether the source provides 
information under an express promise of confidentiality or under 
circumstances from which such an assurance could be reasonably inferred. 
Also, where the record, or information in it, has been compiled by a law 
enforcement authority conducting a criminal investigation, or by an 
agency conducting a lawful national security investigation, the 
exemption also protects all information supplied by a confidential 
source. Also protected from mandatory disclosure is any information 
which, if disclosed, could reasonably be expected to jeopardize the 
system of confidentiality that assures a flow of information from 
sources to investigatory agencies.
    (e) Techniques and procedures. We may withhold records reflecting 
special techniques or procedures of investigation or prosecution, not 
otherwise generally known to the public. In some cases, it is not 
possible to describe even in general terms those techniques without 
disclosing the very material to be withheld. We may also withhold 
records whose release would disclose guidelines for law enforcement 
investigations or prosecutions if this disclosure could reasonably be 
expected to create a risk that someone could circumvent requirements of 
law or of regulation.
    (f) Life and physical safety. We may withhold records whose 
disclosure could reasonably be expected to endanger the life or physical 
safety of any individual. This protection extends to threats and 
harassment as well as to physical violence.

[62 FR 4154, Jan. 29, 1997. Redesignated at 63 FR 35132, June 29, 1998]



Sec. 402.110  Exemptions eight and nine for withholding records: 
Records on financial institutions; records on wells.

    Exemption eight permits us to withhold records about regulation or 
supervision of financial institutions. Exemption nine permits the 
withholding of geological and geophysical information and data, 
including maps, concerning wells.



Sec. 402.125  Who may release a record.

    Except as otherwise provided by regulation, only the Deputy 
Executive Director for the Office of Public Disclosure, Office of the 
General Counsel, SSA, or her or his designee may determine whether to 
release any record in SSA's control and possession. This official is 
SSA's Freedom of Information Officer. Sections 402.40, 402.55, and 
402.60 list some of the materials which we have determined may be 
released.

[62 FR 4154, Jan. 29, 1997, as amended at 68 FR 60295, Oct. 22, 2003]



Sec. 402.130  How to request a record.

    You may request a record in person or by mail or by electronic 
telecommunications. To the extent practicable, and in the future, we 
will attempt to provide access for requests by telephone, fax, Internet, 
and e-mail. Any request should reasonably describe the record you want. 
If you have detailed information which would assist us in identifying 
that record, please submit it with your request. We may charge fees for 
some requests (Sec. Sec. 402.145-402.175 explain our fees). You should 
identify the request as a Freedom of Information Act request and mark 
the outside of any envelope used to submit your request as a ``Freedom 
of Information Request.'' The staff at

[[Page 34]]

any Social Security office can help you prepare this request.

[63 FR 35132, June 29, 1998]



Sec. 402.135  Where to send a request.

    You may send your request for a record to: The Deputy Executive 
Director for the Office of Public Disclosure, Office of the General 
Counsel, Social Security Administration, 6401 Security Boulevard, 
Baltimore, Maryland 21235.

[62 FR 4154, Jan. 29, 1997, as amended at 68 FR 60295, Oct. 22, 2003]



Sec. 402.140  How a request for a record is processed.

    (a) In general, we will make a determination as to whether a 
requested record will be provided within 20 days (excepting Saturdays, 
Sundays, and legal public holidays) after receipt of a request by the 
appropriate official (see Sec. 402.135). This 20-day period may be 
extended in unusual circumstances by written notice to you, explaining 
why we need additional time, and the extension may be for up to 10 
additional working days when one or more of the following situations 
exist:
    (1) The office processing the request needs to locate and then 
obtain the record from another facility;
    (2) We need to locate, obtain, and appropriately examine a large 
number of records which are requested in a single request; or
    (3) The office processing the request needs to consult with another 
agency which has a substantial interest in the subject matter of the 
request. This consultation shall be conducted with all practicable 
speed.
    (b) If we cannot process your request within 10 additional days, we 
will notify you and provide you an opportunity to limit the scope of the 
request so that it may be processed within the additional 10 days, or we 
will provide you with an opportunity to arrange with us an alternative 
time frame for processing the request, or for processing a modified 
request.
    (c) Multi-tracking procedures. We will establish four tracks for 
handling requests and the track to which a request is assigned will 
depend on the nature of the request and the estimated processing time:
    (1) Track 1--Requests that can be answered with readily available 
records or information. These are the fastest to process.
    (2) Track 2--Requests where we need records or information from 
other offices throughout the Agency but we do not expect that the 
decision on disclosure will be as time consuming as for requests in 
Track 3.
    (3) Track 3--Requests which require a decision or input from another 
office or agency and a considerable amount of time will be needed for 
that, or the request is complicated or involves a large number of 
records. Usually, these cases will take the longest to process.
    (4) Track 4--Requests that will be expedited.
    (d) We will provide for expedited access for requesters who show a 
``compelling need'' for a speedy response. The EFOIA describes 
compelling need as when the failure to obtain the records on an 
expedited basis could reasonably be expected to pose ``an imminent 
threat to the life or physical safety of an individual,'' or when the 
request is from a person primarily engaged in disseminating information 
(such as a member of the news media), and there is an ``urgency to 
inform the public concerning actual or alleged Federal Government 
activity.'' We also will expedite processing of a request if the 
requester explains in detail to our satisfaction that a prompt response 
is needed because the requester may be denied a legal right, benefit, or 
remedy without the requested information, and that it cannot be obtained 
elsewhere in a reasonable amount of time. We will respond within 10 days 
to a request for expedited processing and, if we decide to grant 
expedited processing, we will then notify you of our decision whether or 
not to disclose the records requested as soon as practicable.

[63 FR 35133, June 29, 1998]



Sec. 402.145  Responding to your request.

    (a) Retrieving records. We are required to furnish copies of records 
only when they are in our possession or we can retrieve them from 
storage. We will make reasonable efforts to search for records manually 
or by automated means, including any information stored in an electronic 
form or format,

[[Page 35]]

except when such efforts would significantly interfere with the 
operation of our automated information system. If we have stored the 
records you want in the National Archives or another storage center, we 
will retrieve and review them for possible disclosure. However, the 
Federal Government destroys many old records, so sometimes it is 
impossible to fill requests. Various laws, regulations, and manuals give 
the time periods for keeping records before they may be destroyed. For 
example, there is information about retention of records in the Records 
Disposal Act of 1944, 44 U.S.C. 3301 through 3314; the Federal Property 
Management Regulations, 41 CFR 101-11.4; and the General Records 
Schedules of the National Archives and Records Administration.
    (b) Furnishing records. We will furnish copies only of records that 
we have or can retrieve. We are not required to create new records or to 
perform research for you. We may decide to conserve Government resources 
and at the same time supply the records you need by consolidating 
information from various records rather than copying them all. For 
instance, we could extract sections from various similar records instead 
of providing repetitious information. We generally will furnish only one 
copy of a record. We will make reasonable efforts to provide the records 
in the form or format you request if the record is readily reproducible 
in that form or format.
    (c) Deletions. When we publish or otherwise make available any 
record, we may delete information that is exempt from disclosure. For 
example, in an opinion or order, statement of policy, or other record 
which relates to a private party or parties, the name or names and other 
identifying details may be deleted. When technically feasible, we will 
indicate the extent of deletions on the portion of the record that is 
released or published at the place of the deletion unless including that 
indication would harm an interest protected by an exemption. If we deny 
a request, in whole or in part, we will make a reasonable effort to 
estimate the volume of any requested matter that is not disclosed, 
unless such an estimate would harm an interest protected by an 
exemption.
    (d) Creation of records. We are not required to create new records 
merely to satisfy a request. However, we will search manually or by 
automated means to locate information that is responsive to the request. 
If extensive computer programming is needed to respond to a request, we 
may decline to commit such resources, or if we agree to do so, we may 
charge you for the reasonable cost of doing so. We do not mean that we 
will never help you get information that does not already exist in our 
records. However, diverting staff and equipment from our other 
responsibilities may not always be possible.

[63 FR 35133, June 29, 1998]



Sec. 402.150  Release of records.

    (a) Records previously released. If we have released a record, or a 
part of a record, to others in the past, we will ordinarily release it 
to you also. However, we will not release it to you if a statute forbids 
this disclosure, and we will not necessarily release it to you if an 
exemption applies in your situation and it did not apply, or applied 
differently, in the previous situation(s) or if the previous release was 
unauthorized. See Sec. 402.45(d) regarding records in electronic 
reading rooms.
    (b) Poor copy. If we cannot make a legible copy of a record to be 
released, we do not attempt to reconstruct it. Instead, we furnish the 
best copy possible and note its poor quality in our reply.

[62 FR 4154, Jan. 29, 1997, as amended at 63 FR 35133, June 29, 1998]



Sec. 402.155  Fees to be charged--categories of requests.

    Paragraphs (a) through (c) of this section state, for each category 
of request, the type of fees that we will generally charge. However, for 
each of these categories, the fees may be limited, waived, or reduced 
for the reasons given below or for other reasons.
    (a) Commercial use request. If your request is for a commercial use, 
we will charge you the costs of search, review, and duplication.

[[Page 36]]

    (b) Educational and scientific institutions and news media. If you 
are an educational institution or a non-commercial scientific 
institution, operated primarily for scholarly or scientific research, or 
a representative of the news media, and your request is not for a 
commercial use, we will charge you only for the duplication of 
documents. Also, we will not charge you the copying costs for the first 
100 pages of duplication.
    (c) Other requesters. If your request is not the kind described by 
paragraph (a) or (b) of this section, then we will charge you only for 
the search and the duplication. Also, we will not charge you for the 
first two hours of search time or for the copying costs of the first 100 
pages of duplication.



Sec. 402.160  Fees to be charged--general provisions.

    (a) We may charge search fees even if the records we find are exempt 
from disclosure, or even if we do not find any records at all.
    (b) If we are not charging you for the first two hours of search 
time, under paragraph (c) of Sec. 402.155, and those two hours are 
spent on a computer search, then the two free hours are the first two 
hours of the time needed to access the information in the computer.
    (c) If we are not charging you for the first 100 pages of 
duplication, under paragraph (b) or (c) of Sec. 402.155, then those 100 
pages are the first 100 pages of photocopies of standard size pages, or 
the first 100 pages of computer printout.
    (d) We will charge interest on unpaid bills beginning on the 31st 
day following the day the bill was sent.

[62 FR 4154, Jan. 29, 1997, as amended at 63 FR 35134, June 29, 1998]



Sec. 402.165  Fee schedule.

    The following is our fee schedule for providing records and related 
services under the FOIA:
    (a) Manual searching for or reviewing of records. When the search or 
review is performed by employees at grade GS-1 through GS-8, we will 
charge an hourly rate based on the salary of a GS-5, step 7, employee; 
when done by a GS-9 through GS-14, an hourly rate based on the salary of 
a GS-12, step 4, employee; and when done by a GS-15 or above, an hourly 
rate based on the salary of a GS-15, step 7, employee. In each case, we 
will compute the hourly rate by taking the current hourly rate for the 
specified grade and step, adding 16% of that rate to cover benefits, and 
rounding to the nearest whole dollar. As of January 5, 1997, these rates 
were $14, $28, and $50 respectively. These rates are adjusted as Federal 
salaries change. When a search involves employees at more than one of 
these levels, we will charge the rate appropriate for each.
    (b) Computer searching and printing. We will charge the actual cost 
of operating the computer plus charges for the time spent by the 
operator, at the rates given in paragraph (a) of this section.
    (c) Photocopying standard size pages. We will charge $0.10 per page. 
The Freedom of Information (FOI) Officer may charge lower fees for 
particular documents where--
    (1) The document has already been printed in large numbers;
    (2) The program office determines that using existing stock to 
answer this request, and any other anticipated FOI requests, will not 
interfere with program requirements; and
    (3) The FOI Officer determines that the lower fee is adequate to 
recover the prorated share of the original printing costs.
    (d) Photocopying odd-size documents. For photocopying documents such 
as punchcards or blueprints, or reproducing other records such as tapes, 
we will charge the actual costs of operating the machine, plus the 
actual cost of the materials used, plus charges for the time spent by 
the operator, at the rates given in paragraph (a) of this section.
    (e) Certifying that records are true copies. This service is not 
required by the FOIA. If we agree to provide it, we will charge $10 per 
certification.
    (f) Sending records by express mail, certified mail, or other 
special methods. This service is not required by the FOIA. If we agree 
to provide it, we will charge our actual costs.
    (g) Other special services. For performing any other special service 
that you request and we agree to, we will

[[Page 37]]

charge the actual costs of operating any machinery, plus actual cost of 
any materials used, plus charges for the time of our employees, at the 
rates given in paragraph (a) of this section.
    (h) Billing exceeds cost of service. Generally we will not charge 
you a fee when the cost of the service is less than the cost of sending 
you a bill. However, where an individual, organization, or governmental 
unit makes multiple separate requests, we will total the costs incurred 
and periodically bill the requester for the services rendered.
    (i) Fee for copies of printed materials. When extra copies of 
printed material are available, the charge is generally 1 cent per page. 
If the material may be purchased from the Superintendent of Documents, 
the charge is that set by the Superintendent. The Superintendent's 
address is in Sec. 402.40.
    (j) When not applicable. This fee schedule does not apply to 
requests for records of Social Security number holders, wage earners, 
employers, and claimants when the requests are governed by section 1106 
of the Social Security Act and by Sec. Sec. Sections 402.170 and 
402.175.



Sec. 402.170  Fees for providing records and related services for program 
purposes pursuant to section 1106 of the Social Security Act.

    (a) Program purposes described. (1) We consider a request to be 
program related if the information must be disclosed under the Social 
Security Act. For example, section 205(c)(2)(A) of the Act (42 U.S.C. 
405(c)(2)(A)) requires that we provide certain information upon request 
to a worker, her or his legal representative, her or his survivor, or 
the legal representative of the worker's estate. That information is the 
amounts of the worker's wages and self-employment income and the periods 
during which they were paid or derived, as shown by our records.
    (2) We also consider a request to be program related if the 
requester indicates the needed information will be used for a purpose 
which is directly related to the administration of a program under the 
Social Security Act.
    (i) The major criteria we consider in deciding whether a proposed 
use is so related are:
    (A) Is the information needed to pursue some benefit under the Act?
    (B) Is the information needed solely to verify the accuracy of 
information obtained in connection with a program administered under the 
Act?
    (C) Is the information needed in connection with an activity which 
has been authorized under the Act?
    (D) Is the information needed by an employer to carry out her or his 
taxpaying responsibilities under the Federal Insurance Contributions Act 
or section 218 of the Act?
    (ii) We will consider on a case by case basis those requests which 
do not meet these criteria but are claimed to be program related.
    (b) When we charge. If we determine the request for information is 
program related, we may or may not charge for the information. For 
example, as stated in paragraph (a) of this section, we generally will 
not charge you for information needed to assure the accuracy of our 
records on which your present or future Social Security benefits depend. 
In addition, we generally will not charge for furnishing information 
under section 205(c)(2)(A) of the Act. However, if we do charge for a 
program related request (for example, if more detailed information or 
special services are requested) we will use the fee schedule in Sec. 
402.165 if information is being disclosed under the FOIA and the fee 
schedule in 20 CFR 401.95 if access to the information is being granted 
under the Privacy Act. (Exception: If the request is for purposes of 
administering employee benefits covered by the Employee Retirement 
Income Security Act of 1974 (ERISA), even if the request is covered by 
section 205(c)(2)(A) of the Act, we will charge under Sec. 402.175.)



Sec. 402.175  Fees for providing information and related services for 
non-program purposes.

    (a) General. Section 1106(c) of the Social Security Act permits the 
Commissioner to require requesters of information to pay the full cost 
of supplying the information where the information is requested to 
comply with the

[[Page 38]]

ERISA, or ``* * * for any other purpose not directly related to the 
administration of the program or programs under * * *'' the Social 
Security Act. This may be done notwithstanding the fee provisions of the 
FOIA and the Privacy Act or any other provision of law. As used in this 
section--
    (1) Full cost includes the direct and indirect costs to SSA 
(including costs of duplication) of providing information and related 
services under section 1106(c) of the Act; and
    (2) Full cost of an employee's time includes fringe benefits and 
overhead costs such as rent and utilities.
    (b) Non-program related requests. We consider a request for 
information which does not meet or equal any of the criteria in Sec. 
402.170 to be non-program related. (Whether a request for information 
about an individual is made by that individual or by someone else is not 
a factor.) In responding to these requests, or requests for ERISA 
purposes, we will charge the full cost of our services as described in 
paragraph (c) of this section.
    (c) Fee schedule. Our fee schedule for non-program related requests 
is:
    (1) Manual searching for records. Full cost of the employee's time.
    (2) Photocopying, or reproducing records such as magnetic tapes or 
punch cards. Full cost of the operator's time plus the full cost of the 
machine time and the materials used.
    (3) Use of electronic data processing equipment to obtain records. 
Our full cost for the service, including computer search time, computer 
runs and printouts, and the time of computer programmers and operators 
and other employees.
    (4) Certification or authentication of records. Full cost of 
certification or authentication.
    (5) Forwarding materials to destination. If you request special 
arrangements for forwarding the material, we will charge you the full 
cost of this service (e.g., you request express mail or a commercial 
delivery service). If no special forwarding arrangements are requested, 
we will charge you the full cost of the service, including the U.S. 
Postal Service cost.
    (6) Performing other special services. If we agree to provide any 
special services you request, we will charge you the full cost of the 
time of the employee who performs the service, plus the full cost of any 
machine time and materials that the employee uses.
    (7) Billing exceeds cost of service. Generally we will not charge 
you a fee when the cost of the service is less than the cost of sending 
you a bill. However, where an individual, organization, or governmental 
unit makes multiple separate requests, we will total the costs incurred 
and bill the requester for the services rendered.
    (d) Fee for copies of printed materials. When extra copies of 
printed material are available, the charge is generally 1 cent per page. 
If the material may be purchased from the Superintendent of Documents, 
the charge is that set by the Superintendent. The Superintendent's 
address is in Sec. 402.40.
    (e) Charging when requested record not found. We may charge you for 
search time, even though we fail to find the records. We may also charge 
you for search time if the records we locate are exempt from disclosure.



Sec. 402.180  Procedure on assessing and collecting fees for providing 
records.

    (a) We will generally assume that when you send us a request, you 
agree to pay for the services needed to locate and send that record to 
you. You may specify in your request a limit on the amount you are 
willing to spend. If you do that or include with your request a payment 
that does not cover our fee, we will notify you if it appears that the 
fee will exceed that amount and ask whether you want us to continue to 
process your request. Also, before we start work on your request under 
Sec. 402.140, we will generally notify you of our exact or estimated 
charge for the information, unless it is clear that you have a 
reasonable idea of the cost.
    (b) If you have failed to pay previous bills in a timely fashion, or 
if our initial review of your request indicates that we will charge you 
fees exceeding $250, we will require you to pay your past due fees and/
or the estimated fees, or a deposit, before we start searching for the 
records you want. If so, we will let you know promptly upon receiving

[[Page 39]]

your request. In such cases, administrative time limits (i.e., ten 
working days from receipt of initial requests and 20 working days from 
receipt of appeals from initial denials, plus permissible extensions of 
these time limits) will begin only after we come to an agreement with 
you over payment of fees, or decide that fee waiver or reduction is 
appropriate.
    (c) We will normally require you to pay all fees before we furnish 
the records to you. We may, at our discretion, send you a bill along 
with or following the furnishing of the records. For example, we may do 
this if you have a history of prompt payment. We may also, at our 
discretion, aggregate the charges for certain time periods in order to 
avoid sending numerous small bills to frequent requesters, or to 
businesses or agents representing requesters. For example, we might send 
a bill to such a requester once a month. Fees should be paid in 
accordance with the instructions furnished by the person who responds to 
your requests.
    (d) Payment of fees will be made by check or money order payable to 
``Social Security Administration''.

[62 FR 4154, Jan. 29, 1997, as amended at 68 FR 60295, Oct. 22, 2003]



Sec. 402.185  Waiver or reduction of fees in the public interest.

    (a) Standard. We will waive or reduce the fees we would otherwise 
charge if disclosure of the information meets both tests which are 
explained in paragraphs (b) and (c) of this section:
    (1) It is in the public interest because it is likely to contribute 
significantly to public understanding of the operations or activities of 
the government; and
    (2) It is not primarily in the commercial interest of the requester.
    (b) Public interest. The disclosure passes the first test only if it 
furthers the specific public interest of being likely to contribute 
significantly to public understanding of government operations or 
activities, regardless of any other public interest it may further. In 
analyzing this question, we will consider the following factors:
    (1) How, if at all, do the records to be disclosed pertain to the 
operations or activities of the Federal Government?
    (2) Would disclosure of the records reveal any meaningful 
information about government operations or activities? Can one learn 
from these records anything about such operations that is not already 
public knowledge?
    (3) Will the disclosure advance the understanding of the general 
public as distinguished from a narrow segment of interested persons? 
Under this factor we may consider whether the requester is in a position 
to contribute to public understanding. For example, we may consider 
whether the requester has such knowledge or expertise as may be 
necessary to understand the information, and whether the requester's 
intended use of the information would be likely to disseminate the 
information among the public. An unsupported claim to be doing research 
for a book or article does not demonstrate that likelihood, while such a 
claim by a representative of the news media is better evidence.
    (4) Will the contribution to public understanding be a significant 
one? Will the public's understanding of the government's operations be 
substantially greater as a result of the disclosure?
    (c) Not primarily in the requester's commercial interest. If the 
disclosure passes the test of furthering the specific public interest 
described in paragraph (b) of this section, we will determine whether it 
also furthers the requester's commercial interest and, if so, whether 
this effect outweighs the advancement of that public interest. In 
applying this second test, we will consider the following factors:
    (1) Would the disclosure further a commercial interest of the 
requester, or of someone on whose behalf the requester is acting? 
``Commercial interests'' include interests relating to business, trade, 
and profit. Not only profit-making corporations have commercial 
interests--so do nonprofit corporations, individuals, unions, and other 
associations. The interest of a representative of the news media in 
using the information for news dissemination purposes will not be 
considered a commercial interest.
    (2) If disclosure would further a commercial interest of the 
requester,

[[Page 40]]

would that effect outweigh the advancement of the public interest 
defined in paragraph (b) of this section? Which effect is primary?
    (d) Deciding between waiver and reduction. If the disclosure passes 
both tests, we will normally waive fees. However, in some cases we may 
decide only to reduce the fees. For example, we may do this when 
disclosure of some but not all of the requested records passes the 
tests.
    (e) Procedure for requesting a waiver or reduction. You must make 
your request for a waiver or reduction at the same time you make your 
request for records. You should explain why you believe a waiver or 
reduction is proper under the analysis in paragraphs (a) through (d) of 
this section. Only FOI Officers may make the decision whether to waive, 
or reduce, the fees. If we do not completely grant your request for a 
waiver or reduction, the denial letter will designate a review official. 
You may appeal the denial to that official. In your appeal letter, you 
should discuss whatever reasons are given in our denial letter. The 
process prescribed in Sec. 402.190 of this part will also apply to 
these appeals.



Sec. 402.190  Officials who may deny a request for records under FOIA.

    Only the Deputy Executive Director for the Office of Public 
Disclosure, Office of the General Counsel, SSA, or her or his designee 
is authorized to deny a written request to obtain, inspect, or copy any 
social security record.

[62 FR 4154, Jan. 29, 1997, as amended at 68 FR 60295, Oct. 22, 2003]



Sec. 402.195  How a request is denied.

    (a) Oral requests. If we cannot comply with your oral request 
because the Deputy Executive Director for the Office of Public 
Disclosure, Office of the General Counsel (or designee) has not 
previously made a determination to release the record you want, we will 
tell you that fact. If you still wish to pursue your request, you must 
put your request in writing.
    (b) Written requests. If you make a written request and the 
information or record you requested will not be released, we will send 
you an official denial in writing. We will explain why the request was 
denied (for example, the reasons why the requested document is subject 
to one or more clearly described exemptions), will include the name and 
title or position of the person who made the decision, and what your 
appeal rights are.
    (c) Unproductive searches. We make a diligent search for records to 
satisfy your request. Nevertheless, we may not be able always to find 
the records you want using the information you provided, or they may not 
exist. If we advise you that we have been unable to find the records 
despite a diligent search, this does not constitute a denial of your 
request.

[62 FR 4154, Jan. 29, 1997, as amended at 68 FR 60295, Oct. 22, 2003]



Sec. 402.200  How to appeal a decision denying all or part of a request.

    (a) How to appeal. If all or part of your written request was 
denied, you may request that the Commissioner of Social Security, 6401 
Security Boulevard, Baltimore, MD 21235 review that determination. Your 
request for review:
    (1) Must be in writing;
    (2) Must be mailed within 30 days after you received notification 
that all or part of your request was denied or, if later, 30 days after 
you received materials in partial compliance with your request; and
    (3) May include additional information or evidence to support your 
request.
    (b) How the review is made. After reviewing the prior decision and 
after considering anything else you have submitted, the Commissioner or 
his or her designee will affirm or revise all or part of the prior 
decision. The Commissioner (or a designee) will affirm a denial only 
after consulting with the appropriate SSA official(s), including legal 
counsel. The decision must be made within 20 working days after your 
appeal is received. The Commissioner or a designee may extend this time 
limit up to 10 additional working days if one of the situations in Sec. 
402.140(a) exists, provided that, if a prior extension was used to 
process this request, the sum of the extensions may not exceed 10 
working days. You

[[Page 41]]

will be notified in writing of any extension, the reason for the 
extension, and the date by which your appeal will be decided.
    (c) How you are notified of the Commissioner's decision. The 
Commissioner or a designee will send you a written notice of the 
decision explaining the basis of the decision (for example, the reasons 
why an exemption applies) which will include the name and title or 
position of the person who made the decision. The notice will tell you 
that if any part of your request remains unsatisfied, you have the right 
to seek court review.



Sec. 402.205  U.S. District Court action.

    If the Commissioner or a designee, upon review, affirms the denial 
of your request for records, in whole or in part, you may ask a U.S. 
District Court to review that denial. See 5 U.S.C. 552(a)(4)(B). If we 
fail to act on your request for a record or for review of a denial of 
such a request within the time limits in Sec. 402.140(a) or in Sec. 
402.190(b), you may ask a U.S. District Court to treat this as if the 
Commissioner had denied your request.



PART 403_TESTIMONY BY EMPLOYEES AND THE PRODUCTION OF RECORDS AND 
INFORMATION IN LEGAL PROCEEDINGS--Table of Contents



Sec.
403.100 When can an SSA employee testify or produce information or 
          records in legal proceedings?
403.105 What is the relationship between this part and 20 CFR parts 401 
          and 402?
403.110 What special definitions apply to this part?
403.115 When does this part apply?
403.120 How do you request testimony?
403.125 How will we handle requests for records, information, or 
          testimony involving SSA's Office of the Inspector General?
403.130 What factors may the Commissioner consider in determining 
          whether SSA will grant your application for testimony?
403.135 What happens to your application for testimony?
403.140 If the Commissioner authorizes testimony, what will be the scope 
          and form of that testimony?
403.145 What will SSA do if you have not satisfied the conditions in 
          this part or in 20 CFR part 401 or 402?
403.150 Is there a fee for our services?
403.155 Does SSA certify records?

    Authority: Secs. 702(a)(5) and 1106 of the Act, (42 U.S.C. 902(a)(5) 
and 1306); 5 U.S.C. 301; 31 U.S.C. 9701.

    Source: 66 FR 2809, Jan. 12, 2001, unless otherwise noted.



Sec. 403.100  When can an SSA employee testify or produce information 
or records in legal proceedings?

    An SSA employee can testify concerning any function of SSA or any 
information or record created or acquired by SSA as a result of the 
discharge of its official duties in any legal proceeding covered by this 
part only with the prior authorization of the Commissioner. An SSA 
employee can provide records or other information in a legal proceeding 
covered by this part only to the extent that doing so is consistent with 
20 CFR parts 401 and 402. A request for both testimony and records or 
other information is considered two separate requests--one for testimony 
and one for records or other information. SSA maintains a policy of 
strict impartiality with respect to private litigants and seeks to 
minimize the disruption of official duties.



Sec. 403.105  What is the relationship between this part and 20 CFR 
parts 401 and 402?

    (a) General. Disclosure of SSA's records and information contained 
in those records is governed by the regulations at 20 CFR parts 401 and 
402. SSA employees will not disclose records or information in any legal 
proceeding covered by this part except as permitted by 20 CFR parts 401 
and 402.
    (b) Requests for information or records that do not include 
testimony.
    (1) If you do not request testimony, Sec. Sec. 403.120-403.140 do 
not apply.
    (2) If 20 CFR part 401 or 402 permits disclosure to you of any 
requested record or information, we will make every reasonable effort to 
provide the disclosable information or record to you on or before the 
date specified in your request.
    (3) If neither 20 CFR part 401 nor 402 permits disclosure of 
information or a

[[Page 42]]

record you request, we will notify you as provided in Sec. 403.145. We 
will also send you any notices required by part 401 or 402.



Sec. 403.110  What special definitions apply to this part?

    The following definitions apply:
    (a) Application means a written request for testimony that conforms 
to the requirements of Sec. 403.120.
    (b)(1) Employee includes--
    (i) Any person employed in any capacity by SSA, currently or in the 
past;
    (ii) Any person appointed by, or subject to the supervision, 
jurisdiction, or control of SSA, the Commissioner of Social Security, or 
any other SSA official, currently or in the past; and
    (iii) Any person who is not described elsewhere in this definition 
but whose disclosure of information is subject to the regulations at 20 
CFR part 401, currently or in the past.
    (2) For purposes of this paragraph (b), a person subject to SSA's 
jurisdiction or control includes any person hired as a contractor by 
SSA, any person performing services for SSA under an agreement (such as 
an officer or employee of a State agency involved in determining 
disability for SSA), and any consultant (including medical or vocational 
experts or medical services or consultative examination providers), 
contractor, or subcontractor of such person. Such a person would also 
include any person who has served or is serving in any advisory 
capacity, formal or informal.
    (3) For purposes of this paragraph (b), a person employed by SSA in 
the past is considered an employee only when the matter about which the 
person would testify is one in which he or she was personally involved 
while at SSA; where the matter concerns official information that the 
employee acquired while working, such as sensitive or confidential 
agency information; where the person purports to speak for SSA; or where 
significant SSA resources would be required to prepare the person to 
testify. Such a person would not be considered an employee when the 
person will rely only on expertise or general knowledge he or she 
acquired while working at SSA.
    (c) Commissioner means the Commissioner of Social Security or his or 
her designee(s).
    (d) Legal proceeding includes any pretrial, trial, and post-trial 
stage of any existing or reasonably anticipated judicial or 
administrative action, hearing, investigation, or similar proceeding 
before a court, commission, board, agency, or other tribunal, authority 
or entity, foreign or domestic. Legal proceeding also includes any 
deposition or other pretrial proceeding, including a formal or informal 
request for testimony by an attorney or any other person.
    (e) Record has the same meaning as ``record'' in 20 CFR 402.30.
    (f) Request means any attempt to obtain the production, disclosure, 
or release of information, records, or the testimony of an SSA employee, 
including any order, subpoena, or other command issued in a legal 
proceeding as well as any informal or other attempt (by any method) by a 
party or a party's representative.
    (g) SSA means the Social Security Administration.
    (h) Testimony includes any sworn statement (oral or written), 
including (but not limited to)--
    (1) Any statement provided through personal appearance; deposition; 
or recorded interview; or provided by telephone, television, or 
videotape;
    (2) Any response during discovery or other similar proceedings that 
would involve more than the mere physical production of records; and
    (3) Any declaration made under penalty of perjury or any affidavit.
    (i) We or our means the Social Security Administration.
    (j) You or your means an individual or entity that submits a request 
for records, information or testimony.



Sec. 403.115  When does this part apply?

    (a) Except as specified in paragraph (b) of this section, this part 
applies to any request in connection with any legal proceeding for SSA 
records or other information or for testimony from SSA or its employees. 
This part applies to requests for testimony related to SSA's functions 
or to any information or record created or acquired

[[Page 43]]

by SSA as a result of the discharge of its official duties.
    (b) This part does not apply to requests for testimony--
    (1) In an SSA administrative proceeding;
    (2) In a legal proceeding to which SSA is a party (``SSA'' here 
includes the Commissioner and any employee acting in his or her official 
capacity);
    (3) From the United States Department of Justice;
    (4) In a criminal proceeding in which the United States is a party;
    (5) In a legal proceeding initiated by state or local authorities 
arising from an investigation or audit initiated by, or conducted in 
cooperation with, SSA's Office of the Inspector General;
    (6) From either house of Congress;
    (7) In a law enforcement proceeding related to threats or acts 
against SSA, its employees, or its operations (``SSA'' here includes the 
Commissioner and any employee acting in his or her official capacity); 
or
    (8) Where Federal law or regulations expressly require a Federal 
employee to provide testimony.



Sec. 403.120  How do you request testimony?

    (a) You must submit a written application for testimony of an SSA 
employee. Your application must-
    (1) Describe in detail the nature and relevance of the testimony 
sought in the legal proceeding;
    (2) Include a detailed explanation as to why you need the testimony, 
why you cannot obtain the information you need from an alternative 
source, and why providing it to you would be in SSA's interest; and
    (3) Provide the date and time that you need the testimony and the 
place where SSA would present it.
    (b) You must submit a complete application to SSA at least 30 days 
in advance of the date that you need the testimony. If your application 
is submitted fewer than 30 days before that date, you must provide, in 
addition to the requirements set out above, a detailed explanation as to 
why--
    (1) You did not apply in a timely fashion; and
    (2) It is in SSA's interest to review the untimely application.
    (c) You must send your application for testimony to: Social Security 
Administration, Office of the General Counsel, Office of General Law, 
P.O. Box 17779, Baltimore, MD 21235-7779, Attn: Touhy Officer. (If you 
are requesting testimony of an employee of the Office of the Inspector 
General, send your application to the address in Sec. 403.125.)
    (d) The Commissioner has the sole discretion to waive any 
requirement in this section.
    (e) If your application does not include each of the items required 
by paragraph (a) of this section, we may return it to you for additional 
information. Unless the Commissioner waives one or more requirements, we 
will not process an incomplete or untimely application.

[66 FR 2809, Jan. 12, 2001; 66 FR 14316, Mar. 12, 2001]



Sec. 403.125  How will we handle requests for records, information, or 
testimony involving SSA's Office of the Inspector General?

    A request for records or information of the Office of the Inspector 
General or the testimony of an employee of the Office of the Inspector 
General will be handled in accordance with the provisions of this part, 
except that the Inspector General or the Inspector General's designee 
will make those determinations that the Commissioner otherwise would 
make. Send your request for records or information pertaining to the 
Office of the Inspector General or your application for testimony of an 
employee of the Office of the Inspector General to: Office of the 
Inspector General, Social Security Administration, 300 Altmeyer 
Building, 6401 Security Blvd., Baltimore, MD 21235-6401.



Sec. 403.130  What factors may the Commissioner consider in determining 
whether SSA will grant your application for testimony?

    In deciding whether to authorize the testimony of an SSA employee, 
the Commissioner will consider applicable law and factors relating to 
your need and the burden to SSA. The considerations include, but are not 
limited to, the following:

[[Page 44]]

    (a) Risk of law violation or compromise of Government privilege.
    (1) Would providing the testimony violate a statute (such as 26 
U.S.C. 6103 or section 1106 of the Social Security Act, 42 U.S.C. 1306), 
Executive Order, or regulation (such as 20 CFR part 401)?
    (2) Would providing the testimony put confidential, sensitive, or 
privileged information at risk?
    (b) Burden on SSA. (1) Would granting the application unduly expend 
for private purposes the resources of the United States (including the 
time of SSA employees needed for official duties)?
    (2) Would the testimony be available in a less burdensome form or 
from another source?
    (3) Would the testimony be limited to the purpose of the request?
    (4) Did you previously request the same testimony in the same or a 
related proceeding?
    (c) Interests served by allowing testimony. (1) Would providing the 
testimony serve SSA's interest?
    (2) Would providing the testimony maintain SSA's policy of 
impartiality among private litigants?
    (3) Is another government agency involved in the proceeding?
    (4) Do you need the testimony to prevent fraud or similar 
misconduct?
    (5) Would providing the testimony be necessary to prevent a 
miscarriage of justice or to preserve the rights of an accused 
individual to due process in a criminal proceeding?



Sec. 403.135  What happens to your application for testimony?

    (a) If 20 CFR part 401 or 402 does not permit disclosure of 
information about which you seek testimony from an SSA employee, we will 
notify you under Sec. 403.145.
    (b) If 20 CFR part 401 or 402 permits disclosure of the information 
about which you seek testimony,
    (1) The Commissioner makes the final decision on your application;
    (2) All final decisions are in the sole discretion of the 
Commissioner; and
    (3) We will notify you of the final decision on your application.



Sec. 403.140  If the Commissioner authorizes testimony, what will 
be the scope and form of that testimony?

    The employee's testimony must be limited to matters that were 
specifically approved. We will provide testimony in the form that is 
least burdensome to SSA unless you provide sufficient information in 
your application for SSA to justify a different form. For example, we 
will provide an affidavit or declaration rather than a deposition and a 
deposition rather than trial testimony.



Sec. 403.145  What will SSA do if you have not satisfied the conditions 
in this part or in 20 CFR part 401 or 402?

    (a) We will provide the following information, as appropriate, to 
you or the court or other tribunal conducting the legal proceeding if 
your request states that a response is due on a particular date and the 
conditions prescribed in this part, or the conditions for disclosure in 
20 CFR part 401 or 402, are not satisfied or we anticipate that they 
will not be satisfied by that date:
    (1) A statement that compliance with the request is not authorized 
under 20 CFR part 401 or 402, or is prohibited without the 
Commissioner's approval;
    (2) The requirements for obtaining the approval of the Commissioner 
for testimony or for obtaining information, records, or testimony under 
20 CFR part 401 or 402; and
    (3) If the request complies with Sec. 403.120, the estimated time 
necessary for a decision. We will make every reasonable effort to 
provide this information in writing on or before the date specified in 
your request.
    (b) Generally, if a response to a request for information, records, 
or testimony is due before the conditions of this Part or the conditions 
for disclosure in 20 CFR part 401 or 402 are met, no SSA employee will 
appear.
    (c) SSA will seek the advice and assistance of the Department of 
Justice when appropriate.



Sec. 403.150  Is there a fee for our services?

    (a) General. Unless the Commissioner grants a waiver, you must pay 
fees for our services in providing information, records, or testimony. 
You must pay

[[Page 45]]

the fees as prescribed by the Commissioner. In addition, the 
Commissioner may require that you pay the fees in advance as a condition 
of providing the information, records, or testimony. Make fees payable 
to the Social Security Administration by check or money order.
    (b) Records or information. Unless the Commissioner grants a waiver, 
you must pay the fees for production of records or information 
prescribed in 20 CFR Sec. Sec. 401.95 and 402.155 through 402.185, as 
appropriate.
    (c) Testimony. Unless the Commissioner grants a waiver, you must pay 
fees calculated to reimburse the United States Government for the full 
cost of providing the testimony. Those costs include, but are not 
limited to--
    (1) The salary or wages of the witness and related costs for the 
time necessary to prepare for and provide the testimony and any travel 
time, and
    (2) Other travel costs.
    (d) Waiver or reduction of fees. The Commissioner may waive or 
reduce fees for providing information, records, or testimony under this 
Part. The rules in 20 CFR Sec. 402.185 apply in determining whether to 
waive fees for the production of records. In deciding whether to waive 
or reduce fees for testimony or for production of information that does 
not constitute a record, the Commissioner may consider other factors, 
including but not limited to--
    (1) The ability of the party responsible for the application to pay 
the full amount of the chargeable fees;
    (2) The public interest, as described in 20 CFR Sec. 402.185, 
affected by complying with the application;
    (3) The need for the testimony or information in order to prevent a 
miscarriage of justice;
    (4) The extent to which providing the testimony or information 
serves SSA's interest; and
    (5) The burden on SSA's resources required to provide the 
information or testimony.



Sec. 403.155  Does SSA certify records?

    We can certify the authenticity of copies of records we disclose 
pursuant to 20 CFR parts 401 and 402, and this part. We will provide 
this service only in response to your written request. If we certify, we 
will do so at the time of the disclosure and will not certify copies of 
records that have left our custody. A request for certified copies of 
records previously released is considered a new request for records. 
Fees for this certification are set forth in 20 CFR 402.165(e).



PART 404_FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE (1950	 )
--Table of Contents




       Subpart A_Introduction, General Provisions and Definitions

Sec.
404.1 Introduction.
404.2 General definitions and use of terms.
404.3 General provisions.

            Subpart B_Insured Status and Quarters of Coverage

                                 General

404.101 Introduction.
404.102 Definitions.

                          Fully Insured Status

404.110 How we determine fully insured status.
404.111 When we consider a person fully insured based on World War II 
          active military or naval service.
404.112 When we consider certain employees of private nonprofit 
          organizations to be fully insured.
404.115 Table for determining the quarters of coverage you need to be 
          fully insured.

                        Currently Insured Status

404.120 How we determine currently insured status.

                        Disability Insured Status

404.130 How we determine disability insured status.
404.131 When you must have disability insured status.
404.132 How we determine fully insured status for a period of disability 
          or disability insurance benefits.
404.133 When we give you quarters of coverage based on military service 
          to establish a period of disability.

                          Quarters of Coverage

404.140 What is a quarter of coverage.
404.141 How we credit quarters of coverage for calendar years before 
          1978.
404.142 How we credit self-employment income to calendar quarters for 
          taxable years beginning before 1978.

[[Page 46]]

404.143 How we credit quarters of coverage for calendar years after 
          1977.
404.144 How we credit self-employment income to calendar years for 
          taxable years beginning after 1977.
404.145 When you acquire a quarter of coverage.
404.146 When a calendar quarter cannot be a quarter of coverage.

Appendix to Subpart B--Quarter of Coverage Amounts for Calendar Years 
          After 1978

              Subpart C_Computing Primary Insurance Amounts

                                 General

404.201 What is included in this subpart?
404.202 Other regulations related to this subpart.
404.203 Definitions.
404.204 Methods of computing primary insurance amounts--general.

 Average-Indexed-Monthly Earnings Method of Computing Primary Insurance 
                                 Amounts

404.210 Average-indexed-monthly-earnings method.
404.211 Computing your average indexed monthly earnings.
404.212 Computing your primary insurance amount from your average 
          indexed monthly earnings.
404.213 Computation where you are eligible for a pension based on your 
          noncovered employment.

   Average-Monthly-Wage Method of Computing Primary Insurance Amounts

404.220 Average-monthly-wage method.
404.221 Computing your average monthly wage.
404.222 Use of benefit table in finding your primary insurance amount 
          from your average monthly wage.

Guaranteed Alternative for People Reaching Age 62 After 1978 but Before 
                                  1984

404.230 Guaranteed alternative.
404.231 Steps in computing your primary insurance amount under the 
          guaranteed alternative--general.
404.232 Computing your average monthly wage under the guaranteed 
          alternative.
404.233 Adjustment of your guaranteed alternative when you become 
          entitled after age 62.

         Old-Start Method of Computing Primary Insurance Amounts

404.240 Old-start method--general.
404.241 1977 simplified old-start method.
404.242 Use of old-start primary insurance amount as guaranteed 
          alternative.
404.243 Computation where you are eligible for a pension based on 
          noncovered employment.

   Special Computation Rules for People Who Had a Period of Disability

404.250 Special computation rules for people who had a period of 
          disability.
404.251 Subsequent entitlement to benefits less than 12 months after 
          entitlement to disability benefits ended.
404.252 Subsequent entitlement to benefits 12 months or more after 
          entitlement to disability benefits ended.

                Special Minimum Primary Insurance Amounts

404.260 Special minimum primary insurance amounts.
404.261 Computing your special minimum primary insurance amount.

                        Cost-of-Living Increases

404.270 Cost-of-living increases.
404.271 When automatic cost-of-living increases apply.
404.272 Indexes we use to measure the rise in the cost-of-living.
404.273 When automatic cost-of-living increases are to be made.
404.274 Measuring the increase in the indexes.
404.275 Amount of automatic cost-of-living increases.
404.276 Publication of notice of increase.
404.277 When does the frozen minimum primary insurance amount increase 
          because of cost-of-living adjustments?
404.278 Additional cost-of-living increase.

                Recomputing Your Primary Insurance Amount

404.280 Recomputations.
404.281 Why your primary insurance amount may be recomputed.
404.282 Effective date of recomputations.
404.283 Recomputation under method other than that used to find your 
          primary insurance amount.
404.284 Recomputations for people who reach age 62, or become disabled, 
          or die before age 62 after 1978.
404.285 Recomputations performed automatically.
404.286 How to request an immediate recomputation.
404.287 Waiver of recomputation.
404.288 Recomputing when you are entitled to a monthly pension based on 
          noncovered employment.

               Recalculations of Primary Insurance Amounts

404.290 Recalculations.

Appendixes to Subpart C--Note

[[Page 47]]

Appendix I to Subpart C--Average of the Total Wages for Years After 1950
Appendix II to Subpart C--Benefit Formulas Used With Average Indexed 
          Monthly Earnings
Appendix III to Subpart C--Benefit Table
Appendix IV to Subpart C--Earnings Needed for a Year of Coverage After 
          1950
Appendix V to Subpart C--Computing the Special Minimum Primary Insurance 
          Amount and Related Maximum Family Benefits
Appendix VI to Subpart C--Percentage of Automatic Increases in Primary 
          Insurance Amounts Since 1978
Appendix VII to Subpart C--``Old-Law'' Contribution and Benefit Base

  Subpart D_Old-Age, Disability, Dependents' and Survivors' Insurance 
                     Benefits; Period of Disability

                                 General

404.301 Introduction.
404.302 Other regulations related to this subpart.
404.303 Definitions.
404.304 What are the general rules on benefit amounts?
404.305 When you may not be entitled to benefits.

                     Old-Age and Disability Benefits

404.310 When am I entitled to old-age benefits?
404.311 When does my entitlement to old-age benefits begin and end?
404.312 How is my old-age benefit amount calculated?
404.313 What are delayed retirement credits and how do they increase my 
          old-age benefit amount?
404.315 Who is entitled to disability benefits?
404.316 When entitlement to disability benefits begins and ends.
404.317 How is the amount of my disability benefit calculated?
404.320 Who is entitled to a period of disability.
404.321 When a period of disability begins and ends.
404.322 When you may apply for a period of disability after a delay due 
          to a physical or mental condition.
404.325 The termination month.

                Benefits for Spouses and Divorced Spouses

404.330 Who is entitled to wife's or husband's benefits.
404.331 Who is entitled to wife's or husband's benefits as a divorced 
          spouse.
404.332 When wife's and husband's benefits begin and end.
404.333 Wife's and husband's benefit amounts.
404.335 How do I become entitled to widow's or widower's benefits?
404.336 How do I become entitled to widow's or widower's benefits as a 
          surviving divorced spouse?
404.337 When does my entitlement to widow's and widower's benefits start 
          and end?
404.338 How is the amount of my widow's or widower's benefit calculated?
404.339 Who is entitled to mother's or father's benefits.
404.340 Who is entitled to mother's or father's benefits as a surviving 
          divorced spouse.
404.341 When mother's and father's benefits begin and end.
404.342 Mother's and father's benefit amounts.
404.344 Your relationship by marriage to the insured.
404.345 Your relationship as wife, husband, widow, or widower under 
          State law.
404.346 Your relationship as wife, husband, widow, or widower based upon 
          a deemed valid marriage.
404.347 ``Living in the same household'' defined.
404.348 When a child living with you is ``in your care''.
404.349 When a child living apart from you is ``in your care''.

                            Child's Benefits

404.350 Who is entitled to child's benefits.
404.351 Who may be reentitled to child's benefits.
404.352 When does my entitlement to child's benefits begin and end?
404.353 Child's benefit amounts.
404.354 Your relationship to the insured.
404.355 Who is the insured's natural child.
404.356 Who is the insured's legally adopted child.
404.357 Who is the insured's stepchild.
404.358 Who is the insured's grandchild or stepgrandchild.
404.359 Who is the insured's equitably adopted child.
404.360 When a child is dependent upon the insured person.
404.361 When a natural child is dependent.
404.362 When a legally adopted child is dependent.
404.363 When a stepchild is dependent.
404.364 When a grandchild or stepgrandchild is dependent.
404.365 When an equitably adopted child is dependent.
404.366 ``Contributions for support,'' ``one-half support,'' and 
          ``living with'' the insured defined--determining first month 
          of entitlement.
404.367 When you are a ``full-time elementary or secondary school 
          student''.

[[Page 48]]

404.368 When you are considered a full-time student during a period of 
          nonattendance.

                            Parent's Benefits

404.370 Who is entitled to parent's benefits.
404.371 When parent's benefits begin and end.
404.373 Parent's benefit amounts.
404.374 Parent's relationship to the insured.

                       Special Payments at Age 72

404.380 General.
404.381 Who is entitled to special age 72 payments.
404.382 When special age 72 payments begin and end.
404.383 Special age 72 payment amounts.
404.384 Reductions, suspensions, and nonpayments of special age 72 
          payments.

                         Lump-Sum Death Payment

404.390 General.
404.391 Who is entitled to the lump-sum death payment as a widow or 
          widower who was living in the same household.
404.392 Who is entitled to the lump-sum death payment when there is no 
          widow(er) who was living in the same household.

      Subpart E_Deductions; Reductions; and Nonpayments of Benefits

404.401 Deduction, reduction, and nonpayment of monthly benefits or 
          lump-sum death payments.
404.401a When we do not pay benefits because of a disability 
          beneficiary's work activity.
404.402 Interrelationship of deductions, reductions, adjustments, and 
          nonpayment of benefits.
404.403 Reduction where total monthly benefits exceed maximum family 
          benefits payable.
404.404 How reduction for maximum affects insured individual and other 
          persons entitled on his earnings record.
404.405 Situations where total benefits can exceed maximum because of 
          ``savings clause.''
404.406 Reduction for maximum because of retroactive effect of 
          application for monthly benefits.
404.407 Reduction because of entitlement to other benefits.
404.408 Reduction of benefits based on disability on account of receipt 
          of certain other disability benefits provided under Federal, 
          State, or local laws or plans.
404.408a Reduction where spouse is receiving a Government pension.
404.408b Reduction of retroactive monthly social security benefits where 
          supplemental security income (SSI) payments were received for 
          the same period.
404.409 What is full retirement age?
404.410 How does SSA reduce my benefits when my entitlement begins 
          before full retirement age?
404.411 How are benefits reduced for age when a person is entitled to 
          two or more benefits?
404.412 After my benefits are reduced for age when and how will 
          adjustments to that reduction be made?
404.413 After my benefits are reduced for age what happens if there is 
          an increase in my primary insurance amount?
404.415 Deductions because of excess earnings; annual earnings test.
404.416 Amount of deduction because of excess earnings.
404.417 Deductions because of noncovered remunerative activity outside 
          the United States; 45 hour and 7-day work test.
404.418 ``Noncovered remunerative activity outside the United States,'' 
          defined.
404.420 Persons deemed entitled to benefits based on an individual's 
          earnings record.
404.421 How are deductions made when a beneficiary fails to have a child 
          in his or her care?
404.423 Manner of making deductions.
404.424 Total amount of deductions where more than one deduction event 
          occurs in a month.
404.425 Total amount of deductions where deduction events occur in more 
          than 1 month.
404.428 Earnings in a taxable year.
404.429 Earnings; defined.
404.430 Excess earnings defined for taxable years ending after December 
          1972; monthly exempt amount defined.
404.434 Excess earnings; method of charging.
404.435 Excess earnings; months to which excess earnings cannot be 
          charged.
404.436 Excess earnings; months to which excess earnings cannot be 
          charged because individual is deemed not entitled to benefits.
404.437 Excess earnings; benefit rate subject to deductions because of 
          excess earnings.
404.439 Partial monthly benefits; excess earnings of the individual 
          charged against his benefits and the benefits of persons 
          entitled (or deemed entitled) to benefits on his earnings 
          record.
404.440 Partial monthly benefits; prorated share of partial payment 
          exceeds the benefit before deduction for excess earnings.
404.441 Partial monthly benefits; insured individual and another person 
          entitled (or deemed entitled) on the same earnings record both 
          have excess earnings.
404.446 Definition of ``substantial services'' and ``services''.
404.447 Evaluation of factors involved in substantial services test.

[[Page 49]]

404.450 Required reports of work outside the United States or failure to 
          have care of a child.
404.451 Penalty deductions for failure to report within prescribed time 
          limit noncovered remunerative activity outside the United 
          States or not having care of a child.
404.452 Reports to Social Security Administration of earnings; wages; 
          net earnings from self-employment.
404.453 Penalty deductions for failure to report earnings timely.
404.454 Good cause for failure to make required reports.
404.455 Request by Social Security Administration for reports of 
          earnings and estimated earnings; effect of failure to comply 
          with request.
404.456 Current suspension of benefits because an individual works or 
          engages in self-employment.
404.457 Deductions where taxes neither deducted from wages of certain 
          maritime employees nor paid.
404.458 Limiting deductions where total family benefits payable would 
          not be affected or would be only partly affected.
404.459 Penalty for false or misleading statements.
404.460 Nonpayment of monthly benefits of aliens outside the United 
          States.
404.461 Nonpayment of lump sum after death of alien outside United 
          States for more than 6 months.
404.462 Nonpayment of hospital and medical insurance benefits of alien 
          outside United States for more than 6 months.
404.463 Nonpayment of benefits of aliens outside the United States; 
          ``foreign social insurance system,'' and ``treaty obligation'' 
          exceptions defined.
404.464 Nonpayment of benefits where individual is deported; prohibition 
          against payment of lump sum based on deported individual's 
          earnings records.
404.465 Conviction for subversive activities; effect on monthly benefits 
          and entitlement to hospital insurance benefits.
404.466 Conviction for subversive activities; effect on enrollment for 
          supplementary medical insurance benefits.
404.467 Nonpayment of benefits; individual entitled to disability 
          insurance benefits or childhood disability benefits based on 
          statutory blindness is engaging in substantial gainful 
          activity.
404.468 Nonpayment of benefits to prisoners.
404.469 Nonpayment of benefits where individual has not furnished or 
          applied for a Social Security number.
404.470 Nonpayment of disability benefits due to noncompliance with 
          rules regarding treatment for drug addiction or alcoholism.
404.480 Paying benefits in installments: Drug addiction or alcoholism.

Subpart F_Overpayments, Underpayments, Waiver of Adjustment or Recovery 
         of Overpayments, and Liability of a Certifying Officer

404.501 General applicability of section 204 of the Act.
404.502 Overpayments.
404.502a Notice of right to waiver consideration.
404.503 Underpayments.
404.504 Relation to provisions for reductions and increases.
404.505 Relationship to provisions requiring deductions.
404.506 When waiver may be applied and how to process the request.
404.507 Fault.
404.508 Defeat the purpose of Title II.
404.509 Against equity and good conscience; defined.
404.510 When an individual is ``without fault'' in a deduction 
          overpayment.
404.510a When an individual is ``without fault'' in an entitlement 
          overpayment.
404.511 When an individual is at ``fault'' in a deduction overpayment.
404.512 When adjustment or recovery of an overpayment will be waived.
404.513 Liability of a certifying officer.
404.515 Collection and compromise of claims for overpayment.
404.520 Referral of overpayments to the Department of the Treasury for 
          tax refund offset--General.
404.521 Notice to overpaid individual.
404.522 Review within SSA that an overpayment is past due and legally 
          enforceable.
404.523 Findings by SSA.
404.524 Review of our records related to the overpayment.
404.525 Suspension of offset.
404.526 Tax refund insufficient to cover amount of overpayment.
404.527 Additional methods for recovery of title II benefit 
          overpayments.

            Subpart G_Filing of Applications and Other Forms

                           General Provisions

404.601 Introduction.
404.602 Definitions.
404.603 You must file an application to receive benefits.

                              Applications

404.610 What makes an application a claim for benefits?
404.611 How do I file an application for Social Security benefits?
404.612 Who may sign an application.

[[Page 50]]

404.613 Evidence of authority to sign an application for another.
404.614 When an application or other form is considered filed.
404.615 Claimant must be alive when an application is filed.
404.617 Pilot program for photographic identification of disability 
          benefit applicants in designated geographic areas.

                 Effective Filing Period of Application

404.620 Filing before the first month you meet the requirements for 
          benefits.
404.621 What happens if I file after the first month I meet the 
          requirements for benefits?
404.622 Limiting an application.
404.623 Am I required to file for all benefits if I am eligible for old-
          age and husband's or wife's benefits?

                 Filing Date Based on Written Statement

404.630 Use of date of written statement as filing date.
404.631 Statements filed with the Railroad Retirement Board.
404.632 Statements filed with a hospital.

               Deemed Filing Date Based on Misinformation

404.633 Deemed filing date in a case of misinformation.

                        Withdrawal of Application

404.640 Withdrawal of an application.
404.641 Cancellation of a request to withdraw.

                           Subpart H_Evidence

                                 General

404.701 Introduction.
404.702 Definitions.
404.703 When evidence is needed.
404.704 Your responsibility for giving evidence.
404.705 Failure to give requested evidence.
404.706 Where to give evidence.
404.707 Original records or copies as evidence.
404.708 How we decide what is enough evidence.
404.709 Preferred evidence and other evidence.

                  Evidence of Age, Marriage, and Death

404.715 When evidence of age is needed.
404.716 Type of evidence of age to be given.
404.720 Evidence of a person's death.
404.721 Evidence to presume a person is dead.
404.722 Rebuttal of a presumption of death.
404.723 When evidence of marriage is required.
404.725 Evidence of a valid ceremonial marriage.
404.726 Evidence of common-law marriage.
404.727 Evidence of a deemed valid marriage.
404.728 Evidence a marriage has ended.

               Evidence for Child's and Parent's Benefits

404.730 When evidence of a parent or child relationship is needed.
404.731 Evidence you are a natural parent or child.
404.732 Evidence you are a stepparent or stepchild.
404.733 Evidence you are the legally adopting parent or legally adopted 
          child.
404.734 Evidence you are an equitably adopted child.
404.735 Evidence you are the grandchild or stepgrandchild.
404.736 Evidence of a child's dependency.
404.745 Evidence of school attendance for child age 18 or older.
404.750 Evidence of a parent's support.

                       Other Evidence Requirements

404.760 Evidence of living in the same household with insured person.
404.762 Evidence of having a child in your care.
404.770 Evidence of where the insured person had a permanent home.
404.780 Evidence of ``good cause'' for exceeding time limits on 
          accepting proof of support or application for a lump-sum death 
          payment.

                      Subpart I_Records of Earnings

                           General Provisions

404.801 Introduction.
404.802 Definitions.
404.803 Conclusiveness of the record of your earnings.

                     Obtaining Earnings Information

404.810 How to obtain a statement of earnings and a benefit estimate 
          statement.
404.811 The statement of earnings and benefit estimates you requested.
404.812 Statement of earnings and benefit estimates sent without 
          request.

                     Correcting the Earnings Record

404.820 Filing a request for correction of the record of your earnings.
404.821 Correction of the record of your earnings before the time limit 
          ends.
404.822 Correction of the record of your earnings after the time limit 
          ends.
404.823 Correction of the record of your earnings for work in the employ 
          of the United States.

[[Page 51]]

         Notice of Removal or Reduction of an Entry of Earnings

404.830 Notice of removal or reduction of your wages.
404.831 Notice of removal or reduction of your self-employment income.

 Subpart J_Determinations, Administrative Review Process, and Reopening 
                     of Determinations and Decisions

          Introduction, Definitions, and Initial Determinations

404.900 Introduction.
404.901 Definitions.
404.902 Administrative actions that are initial determinations.
404.903 Administrative actions that are not initial determinations.
404.904 Notice of the initial determination.
404.905 Effect of an initial determination.
404.906 Testing modifications to the disability determination 
          procedures.

                             Reconsideration

404.907 Reconsideration--general.
404.908 Parties to a reconsideration.
404.909 How to request reconsideration.
404.911 Good cause for missing the deadline to request review.
404.913 Reconsideration procedures.
404.914 Disability hearing--general.
404.915 Disability hearing--disability hearing officers.
404.916 Disability hearing--procedures.
404.917 Disability hearing--disability hearing officer's reconsidered 
          determination.
404.918 Disability hearing--review of the disability hearing officer's 
          reconsidered determination before it is issued.
404.919 Notice of another person's request for reconsideration.
404.920 Reconsidered determination.
404.921 Effect of a reconsidered determination.
404.922 Notice of a reconsidered determination.

                        Expedited Appeals Process

404.923 Expedited appeals process--general.
404.924 When the expedited appeals process may be used.
404.925 How to request expedited appeals process.
404.926 Agreement in expedited appeals process.
404.927 Effect of expedited appeals process agreement.
404.928 Expedited appeals process request that does not result in 
          agreement.

               Hearing Before an Administrative Law Judge

404.929 Hearing before an administrative law judge--general.
404.930 Availability of a hearing before an administrative law judge.
404.932 Parties to a hearing before an administrative law judge.
404.933 How to request a hearing before an administrative law judge.
404.935 Submitting evidence prior to a hearing before an administrative 
          law judge.
404.936 Time and place for a hearing before an administrative law judge.
404.938 Notice of a hearing before an administrative law judge.
404.939 Objections to the issues.
404.940 Disqualification of the administrative law judge.
404.941 Prehearing case review.
404.942 Prehearing proceedings and decisions by attorney advisors.
404.943 Responsibilities of the adjudication officer.

               Administrative Law Judge Hearing Procedures

404.944 Administrative law judge hearing procedures--general.
404.946 Issues before an administrative law judge.
404.948 Deciding a case without an oral hearing before an administrative 
          law judge.
404.949 Presenting written statements and oral arguments.
404.950 Presenting evidence at a hearing before an administrative law 
          judge.
404.951 When a record of a hearing before an administrative law judge is 
          made.
404.952 Consolidated hearing before an administrative law judge.
404.953 The decision of an administrative law judge.
404.955 The effect of an administrative law judge's decision.
404.956 Removal of a hearing request from an administrative law judge to 
          the Appeals Council.
404.957 Dismissal of a request for a hearing before an administrative 
          law judge.
404.958 Notice of dismissal of a request for a hearing before an 
          administrative law judge.
404.959 Effect of dismissal of a request for a hearing before an 
          administrative law judge.
404.960 Vacating a dismissal of a request for a hearing before an 
          administrative law judge.
404.961 Prehearing and posthearing conferences.
404.965 [Reserved]

                         Appeals Council Review

404.966 Testing elimination of the request for Appeals Council review.
404.967 Appeals Council review--general.
404.968 How to request Appeals Council review.

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404.969 Appeals Council initiates review.
404.970 Cases the Appeals Council will review.
404.971 Dismissal by Appeals Council.
404.972 Effect of dismissal of request for Appeals Council review.
404.973 Notice of Appeals Council review.
404.974 Obtaining evidence from Appeals Council.
404.975 Filing briefs with the Appeals Council.
404.976 Procedures before Appeals Council on review.
404.977 Case remanded by Appeals Council.
404.979 Decision of Appeals Council.
404.981 Effect of Appeals Council's decision or denial of review.
404.982 Extension of time to file action in Federal district court.

                           Court Remand Cases

404.983 Case remanded by a Federal court.
404.984 Appeals Council review of administrative law judge decision in a 
          case remanded by a Federal court.
404.985 Application of circuit court law.

           Reopening and Revising Determinations and Decisions

404.987 Reopening and revising determinations and decisions.
404.988 Conditions for reopening.
404.989 Good cause for reopening.
404.990 Finality of determinations and decisions on revision of an 
          earnings record.
404.991 Finality of determinations and decisions to suspend benefit 
          payments for entire taxable year because of earnings.
404.991a Late completion of timely investigation.
404.992 Notice of revised determination or decision.
404.993 Effect of revised determination or decision.
404.994 Time and place to request a hearing on revised determination or 
          decision.
404.995 Finality of findings when later claim is filed on same earnings 
          record.
404.996 Increase in future benefits where time period for reopening 
          expires.

                   Payment of Certain Travel Expenses

404.999a Payment of certain travel expenses--general.
404.999b Who may be reimbursed.
404.999c What travel expenses are reimbursable.
404.999d When and how to claim reimbursement.

Subpart K_Employment, Wages, Self-Employment, and Self-Employment Income

404.1001 Introduction.
404.1002 Definitions.

                               Employment

404.1003 Employment.
404.1004 What work is covered as employment.
404.1005 Who is an employee.
404.1006 Corporation officer.
404.1007 Common-law employee.
404.1008 Agent-driver or commission-driver, full-time life insurance 
          salesman, home worker, or traveling or city salesman.
404.1009 Who is an employer.
404.1010 Farm crew leader as employer.

                      Work Excluded From Employment

404.1012 Work excluded from employment.
404.1013 Included-excluded rule.
404.1014 Domestic service by a student for a local college club, 
          fraternity or sorority.
404.1015 Family services.
404.1016 Foreign agricultural workers.
404.1017 Sharefarmers.
404.1018 Work by civilians for the United States Government or its 
          instrumentalities--wages paid after 1983.
404.1018a Work by civilians for the United States Government or its 
          instrumentalities--remuneration paid prior to 1984.
404.1018b Medicare qualified government employment.
404.1019 Work as a member of a uniformed service of the United States.
404.1020 Work for States and their political subdivisions and 
          instrumentalities.
404.1021 Work for the District of Columbia.
404.1022 American Samoa or Guam.
404.1023 Ministers of churches and members of religious orders.
404.1024 Election of coverage by religious orders.
404.1025 Work for religious, charitable, educational, or certain other 
          organizations exempt from income tax.
404.1026 Work for a church or qualified church-controlled organization.
404.1027 Railroad work.
404.1028 Student working for a school, college, or university.
404.1029 Student nurses.
404.1030 Delivery and distribution or sale of newspapers, shopping news, 
          and magazines.
404.1031 Fishing.
404.1032 Work for a foreign government.
404.1033 Work for a wholly owned instrumentality of a foreign 
          government.
404.1034 Work for an international organization.
404.1035 Work for a communist organization.
404.1036 Certain nonresident aliens.
404.1037 Work on or in connection with a non-American vessel or 
          aircraft.
404.1038 Domestic employees under age 18.

[[Page 53]]

       Exemption From Social Security by Reason of Religous Belief

404.1039 Employers (including partnerships) and employees who are both 
          members of certain religious groups opposed to insurance.

                                  Wages

404.1041 Wages.
404.1042 Wages when paid and received.
404.1043 Facilities or privileges--meals and lodging.
404.1044 Vacation pay.
404.1045 Employee expenses.
404.1046 Pay for work by certain members of religious orders.
404.1047 Annual wage limitation.
404.1048 Contribution and benefit base after 1992.
404.1049 Payments under an employer plan or system.
404.1050 Retirement payments.
404.1051 Payments on account of sickness or accident disability, or 
          related medical or hospitalization expenses.
404.1052 Payments from or to certain tax-exempt trusts or payments under 
          or into certain annuity plans.
404.1053 ``Qualified benefits'' under a cafeteria plan.
404.1054 Payments by an employer of employee's tax or employee's 
          contribution under State law.
404.1055 Payments for agricultural labor.
404.1056 Explanation of agricultural labor.
404.1057 Domestic service in the employer's home.
404.1058 Special situations.
404.1059 Deemed wages for certain individuals interned during World War 
          II.
404.1060 [Reserved]

                             Self-Employment

404.1065 Self-employment coverage.
404.1066 Trade or business in general.
404.1068 Employees who are considered self-employed.
404.1069 Real estate agents and direct sellers.
404.1070 Christian Science practitioners.
404.1071 Ministers and members of religious orders.
404.1073 Public office.
404.1074 Farm crew leader who is self-employed.
404.1075 Members of certain religious groups opposed to insurance.
404.1077 Individuals under railroad retirement system.

                         Self-Employment Income

404.1080 Net earnings from self-employment.
404.1081 General rules for figuring net earnings from self-employment.
404.1082 Rentals from real estate; material participation.
404.1083 Dividends and interest.
404.1084 Gain or loss from disposition of property; capital assets; 
          timber, coal, and iron ore; involuntary conversion.
404.1085 Net operating loss deduction.
404.1086 Community income.
404.1087 Figuring partner's net earnings from self-employment for 
          taxable year which ends as a result of death.
404.1088 Retirement payment to retired partners.
404.1089 Figuring net earnings for residents and nonresidents of Puerto 
          Rico.
404.1090 Personal exemption deduction.
404.1091 Figuring net earnings for ministers and members of religious 
          orders.
404.1092 Figuring net earnings for U.S. citizens or residents living 
          outside the United States.
404.1093 Possession of the United States.
404.1094 Options available for figuring net earnings from self-
          employment.
404.1095 Agricultural trade or business.
404.1096 Self-employment income.

Subpart L [Reserved]

     Subpart M_Coverage of Employees of State and Local Governments

                                 General

404.1200 General.
404.1201 Scope of this subpart regarding coverage and wage reports and 
          adjustments.
404.1202 Definitions.
404.1203 Evidence--for wages paid prior to 1987.
404.1204 Designating officials to act on behalf of the State.

                 What Groups of Employees May Be Covered

404.1205 Absolute coverage groups.
404.1206 Retirement system coverage groups.
404.1207 Divided retirement system coverage groups.
404.1208 Ineligible employees.
404.1209 Mandatorily excluded services.
404.1210 Optionally excluded services.
404.1211 Interstate instrumentalities.
404.1212 Police officers and firefighters.

         How Coverage Under Agreements Is Obtained and Continues

404.1214 Agreement for coverage.
404.1215 Modification of agreement.
404.1216 Modification of agreement to correct an error.
404.1217 Continuation of coverage.
404.1218 Resumption of coverage.
404.1219 Dissolution of political subdivision.

                    How To Identify Covered Employees

404.1220 Identification numbers.

[[Page 54]]

                  What Records of Coverage Must Be Kept

404.1225 Records--for wages paid prior to 1987.

            Review of Compliance by State With Its Agreement

404.1230 Onsite review program.
404.1231 Scope of review.
404.1232 Conduct of review.
404.1234 Reports of review's findings.

   How To Report Wages and Contributions--for Wages Paid Prior to 1987

404.1237 Wage reports and contribution returns--general--for wages paid 
          prior to 1987.
404.1239 Wage reports for employees performing services in more than one 
          coverage group--for wages paid prior to 1987.
404.1242 Back pay.
404.1243 Use of reporting forms--for wages paid prior to 1987.
404.1247 When to report wages--for wages paid prior to 1987.
404.1249 When and where to make deposits of contributions and to file 
          contribution returns and wage reports--for wages paid prior to 
          1987.
404.1251 Final reports--for wages paid prior to 1987.

 What Is a State's Liability for Contributions--for Wages Paid Prior to 
                                  1987

404.1255 State's liability for contributions--for wages paid prior to 
          1987.
404.1256 Limitation on State's liability for contributions for multiple 
          employment situations--for wages paid prior to 1987.

 Figuring the Amount of the State's Contributions--for Wages Paid Prior 
                                 to 1987

404.1260 Amount of contributions--for wages paid prior to 1987.
404.1262 Manner of payment of contributions by State--for wages paid 
          prior to 1987.
404.1263 When fractional part of a cent may be disregarded--for wages 
          paid prior to 1987.

 If a State Fails To Make Timely Payments--for Wages Paid Prior to 1987

404.1265 Addition of interest to contributions--for wages paid prior to 
          1987.
404.1267 Failure to make timely payments--for wages paid prior to 1987.

  How Errors in Reports and Contributions Are Adjusted--for Wages Paid 
                              Prior to 1987

404.1270 Adjustments in general--for wages paid prior to 1987.
404.1271 Adjustment of overpayment of contributions--for wages paid 
          prior to 1987.
404.1272 Refund or recomputation of overpayments which are not 
          adjustable--for wages paid prior to 1987.
404.1275 Adjustment of employee contributions--for wages paid prior to 
          1987.
404.1276 Reports and payments erroneously made to Internal Revenue 
          Service-transfer of funds--for wages paid prior to 1987.

 How Overpayments of Contributions Are Credited or Refunded--for Wages 
                           Paid Prior to 1987

404.1280 Allowance of credits or refunds--for wages paid prior to 1987.
404.1281 Credits or refunds for periods of time during which no 
          liability exists--for wages paid prior to 1987.
404.1282 Time limitations on credits or refunds--for wages paid prior to 
          1987.
404.1283 Exceptions to the time limitations on credits or refunds--for 
          wages paid prior to 1987.
404.1284 Offsetting underpayments against overpayments--for wages paid 
          prior to 1987.

 How Assessments for Underpayments of Contributions Are Made--for Wages 
                           Paid Prior to 1987

404.1285 Assessments of amounts due--for wages paid prior to 1987.
404.1286 Time limitations on assessments--for wages paid prior to 1987.
404.1287 Exceptions to the time limitations on assessments--for wages 
          paid prior to 1987.
404.1289 Payment after expiration of time limitation for assessment--for 
          wages paid prior to 1987.

Secretary's Review of Decisions on Credits, Refunds, or Assessments--for 
                        Wages Paid Prior to 1987

404.1290 Review of decisions by the Secretary--for wages paid prior to 
          1987.
404.1291 Reconsideration--for wages paid prior to 1987.
404.1292 How to request review--for wages paid prior to 1987.
404.1293 Time for filing request for review--for wages paid prior to 
          1987.
404.1294 Notification to State after reconsideration--for wages paid 
          prior to 1987.
404.1295 Commissioner's review--for wages paid prior to 1987.
404.1296 Commissioner's notification to the State--for wages paid prior 
          to 1987.

  How a State May Seek Court Review of Secretary's Decision--for Wages 
                           Paid Prior to 1987

404.1297 Review by court--for wages paid prior to 1987.
404.1298 Time for filing civil action--for wages paid prior to 1987.

[[Page 55]]

404.1299 Final judgments--for wages paid prior to 1987.

    Subpart N_Wage Credits for Veterans and Members of the Uniformed 
                                Services

                                 General

404.1301 Introduction.
404.1302 Definitions.

                          World War II Veterans

404.1310 Who is a World War II veteran.
404.1311 Ninety-day active service requirement for World War II 
          veterans.
404.1312 World War II service included.
404.1313 World War II service excluded.

                       Post-World War II Veterans

404.1320 Who is a post-World War II veteran.
404.1321 Ninety-day active service requirement for post-World War II 
          veterans.
404.1322 Post-World War II service included.
404.1323 Post-World War II service excluded.

                     Separation From Active Service

404.1325 Separation from active service under conditions other than 
          dishonorable.

                    Members of the Uniformed Services

404.1330 Who is a member of a uniformed service.

             Amounts of Wage Credits and Limits on Their Use

404.1340 Wage credits for World War II and post-World War II veterans.
404.1341 Wage credits for a member of a uniformed service.
404.1342 Limits on granting World War II and post-World War II wage 
          credits.
404.1343 When the limits on granting World War II and post-World War II 
          wage credits do not apply.

             Deemed Insured Status for World War II Veterans

404.1350 Deemed insured status.
404.1351 When deemed insured status does not apply.
404.1352 Benefits and payments based on deemed insured status.

  Effect of Other Benefits on Payment of Social Security Benefits and 
                                Payments

404.1360 Veterans Administration pension or compensation payable.
404.1361 Federal benefit payable other than by Veterans Administration.
404.1362 Treatment of social security benefits or payments where 
          Veterans Administration pension or compensation payable.
404.1363 Treatment of social security benefits or payments where Federal 
          benefit payable other than by Veterans Administration.

    Evidence of Active Service and Membership in a Uniformed Service

404.1370 Evidence of active service and separation from active service.
404.1371 Evidence of membership in a uniformed service during the years 
          1957 through 1967.

    Subpart O_Interrelationship of Old-Age, Survivors and Disability 
         Insurance Program With the Railroad Retirement Program

404.1401 What is the interrelationship between the Railroad Retirement 
          Act and the Old-Age, Survivors and Disability Insurance 
          Program of the Social Security Act?
404.1402 When are railroad industry services by a non-vested worker 
          covered under Social Security?
404.1404 Effective date of coverage of railroad services under the act.
404.1405 If you have been considered a non-vested worker, what are the 
          situations when your railroad industry work will not be 
          covered under Social Security?
404.1406 Eligibility to railroad retirement benefits as a bar to payment 
          of social security benefits.
404.1407 When railroad retirement benefits do not bar payment of social 
          security benefits.
404.1408 Compensation to be treated as wages.
404.1409 Purposes of using compensation.
404.1410 Presumption on basis of certified compensation record.
404.1412 Compensation quarters of coverage.
404.1413 When will we certify payment to the Railroad Retirement Board 
          (RRB)?

             Subpart P_Determining Disability and Blindness

                                 General

404.1501 Scope of subpart.
404.1502 General definitions and terms for this subpart.

                             Determinations

404.1503 Who makes disability and blindness determinations.
404.1503a Program integrity.
404.1504 Determinations by other organizations and agencies.

                        Definition of Disability

404.1505 Basic definition of disability.
404.1506 When we will not consider your impairment.
404.1508 What is needed to show an impairment.

[[Page 56]]

404.1509 How long the impairment must last.
404.1510 Meaning of substantial gainful activity.
404.1511 Definition of disabling impairment.

                                Evidence

404.1512 Evidence.
404.1513 Medical and other evidence of your impairment(s).
404.1514 When we will purchase existing evidence.
404.1515 Where and how to submit evidence.
404.1516 If you fail to submit medical and other evidence.
404.1517 Consultative examination at our expense.
404.1518 If you do not appear at a consultative examination.

Standards To Be Used in Determining When a Consultative Examination Will 
        Be Obtained in Connection With Disability Determinations

404.1519 The consultative examination.
404.1519a When we will purchase a consultative examination and how we 
          will use it.
404.1519b When we will not purchase a consultative examination.

        Standards for the Type of Referral and for Report Content

404.1519f Type of purchased examinations.
404.1519g Who we will select to perform a consultative examination.
404.1519h Your treating source.
404.1519i Other sources for consultative examinations.
404.1519j Objections to the medical source designated to perform the 
          consultative examination.
404.1519k Purchase of medical examinations, laboratory tests, and other 
          services.
404.1519m Diagnostic tests or procedures.
404.1519n Informing the medical source of examination scheduling, report 
          content, and signature requirements.
404.1519o When a properly signed consultative examination report has not 
          been received.
404.1519p Reviewing reports of consultative examinations.
404.1519q Conflict of interest.

             Authorizing and Monitoring the Referral Process

404.1519s Authorizing and monitoring the consultative examination.

           Procedures To Monitor the Consultative Examination

404.1519t Consultative examination oversight.

                        Evaluation of Disability

404.1520 Evaluation of disability in general.
404.1520a Evaluation of mental impairments.
404.1521 What we mean by an impairment(s) that is not severe.
404.1522 When you have two or more unrelated impairments--initial 
          claims.
404.1523 Multiple impairments.

                         Medical Considerations

404.1525 Listing of Impairments in appendix 1.
404.1526 Medical equivalence.
404.1527 Evaluating opinion evidence.
404.1528 Symptoms, signs, and laboratory findings.
404.1529 How we evaluate symptoms, including pain.
404.1530 Need to follow prescribed treatment.
404.1535 How we will determine whether your drug addiction or alcoholism 
          is a contributing factor material to the determination of 
          disability.
404.1536 Treatment required for individuals whose drug addiction or 
          alcoholism is a contributing factor material to the 
          determination of disability.
404.1537 What we mean by appropriate treatment.
404.1538 What we mean by approved institutions or facilities.
404.1539 How we consider whether treatment is available.
404.1540 Evaluating compliance with the treatment requirements.
404.1541 Establishment and use of referral and monitoring agencies.

                      Residual Functional Capacity

404.1545 Your residual functional capacity.
404.1546 Responsibility for assessing your residual functional capacity.

                        Vocational Considerations

404.1560 When we will consider your vocational background.
404.1562 Medical-vocational profiles showing an inability to make an 
          adjustment to other work.
404.1563 Your age as a vocational factor.
404.1564 Your education as a vocational factor.
404.1565 Your work experience as a vocational factor.
404.1566 Work which exists in the national economy.
404.1567 Physical exertion requirements.
404.1568 Skill requirements.
404.1569 Listing of Medical-Vocational Guidelines in appendix 2.
404.1569a Exertional and nonexertional limitations.

[[Page 57]]

                      Substantial Gainful Activity

404.1571 General.
404.1572 What we mean by substantial gainful activity.
404.1573 General information about work activity.
404.1574 Evaluation guides if you are an employee.
404.1574a When and how we will average your earnings.
404.1575 Evaluation guides if you are self-employed.
404.1576 Impairment-related work expenses.

            Widows, Widowers, and Surviving Divorced Spouses

404.1577 Disability defined for widows, widowers, and surviving divorced 
          spouses for monthly benefits payable for months prior to 
          January 1991.
404.1578 How we determine disability for widows, widowers, and surviving 
          divorced spouses for monthly benefits payable for months prior 
          to January 1991.
404.1579 How we will determine whether your disability continues or 
          ends.

                                Blindness

404.1581 Meaning of blindness as defined in the law.
404.1582 A period of disability based on blindness.
404.1583 How we determine disability for blind persons who are age 55 or 
          older.
404.1584 Evaluation of work activity of blind people.
404.1585 Trial work period for persons age 55 or older who are blind.
404.1586 Why and when we will stop your cash benefits.
404.1587 Circumstances under which we may suspend your benefits before 
          we make a determination.

                    Continuing or Stopping Disability

404.1588 Your responsibility to tell us of events that may change your 
          disability status.
404.1589 We may conduct a review to find out whether you continue to be 
          disabled.
404.1590 When and how often we will conduct a continuing disability 
          review.
404.1591 If your medical recovery was expected and you returned to work.
404.1592 The trial work period.
404.1592a The reentitlement period.
404.1593 Medical evidence in continuing disability review cases.
404.1594 How we will determine whether your disability continues or 
          ends.
404.1595 When we determine that you are not now disabled.
404.1596 Circumstances under which we may suspend your benefits before 
          we make a determination.
404.1597 After we make a determination that you are not now disabled.
404.1597a Continued benefits pending appeal of a medical cessation 
          determination.
404.1598 If you become disabled by another impairment(s).
404.1599 Work incentive experiments and rehabilitation demonstration 
          projects in the disability program.

Appendix 1 to Subpart P--Listing of Impairments
Appendix 2 to Subpart P--Medical-Vocational Guidelines

                 Subpart Q_Determinations of Disability

                           General Provisions

404.1601 Purpose and scope.
404.1602 Definitions.
404.1603 Basic responsibilities for us and the State.

  Responsibilities for Performing the Disability Determination Function

404.1610 How a State notifies us that it wishes to perform the 
          disability determination function.
404.1611 How we notify a State whether it may perform the disability 
          determination function.
404.1613 Disability determinations the State makes.
404.1614 Responsibilities for obtaining evidence to make disability 
          determinations.
404.1615 Making disability determinations.
404.1616 Medical or psychological consultants.
404.1617 Reasonable efforts to obtain review by a qualified psychiatrist 
          or psychologist.
404.1618 Notifying claimants of the disability determination.

            Administrative Responsibilities and Requirements

404.1620 General administrative requirements.
404.1621 Personnel.
404.1622 Training.
404.1623 Facilities.
404.1624 Medical and other purchased services.
404.1625 Records and reports.
404.1626 Fiscal.
404.1627 Audits.
404.1628 Property.
404.1629 Participation in research and demonstration projects.
404.1630 Coordination with other agencies.
404.1631 Confidentiality of information and records.
404.1632 Other Federal laws and regulations.
404.1633 Policies and operating instructions.

                          Performance Standards

404.1640 General.

[[Page 58]]

404.1641 Standards of performance.
404.1642 Processing time standards.
404.1643 Performance accuracy standard.
404.1644 How and when we determine whether the processing time standards 
          are met.
404.1645 How and when we determine whether the performance accuracy 
          standard is met.
404.1650 Action we will take if a State agency does not meet the 
          standards.

                   Performance Monitoring and Support

404.1660 How we will monitor.
404.1661 When we will provide performance support.
404.1662 What support we will provide.

                           Substantial Failure

404.1670 General.
404.1671 Good cause for not following the Act, our regulations, or other 
          written guidelines.
404.1675 Finding of substantial failure.

                          Hearings and Appeals

404.1680 Notice of right to hearing on proposed finding of substantial 
          failure.
404.1681 Disputes on matters other than substantial failure.
404.1682 Who conducts the hearings.
404.1683 Hearings and appeals process.

             Assumption of Disability Determination Function

404.1690 Assumption when we make a finding of substantial failure.
404.1691 Assumption when State no longer wishes to perform the 
          disability determination function.
404.1692 Protection of State employees.
404.1693 Limitation on State expenditures after notice.
404.1694 Final accounting by the State.

                   Subpart R_Representation of Parties

404.1700 Introduction.
404.1703 Definitions.
404.1705 Who may be your representative.
404.1706 Notification of options for obtaining attorney representation.
404.1707 Appointing a representative.
404.1710 Authority of a representative.
404.1715 Notice or request to a representative.
404.1720 Fee for a representative's services.
404.1725 Request for approval of a fee.
404.1728 Proceedings before a State or Federal court.
404.1730 Payment of fees.
404.1735 Services in a proceeding under title II of the Act.
404.1740 Rules of conduct and standards of responsibility for 
          representatives.
404.1745 Violations of our requirements, rules, or standards.
404.1750 Notice of charges against a representative.
404.1755 Withdrawing charges against a representative.
404.1765 Hearing on charges.
404.1770 Decision by hearing officer.
404.1775 Requesting review of the hearing officer's decision.
404.1776 Assignment of request for review of the hearing officer's 
          decision.
404.1780 Appeals Council's review of hearing officer's decision.
404.1785 Evidence permitted on review.
404.1790 Appeals Council's decision.
404.1795 When the Appeals Council will dismiss a request for review.
404.1797 Reinstatement after suspension--period of suspension expired.
404.1799 Reinstatement after suspension or disqualification--period of 
          suspension not expired.

                      Subpart S_Payment Procedures

404.1800 Introduction.
404.1805 Paying benefits.
404.1807 Monthly payment day.
404.1810 Expediting benefit payments.
404.1815 Withholding certification or payments.
404.1820 Transfer or assignment of payments.
404.1825 Joint payments to a family.

                    Subpart T_Totalization Agreements

                           General Provisions

404.1901 Introduction.
404.1902 Definitions.
404.1903 Negotiating totalization agreements.
404.1904 Effective date of a totalization agreement.
404.1905 Termination of agreements.

                           Benefit Provisions

404.1908 Crediting foreign periods of coverage.
404.1910 Person qualifies under more than one totalization agreement.
404.1911 Effects of a totalization agreement on entitlement to hospital 
          insurance benefits.

                           Coverage Provisions

404.1913 Precluding dual coverage.
404.1914 Certificate of coverage.
404.1915 Payment of contributions.

                         Computation Provisions

404.1918 How benefits are computed.
404.1919 How benefits are recomputed.
404.1920 Supplementing the U.S. benefit if the total amount of the 
          combined benefits is less than the U.S. minimum benefit.

[[Page 59]]

404.1921 Benefits of less than $1 due.

                            Other Provisions

404.1925 Applications.
404.1926 Evidence.
404.1927 Appeals.
404.1928 Effect of the alien non-payment provision.
404.1929 Overpayments.
404.1930 Disclosure of information.

                    Subpart U_Representative Payment

404.2001 Introduction.
404.2010 When payment will be made to a representative payee.
404.2015 Information considered in determining whether to make 
          representative payments.
404.2020 Information considered in selecting a representative payee.
404.2021 Order of preference in selecting a representative payee.
404.2025 Information to be submitted by a representative payee.
404.2030 Advance notice of the determination to make representative 
          payment.
404.2035 Responsibilities of a representative payee.
404.2040 Use of benefit payments.
404.2040a Compensation for qualified organizations serving as 
          representative payees.
404.2041 Liability for misuse of benefit payments.
404.2045 Conservation and investment of benefit payments.
404.2050 When a new representative payee will be selected.
404.2055 When representative payment will be stopped.
404.2060 Transfer of accumulated benefit payments.
404.2065 Accounting for benefit payments.

        Subpart V_Payments for Vocational Rehabilitation Services

                           General Provisions

404.2101 General.
404.2102 Purpose and scope.
404.2103 Definitions.
404.2104 Participation by State VR agencies or alternate participants.
404.2106 Basic qualifications for alternate participants.

                           Payment Provisions

404.2108 Requirements for payment.
404.2109 Responsibility for making payment decisions.
404.2110 What we mean by ``SGA'' and by ``a continuous period of 9 
          months''.
404.2111 Criteria for determining when VR services will be considered to 
          have contributed to a continuous period of 9 months.
404.2112 Payment for VR services in a case where an individual continues 
          to receive disability payments based on participation in an 
          approved VR program.
404.2114 Services for which payment may be made.
404.2115 When services must have been provided.
404.2116 When claims for payment for VR services must be made (filing 
          deadlines).
404.2117 What costs will be paid.

                        Administrative Provisions

404.2118 Applicability of these provisions to alternate participants.
404.2119 Method of payment.
404.2120 Audits.
404.2121 Validation reviews.
404.2122 Confidentiality of information and records.
404.2123 Other Federal laws and regulations.
404.2127 Resolution of disputes.



       Subpart A_Introduction, General Provisions and Definitions

    Authority: Secs. 203, 205(a), 216(j), and 702(a)(5) of the Social 
Security Act (42 U.S.C. 403, 405(a), 416(j), and 902(a)(5)).



Sec. 404.1  Introduction.

    The regulations in this part 404 (Regulations No. 4 of the Social 
Security Administration) relate to the provisions of title II of the 
Social Security Act as amended on August 28, 1950, and as further 
amended thereafter. The regulations in this part are divided into 22 
subparts:
    (a) Subpart A contains provisions relating to general definitions 
and use of terms.
    (b) Subpart B relates to quarters of coverage and insured status 
requirements.
    (c) Subpart C relates to the computation and recomputation of the 
primary insurance amount.
    (d) Subpart D relates to the requirements for entitlement to monthly 
benefits and to the lump-sum death payment duration of entitlement and 
benefit rates.
    (e) Subpart E contains provisions relating to the reduction and 
increase of insurance benefits and to deductions from benefits and lump-
sum death payments.

[[Page 60]]

    (f) Subpart F relates to overpayments, underpayments, waiver of 
adjustment or recovery of overpayments and liability of certifying 
officers.
    (g) Subpart G relates to filing of applications and other forms.
    (h) Subpart H relates to evidentiary requirements for establishing 
an initial and continuing right to monthly benefits and for establishing 
a right to lump-sum death payment. (Evidentiary requirements relating to 
disability are contained in subpart P.)
    (i) Subpart I relates to maintenance and revision of records of 
wages and self-employment income.
    (j) Subpart J relates to initial determinations, the administrative 
review process, and reopening of determinations and decisions.
    (k) Subpart K relates to employment, wages, self-employment and 
self-employment income.
    (l) Subpart L is reserved.
    (m) Subpart M relates to coverage of employees of State and local 
Governments.
    (n) Subpart N relates to benefits in cases involving veterans.
    (o) Subpart O relates to the interrelationship of the old-age, 
survivors and disability insurance program with the railroad retirement 
program.
    (p) Subpart P relates to the determination of disability or 
blindness.
    (q) Subpart Q relates to standards, requirements and procedures for 
States making determinations of disability for the Commissioner. It also 
sets out the Commissioner's responsibilities in carrying out the 
disability determination function.
    (r) Subpart R relates to the provisions applicable to attorneys and 
other individuals who represent applicants in connection with claims for 
benefits.
    (s) Subpart S relates to the payment of benefits to individuals who 
are entitled to benefits.
    (t) Subpart T relates to the negotiation and administration of 
totalization agreements between the United States and foreign countries.
    (u) Subpart U relates to the selection of a representative payee to 
receive benefits on behalf of a beneficiary and to the duties and 
responsibilities of a representative payee.
    (v) Subpart V relates to payments to State vocational rehabilitative 
agencies (or alternate participants) for vocational rehabilitation 
services.

[26 FR 7054, Aug. 5, 1961; 26 FR 7760, Aug. 19, 1961, as amended at 27 
FR 4513, May 11, 1962; 28 FR 14492, Dec. 31, 1963; 51 FR 11718, Apr. 7, 
1986; 62 FR 38450, July 18, 1997]



Sec. 404.2  General definitions and use of terms.

    (a) Terms relating to the Act and regulations. (1) The Act means the 
Social Security Act, as amended (42 U.S.C. Chapter 7).
    (2) Section means a section of the regulations in part 404 of this 
chapter unless the context indicates otherwise.
    (b) Commissioner; Appeals Council; Administrative Law Judge defined. 
(1) Commissioner means the Commissioner of Social Security.
    (2) Appeals Council means the Appeals Council of the Office of 
Hearings and Appeals in the Social Security Administration or such 
member or members thereof as may be designated by the Chairman.
    (3) Administrative Law Judge means an Administrative Law Judge in 
the Office of Hearings and Appeals in the Social Security 
Administration.
    (c) Miscellaneous. (1) Certify, when used in connection with the 
duty imposed on the Commissioner by section 205(i) of the act, means 
that action taken by the Administration in the form of a written 
statement addressed to the Managing Trustee, setting forth the name and 
address of the person to whom payment of a benefit or lump sum, or any 
part thereof, is to be made, the amount to be paid, and the time at 
which payment should be made.
    (2) Benefit means an old-age insurance benefit, disability insurance 
benefit, wife's insurance benefit, husband's insurance benefit, child's 
insurance benefit, widow's insurance benefit, widower's insurance 
benefit, mother's insurance benefit, father's insurance benefit, 
parent's insurance benefit, or special payment at age 72 under title II 
of the Act. (Lump sums, which are death payments under title II of the 
Act, are excluded from the term benefit as defined in this part to 
permit greater clarity in the regulations.)

[[Page 61]]

    (3) Lump sum means a lump-sum death payment under title II of the 
act or any person's share of such a payment.
    (4) Attainment of age. An individual attains a given age on the 
first moment of the day preceding the anniversary of his birth 
corresponding to such age.
    (5) State, unless otherwise indicated, includes (i) the District of 
Columbia, (ii) the Virgin Islands, (iii) the Commonwealth of Puerto Rico 
effective January 1, 1951, (iv) Guam and American Samoa, effective 
September 13, 1960, generally, and for purposes of sections 210(a) and 
211 of the act effective after 1960 with respect to service performed 
after 1960, and effective for taxable years beginning after 1960 with 
respect to crediting net earnings from self-employment and self-
employment income, and (v) the Territories of Alaska and Hawaii prior to 
January 3, 1959, and August 21, 1959, respectively when those 
territories acquired statehood.
    (6) United States, when used in a geographical sense, includes, 
unless otherwise indicated, (i) the States, (ii) the Territories of 
Alaska and Hawaii prior to January 3, 1959, and August 21, 1959, 
respectively, when they acquired statehood, (iii) the District of 
Columbia, (iv) the Virgin Islands, (v) the Commonwealth of Puerto Rico 
effective January 1, 1951, and (vi) Guam and American Samoa, effective 
September 13, 1960, generally, and for purposes of sections 210(a) and 
211 of the act, effective after 1960 with respect to service performed 
after 1960, and effective for taxable years beginning after 1960 with 
respect to crediting net earnings from self-employment and self-
employment income.
    (7) Masculine gender includes the feminine, unless otherwise 
indicated.
    (8) The terms defined in sections 209, 210, and 211 of the act shall 
have the meanings therein assigned to them.

[26 FR 7055, Aug. 5, 1961; 26 FR 7760, Aug. 19, 1961, as amended at 28 
FR 1037, Feb. 2, 1963; 28 FR 14492, Dec. 31, 1963; 29 FR 15509, Nov. 19, 
1964; 41 FR 32886, Aug. 6, 1976; 51 FR 11718, Apr. 7, 1986; 61 FR 41330, 
Aug. 8, 1996; 62 FR 38450, July 18, 1997]



Sec. 404.3  General provisions.

    (a) Effect of cross references. The cross references in the 
regulations in this part 404 to other portions of the regulations, when 
the word see is used, are made only for convenience and shall be given 
no legal effect.
    (b) Periods of limitation ending on nonwork days. Pursuant to the 
provisions of section 216(j) of the act, effective September 13, 1960, 
where any provision of title II, or any provision of another law of the 
United States (other than the Internal Revenue Code of 1954) relating to 
or changing the effect of title II, or any regulation of the 
Commissioner issued under title II, provides for a period within which 
an act is required to be done which affects eligibility for or the 
amount of any benefit or payment under this title or is necessary to 
establish or protect any rights under this title, and such period ends 
on a Saturday, Sunday or Federal legal holiday or on any other day all 
or part of which is declared to be a nonwork day for Federal employees 
by statute or Executive Order, then such act shall be considered as done 
within such period if it is done on the first day thereafter which is 
not a Saturday, Sunday, or legal holiday or any other day all or part of 
which is declared to be a nonwork day for Federal employees either by 
statute or Executive Order. For purposes of this paragraph, the day on 
which a period ends shall include the final day of any extended period 
where such extension is authorized by law or by the Commissioner 
pursuant to law. Such extension of any period of limitation does not 
apply to periods during which benefits may be paid for months prior to 
the month an application for such benefits is filed pursuant to Sec. 
404.621, or to periods during which an application for benefits may be 
accepted as such pursuant to Sec. 404.620.

[26 FR 7055, Aug. 5, 1961, as amended at 29 FR 15509, Nov. 19, 1964; 51 
FR 11718, Apr. 7, 1986; 61 FR 41330, Aug. 8, 1996; 62 FR 38450, July 18, 
1997]

[[Page 62]]



            Subpart B_Insured Status and Quarters of Coverage

    Authority: Secs. 205(a), 212, 213, 214, 216, 217, 223, and 702(a)(5) 
of the Social Security Act (42 U.S.C. 405(a), 412, 413, 414, 416, 417, 
423, and 902(a)(5)).

    Source: 45 FR 25384, Apr. 15, 1980, unless otherwise noted.

                                 General



Sec. 404.101  Introduction.

    (a) Insured status. This subpart explains what we mean when we say 
that a person has insured status under the social security program. It 
also describes how a person may become fully insured, currently insured 
or insured for disability benefits. Your insured status is a basic 
factor in determining if you are entitled to old-age or disability 
insurance benefits or to a period of disability. It is also a basic 
factor in determining if dependents' or survivors' insurance benefits or 
a lump-sum death payment are payable based on your earnings record. If 
you are neither fully nor currently insured, no benefits are payable 
based on your earnings. (Subpart D of this part describes these benefits 
and the kind of insured status required for each.) In Sec. Sec. 404.110 
through 404.120 we tell how we determine if you are fully or currently 
insured. The rules for determining if you are insured for purposes of 
establishing a period of disability or becoming entitled to disability 
insurance benefits are in Sec. Sec. 404.130 through 404.133. Whether 
you have the required insured status depends on the number of quarters 
of coverage (QCs) you have acquired.
    (b) QCs. This subpart also sets out our rules on crediting you with 
QCs. QCs are used in determining insured status. In general, you are 
credited with QCs based on the wages you are paid and the self-
employment income you derive during certain periods. (See subpart K of 
this part for a definition of wages and self-employment income.) Our 
rules on how and when you acquire a QC are contained in Sec. Sec. 
404.140 through 404.146.



Sec. 404.102  Definitions.

    For the purpose of this subpart--
    Act means the Social Security Act, as amended.
    Age means how many years old you are. You reach a particular age on 
the day before your birthday. For example, if your sixty-second birthday 
is on July 1, 1979, you became age 62 on June 30, 1979.
    Quarter or calendar quarter means a period of three calendar months 
ending March 31, June 30, September 30, or December 31 of any year.
    We, our, or us means the Social Security Administration.
    You or your means the worker whose insured status is being 
considered.

                          Fully Insured Status



Sec. 404.110  How we determine fully insured status.

    (a) General. We describe how we determine the number of quarters of 
coverage (QCs) you need to be fully insured in paragraphs (b), (c), and 
(d) of this section. The table in Sec. 404.115 may be used to determine 
the number of QCs you need to be fully insured under paragraph (b) of 
this section. We consider certain World War II veterans to have died 
fully insured (see Sec. 404.111). We also consider certain employees of 
private nonprofit organizations to be fully insured if they meet special 
requirements (see Sec. 404.112).
    (b) How many QCs you need to be fully insured. (1) You need at least 
6 QCs but not more than 40 QCs to be fully insured. A person who died 
before 1951 with at least 6 QCs is fully insured.
    (2) You are fully insured for old-age insurance benefits if you have 
one QC (whenever acquired) for each calendar year elapsing after 1950 
or, if later, after the year in which you became age 21, and before the 
year you reach retirement age, that is, before--
    (i) The year you become age 62, if you are a woman;
    (ii) The year you become age 62, if you are a man who becomes age 62 
after 1974;
    (iii) The year 1975, if you are a man who became age 62 in 1973 or 
1974; or
    (iv) The year you became age 65, if you are a man who became age 62 
before 1973.
    (3) A person who is otherwise eligible for survivor's benefits and 
who files an application will be entitled to benefits

[[Page 63]]

based on your earnings if you die fully insured. You will be fully 
insured if you had one QC (whenever acquired) for each calendar year 
elapsing after 1950 or, if later, after the year you became age 21, and 
before the earlier of the following years:
    (i) The year you die; or
    (ii) The year you reach retirement age as shown in paragraph (b)(2) 
of this section.
    (c) How a period of disability affects the number of QCs you need. 
In determining the number of elapsed years under paragraph (b) of this 
section, we do not count as an elapsed year any year which is wholly or 
partly in a period of disability we established for you. For example, if 
we established a period of disability for you from December 5, 1975 
through January 31, 1977, the three years, 1975, 1976 and 1977, would 
not be counted as elapsed years.
    (d) How we credit QCs for fully insured status based on your total 
wages before 1951--(1) General. For purposes of paragraph (b) of this 
section, we may use the following rules in crediting QCs based on your 
wages before 1951 instead of the rule in Sec. 404.141(b)(1).
    (i) We may consider you to have one QC for each $400 of your total 
wages before 1951, as defined in paragraph (d)(2) of this section, if 
you have at least 7 elapsed years as determined under paragraph (b)(2) 
or (b)(3) of this section; and the number of QCs determined under this 
paragraph plus the number of QCs credited to you for periods after 1950 
make you fully insured.
    (ii) If you file an application in June 1992 or later and you are 
not entitled to a benefit under Sec. 404.380 or section 227 of the Act 
in the month the application is made, we may consider you to have at 
least one QC before 1951 if you have $400 or more total wages before 
1951, as defined in paragraph (d)(2) of this section, provided that the 
number of QCs credited to you under this paragraph plus the number of 
QCs credited to you for periods after 1950 make you fully insured.
    (2) What are total wages before 1951. For purposes of paragraph 
(d)(1) of this section, your total wages before 1951 include--
    (i) Remuneration credited to you before 1951 on the records of the 
Secretary;
    (ii) Wages considered paid to you before 1951 under section 217 of 
the Act (relating to benefits in case of veterans);
    (iii) Compensation under the Railroad Retirement Act of 1937 before 
1951 that can be credited to you under title II of the Social Security 
Act; and
    (iv) Wages considered paid to you before 1951 under section 231 of 
the Act (relating to benefits in case of certain persons interned in the 
United States during World War II).
    (e) When your fully insured status begins. You are fully insured as 
of the first day of the calendar quarter in which you acquire the last 
needed QC (see Sec. 404.145).

[45 FR 25384, Apr. 15, 1980, as amended at 50 FR 36573, Sept. 9, 1985; 
57 FR 23156, June 2, 1992]



Sec. 404.111  When we consider a person fully insured based on World War II 
active military or naval service.

    We consider that a person, who was not otherwise fully insured, died 
fully insured if--
    (a) The person was in the active military or naval service of the 
United States during World War II;
    (b) The person died within three years after separation from service 
and before July 27, 1954; and
    (c) The conditions in Sec. 404.1350 that permit us to consider the 
person fully insured are met.
    (d) The provisions of this section do not apply to persons filing 
applications after May 31, 1992, unless a survivor is entitled to 
benefits under section 202 of the Act based on the primary insurance 
amount of the fully insured person for the month preceding the month in 
which the application is made.

[45 FR 25384, Apr. 15, 1980, as amended at 57 FR 23157, June 2, 1992]



Sec. 404.112  When we consider certain employees of private nonprofit 
organizations to be fully insured.

    If you are age 55 or over on January 1, 1984, and are on that date 
an employee of an organization described in Sec. 404.1025(a) which does 
not have in effect a waiver certificate under section

[[Page 64]]

3121(k) of the Code on that date and whose employees are mandatorily 
covered as a result of section 102 of Pub. L. 98-21, we consider you to 
be fully insured if you meet the following requirements:

------------------------------------------------------------------------
                                                                 QC's
                                                               acquired
              Your age on January 1, 1984 is--                after Dec.
                                                               31, 1983
------------------------------------------------------------------------
60 or over.................................................            6
59 or over but less than age 60............................            8
58 or over but less than age 59............................           12
57 or over but less than age 58............................           16
55 or over but less than age 57............................           20
------------------------------------------------------------------------


[50 FR 36573, Sept. 9, 1985]



Sec. 404.115  Table for determining the quarters of coverage you need to 
be fully insured.

    (a) General. You may use the following table to determine the number 
of quarters of coverage (QCs) you need to be fully insured under Sec. 
404.110. Paragraphs (b) and (c) of this section tell you how to use this 
table.

----------------------------------------------------------------------------------------------------------------
Worker who reaches retirement age as described in Sec.  404.110(b)(2)       Worker who dies before reaching
-----------------------------------------------------------------------    retirement age as described in Sec.
                                                    Col. II \1\                       404.110(b)(2)
                                           ---------------------------------------------------------------------
                                                                                                    Col. V \4\--
           Col. I--Date of birth                                          Col. III                   Age in year
                                                 Men          Women     \2\--Year of   Col. IV \3\    of death
                                                                            death
----------------------------------------------------------------------------------------------------------------
Jan. 1, 1893 or earlier...................             6             6      \5\ 1957             6        \6\ 28
Jan. 2, 1893 to Jan. 1, 1894..............             7             6          1958             7            29
Jan. 2, 1894 to Jan. 1, 1895..............             8             6          1959             8            30
Jan. 2, 1895 to Jan. 1, 1896..............             9             6          1960             9            31
Jan. 2, 1896 to Jan. 1, 1897..............            10             7          1961            10            32
Jan. 2, 1897 to Jan. 1, 1898..............            11             8          1962            11            33
Jan. 2, 1898 to Jan. 1, 1899..............            12             9          1963            12            34
Jan. 2, 1899 to Jan. 1, 1900..............            13            10          1964            13            35
Jan. 2, 1900 to Jan. 1, 1901..............            14            11          1965            14            36
Jan. 2, 1901 to Jan. 1, 1902..............            15            12          1966            15            37
Jan. 2, 1902 to Jan. 1, 1903..............            16            13          1967            16            38
Jan. 2, 1903 to Jan. 1, 1904..............            17            14          1968            17            39
Jan. 2, 1904 to Jan. 1, 1905..............            18            15          1969            18            40
Jan. 2, 1905 to Jan. 1, 1906..............            19            16          1970            19            41
Jan. 2, 1906 to Jan. 1, 1907..............            20            17          1971            20            42
Jan. 2, 1907 to Jan. 1, 1908..............            21            18          1972            21            43
Jan. 2, 1908 to Jan. 1, 1909..............            22            19          1973            22            44
Jan. 2, 1909 to Jan. 1, 1910..............            23            20          1974            23            45
Jan. 2, 1910 to Jan. 1, 1911..............            24            21          1975            24            46
Jan. 2, 1911 to Jan. 1, 1912..............            24            22          1976            25            47
Jan. 2, 1912 to Jan. 1, 1913..............            24            23          1977            26            48
Jan. 2, 1913 to Jan. 1, 1914..............            24            24          1978            27            49
Jan. 2, 1914 to Jan. 1, 1915..............            25            25          1979            28            50
Jan. 2, 1915 to Jan. 1, 1916..............            26            26          1980            29            51
Jan. 2, 1916 to Jan. 1, 1917..............            27            27          1981            30            52
Jan. 2, 1917 to Jan. 1, 1918..............            28            28          1982            31            53
Jan. 2, 1918 to Jan. 1, 1919..............            29            29          1983            32            54
Jan. 2, 1919 to Jan. 1, 1920..............            30            30          1984            33            55
Jan. 2, 1920 to Jan. 1, 1921..............            31            31          1985            34            56
Jan. 2, 1921 to Jan. 1, 1922..............            32            32          1986            35            57
Jan. 2, 1922 to Jan. 1, 1923..............            33            33          1987            36            58
Jan. 2, 1923 to Jan. 1, 1924..............            34            34          1988            37            59
Jan. 2, 1924 to Jan. 1, 1925..............            35            35          1989            38            60
Jan. 2, 1925 to Jan. 1, 1926..............            36            36          1990            39            61
Jan. 2, 1926 to Jan. 1, 1927..............            37            37      \7\ 1991            40            62
Jan. 2, 1927 to Jan. 1, 1928..............            38            38  ............  ............  ............
Jan. 2, 1928 to Jan. 1, 1929..............            39            39  ............  ............  ............
Jan. 2, 1929 or later.....................            40  ............  ............  ............
----------------------------------------------------------------------------------------------------------------
\1\ Number of QCs required for fully insured status; living worker or worker who dies after reaching retirement
  age.
\2\ Worker born before Jan. 2, 1930 who dies before reaching retirement age.
\3\ Number of QCs required for fully insured status.
\4\ Worker born Jan. 2, 1930 or later, who dies before reaching retirement age.
\5\ Or earlier.
\6\ Or younger.
\7\ Or later.

    (b) Number of QCs you need. The QCs you need for fully insured 
status are in column II opposite your date of birth in column I. If a 
worker dies before

[[Page 65]]

reaching retirement age as described in Sec. 404.110(b)(2), the QCs 
needed for fully insured status are shown in column IV opposite--
    (1) The year of death in column III, if the worker was born before 
January 2, 1930; or
    (2) The age in the year of death in column V, if the worker was born 
after January 1, 1930.
    (c) How a period of disability affects the number of QCs you need. 
If you had a period of disability established for you, it affects the 
number of QCs you need to be fully insured (see Sec. 404.110(c)). For 
each year which is wholly or partly in a period of disability, subtract 
one QC from the number of QCs shown in the appropriate line and column 
of the table as explained in paragraph (b) of this section.

                        Currently Insured Status



Sec. 404.120  How we determine currently insured status.

    (a) What the period is for determining currently insured status. You 
are currently insured if you have at least 6 quarters of coverage (QCs) 
during the 13-quarter period ending with the quarter in which you--
    (1) Die;
    (2) Most recently became entitled to disability insurance benefits; 
or
    (3) Became entitled to old-age insurance benefits.
    (b) What quarters are not counted as part of the 13-quarter period. 
We do not count as part of the 13-quarter period any quarter all or part 
of which is included in a period of disability established for you, 
except that the first and last quarters of the period of disability may 
be counted if they are QCs (see Sec. 404.146(d)).

                        Disability Insured Status



Sec. 404.130  How we determine disability insured status.

    (a) General. We have four different rules for determining if you are 
insured for purposes of establishing a period of disability or becoming 
entitled to disability insurance benefits. To have disability insured 
status, you must meet one of these rules and you must be fully insured 
(see Sec. 404.132 which tells when the period ends for determining the 
number of quarters of coverage (QCs) you need to be fully insured).
    (b) Rule I--You must meet the 20/40 requirement. You are insured in 
a quarter for purposes of establishing a period of disability or 
becoming entitled to disability insurance benefits if in that quarter--
    (1) You are fully insured; and
    (2) You have at least 20 QCs in the 40-quarter period (see paragraph 
(f) of this section) ending with that quarter.
    (c) Rule II--You become disabled before age 31. You are insured in a 
quarter for purposes of establishing a period of disability or becoming 
entitled to disability insurance benefits if in that quarter--
    (1) You have not become (or would not become) age 31;
    (2) You are fully insured; and
    (3) You have QCs in at least one-half of the quarters during the 
period ending with that quarter and beginning with the quarter after the 
quarter you became age 21; however--
    (i) If the number of quarters during this period is an odd number, 
we reduce the number by one; and
    (ii) If the period has less than 12 quarters, you must have at least 
6 QCs in the 12-quarter period ending with that quarter.
    (d) Rule III--You had a period of disability before age 31. You are 
insured in a quarter for purposes of establishing a period of disability 
or becoming entitled to disability insurance benefits if in that 
quarter--
    (1) You are disabled again at age 31 or later after having had a 
prior period of disability established which began before age 31 and for 
which you were only insured under paragraph (c) of this section; and
    (2) You are fully insured and have QCs in at least one-half the 
calendar quarters in the period beginning with the quarter after the 
quarter you became age 21 and through the quarter in which the later 
period of disability begins, up to a maximum of 20 QCs out of 40 
calendar quarters; however--
    (i) If the number of quarters during this period is an odd number, 
we reduce the number by one;
    (ii) If the period has less than 12 quarters, you must have at least 
6 QCs

[[Page 66]]

in the 12-quarter period ending with that quarter; and
    (iii) No monthly benefits may be paid or increased under Rule III 
before May 1983.
    (e) Rule IV--You are statutorily blind. You are insured in a quarter 
for purposes of establishing a period of disability or becoming entitled 
to disability insurance benefits if in that quarter--
    (1) You are disabled by blindness as defined in Sec. 404.1581; and
    (2) You are fully insured.
    (f) How we determine the 40-quarter or other period. In determining 
the 40-quarter period or other period in paragraph (b), (c), or (d) of 
this section, we do not count any quarter all or part of which is in a 
prior period of disability established for you, unless the quarter is 
the first or last quarter of this period and the quarter is a QC. 
However, we will count all the quarters in the prior period of 
disability established for you if by doing so you would be entitled to 
benefits or the amount of the benefit would be larger.

[49 FR 28547, July 13, 1984, as amended at 55 FR 7313, Mar. 1, 1990]



Sec. 404.131  When you must have disability insured status.

    (a) For a period of disability. To establish a period of disability, 
you must have disability insured status in the quarter in which you 
become disabled or in a later quarter in which you are disabled.
    (b) For disability insurance benefits. (1) To become entitled to 
disability insurance benefits, you must have disability insured status 
in the first full month that you are disabled as described in Sec. 
404.1501(a), or if later--
    (i) The 17th month (if you have to serve a waiting period described 
in Sec. 404.315(d)) before the month in which you file an application 
for disability insurance benefits; or
    (ii) The 12th month (if you do not have to serve a waiting period) 
before the month in which you file an application for disability 
insurance benefits.
    (2) If you do not have disability insured status in a month 
specified in paragraph (b)(1) of this section, you will be insured for 
disability insurance benefits beginning with the first month after that 
month in which you do meet the insured status requirement and you also 
meet all other requirements for disability insurance benefits described 
in Sec. 404.315.



Sec. 404.132  How we determine fully insured status for a period of 
disability or disability insurance benefits.

    In determining if you are fully insured for purposes of paragraph 
(b), (c), (d), or (e) of Sec. 404.130 on disability insured status, we 
use the fully insured status requirements in Sec. 404.110, but apply 
the following rules in determining when the period of elasped years 
ends:
    (a) If you are a woman, or a man born after January 1, 1913, the 
period of elapsed years in Sec. 404.110(b) used in determining the 
number of quarters of coverage (QCs) you need to be fully insured ends 
as of the earlier of--
    (1) The year you become age 62; or
    (2) The year in which--
    (i) Your period of disability begins;
    (ii) Your waiting period begins (see Sec. 404.315(d)); or
    (iii) You become entitled to disability insurance benefits (if you 
do not have to serve a waiting period).
    (b) If you are a man born before January 2, 1913, the period of 
elapsed years in Sec. 404.110(b) used in determining the number of QCs 
you need to be fully insured ends as of the earlier of--
    (1) The year 1975; or
    (2) The year specified in paragraph (a)(2) of this section.

[45 FR 25384, Apr. 15, 1980, as amended at 49 FR 28547, July 13, 1984]



Sec. 404.133  When we give you quarters of coverage based on military 
service to establish a period of disability.

    For purposes of establishing a period of disability only, we give 
you quarters of coverage (QCs) for your military service before 1957 
(see subpart N of this part). We do this even though we may not use that 
military service for other purposes of title II of the Act because a 
periodic benefit is payable from another Federal agency based in whole 
or in part on the same period of military service.

[[Page 67]]

                          Quarters of Coverage



Sec. 404.140  What is a quarter of coverage.

    (a) General. A quarter of coverage (QC) is the basic unit of social 
security coverage used in determining a worker's insured status. We 
credit you with QCs based on your earnings covered under social 
security.
    (b) How we credit QCs based on earnings before 1978 (General). 
Before 1978, wages were generally reported on a quarterly basis and 
self-employment income was reported on an annual basis. For the most 
part, we credit QCs for calendar years before 1978 based on your 
quarterly earnings. For these years, as explained in Sec. 404.141, we 
generally credit you with a QC for each calendar quarter in which you 
were paid at least $50 in wages or were credited with at least $100 of 
self-employment income. Section 404.142 tells how self-employment income 
derived in a taxable year beginning before 1978 is credited to specific 
calendar quarters for purposes of Sec. 404.141.
    (c) How we credit QCs based on earnings after 1977 (General). After 
1977, both wages and self-employment income are generally reported on an 
annual basis. For calendar years after 1977, as explained in Sec. 
404.143, we generally credit you with a QC for each part of your total 
covered earnings in a calendar year that equals the amount required for 
a QC in that year. Section 404.143 also tells how the amount required 
for a QC will be increased in the future as average wages increase. 
Section 404.144 tells how self-employment income derived in a taxable 
year beginning after 1977 is credited to specific calendar years for 
purposes of Sec. 404.143.
    (d) When a QC is acquired and when a calendar quarter is not a QC 
(general). Section 404.145 tells when a QC is acquired and Sec. 404.146 
tells when a calendar quarter cannot be a QC. These rules apply when we 
credit QCs under Sec. 404.141 or Sec. 404.143.



Sec. 404.141  How we credit quarters of coverage for calendar years 
before 1978.

    (a) General. The rules in this section tell how we credit calendar 
quarters as quarters of coverage (QCs) for calendar years before 1978. 
We credit you with a QC for a calendar quarter based on the amount of 
wages you were paid and self-employment income you derived during 
certain periods. The rules in paragraphs (b), (c), and (d) of this 
section are subject to the limitations in Sec. 404.146, which tells 
when a calendar quarter cannot be a QC.
    (b) How we credit QCs based on wages paid in, or self-employment 
income credited to, a calendar quarter. We credit you with a QC for a 
calendar quarter in which--
    (1) You were paid wages of $50 or more (see paragraph (c) of this 
section for an exception relating to wages paid for agricultural labor); 
or
    (2) You were credited (under Sec. 404.142) with self-employment 
income of $100 or more.
    (c) How we credit QCs based on wages paid for agricultural labor in 
a calendar year after 1954. (1) We credit QCs based on wages for 
agricultural labor depending on the amount of wages paid during a 
calendar year for that work. If you were paid wages for agricultural 
labor in a calendar year after 1954 and before 1978, we credit you with 
QCs for calendar quarters in that year which are not otherwise QCs 
according to the following table.

------------------------------------------------------------------------
  If the wages paid to you in a
 calendar year for agricultural   We credit you with    And assign: \1\
           labor were
------------------------------------------------------------------------
$400 or more....................  4 QCs.............  All.
At least $300 but less than $400  3 QCs.............  Last 3.
At least $200 but less than $300  2 QCs.............  Last 2.
At least $100 but less than $200  1 QC..............  Last.
Less than $100..................  No QCs............
------------------------------------------------------------------------
\1\ One QC to each of the following calendar quarters in that year.

    (2) When we assign QCs to calendar quarters in a year as shown in 
the table in paragraph (c)(1) of this section, you might not meet (or 
might not meet as early in the year as otherwise possible) the 
requirements to be fully or currently insured, to be entitled to a 
computation or recomputation of your primary insurance amount, or to 
establish a period of disability. If this happens, we assign the QCs to 
different quarters in that year than those shown in the table if this 
assignment permits you to meet these requirements (or meet

[[Page 68]]

them earlier in the year). We can only reassign QCs for purposes of 
meeting these requirements.
    (d) How we credit QCs based on wages paid or self-employment income 
derived in a year. (1) If you were paid wages in a calendar year after 
1950 and before 1978 at least equal to the annual wage limitation in 
effect for that year as described in Sec. 404.1027(a), we credit you 
with a QC for each quarter in that calendar year. If you were paid at 
least $3,000 wages in a calendar year before 1951, we credit you with a 
QC for each quarter in that calendar year.
    (2) If you derived self-employment income (or derived self-
employment income and also were paid wages) during a taxable year 
beginning after 1950 and before 1978 at least equal to the self-
employment income and wage limitation in effect for that year as 
described in Sec. 404.1068(b), we credit you with a QC for each 
calendar quarter wholly or partly in that taxable year.

[45 FR 25384, Apr. 15, 1980; 45 FR 41931, June 23, 1980]



Sec. 404.142  How we credit self-employment income to calendar quarters 
for taxable years beginning before 1978.

    In crediting quarters of coverage under Sec. 404.141(b)(2), we 
credit any self-employment income you derived during a taxable year that 
began before 1978 to calendar quarters as follows:
    (a) If your taxable year was a calendar year, we credit your self-
employment income equally to each quarter of that calendar year.
    (b) If your taxable year was not a calendar year (that is, it began 
on a date other than January 1, or was less than a calendar year), we 
credit your self-employment income equally--
    (1) To the calendar quarter in which your taxable year ended; and
    (2) To each of the next three or fewer preceding quarters that were 
wholly or partly in your taxable year.



Sec. 404.143  How we credit quarters of coverage for calendar years after 
1977.

    (a) Crediting quarters of coverage (QCs). For calendar years after 
1977, we credit you with a QC for each part of the total wages paid and 
self-employment income credited (under Sec. 404.144) to you in a 
calendar year that equals the amount required for a QC in that year. For 
example, if the total of your wages and self-employment income for a 
calendar year is more than twice, but less than 3 times, the amount 
required for a QC in that year, we credit you with only 2 QCs for the 
year. The rules for crediting QCs in this section are subject to the 
limitations in Sec. 404.146, which tells when a calendar quarter cannot 
be a QC. In addition, we cannot credit you with more than four QCs for 
any calendar year. The amount of wages and self-employment income that 
you must have for each QC is--
    (1) $250 for calendar year 1978; and
    (2) For each calendar year after 1978, an amount determined by the 
Commissioner for that year (on the basis of a formula in section 
213(d)(2) of the Act which reflects national increases in average 
wages). The amount determined by the Commissioner is published in the 
Federal Register on or before November 1 of the preceding year and 
included in the appendix to this subpart.
    (b) Assigning QCs. We assign a QC credited under paragraph (a) of 
this section to a specific calendar quarter in the calendar year only if 
the assignment is necessary to--
    (1) Give you fully or currently insured status;
    (2) Entitle you to a computation or recomputation of your primary 
insurance amount; or
    (3) Permit you to establish a period of disability.

[45 FR 25834, Apr. 15, 1980, as amended at 62 FR 38450, July 18, 1997]



Sec. 404.144  How we credit self-employment income to calendar years 
for taxable years beginning after 1977.

    In crediting quarters of coverage under Sec. 404.143(a), we credit 
self-employment income you derived during a taxable year that begins 
after 1977 to calendar years as follows:
    (a) If your taxable year is a calendar year or begins and ends 
within the same calendar year, we credit your self-employment income to 
that calendar year.
    (b) If your taxable year begins in one calendar year and ends in the 
following

[[Page 69]]

calendar year, we allocate proportionately your self-employment income 
to the two calendar years on the basis of the number of months in each 
calendar year which are included completely within your taxable year. We 
consider the calendar month in which your taxable year ends as included 
completely within your taxable year.

    Example: For the taxable year beginning May 15, 1978, and ending May 
14, 1979, your self-employment income is $1200. We credit 7/12 ($700) of 
your self-employment income to calendar year 1978 and 5/12 ($500) of 
your self-employment income to calendar year 1979.



Sec. 404.145  When you acquire a quarter of coverage.

    If we credit you with a quarter of coverage (QC) for a calendar 
quarter under paragraph (b), (c), or (d) of Sec. 404.141 for calendar 
years before 1978 or assign it to a specific calendar quarter under 
paragraph (b) of Sec. 404.143 for calendar years after 1977, you 
acquire the QC as of the first day of the calendar quarter.



Sec. 404.146  When a calendar quarter cannot be a quarter of coverage.

    This section applies when we credit you with quarters of coverage 
(QCs) under Sec. 404.141 for calendar years before 1978 and under Sec. 
404.143 for calendar years after 1977. We cannot credit you with a QC 
for--
    (a) A calendar quarter that has not begun;
    (b) A calendar quarter that begins after the quarter of your death;
    (c) A calendar quarter that has already been counted as a QC; or
    (d) A calendar quarter that is included in a period of disability 
established for you, unless--
    (1) The quarter is the first or the last quarter of this period; or
    (2) The period of disability is not taken into consideration (see 
Sec. 404.320(a)).

   Appendix to Subpart B of Part 404--Quarter of Coverage Amounts for 
                        Calendar Years After 1978

    This appendix shows the amount determined by the Commissioner that 
is needed for a quarter of coverage for each year after 1978 as 
explained in Sec. 404.143. We publish the amount as a Notice in the 
Federal Register on or before November 1 of the preceding year. The 
amounts determined by the Commissioner are as follows:

------------------------------------------------------------------------
                                                                 Amount
                         Calendar year                           needed
------------------------------------------------------------------------
1979..........................................................      $260
1980..........................................................       290
1981..........................................................       310
1982..........................................................       340
1983..........................................................       370
1984..........................................................       390
1985..........................................................       410
1986..........................................................       440
1987..........................................................       460
1988..........................................................       470
1989..........................................................       500
1990..........................................................       520
1991..........................................................       540
1992..........................................................       570
------------------------------------------------------------------------


[45 FR 25384, Apr. 15, 1980, as amended at 52 FR 8247, Mar. 17, 1987; 57 
FR 44096, Sept 24, 1992; 62 FR 38450, July 18, 1997]



              Subpart C_Computing Primary Insurance Amounts

    Authority: Secs. 202(a), 205(a), 215, and 702(a)(5) of the Social 
Security Act (42 U.S.C. 402(a), 405(a), 415, and 902(a)(5)).

    Source: 47 FR 30734, July 15, 1982, unless otherwise noted.

                                 General



Sec. 404.201  What is included in this subpart?

    In this subpart we describe how we compute your primary insurance 
amount (PIA), how and when we will recalculate or recompute your PIA to 
include credit for additional earnings, and how we automatically adjust 
your PIA to reflect changes in the cost of living.
    (a) What is my primary insurance amount? Your primary insurance 
amount (PIA) is the basic figure we use to determine the monthly benefit 
amount payable to you and your family. For example, if you retire in the 
month you attain full retirement age (as defined in Sec. 404.409) or if 
you become disabled, you will be entitled to a monthly benefit equal to 
your PIA. If you retire prior to full retirement age your monthly 
benefit will be reduced as explained in Sec. Sec. 404.410--404.413. 
Benefits to other members of your family are a specified percentage of 
your PIA

[[Page 70]]

as explained in subpart D. Total benefits to your family are subject to 
a maximum as explained in Sec. 404.403.
    (b) How is this subpart organized? (1) In Sec. Sec. 404.201 through 
404.204, we explain some introductory matters.
    (2) In Sec. Sec. 404.210 through 404.213, we describe the average-
indexed-monthly-earnings method we use to compute the primary insurance 
amount (PIA) for workers who attain age 62 (or become disabled or die 
before age 62) after 1978.
    (3) In Sec. Sec. 404.220 through 404.222, we describe the average-
monthly-wage method we use to compute the PIA for workers who attain age 
62 (or become disabled or die before age 62) before 1979.
    (4) In Sec. Sec. 404.230 through 404.233, we describe the 
guaranteed alternative method we use to compute the PIA for people who 
attain age 62 after 1978 but before 1984.
    (5) In Sec. Sec. 404.240 through 404.243, we describe the old-start 
method we use to compute the PIA for those who had all or substantially 
all of their social security covered earnings before 1951.
    (6) In Sec. Sec. 404.250 through 404.252, we describe special rules 
we use to compute the PIA for a worker who previously had a period of 
disability.
    (7) In Sec. Sec. 404.260 through 404.261, we describe how we 
compute the special minimum PIA for long-term, low-paid workers.
    (8) In Sec. Sec. 404.270 through 404.278, we describe how we 
automatically increase your PIA because of increases in the cost of 
living.
    (9) In Sec. Sec. 404.280 through 404.288, we describe how and when 
we will recompute your PIA to include additional earnings which were not 
used in the original computation.
    (10) In Sec. 404.290 we describe how and when we will recalculate 
your PIA.
    (11) Appendices I-VII contain material such as figures and formulas 
that we use to compute PIAs.

[68 FR 4701, Jan. 30, 2003]



Sec. 404.202  Other regulations related to this subpart.

    This subpart is related to several others. In subpart B of this 
part, we describe how you become insured for social security benefits as 
a result of your work in covered employment. In subpart D, we discuss 
the different kinds of social security benefits available--old-age and 
disability benefits for you and benefits for your dependents and 
survivors--the amount of the benefits, and the requirements you and your 
family must meet to qualify for them; your work status, your age, the 
size of your family, and other factors may affect the amount of the 
benefits for you and your family. Rules relating to deductions, 
reductions, and nonpayment of benefits we describe in subpart E. In 
subpart F of this part, we describe what we do when a recalculation or 
recomputation of your primary insurance amount (as described in this 
subpart) results in our finding that you and your family have been 
overpaid or underpaid. In subparts G and H of this part, we tell how to 
apply for benefits and what evidence is needed to establish entitlement 
to them. In subpart J of this part, we describe how benefits are paid. 
Then in subparts I, K, N, and O of this part, we discuss your earnings 
that are taxable and creditable for social security purposes (and how we 
keep records of them), and deemed military wage credits which may be 
used in finding your primary insurance amount.



Sec. 404.203  Definitions.

    (a) General definitions. As used in this subpart--
    Ad hoc increase in primary insurance amounts means an increase in 
primary insurance amounts enacted by the Congress and signed into law by 
the President.
    Entitled means that a person has applied for benefits and has proven 
his or her right to them for a given period of time.
    We, us, or our means the Social Security Administration.
    You or your means the insured worker who has applied for benefits or 
a deceased insured worker on whose social security earnings record 
someone else has applied.
    (b) Other definitions. To make it easier to find them, we have 
placed other definitions in the sections of this subpart in which they 
are used.

[47 FR 30734, July 15, 1982, as amended at 62 FR 38450, July 18, 1997]

[[Page 71]]



Sec. 404.204  Methods of computing primary insurance amounts--general.

    (a) General. We compute most workers' primary insurance amounts 
under one of two major methods. There are, in addition, several special 
methods of computing primary insurance amounts which we apply to some 
workers. Your primary insurance amount is the highest of all those 
computed under the methods for which you are eligible.
    (b) Major methods. (1) If after 1978 you reach age 62, or become 
disabled or die before age 62, we compute your primary insurance amount 
under what we call the average-indexed-monthly-earnings method, which is 
described in Sec. Sec. 404.210 through 404.212. The earliest of the 
three dates determines the computation method we use.
    (2) If before 1979 you reached age 62, became disabled, or died, we 
compute your primary insurance amount under what we call the average-
monthly-wage method, described in Sec. Sec. 404.220 through 404.222.
    (c) Special methods. (1) Your primary insurance amount, computed 
under any of the special methods for which you are eligible as described 
in this paragraph, may be substituted for your primary insurance amount 
computed under either major method described in paragraph (b) of this 
section.
    (2) If you reach age 62 during the period 1979-1983, your primary 
insurance amount is guaranteed to be the highest of--
    (i) The primary insurance amount we compute for you under the 
average-indexed-monthly-earnings method;
    (ii) The primary insurance amount we compute for you under the 
average-monthly-wage method, as modified by the rules described in 
Sec. Sec. 404.230 through 404.233; or
    (iii) The primary insurance amount computed under what we call the 
old-start method; as described in Sec. Sec. 404.240 through 404.242.
    (3) If you had all or substantially all of your social security 
earnings before 1951, we will also compute your primary insurance amount 
under what we call the old-start method.
    (4) We compute your primary insurance amount under the rules in 
Sec. Sec. 404.250 through 404.252, if--
    (i) You were disabled and received social security disability 
insurance benefits sometime in your life;
    (ii) Your disability insurance benefits were terminated because of 
your recovery or because you engaged in substantial gainful activity; 
and
    (iii) You are, after 1978, re-entitled to disability insurance 
benefits, or entitled to old-age insurance benefits, or have died.
    (5) In some situations, we use what we call a special minimum 
computation, described in Sec. Sec. 404.260 through 404.261, to find 
your primary insurance amount. Computations under this method reflect 
long-term, low-wage attachment to covered work.

 Average-Indexed-Monthly Earnings Method of Computing Primary Insurance 
                                 Amounts



Sec. 404.210  Average-indexed-monthly-earnings method.

    (a) Who is eligible for this method. If after 1978, you reach age 
62, or become disabled or die before age 62, we will compute your 
primary insurance amount under the average-indexed-monthly-earnings 
method.
    (b) Steps in computing your primary insurance amount under the 
average-indexed-monthly-earnings method. We follow these three major 
steps in computing your primary insurance amount:
    (1) First, we find your average indexed monthly earnings, as 
described in Sec. 404.211;
    (2) Second, we find the benefit formula in effect for the year you 
reach age 62, or become disabled or die before age 62, as described in 
Sec. 404.212; and
    (3) Then, we apply that benefit formula to your average indexed 
monthly earnings to find your primary insurance amount, as described in 
Sec. 404.212.
    (4) Next, we apply any automatic cost-of-living or ad hoc increases 
in primary insurance amounts that became effective in or after the year 
you reached age 62, unless you are receiving benefits based on the 
minimum primary insurance amount, in which case not all the increases 
may be applied, as described in Sec. 404.277.

[[Page 72]]



Sec. 404.211  Computing your average indexed monthly earnings.

    (a) General. In this method, your social security earnings after 
1950 are indexed, as described in paragraph (d) of this section, then 
averaged over the period of time you can reasonably have been expected 
to have worked in employment or self-employment covered by social 
security. (Your earnings before 1951 are not used in finding your 
average indexed monthly earnings.)
    (b) Which earnings may be used in computing your average indexed 
monthly earnings--(1) Earnings. In computing your average indexed 
monthly earnings, we use wages, compensation, self-employment income, 
and deemed military wage credits (see Sec. Sec. 404.1340 through 
404.1343) that are creditable to you for social security purposes for 
years after 1950.
    (2) Computation base years. We use your earnings in your computation 
base years in finding your average indexed monthly earnings. All years 
after 1950 up to (but not including) the year you become entitled to 
old-age or disability insurance benefits, and through the year you die 
if you had not been entitled to old-age or disability benefits, are 
computation base years for you. The year you become entitled to benefits 
and following years may be used as computation base years in a 
recomputation if their use would result in a higher primary insurance 
amount. (See Sec. Sec. 404.280 through 404.287.) However, years after 
the year you die may not be used as computation base years even if you 
have earnings credited to you in those years. Computation base years do 
not include years wholly within a period of disability unless your 
primary insurance amount would be higher by using the disability years. 
In such situations, we count all the years during the period of 
disability, even if you had no earnings in some of them.
    (c) Average of the total wages. Before we compute your average 
indexed monthly earnings, we must first know the ``average of the total 
wages'' of all workers for each year from 1951 until the second year 
before you become eligible. The average of the total wages for years 
after 1950 are shown in appendix I. Corresponding figures for more 
recent years which have not yet been incorporated into this appendix are 
published in the Federal Register on or before November 1 of the 
succeeding year. ``Average of the total wages'' (or ``average wage'') 
means:
    (1) For the years 1951 through 1977, four times the amount of 
average taxable wages that were reported to the Social Security 
Administration for the first calendar quarter of each year for social 
security tax purposes. For years prior to 1973, these average wages were 
determined from a sampling of these reports.
    (2) For the years 1978 through 1990, all remuneration reported as 
wages on Form W-2 to the Internal Revenue Service for all employees for 
income tax purposes, divided by the number of wage earners. We adjusted 
those averages to make them comparable to the averages for 1951-1977. 
For years after 1977, the term includes remuneration for services not 
covered by social security and remuneration for covered employment in 
excess of that which is subject to FICA contributions.
    (3) For years after 1990, all remuneration reported as wages on Form 
W-2 to the Internal Revenue Service for all employees for income tax 
purposes, including remuneration described in paragraph (c)(2) of this 
section, plus contributions to certain deferred compensation plans 
described in section 209(k) of the Social Security Act (also reported on 
Form W-2), divided by the number of wage earners. If both distributions 
from and contributions to any such deferred compensation plan are 
reported on Form W-2, we will include only the contributions in the 
calculation of the average of the total wages. We will adjust those 
averages to make them comparable to the averages for 1951-1990.
    (d) Indexing your earnings. (1) The first step in indexing your 
social security earnings is to find the relationship (under paragraph 
(d)(2) of this section) between--
    (i) The average wage of all workers in your computation base years; 
and
    (ii) The average wage of all workers in your indexing year. As a 
general rule, your indexing year is the second year before the earliest 
of the year you reach age 62, or become disabled or die before age 62. 
However, your indexing

[[Page 73]]

year is determined under paragraph (d)(4) of this section if you die 
before age 62, your surviving spouse or surviving divorced spouse is 
first eligible for benefits after 1984, and the indexing year explained 
in paragraph (d)(4) results in a higher widow(er)'s benefit than results 
from determining the indexing year under the general rule.
    (2) To find the relationship, we divide the average wages for your 
indexing year, in turn, by the average wages for each year beginning 
with 1951 and ending with your indexing year. We use the quotients found 
in these divisions to index your earnings as described in paragraph 
(d)(3) of this section.
    (3) The second step in indexing your social security earnings is to 
multiply the actual year-by-year dollar amounts of your earnings (up to 
the maximum amounts creditable, as explained in Sec. Sec. 404.1047 and 
404.1096 of this part) by the quotients found in paragraph (d)(2) of 
this section for each of those years. We round the results to the nearer 
penny. (The quotient for your indexing year is 1.0; this means that your 
earnings in that year are used in their actual dollar amount; any 
earnings after your indexing year that may be used in computing your 
average indexed monthly earnings are also used in their actual dollar 
amount.)

    Example: Ms. A reaches age 62 in July 1979. Her year-by-year social 
security earnings since 1950 are as follows:

------------------------------------------------------------------------
                            Year                               Earnings
------------------------------------------------------------------------
1951.......................................................       $3,200
1952.......................................................        3,400
1953.......................................................        3,300
1954.......................................................        3,600
1955.......................................................        3,700
1956.......................................................        3,700
1957.......................................................        4,000
1958.......................................................        4,200
1959.......................................................        4,400
1960.......................................................        4,500
1961.......................................................        2,800
1962.......................................................        2,200
1963.......................................................            0
1964.......................................................            0
1965.......................................................        3,700
1966.......................................................        4,500
1967.......................................................        5,400
1968.......................................................        6,200
1969.......................................................        6,900
1970.......................................................        7,300
1971.......................................................        7,500
1972.......................................................        7,800
1973.......................................................        8,200
1974.......................................................        9,000
1975.......................................................        9,900
1976.......................................................       11,100
1977.......................................................        9,900
1978.......................................................       11,000
------------------------------------------------------------------------

    Step 1. The first step in indexing Ms. A's earnings is to find the 
relationship between the general wage level in Ms. A's indexing year 
(1977) and the general wage level in each of the years 1951-1976. We 
refer to appendix I for average wage figures, and perform the following 
computations:

------------------------------------------------------------------------
                                                    II.      III. Column
                                      I. 1977   Nationwide  I divided by
               Year                   general   average of    column II
                                    wage level   the total     equals
                                                   wages    relationship
------------------------------------------------------------------------
1951..............................   $9,779.44   $2,799.16    3.4937053
1952..............................    9,779.44    2,973.32    3.2890641
1953..............................    9,779.44    3,139.44    3.1150269
1954..............................    9,779.44    3,155.64    3.0990354
1955..............................    9,779.44    3,301.44    2.9621741
1956..............................    9,779.44    3,532.36    2.7685287
1957..............................    9,779.44    3,641.72    2.6853904
1958..............................    9,779.44    3,673.80    2.6619413
1959..............................    9,779.44    3,855.80    2.5362934
1960..............................    9,779.44    4,007.12    2.4405159
1961..............................    9,779.44    4,086.76    2.3929568
1962..............................    9,779.44    4,291.40    2.2788461
1963..............................    9,779.44    4,396.64    2.2242986
1964..............................    9,779.44    4,576.32    2.1369659
1965..............................    9,779.44    4,658.72    2.0991689
1966..............................    9,779.44    4,938.36    1.9803012
1967..............................    9,779.44    5,213.44    1.8758133
1968..............................    9,779.44    5,571.76    1.7551797
1969..............................    9,779.44    5,893.76    1.6592871
1970..............................    9,779.44    6,186.24    1.5808375
1971..............................    9,779.44    6,497.08    1.5052054
1972..............................    9,779.44    7,133.80    1.3708599
1973..............................    9,779.44    7,580.16    1.2901364
1974..............................    9,779.44    8,030.76    1.2177478
1975..............................    9,779.44    8,630.92    1.1330704
1976..............................    9,779.44    9,226.48    1.0599318
1977..............................    9,779.44    9,779.44    1.0000000
------------------------------------------------------------------------

    Step 2. After we have found these indexing quotients, we multiply 
Ms. A's actual year-by-year earnings by them to find her indexed 
earnings, as shown below:

------------------------------------------------------------------------
                                                                 III.
                                                               Column I
                                                      II.     multiplied
                Year                   I. Actual   Indexing    by column
                                       earnings    quotient    II equals
                                                                indexed
                                                               earnings
------------------------------------------------------------------------
1951................................      $3,200   3.4937053  $11,179.86
1952................................       3,400   3.2890641   11,182.82
1953................................       3,300   3.1150269   10,279.59
1954................................       3,600   3.0990354   11,156.53
1955................................       3,700   2.9621741   10,960.04
1956................................       3,700   2.7685287   10,243.56
1957................................       4,000   2.6853904   10,741.56
1958................................       4,200   2.6619413   11,180.15
1959................................       4,400   2.5362934   11,159.69
1960................................       4,500   2.4405159   10,982.32
1961................................       2,800   2.3929568    6,700.28
1962................................       2,200   2.2788461    5,013.46
1963................................           0   2.2242986           0
1964................................           0   2.1369659           0
1965................................       3,700   2.0991689    7,766.92
1966................................       4,500   1.9803012    8,911.36

[[Page 74]]

 
1967................................       5,400   1.8758133   10,129.39
1968................................       6,200   1.7551797   10,882.11
1969................................       6,900   1.6592871   11,449.08
1970................................       7,300   1.5808375   11,540.11
1971................................       7,500   1.5052054   11,289.04
1972................................       7,800   1.3708599   10,692.71
1973................................       8,200   1.2901364   10,579.12
1974................................       9,000   1.2177478   10,959.73
1975................................       9,900   1.1330704   11,217.40
1976................................      11,100   1.0599318   11,765.24
1977................................       9,900   1.0000000    9,900.00
1978................................      11,000           0   11,000.00
------------------------------------------------------------------------

    (4) We calculate your indexing year under this paragraph if you, the 
insured worker, die before reaching age 62, your surviving spouse or 
surviving divorced spouse is first eligible after 1984, and the indexing 
year calculated under this paragraph results in a higher widow(er)'s 
benefit than results from the indexing year calculated under the general 
rule explained in paragraph (d)(1)(ii). For purposes of this paragraph, 
the indexing year is never earlier than the second year before the year 
of your death. Except for this limitation, the indexing year is the 
earlier of--
    (i) The year in which you, the insured worker, attained age 60, or 
would have attained age 60 if you had lived, and
    (ii) The second year before the year in which the surviving spouse 
or the surviving divorced spouse becomes eligible for widow(er)'s 
benefits, i.e. has attained age 60, or is age 50-59 and disabled.
    (e) Number of years to be considered in finding your average indexed 
monthly earnings. To find the number of years to be used in computing 
your average indexed monthly earnings--
    (1) We count the years beginning with 1951, or (if later) the year 
you reach age 22, and ending with the earliest of the year before you 
reach age 62, become disabled, or die. Years wholly or partially within 
a period of disability (as defined in Sec. 404.1501(b) of subpart P of 
this part) are not counted unless your primary insurance amount would be 
higher. In that case, we count all the years during the period of 
disability, even though you had no earnings in some of those years. 
These are your elapsed years. From your elapsed years, we then subtract 
up to 5 years, the exact number depending on the kind of benefits to 
which you are entitled. You cannot, under this procedure, have fewer 
than 2 benefit computation years.
    (2) For computing old-age insurance benefits and survivors insurance 
benefits, we subtract 5 from the number of your elapsed years. See 
paragraphs (e) (3) and (4) of this section for the dropout as applied to 
disability benefits. This is the number of your benefit computation 
years; we use the same number of your computation base years (see 
paragraph (b)(2) of this section) in computing your average indexed 
monthly earnings. For benefit computation years, we use the years with 
the highest amounts of earnings after indexing. They may include 
earnings from years that were not indexed, and must include years of no 
earnings if you do not have sufficient years with earnings. You cannot 
have fewer than 2 benefit computation years.
    (3) Where the worker is first entitled to disability insurance 
benefits (DIB) after June 1980, there is an exception to the usual 5 
year dropout provision explained in paragraph (e)(2) of this section. 
(For entitlement before July 1980, we use the usual dropout.) We call 
this exception the disability dropout. We divide the elapsed years by 5 
and disregard any fraction. The result, which may not exceed 5, is the 
number of dropout years. We subtract that number from the number of 
elapsed years to get the number of benefit computation years, which may 
not be fewer than 2. After the worker dies, the disability dropout no 
longer applies and we use the basic 5 dropout years to compute benefits 
for survivors. We continue to apply the disability dropout when a person 
becomes entitled to old-age insurance benefits (OAIB), unless his or her 
entitlement to DIB ended at least 12 months before he or she became 
eligible for OAIB. For first DIB entitlement before July 1980, we use 
the rule in paragraph (e)(2) of this section.
    (4) For benefits payable after June 1981, the disability dropout 
might be increased by the child care dropout. If the number of 
disability dropout years

[[Page 75]]

is fewer than 3, we will drop out a benefit computation year for each 
benefit computation year that the worker meets the child care 
requirement and had no earnings, until the total of all dropout years is 
3. The child care requirement for any year is that the worker must have 
been living with his or her child (or his or her spouse's child) 
substantially throughout any part of any calendar year that the child 
was alive and under age 3. In actual practice, no more than 2 child care 
years may be dropped, because of the combined effect of the number of 
elapsed years, 1-for-5 dropout years (if any), and the computation years 
required for the computation.

    Example: Ms. M., born August 4, 1953, became entitled to disability 
insurance benefits (DIB) beginning in July 1980 based on a disability 
which began January 15, 1980. In computing the DIB, we determined that 
the elapsed years are 1975 through 1979, the number of dropout years is 
1 (5 elapsed years divided by 5), and the number of computation years is 
4. Since Ms. M. had no earnings in 1975 and 1976, we drop out 1975 and 
use her earnings for the years 1977 through 1979.
    Ms. M. lived with her child, who was born in 1972, in all months of 
1973 and 1974 and did not have any earnings in those years. We, 
therefore, recompute Ms. M.'s DIB beginning with July 1981 to give her 
the advantage of the child care dropout. To do this, we reduce the 4 
computation years by 1 child care year to get 3 computation years. 
Because the child care dropout cannot be applied to computation years in 
which the worker had earnings, we can drop only one of Ms. M.'s 
computation years, i.e., 1976, in addition to the year 1975 which we 
dropped in the initial computation.

    (i) Living with means that you and the child ordinarily live in the 
same home and you exercise, or have the right to exercise, parental 
control. See Sec. 404.366(c) for a further explanation.
    (ii) Substantially throughout any part of any calendar year means 
that any period you were not living with the child during a calendar 
year did not exceed 3 months. If the child was either born or attained 
age 3 during the calendar year, the period of absence in the year cannot 
have exceeded the smaller period of 3 months, or one-half the time after 
the child's birth or before the child attained age 3.
    (iii) Earnings means wages for services rendered and net earnings 
from self-employment minus any net loss for a taxable year. See Sec. 
404.429 for a further explanation.
    (f) Your average indexed monthly earnings. After we have indexed 
your earnings and found your benefit computation years, we compute your 
average indexed monthly earnings by--
    (1) Totalling your indexed earnings in your benefit computation 
years;
    (2) Dividing the total by the number of months in your benefit 
computation years; and
    (3) Rounding the quotient to the next lower whole dollar. if not 
already a multiple of $1.

    Example: From the example in paragraph (d) of this section, we see 
that Ms. A reaches age 62 in 1979. Her elapsed years are 1951-1978 (28 
years). We subtract 5 from her 28 elapsed years to find that we must use 
23 benefit computation years. This means that we will use her 23 highest 
computation base years to find her average indexed monthly earnings. We 
exclude the 5 years 1961-1965 and total her indexed earnings for the 
remaining years, i.e., the benefit computation years (including her 
unindexed earnings in 1977 and 1978) and get $249,381.41. We then divide 
that amount by the 276 months in her 23 benefit computation years and 
find her average indexed monthly earnings to be $903.56, which is 
rounded down to $903.

[47 FR 30734, July 15, 1982; 47 FR 35479, Aug. 13, 1982, as amended at 
48 FR 11695, Mar. 21, 1983; 51 FR 4482, Feb. 5, 1986; 57 FR 1381, Jan. 
14, 1992]



Sec. 404.212  Computing your primary insurance amount from your average 
indexed monthly earnings.

    (a) General. We compute your primary insurance amount under the 
average-indexed-monthly-earnings method by applying a benefit formula to 
your average indexed monthly earnings.
    (b) Benefit formula. (1) We use the applicable benefit formula in 
appendix II for the year you reach age 62, become disabled, or die 
whichever occurs first. If you die before age 62, and your surviving 
spouse or surviving divorced spouse is first eligible after 1984, we may 
compute the primary insurance amount, for the purpose of paying benefits 
to your widow(er), as if you had not died but reached age 62 in the 
second year after the indexing year that we computed under the 
provisions of Sec. 404.211(d)(4). We will not use this primary 
insurance amount for computing

[[Page 76]]

benefit amounts for your other survivors or for computing the maximum 
family benefits payable on your earnings record. Further, we will only 
use this primary insurance amount if it results in a higher widow(er)'s 
benefit than would result if we did not use this special computation.
    (2) The dollar amounts in the benefit formula are automatically 
increased each year for persons who attain age 62, or who become 
disabled or die before age 62 in that year, by the same percentage as 
the increase in the average of the total wages (see appendix I).
    (3) We will publish benefit formulas for years after 1979 in the 
Federal Register at the same time we publish the average of the total 
wage figures. We begin to use a new benefit formula as soon as it is 
applicable, even before we periodically update appendix II.
    (4) We may use a modified formula, as explained in Sec. 404.213, if 
you are entitled to a pension based on your employment which was not 
covered by Social Security.
    (c) Computing your primary insurance amount from the benefit 
formula. We compute your primary insurance amount by applying the 
benefit formula to your average indexed monthly earnings and adding the 
results for each step of the formula. For computations using the benefit 
formulas in effect for 1979 through 1982, we round the total amount to 
the next higher multiple of $0.10 if it is not a multiple of $0.10 and 
for computations using the benefit formulas effective for 1983 and later 
years, we round to the next lower multiple of $0.10. (See paragraph (e) 
of this section for a discussion of the minimum primary insurance 
amount.)
    (d) Adjustment of your primary insurance amount when entitlement to 
benefits occurs in a year after attainment of age 62, disability or 
death. If you (or your survivors) do not become entitled to benefits in 
the same year you reach age 62, become disabled, or die before age 62, 
we compute your primary insurance amount by--
    (1) Computing your average indexed monthly earnings as described in 
Sec. 404.211;
    (2) Applying to your average indexed monthly earnings the benefit 
formula for the year in which you reach age 62, or become disabled or 
die before age 62; and
    (3) Applying to the primary insurance amount all automatic cost-of-
living and ad hoc increases in primary insurance amounts that have gone 
into effect in or after the year you reached age 62, became disabled, or 
died before age 62. (See Sec. 404.277 for special rules on minimum 
benefits, and appendix VI for a table of percentage increases in primary 
insurance amounts since December 1978. Increases in primary insurance 
amounts are published in the Federal Register and we periodically update 
appendix VI.)
    (e) Minimum primary insurance amount. If you were eligible for 
benefits, or died without having been eligible, before 1982, your 
primary insurance amount computed under this method cannot be less than 
$122. This minimum benefit provision has been repealed effective with 
January 1982 for most workers and their families where the worker 
initially becomes eligible for benefits in that or a later month, or 
dies in January 1982 or a later month without having been eligible 
before January 1982. For members of a religious order who are required 
to take a vow of poverty, as explained in 20 CFR 404.1024, and which 
religious order elected Social Security coverage before December 29, 
1981, the repeal is effective with January 1992 based on first 
eligibility or death in that month or later.

[47 FR 30734, July 15, 1982, as amended at 48 FR 46142, Oct. 11, 1983; 
51 FR 4482, Feb. 5, 1986; 52 FR 47916, Dec. 17, 1987]



Sec. 404.213  Computation where you are eligible for a pension based 
on your noncovered employment.

    (a) When applicable. Except as provided in paragraph (d) of this 
section, we will modify the formula prescribed in Sec. 404.212 and in 
appendix II of this subpart in the following situations:
    (1) You become eligible for old-age insurance benefits after 1985; 
or
    (2) You become eligible for disability insurance benefits after 
1985; and
    (3) For the same months after 1985 that you are entitled to old-age 
or disability benefits, you are also entitled to a monthly pension(s) 
for which you first became eligible after 1985 based in

[[Page 77]]

whole or part on your earnings in employment which was not covered under 
Social Security. We consider you to first become eligible for a monthly 
pension in the first month for which you met all requirements for the 
pension except that you were working or had not yet applied. In 
determining whether you are eligible for a pension before 1986, we 
consider all applicable service used by the pension-paying agency. 
(Noncovered employment includes employment outside the United States 
which is not covered under the United States Social Security system. 
Pensions from noncovered employment outside the United States include 
both pensions from social insurance systems that base benefits on 
earnings but not on residence or citizenship, and those from private 
employers. However, for benefits payable for months prior to January 
1995, we will not modify the computation of a totalization benefit (see 
Sec. Sec. 404.1908 and 404.1918) as a result of your entitlement to 
another pension based on employment covered by a totalization agreement. 
Beginning January 1995, we will not modify the computation of a 
totalization benefit in any case (see Sec. 404.213(e)(8)).
    (b) Amount of your monthly pension that we use. For purposes of 
computing your primary insurance amount, we consider the amount of your 
monthly pension(s) (or the amount prorated on a monthly basis) which is 
attributable to your noncovered work after 1956 that you are entitled to 
for the first month in which you are concurrently entitled to Social 
Security benefits. For applications filed before December 1988, we will 
use the month of earliest concurrent eligibility. In determining the 
amount of your monthly pension we will use, we will consider the 
following:
    (1) If your pension is not paid on a monthly basis or is paid in a 
lump-sum, we will allocate it proportionately as if it were paid 
monthly. We will allocate this the same way we allocate lump-sum 
payments for a spouse or surviving spouse whose benefits are reduced 
because of entitlement to a Government pension. (See Sec. 404.408a.)
    (2) If your monthly pension is reduced to provide a survivor's 
benefit, we will use the unreduced amount.
    (3) If the monthly pension amount which we will use in computing 
your primary insurance amount is not a multiple of $0.10, we will round 
it to the next lower multiple of $0.10.
    (c) How we compute your primary insurance amount. When you become 
entitled to old-age or disability insurance benefits and to a monthly 
pension, we will compute your primary insurance amount under the 
average-indexed-monthly-earnings method (Sec. 404.212) as modified by 
paragraph (c) (1) and (2) of this section. Where applicable, we will 
also consider the 1977 simplified old-start method (Sec. 404.241) as 
modified by Sec. 404.243 and a special minimum primary insurance amount 
as explained in Sec. Sec. 404.260 and 404.261. We will use the highest 
result from these three methods as your primary insurance amount. We 
compute under the average-indexed-monthly-earnings method, and use the 
higher primary insurance amount resulting from the application of 
paragraphs (c) (1) and (2) of this section, as follows:
    (1) The formula in appendix II, except that instead of the first 
percentage figure (i.e., 90 percent), we use--
    (i) 80 percent if you initially become eligible for old-age or 
disability insurance benefits in 1986;
    (ii) 70 percent for initial eligibility in 1987;
    (iii) 60 percent for initial eligibility in 1988;
    (iv) 50 percent for initial eligibility in 1989;
    (v) 40 percent for initial eligibility in 1990 and later years, or
    (2) The formula in appendix II minus one-half the portion of your 
monthly pension which is due to noncovered work after 1956 and for which 
you were entitled in the first month you were entitled to both Social 
Security benefits and the monthly pension. If the monthly pension amount 
is not a multiple of $0.10, we will round to the next lower multiple of 
$0.10. To determine the portion of your pension which is due to 
noncovered work after 1956, we consider the total number of years of 
work used to compute your pension and the percentage of those years 
which are after 1956, and in which your employment was not covered. We 
take that percentage of your total pension

[[Page 78]]

as the amount which is due to your noncovered work after 1956.
    (d) Alternate computation. (1) If you have more than 20 but less 
than 30 years of coverage as defined in the column headed ``Alternate 
Computation Under Sec. 404.213(d)'' in appendix IV of this subpart, we 
will compute your primary insurance amount using the applicable 
percentage given below instead of the first percentage in appendix II of 
this subpart if the applicable percentage below is larger than the 
percentage specified in paragraph (c) of this section:
    (i) For benefits payable for months before January 1989--

------------------------------------------------------------------------
                       Years of coverage                         Percent
------------------------------------------------------------------------
29............................................................        80
28............................................................        70
27............................................................        60
26............................................................        50
------------------------------------------------------------------------

    (ii) For benefits payable for months after December 1988--

------------------------------------------------------------------------
                       Years of coverage                         Percent
------------------------------------------------------------------------
29............................................................        85
28............................................................        80
27............................................................        75
26............................................................        70
25............................................................        65
24............................................................        60
23............................................................        55
22............................................................        50
21............................................................        45
------------------------------------------------------------------------

    (2) If you later earn additional year(s) of coverage, we will 
recompute your primary insurance amount, effective with January of the 
following year.
    (e) Exceptions. The computations in paragraph (c) of this section do 
not apply in the following situations:
    (1) Payments made under the Railroad Retirement Act are not 
considered to be a pension from noncovered employment for the purposes 
of this section. See subpart O of this part for a discussion of railroad 
retirement benefits.
    (2) You were entitled before 1986 to disability insurance benefits 
in any of the 12 months before you reach age 62 or again become 
disabled. (See Sec. 404.251 for the appropriate computation.)
    (3) You were a Federal employee performing service on January 1, 
1984 to which Social Security coverage was extended on that date solely 
by reason of the amendments made by section 101 of the Social Security 
Amendments of 1983.
    (4) You were an employee of a nonprofit organization who was exempt 
from Social Security coverage on December 31, 1983 unless you were 
previously covered under a waiver certificate which was terminated prior 
to that date..
    (5) You have 30 years of coverage as defined in the column headed 
``Alternate Computation Under Sec. 404.213(d)'' in appendix IV of this 
subpart.
    (6) Your survivors are entitled to benefits on your record of 
earnings. (After your death, we will recompute the primary insurance 
amount to nullify the effect of any monthly pension, based in whole or 
in part on noncovered employment, to which you had been entitled.)
    (7) For benefits payable for months after December 1994, payments by 
the social security system of a foreign country which are based on a 
totalization agreement between the United States and that country are 
not considered to be a pension from noncovered employment for purposes 
of this section. See subpart T of this part for a discussion of 
totalization agreements.
    (8) For benefits payable for months after December 1994, the 
computations in paragraph (c) do not apply in the case of an individual 
whose entitlement to U.S. social security benefits results from a 
totalization agreement between the United States and a foreign country.
    (9) For benefits payable for months after December 1994, you are 
eligible after 1985 for monthly periodic benefits based wholly on 
service as a member of a uniformed service, including inactive duty 
training.
    (f) Entitlement to a totalization benefit and a pension based on 
noncovered employment. If, before January 1995, you are entitled to a 
totalization benefit and to a pension based on noncovered employment 
that is not covered by a totalization agreement, we count your coverage 
from a foreign country with which the United States (U.S.) has a 
totalization agreement and your U.S. coverage to determine if you meet 
the

[[Page 79]]

requirements for the modified computation in paragraph (d) of this 
section or the exception in paragraph (e)(5) of this section.
    (1) Where the amount of your totalization benefit will be determined 
using a computation method that does not consider foreign earnings (see 
Sec. 404.1918), we will find your total years of coverage by adding 
your--
    (i) Years of coverage from the agreement country (quarters of 
coverage credited under Sec. 404.1908 divided by four) and
    (ii) Years of U.S. coverage as defined for the purpose of computing 
the special minimum primary insurance amount under Sec. 404.261.
    (2) Where the amount of your totalization benefit will be determined 
using a computation method that does consider foreign earnings, we will 
credit your foreign earnings to your U.S. earnings record and then find 
your total years of coverage using the method described in Sec. 
404.261.

[52 FR 47916, Dec. 17, 1987, as amended at 55 FR 21382, May 24, 1990; 57 
FR 22429, May 28, 1992; 60 FR 17444, Apr. 6, 1995; 60 FR 56513, Nov. 9, 
1995]

   Average-Monthly-Wage Method of Computing Primary Insurance Amounts



Sec. 404.220  Average-monthly-wage method.

    (a) Who is eligible for this method. You must before 1979, reach age 
62, become disabled or die to be eligible for us to compute your primary 
insurance amount under the average-monthly-wage method. Also, as 
explained in Sec. 404.230, if you reach age 62 after 1978 but before 
1984, you are eligible to have your primary insurance amount computed 
under a modified average-monthly-wage method if it is to your advantage. 
Being eligible for either the average-monthly-wage method or the 
modified average-monthly-wage method does not preclude your eligibility 
under the old-start method described in Sec. Sec. 404.240 through 
404.242.
    (b) Steps in computing your primary insurance amount under the 
average-monthly-wage method. We follow these three major steps in 
computing your primary insurance amount under the average-monthly-wage 
method:
    (1) First, we find your average monthly wage, as described in Sec. 
404.221;
    (2) Second, we look at the benefit table in appendix III; and
    (3) Then we find your primary insurance amount in the benefit table, 
as described in Sec. 404.222.
    (4) Finally, we apply any automatic cost-of-living or ad hoc 
increases that became effective in or after the year you reached age 62, 
or became disabled, or died before age 62, as explained in Sec. Sec. 
404.270 through 404.277.



Sec. 404.221  Computing your average monthly wage.

    (a) General. Under the average-monthly-wage method, your social 
security earnings are averaged over the length of time you can 
reasonably have been expected to have worked under social security after 
1950 (or after you reached age 21, if later).
    (b) Which of your earnings may be used in computing your average 
monthly wage. (1) In computing your average monthly wage, we consider 
all the wages, compensation, self-employment income, and deemed military 
wage credits that are creditable to you for social security purposes. 
(The maximum amounts creditable are explained in Sec. Sec. 404.1047 and 
404.1096 of this part.)
    (2) We use your earnings in your computation base years in computing 
your average monthly wage. All years after 1950 up to (but not 
including) the year you become entitled to old-age or disability 
insurance benefits, or through the year you die if you had not been 
entitled to old-age or disability benefits, are computation base years 
for you. Years after the year you die may not be used as computation 
base years even if you have earnings credited to you in them. However, 
years beginning with the year you become entitled to benefits may be 
used for benefits beginning with the following year if using them would 
give you a higher primary insurance amount. Years wholly within a period 
of disability are not computation base years unless your primary 
insurance amount would be higher if they were. In such situations, we 
count

[[Page 80]]

all the years during the period of disability, even if you had no 
earnings in some of them.
    (c) Number of years to be considered in computing your average 
monthly wage. To find the number of years to be used in computing your 
average monthly wage--
    (1) We count the years beginning with 1951 or (if later) the year 
you reached age 22 and ending with the year before you reached age 62, 
or became disabled, or died before age 62. Any part of a year--or 
years--in which you were disabled, as defined in Sec. 404.1505, is not 
counted unless doing so would give you a higher average monthly wage. In 
that case, we count all the years during the period of disability, even 
if you had no earnings in some of those years. These are your elapsed 
years. (If you are a male and you reached age 62 before 1975, see 
paragraph (c)(2) of this section for the rules on finding your elapsed 
years.)
    (2) If you are a male and you reached age 62 in--
    (i) 1972 or earlier, we count the years beginning with 1951 and 
ending with the year before you reached age 65, or became disabled or 
died before age 65 to find your elapsed years;
    (ii) 1973, we count the years beginning with 1951 and ending with 
the year before you reached age 64, or became disabled or died before 
age 64 to find your elapsed years; or
    (iii) 1974, we count the years beginning with 1951 and ending with 
the year before you reached age 63, became disabled, or died before age 
63 to find your elapsed years.
    (3) Then we subtract 5 from the number of your elapsed years. This 
is the number of your benefit computation years; we use the same number 
of your computation base years in computing your average monthly wage. 
For benefit computation years, we use the years with the highest amounts 
of earnings, but they may include years of no earnings. You cannot have 
fewer than 2 benefit computation years.
    (d) Your average monthly wage. After we find your benefit 
computation years, we compute your average monthly wage by--
    (1) Totalling your creditable earnings in your benefit computation 
years;
    (2) Dividing the total by the number of months in your benefit 
computation years; and
    (3) Rounding the quotient to the next lower whole dollar if not 
already a multiple of $1.

    Example: Mr. B reaches age 62 and becomes entitled to old-age 
insurance benefits in August 1978. He had no social security earnings 
before 1951 and his year-by-year social security earnings after 1950 are 
as follows:

------------------------------------------------------------------------
                            Year                               Earnings
------------------------------------------------------------------------
1951.......................................................       $2,700
1952.......................................................        2,700
1953.......................................................        3,400
1954.......................................................        3,100
1955.......................................................        4,000
1956.......................................................        4,100
1957.......................................................        4,000
1958.......................................................        4,200
1959.......................................................        4,800
1960.......................................................        4,800
1961.......................................................        4,800
1962.......................................................        4,800
1963.......................................................        4,800
1964.......................................................        1,500
1965.......................................................            0
1966.......................................................            0
1967.......................................................            0
1968.......................................................        3,100
1969.......................................................        5,200
1970.......................................................        7,100
1971.......................................................        7,800
1972.......................................................        8,600
1973.......................................................        8,900
1974.......................................................        9,700
1975.......................................................       10,100
1976.......................................................       10,800
1977.......................................................       11,900
------------------------------------------------------------------------

    We first find Mr. B's elapsed years, which are the 27 years 1951-
1977. We subtract 5 from his 27 elapsed years to find that we must use 
22 benefit computation years in computing his average monthly wage. His 
computation base years are 1951-1977, which are the years after 1950 and 
prior to the year he became entitled. This means that we will use his 22 
computation base years with the highest earnings to compute his average 
monthly wage. Thus, we exclude the years 1964-1967 and 1951.
    We total his earnings in his benefit computation years and get 
$132,700. We then divide that amount by the 264 months in his 22 benefit 
computation years and find his average monthly wage to be $502.65, which 
is rounded down to $502.

    (e) ``Deemed'' average monthly wage for certain deceased veterans of 
World War II. Certain deceased veterans of World War II are ``deemed'' 
to have an average monthly wage of $160 (see Sec. Sec. 404.1340 through 
404.1343 of this part) unless their actual average monthly wage, as

[[Page 81]]

found in the method described in paragraphs (a) through (d) of this 
section is higher.



Sec. 404.222  Use of benefit table in finding your primary insurance 
amount from your average monthly wage.

    (a) General. We find your primary insurance amount under the 
average-monthly-wage method in the benefit table in appendix III.
    (b) Finding your primary insurance amount from benefit table. We 
find your average monthly wage in column III of the table. Your primary 
insurance amount appears on the same line in column IV (column II if you 
are entitled to benefits for any of the 12 months preceding the 
effective month in column IV). As explained in Sec. 404.212(e), there 
is a minimum primary insurance amount of $122 payable for persons who 
became eligible or died after 1978 and before January 1982. There is 
also an alternative minimum of $121.80 (before the application of cost-
of-living increases) for members of this group whose benefits were 
computed from the benefit table in effect in December 1978 on the basis 
of either the old-start computation method in Sec. Sec. 404.240 through 
404.242 or the guaranteed alternative computation method explained in 
Sec. Sec. 404.230 through 404.233. However, as can be seen from the 
extended table in appendix III, the lowest primary insurance amount 
under this method is now $1.70 for individuals for whom the minimum 
benefit has been repealed.

    Example: In the example in Sec. 404.221(d), we computed Mr. B's 
average monthly wage to be $502. We refer to the December 1978 benefit 
table in appendix III. Then we find his average monthly wage in column 
III of the table. Reading across, his primary insurance amount is on the 
same line in column IV and is $390.50. A 9.9 percent automatic cost-of-
living benefit increase was effective for June 1979, increasing Mr. B's 
primary insurance amount to $429.20, as explained in Sec. Sec. 404.270 
through 404.277. Then, we increase the $429.20 by the 14.3 percent June 
1980 cost-of-living benefit increase and get $490.60, and by the 11.2 
percent June 1981 increase to get $545.60.

[47 FR 30734, July 15, 1982, as amended at 48 FR 46142, Oct. 11, 1983]

Guaranteed Alternative for People Reaching Age 62 After 1978 but Before 
                                  1984



Sec. 404.230  Guaranteed alternative.

    (a) General. If you reach age 62 after 1978 but before 1984, we 
compute your primary insurance amount under a modified average-monthly-
wage method as a guaranteed alternative to your primary insurance amount 
computed under the average-indexed-monthly-earnings method. We also 
compute your primary insurance amount under the old-start method 
(Sec. Sec. 404.240 through 404.242) and under the special rules for a 
person who had a period of disability (Sec. Sec. 404.250 through 
404.252), if you are eligible. In Sec. Sec. 404.231 through 404.233, we 
explain the average-monthly-wage method as the alternative to the 
average-indexed-monthly-earnings method.
    (b) Restrictions. (1) To qualify for this guaranteed-alternative 
computation, you must have some creditable earnings before 1979.
    (2) You or your survivors do not qualify for a guaranteed-
alternative computation if you were eligible (you attained age 62, 
became disabled, or died before age 62) for social security benefits 
based on your own earnings at any time before 1979 unless--
    (i) Those benefits were disability insurance benefits which were 
terminated because you recovered from your disability or you engaged in 
substantial gainful activity; and
    (ii) You spent at least 12 months without being eligible for 
disability benefits again.
    (3) This guaranteed alternative method applies only to old-age 
insurance benefits and to survivor benefits where the deceased worker 
reached the month of his or her 62nd birthday after 1978 but before 1984 
and died after reaching age 62.



Sec. 404.231  Steps in computing your primary insurance amount under 
the guaranteed alternative--general.

    If you reach age 62 after 1978 but before 1984, we follow three 
major steps in finding your guaranteed alternative:
    (a) First, we compute your average monthly wage, as described in 
Sec. 404.232;
    (b) Second, we find the primary insurance amount that corresponds to

[[Page 82]]

your average monthly wage in the benefit table in appendix III.
    (c) Then we apply any automatic cost-of-living or ad hoc increases 
in primary insurance amounts that have become effective in or after the 
year you reached age 62.



Sec. 404.232  Computing your average monthly wage under the guaranteed 
alternative.

    (a) General. With the exception described in paragraph (b) of this 
section, we follow the rules in Sec. 404.221 to compute your average 
monthly wage.
    (b) Exception. We do not use any year after the year you reach age 
61 as a computation base year in computing your average monthly wage for 
purposes of the guaranteed alternative.



Sec. 404.233  Adjustment of your guaranteed alternative when you become 
entitled after age 62.

    (a) If you do not become entitled to benefits at the time you reach 
age 62, we adjust the guaranteed alternative computed for you under 
Sec. 404.232 as described in paragraph (b) of this section.
    (b) To the primary insurance amount computed under the guaranteed 
alternative, we apply any automatic cost-of-living or ad hoc increases 
in primary insurance amounts that go into effect in the year you reach 
age 62 and in years up through the year you become entitled to benefits. 
(See appendix VI for a list of the percentage increases in primary 
insurance amounts since December 1978.)

    Example: Mr. C reaches age 62 in January 1981 and becomes entitled 
to old-age insurance benefits in April 1981. He had no social security 
earnings before 1951 and his year-by-year social security earnings after 
1950 are as follows:

------------------------------------------------------------------------
                            Year                               Earnings
------------------------------------------------------------------------
1951.......................................................       $3,600
1952.......................................................        3,600
1953.......................................................        3,600
1954.......................................................        3,600
1955.......................................................        4,200
1956.......................................................        4,200
1957.......................................................        4,200
1958.......................................................        4,200
1959.......................................................        4,800
1960.......................................................        4,800
1961.......................................................        4,800
1962.......................................................        4,800
1963.......................................................        4,800
1964.......................................................        4,800
1965.......................................................        4,800
1966.......................................................        6,600
1967.......................................................        6,600
1968.......................................................        7,800
1969.......................................................        7,800
1970.......................................................        7,800
1971.......................................................        7,800
1972.......................................................        9,000
1973.......................................................       10,800
1974.......................................................       13,200
1975.......................................................       14,100
1976.......................................................       15,300
1977.......................................................       16,500
1978.......................................................       17,700
1979.......................................................       22,900
1980.......................................................       25,900
1981.......................................................       29,700
------------------------------------------------------------------------

    Mr. C's elapsed years are the 30 years 1951 through 1980. We 
subtract 5 from his 30 elapsed years to find that we must use 25 benefit 
computation years in computing his average monthly wage. His computation 
base years are 1951 through 1980 which are years after 1950 up to the 
year he reached age 62. We will use his 25 computation base years with 
the highest earnings to compute his average monthly wage. Thus, we 
exclude the years 1951-1955. The year 1981 is not a base year for this 
computation.
    We total his earnings in his benefit computation years and get 
$236,000. We then divide by the 300 months in his 25 benefit computation 
years, and find his average monthly wage to be $786.66 which is rounded 
down to $786.
    The primary insurance amount in the benefit table in appendix III 
that corresponds to Mr. C's average monthly wage is $521.70. The 9.9 
percent and 14.3 percent cost of living increase for 1979 and 1980, 
respectively, are not applicable because Mr. C reached age 62 in 1981.
    The average indexed monthly earnings method described in Sec. Sec. 
404.210 through 404.212 considers all of the earnings after 1950, 
including 1981 earnings which, in Mr. C's case cannot be used in the 
guaranteed alternative method. Mr. C's primary insurance amount under 
the average indexed earnings method is $548.40. Therefore, his benefit 
is based upon the $548.40 primary insurance amount. As in the guaranteed 
alternative method, Mr. C is not entitled to the cost of living 
increases for years before the year he reaches age 62.

         Old-Start Method of Computing Primary Insurance Amounts



Sec. 404.240  Old-start method--general.

    If you had all or substantially all your social security earnings 
before 1951, your primary insurance amount computed under the ``1977 
simplified old-start'' method may be higher than any other primary 
insurance amount computed for you under any other

[[Page 83]]

method for which you are eligible. As explained in Sec. 404.242, if you 
reach age 62 after 1978, your primary insurance amount computed under 
the old-start method is used, for purposes of the guaranteed alternative 
described in Sec. 404.230, if the old-start primary insurance amount is 
higher than the one found under the average-monthly-wage method. We may 
use a modified computation, as explained in Sec. 404.243, if you are 
entitled to a pension based on your employment which was not covered by 
Social Security.

[47 FR 30734, July 15, 1982, as amended at 52 FR 47917, Dec. 17, 1987]



Sec. 404.241  1977 simplified old-start method.

    (a) Who is qualified. To qualify for the old-start computation, you 
must meet the conditions in paragraphs (a) (1), (2), or (3) of this 
section:
    (1) You must--
    (i) Have one ``quarter of coverage'' (see Sec. Sec. 404.101 and 
404.110 of this part) before 1951;
    (ii) Have attained age 21 after 1936 and before 1950, or attained 
age 22 after 1950 and earned fewer than 6 quarters of coverage after 
1950;
    (iii) Have not had a period of disability which began before 1951, 
unless it can be disregarded, as explained in Sec. 404.320 of this part; 
and,
    (iv) Have attained age 62, become disabled, or died, after 1977.
    (2)(i) You or your survivor becomes entitled to benefits for June 
1992 or later;
    (ii) You do not meet the conditions in paragraph (a)(1) of this 
section, and,
    (iii) No person is entitled to benefits on your earnings record in 
the month before the month you or your survivor becomes entitled to 
benefits.
    (3) A recomputation is first effective for June 1992 or later based 
on your earnings for 1992 or later.
    (b) Steps in old-start computation. (1) First, we allocate your 
earnings during the period 1937-1950 as described in paragraph (c) of 
this section.
    (2) Next, we compute your average monthly wage, as described in 
paragraph (d) of this section.
    (3) Next, we apply the old-start formula to your average monthly 
wage, as described in paragraph (e)(1) of this section.
    (4) Next, we apply certain increments to the amount computed in step 
(3), as described in paragraph (e)(2) of this section.
    (5) Next, we find your primary insurance amount in the benefit table 
in appendix III, as described in paragraph (f)(1) of this section.
    (6) Then, we apply automatic cost-of-living or ad hoc increases in 
primary insurance amounts to the primary insurance amount found in step 
(5), as described in paragraph (f)(2) of this section.
    (c) Finding your computation base years under the old-start method. 
(1) Instead of using your actual year-by-year earnings before 1951, we 
find your computation base years for 1937-1950 (and the amount of 
earnings for each of them) by allocating your total 1937-1950 earnings 
among the years before 1951 under the following procedure:
    (i) If you reached age 21 before 1950 and your total 1937-1950 
earnings are not more than $3,000 times the number of years after the 
year you reached age 20 and before 1951 (a maximum of 14 years), we 
allocate your earnings equally among those years, and those years are 
your computation base years before 1951.
    (ii) If you reached age 21 before 1950 and your total 1937-1950 
earnings are more than $3,000 times the number of years after the year 
you reached age 20 and before 1951, we allocate your earnings at the 
rate of $3,000 per year for each year after you reached age 20 and 
before 1951 up to a maximum of 14 years. We credit any remainder in 
reverse order to years before age 21 in $3,000 increments and any amount 
left over of less than $3,000 to the year before the earliest year to 
which we credited $3,000. No more than $42,000 may be credited in this 
way and to no more than 14 years. Those years are your computation base 
years before 1951.
    (iii) If you reached age 21 in 1950 or later and your total pre-1951 
earnings are $3,000 or less, we credit the total to the year you reached 
age 20 and that year is your pre-1951 computation base year.
    (iv) If you reached age 21 in 1950 or later and your total pre-1951 
earnings

[[Page 84]]

are more than $3,000, we credit $3,000 to the year you reached age 20 
and credit the remainder to earlier years (or year) in blocks of $3,000 
in reverse order. We credit any remainder of less than $3,000 to the 
year before the earliest year to which we had credited $3,000. No more 
than $42,000 may be credited in this way and to no more than 14 years. 
Those years are your computation base years before 1951.
    (v) If you die before 1951, we allocate your 1937-1950 earnings 
under paragraphs (c)(1) (i) through (iv), except that in determining the 
number of years, we will use the year of death instead of 1951. If you 
die before you attain age 21, the number of years in the period is equal 
to 1.
    (vi) For purposes of paragraphs (c)(1) (i) through (v), if you had a 
period of disability which began before 1951, we will exclude the years 
wholly within a period of disability in determining the number of years.
    (2)(i) All years after 1950 up to (but not including) the year you 
become entitled to old-age insurance or disability insurance benefits 
(or through the year you die if you had not become entitled to old-age 
or disability benefits) are also computation base years for you.
    (ii) Years wholly within a period of disability are not computation 
base years unless your primary insurance amount would be higher if they 
were. In such situations, we count all the years during the period of 
disability, even if you had no earnings in some of them.

    Example: Ms. D reaches age 62 in June 1979. Her total 1937-1950 
social security earnings are $40,000 and she had social security 
earnings of $7,100 in 1976 and $6,300 in 1977. Since she reaches age 62 
after 1978, we first compute her primary insurance amount under the 
average-indexed-monthly-earnings method (Sec. Sec. 404.210 through 
404.212). As of June 1981, it is $170.50, which is the minimum primary 
insurance amount applicable, because her average indexed monthly 
earnings of $50 would yield only $56.50 under the benefit formula. Ms. D 
reached age 62 after 1978 but before 1984 and her guaranteed alternative 
under the average-monthly-wage method as of June 1981 is $170.30, which 
is the minimum primary insurance amount based on average monthly wages 
of $48. (These amounts include the 9.9, the 14.3, and the 11.2 percent 
cost-of-living increases effective June 1979, June 1980, and June 1981 
respectively.)
    Ms. D is also eligible for the old-start method. We first allocate 
$3,000 of her 1937-1950 earnings to each of her 13 computation base 
years starting with the year she reached age 21 (1938) and ending with 
1950. The remaining $1,000 is credited to the year she reached age 20. 
Ms. D, then, has 42 computation base years (14 before 1951 and 28 after 
1950).

    (d) Computing your average monthly wage under the old-start method. 
(1) First, we count your elapsed years, which are the years beginning 
with 1937 (or the year you reach 22, if later) and ending with the year 
before you reach age 62, or become disabled or die before age 62. (See 
Sec. 404.211(e)(1) for the rule on how we treat years wholly or 
partially within a period of disability.)
    (2) Next, we subtract 5 from the number of your elapsed years, and 
this is the number of computation years we must use. We then choose this 
number of your computation base years in which you had the highest 
earnings. These years are your benefit computation years. You must have 
at least 2 benefit computation years.
    (3) Then we compute your average monthly wage by dividing your total 
creditable earnings in your benefit computation years by the number of 
months in these years and rounding the quotient to the next lower dollar 
if not already a multiple of $1.
    (e) Old-start computation formula. We use the following formula to 
compute your primary insurance benefit, which we will convert to your 
primary insurance amount:
    (1) We take 40 percent of the first $50 of your average monthly 
wage, plus 10 percent of the next $200 of your average monthly wage up 
to a total average monthly wage of $250. (We do not use more than $250 
of your average monthly wage.)
    (2) We increase the amount found in paragraph (e)(1) of this section 
by 1 percent for each $1,650 in your pre-1951 earnings, disregarding any 
remainder less than $1,650. We always increase the amount by at least 4 
of these 1 percent increments but may not increase it by more than 14 of 
them.
    (f) Finding your primary insurance amount under the old-start 
method. (1) In column I of the benefit table in appendix III we locate 
the amount (the primary insurance benefit) computed in

[[Page 85]]

paragraph (e) of this section and find the corresponding primary 
insurance amount on the same line in column IV of the table.
    (2) We increase that amount by any automatic cost-of-living or ad 
hoc increases in primary insurance amounts effective since the beginning 
of the year in which you reached age 62, or became disabled or died 
before age 62. (See Sec. Sec. 404.270 through 404.277.)

    Example: From the example in paragraph (c)(2) of this section, we 
see that Ms. D's elapsed years total 40 (number of years at ages 22 to 
61, both inclusive). Her benefit computation years, therefore, must 
total 35. Since she has only 16 years of actual earnings, we must 
include 19 years of zero earnings in this old-start computation to reach 
the required 35 benefit computation years.
    We next divide her total social security earnings ($53,400) by the 
420 months in her benefit computation years and find her average monthly 
wage to be $127.
    We apply the old-start computation formula to Ms. D's average 
monthly wage as follows: 40 percent of the first $50 of her average 
monthly wage ($20.00), plus 10 percent of the remaining $77 of her 
average monthly wage ($7.70), for a total of $27.70.
    We then apply 14 1-percent increments to that amount, increasing it 
by $3.88 to $31.58. We find $31.58 in column I of the December 1978 
benefit table in appendix III and find her primary insurance amount of 
$195.90 on the same line in column IV. We apply the 9.9 percent 
automatic cost-of-living increase effective for June 1979 to $195.90 and 
get an old-start primary insurance amount of $215.30 which we then 
increase to $246.10 to reflect the 14.3 percent cost-of-living increase 
effective for June 1980, and to $273.70 to reflect the June 1981 
increase. Since that primary insurance amount is higher than the $153.10 
primary insurance amount computed under the average-monthly-wage method 
and the $153.30 primary insurance amount computed under the average-
indexed-monthly-earnings method, we base Ms. D's benefits (and those of 
her family) on $215.30 (plus later cost-of-living increases), which is 
the highest primary insurance amount.

[47 FR 30734, July 15, 1982, as amended at 55 FR 21382, May 24, 1990; 57 
FR 23157, June 2, 1992]



Sec. 404.242  Use of old-start primary insurance amount as guaranteed 
alternative.

    If your primary insurance amount as computed under the old-start 
method is higher than your primary insurance amount computed under the 
average-monthly-wage method, your old-start primary insurance amount 
will serve as the guaranteed alternative to your primary insurance 
amount computed under the average-indexed-monthly-earnings method, as 
described in Sec. 404.230. However, earnings that you have in or after 
the year you reach age 62, or become disabled or die before age 62 are 
not used in an old-start computation in this situation.



Sec. 404.243  Computation where you are eligible for a pension based 
on noncovered employment.

    The provisions of Sec. 404.213 are applicable to computations under 
the old-start method, except for paragraphs (c) (1) and (2) and (d) of 
that section. Your primary insurance amount will be whichever of the 
following two amounts is larger:
    (a) One-half the primary insurance amount computed according to 
Sec. 404.241 (before application of the cost of living amount); or
    (b) The primary insurance amount computed according to Sec. 404.241 
(before application of the cost of living amount), minus one-half the 
portion of your monthly pension which is due to noncovered work after 
1956 and for which you were eligible in the first month you became 
eligible for Social Security benefits. If the result is not a multiple 
of $0.10, we will round to the next lower multiple of $0.10. (See Sec. 
404.213 (b)(3) if you are not eligible for a monthly pension in the 
first month you are entitled to Social Security benefits.) To determine 
the portion of your pension which is due to noncovered work after 1956, 
we consider the total number of years of work used to compute your 
pension and the percentage of those years which are after 1956 and in 
which your employment was not covered. We take that percentage of your 
total pension as the amount which is due to your noncovered work after 
1956.

[52 FR 47918, Dec. 17, 1987]

[[Page 86]]

   Special Computation Rules for People Who Had a Period of Disability



Sec. 404.250  Special computation rules for people who had a period of 
disability.

    If you were disabled at some time in your life, received disability 
insurance benefits, and those benefits were terminated because you 
recovered from your disability or because you engaged in substantial 
gainful activity, special rules apply in computing your primary 
insurance amount when you become eligible after 1978 for old-age 
insurance benefits or if you become re-entitled to disability insurance 
benefits or die. (For purposes of Sec. Sec. 404.250 through 404.252, we 
use the term second entitlement to refer to this situation.) There are 
two sets of rules:
    (a) Second entitlement within 12 months. If 12 months or fewer pass 
between the last month for which you received a disability insurance 
benefit and your second entitlement, see the rules in Sec. 404.251; and
    (b) Second entitlement after more than 12 months. If more than 12 
months pass between the last month for which you received a disability 
insurance benefit and your second entitlement, see the rules in Sec. 
404.252.



Sec. 404.251  Subsequent entitlement to benefits less than 12 months 
after entitlement to disability benefits ended.

    (a) Disability before 1979; second entitlement after 1978. In this 
situation, we compute your second-entitlement primary insurance amount 
by selecting the highest of the following:
    (1) The primary insurance amount to which you were entitled when you 
last received a benefit, increased by any automatic cost-of-living or ad 
hoc increases in primary insurance amounts that took effect since then;
    (2) The primary insurance amount resulting from a recomputation of 
your primary insurance amount, if one is possible; or
    (3) The primary insurance amount computed for you as of the time of 
your second entitlement under any method for which you are qualified at 
that time, including the average-indexed-monthly-earnings method if the 
previous period of disability is disregarded.
    (b) Disability and second entitlement after 1978. In this situation, 
we compute your second-entitlement primary insurance amount by selecting 
the highest of the following:
    (1) The primary insurance amount to which you were entitled when you 
last received a benefit, increased by any automatic cost-of-living or ad 
hoc increases in primary insurance amount that took effect since then;
    (2) The primary insurance amount resulting from a recomputation of 
your primary insurance amount, if one is possible (this recomputation 
may be under the average-indexed-monthly-earnings method only); or
    (3) The primary insurance amount computed for you as of the time of 
your second entitlement under any method (including an old-start method) 
for which you are qualifed at that time.
    (c) Disability before 1986; second entitlement after 1985. When 
applying the rule in paragraph (b)(3) of this section, we must consider 
your receipt of a monthly pension based on noncovered employment. (See 
Sec. 404.213). However, we will disregard your monthly pension if you 
were previously entitled to disability benefits before 1986 and in any 
of the 12 months before your second entitlement.

[47 FR 30734, July 15, 1982, as amended at 52 FR 47918, Dec. 17, 1987]



Sec. 404.252  Subsequent entitlement to benefits 12 months or more 
after entitlement to disability benefits ended.

    In this situation, we compute your second-entitlement primary 
insurance amount by selecting the higher of the following:
    (a) New primary insurance amount. The primary insurance amount 
computed as of the time of your second entitlement under any of the 
computation methods for which you qualify at the time of your second 
entitlement; or
    (b) Previous primary insurance amount. The primary insurance amount 
to which you were entitled in the last month for which you were entitled 
to a disability insurance benefit.

[[Page 87]]

                Special Minimum Primary Insurance Amounts



Sec. 404.260  Special minimum primary insurance amounts.

    Regardless of the method we use to compute your primary insurance 
amount, if the special minimum primary insurance amount described in 
Sec. 404.261 is higher, then your benefits (and those of your 
dependents or survivors) will be based on the special minimum primary 
insurance amount. Special minimum primary insurance amounts are not 
based on a worker's average earnings, as are primary insurance amounts 
computed under other methods. Rather, the special minimum primary 
insurance amount is designed to provide higher benefits to people who 
worked for long periods in low-paid jobs covered by social security.



Sec. 404.261  Computing your special minimum primary insurance amount.

    (a) Years of coverage. (1) The first step in computing your special 
minimum primary insurance amount is to find the number of your years of 
coverage, which is the sum of--
    (i) The quotient found by dividing your total creditable social 
security earnings during the period 1937-1950 by $900, disregarding any 
fractional remainder; plus
    (ii) The number of your computation base years after 1950 in which 
your social security earnings were at least the amounts shown in 
appendix IV. (Computation base years mean the same here as in other 
computation methods discussed in this subpart.)
    (2) You must have at least 11 years of coverage to qualify for a 
special minimum primary insurance amount computation. However, special 
minimum primary insurance amounts based on little more than 10 years of 
coverage are usually lower than the regular minimum benefit that was in 
effect before 1982 (see Sec. Sec. 404.212(e) and 404.222(b) of this 
part). In any situation where your primary insurance amount computed 
under another method is higher, we use that higher amount.
    (b) Computing your special minimum primary insurance amount. (1) 
First, we subtract 10 from your years of coverage and multiply the 
remainder (at least 1 and no more than 20) by $11.50;
    (2) Then we increase the amount found in paragraph (b)(1) of this 
section by any automatic cost-of-living or ad hoc increases that have 
become effective since December 1978 to find your special minimum 
primary insurance amount. See appendix V for the applicable table, which 
includes the 9.9 percent cost-of-living increase that became effective 
June 1979, the 14.3 percent increase that became effective June 1980, 
and the 11.2 percent increase that became effective June 1981.

    Example: Ms. F, who attained age 62 in January 1979, had $10,000 in 
total social security earnings before 1951 and her post-1950 earnings 
are as follows:

------------------------------------------------------------------------
                            Year                               Earnings
------------------------------------------------------------------------
1951.......................................................       $1,100
1952.......................................................          950
1953.......................................................            0
1954.......................................................        1,000
1955.......................................................        1,100
1956.......................................................        1,200
1957.......................................................            0
1958.......................................................        1,300
1959.......................................................            0
1960.......................................................        1,300
1961.......................................................            0
1962.......................................................        1,400
1963.......................................................        1,300
1964.......................................................            0
1965.......................................................          500
1966.......................................................          700
1967.......................................................          650
1968.......................................................          900
1969.......................................................        1,950
1970.......................................................        2,100
1971.......................................................        2,000
1972.......................................................        1,500
1973.......................................................        2,700
1974.......................................................        2,100
1975.......................................................        2,600
1976.......................................................        3,850
1977.......................................................        4,150
1978.......................................................            0
------------------------------------------------------------------------

    Her primary insurance amount under the average-indexed-monthly-
earnings method as of June 1981 is $240.40 (based on average indexed 
monthly earnings of $229). Her guaranteed-alternative primary insurance 
amount under the average-monthly-wage method as of June 1981 is $255.80 
(based on average monthly wages of $131).
    However, Ms. F has enough earnings before 1951 to allow her 11 years 
of coverage before 1951 ($10,000/$900=11, plus a remainder, which we 
drop). She has sufficient earnings in 1951-52, 1954-56, 1958, 1960, 
1962-63, 1969-71, 1973, and 1976-77 to have a year of coverage for each 
of

[[Page 88]]

those years. She thus has 15 years of coverage after 1950 and a total of 
26 years of coverage. We subtract 10 from her years of coverage, 
multiply the remainder (16) by $11.50 and get $184.00. We then apply the 
June 1979, June 1980, and June 1981 automatic cost-of-living increases 
(9.9 percent, 14.3 percent, and 11.2 percent, respectively) to that 
amount to find her special minimum primary insurance amount of $202.30 
effective June 1979, $231.30 effective June 1980, and $257.30 effective 
June 1981. (See appendices V and VI.) Since her special minimum primary 
insurance amount is higher than the primary insurance amounts computed 
for her under the other methods described in this subpart for which she 
is eligible, her benefits (and those of her family) are based on the 
special minimum primary insurance amount.

[47 FR 30734, July 15, 1982, as amended at 48 FR 46143, Oct. 11, 1983]

                        Cost-of-Living Increases



Sec. 404.270  Cost-of-living increases.

    Your primary insurance amount may be automatically increased each 
December so it keeps up with rises in the cost of living. These 
automatic increases also apply to other benefit amounts, as described in 
Sec. 404.271.

[47 FR 30734, July 15, 1982, as amended at 51 FR 12603, Apr. 14, 1986]



Sec. 404.271  When automatic cost-of-living increases apply.

    Besides increases in the primary insurance amounts of current 
beneficiaries, automatic cost-of-living increases also apply to--
    (a) The benefits of certain uninsured people age 72 and older (see 
Sec. 404.380);
    (b) The special minimum primary insurance amounts (described in 
Sec. Sec. 404.260 through 404.261) of current and future beneficiaries;
    (c) The primary insurance amounts of people who after 1978 become 
eligible for benefits or die before becoming eligible (beginning with 
December of the year they become eligible or die), although certain 
limitations are placed on the automatic adjustment of the frozen minimum 
primary insurance amount (as described in Sec. 404.277); and
    (d) The maximum family benefit amounts in column V of the benefit 
table in appendix III.

[47 FR 30734, July 15, 1982, as amended at 51 FR 12603, Apr. 14, 1986]



Sec. 404.272  Indexes we use to measure the rise in the cost-of-living.

    (a) The bases. To measure increases in the cost-of-living for annual 
automatic increase purposes, we use either:
    (1) The revised Consumer Price Index (CPI) for urban wage earners 
and clerical workers as published by the Department of Labor, or
    (2) The average wage index (AWI), which is the average of the annual 
total wages that we use to index (i.e., update) a worker's past earnings 
when we compute his or her primary insurance amount (Sec. 404.211(c)).
    (b) Effect of the OASDI fund ratio. Which of these indexes we use to 
measure increases in the cost-of-living depends on the Old-Age, 
Survivors, and Disability Insurance (OASDI) fund ratio.
    (c) OASDI fund ratio for years after 1984. For purposes of cost-of-
living increases, the OASDI fund ratio is the ratio of the combined 
assets in the Federal Old-Age and Survivors Insurance Trust Fund and the 
Federal Disability Insurance Trust Fund (see section 201 of the Social 
Security Act) on January 1 of a given year, to the estimated 
expenditures from the Funds in the same year. The January 1 balance 
consists of the assets (i.e., government bonds and cash) in the Federal 
Old-Age and Survivors Insurance Trust Fund and the Federal Disability 
Insurance Trust Fund, plus Federal Insurance Contributions Act (FICA) 
and Self-Employment Contributions Act (SECA) taxes transferred to these 
trust funds on January 1 of the given year, minus the outstanding 
amounts (principal and interest) owed to the Federal Hospital Insurance 
Trust Fund as a result of interfund loans. Estimated expenditures are 
amounts we expect to pay from the Old-Age and Survivors Insurance and 
the Disability Insurance Trust Funds during the year, including the net 
amount that we pay into the Railroad Retirement Account, but excluding 
principal repayments and interest payments to the Hospital Insurance 
Trust Fund and transfer payments between the Old-Age and Survivors 
Insurance and the Disability Insurance Trust Funds. The ratio as 
calculated under this rule is rounded to the nearest 0.1 percent.

[[Page 89]]

    (d) Which index we use. We use the CPI if the OASDI fund ratio is 
15.0 percent or more for any year from 1984 through 1988, and if the 
ratio is 20.0 percent or more for any year after 1988. We use either the 
CPI or the AWI, depending on which has the lower percentage increase in 
the applicable measuring period (see Sec. 404.274), if the OASDI fund 
ratio is less than 15.0 percent for any year from 1984 through 1988, and 
if the ratio is less than 20.0 percent for any year after 1988. For 
example, if the OASDI fund ratio for a year is 17.0 percent, the cost-
of-living increase effective December of that year will be based on the 
CPI.

[51 FR 12603, Apr. 14, 1986]



Sec. 404.273  When automatic cost-of-living increases are to be made.

    We make automatic cost-of-living increases if the applicable index, 
either the CPI or the AWI, rises by 3.0 percent or more over a specified 
measuring period (see the rules in Sec. 404.274). If the cost-of-living 
increase is to be based on an increase of 3.0 percent or more in the 
CPI, the increase becomes effective in December of the year in which the 
measuring period ends. If the increase is to be based on an increase of 
3.0 percent or more in the AWI, the increase becomes effective in 
December of the year after the year in which the measuring period ends.

[51 FR 12603, Apr. 14, 1986]



Sec. 404.274  Measuring the increase in the indexes.

    (a) General. Depending on the OASDI fund ratio, we measure the rise 
in one index or in both indexes during the applicable measuring period 
(described in paragraphs (b) and (c) of this section) to determine 
whether there will be an automatic cost-of-living increase and if so, 
its amount.
    (b) Measuring period based on CPI. For the increase effective 
December 1984 and later years, the measuring period we use for finding 
the amount of the CPI increase--
    (1) Begins with--
    (i) Any calendar quarter in which an ad hoc benefit increase is 
effective; or, if later,
    (ii) The third calendar quarter of any year in which the last 
automatic increase became effective; and
    (2) Ends with the third calendar quarter of the following year, but 
only if the CPI has increased by at least 3.0 percent (after rounding to 
the nearest one-tenth of one percent) since the beginning of the 
measuring period. (If the CPI increase is less than 3.0 percent, we 
extend the measuring period to the third quarter of the next year, doing 
so repeatedly until the 3.0 percent level is reached.) If this measuring 
period ends in a year after the year in which an ad hoc increase was 
enacted into law or took effect, there can be no cost-of-living increase 
based on this measuring period, and we will apply the rule in paragraph 
(d) of this section.
    (c) Measuring period based on AWI. The measuring period we use for 
finding the amount of the AWI increase--
    (1) Begins with--
    (i) The calendar year before the year in which an ad hoc benefit 
increase is effective; or, if later,
    (ii) The calendar year before the year in which the last automatic 
increase became effective; and
    (2) Ends with the following year, but only if the AWI has increased 
by at least 3.0 percent (after rounding to the nearest one-tenth of one 
percent) in that one-year period. (If the AWI increase is less than 3.0 
percent, we extend the measuring period to the next year, doing so 
repeatedly until the 3.0 percent level is reached.) If this measuring 
period ends in a year in which an ad hoc increase was enacted into law 
or took effect, there can be no cost-of-living increase based on this 
measuring period, and we will apply the rule in paragraph (d) of this 
section.
    (d) When no automatic cost-of-living increase is possible. No 
automatic cost-of-living increase is possible for the calendar year that 
immediately follows a year in which an ad hoc increase was enacted into 
law or took effect. The measuring period for the next automatic cost-of-
living increase--
    (1) Where the measuring period is based on the CPI,
    (i) Begins with the calendar quarter in which the ad hoc increase 
took effect; and

[[Page 90]]

    (ii) Ends with the third calendar quarter of the next year in which 
the CPI has risen by at least 3.0 percent if an ad hoc increase was not 
enacted or effective in the preceding year. (If the CPI increase is less 
than 3.0 percent, or an ad hoc increase was enacted or effective in the 
prior year, we extend the end of the measuring period to the third 
quarter of the following year, doing so repeatedly until the 3.0 percent 
level is reached in a year which does not immediately follow an ad hoc 
increase year.)
    (2) Where the measuring period is based on the AWI,
    (i) Begins with the calendar year before the year in which the ad 
hoc increase took effect; and
    (ii) Ends with the next calendar year in which the AWI has increased 
by at least 3.0 percent and in which an ad hoc increase is not enacted 
or effective. (If the AWI increase is less than 3.0 percent, we extend 
the end of the measuring period to the following year, doing so 
repeatedly until the 3.0 percent level is reached in a year in which an 
ad hoc increase is not enacted or effective.)

[51 FR 12603, Apr. 21, 1986]



Sec. 404.275  Amount of automatic cost-of-living increases.

    (a) Based on CPI. When the average of the CPI for the three months 
of the quarter ending the measuring period is at least 3.0 percent 
higher than the average of the CPI for the three months of the quarter 
in which the measuring period began, we compute an automatic cost-of-
living increase percentage to be effective beginning with benefits 
payable for December of the year in which the measuring period ended. To 
compute the average of the CPI, the three monthly CPI figures (which are 
published to one decimal place) are added, the total is divided by 3, 
and the result is rounded to the nearest 0.1. If the CPI is the 
applicable index (see Sec. 404.272(d)), we apply the increase (rounded 
to the nearest one-tenth of one percent) to the amounts described in 
Sec. 404.271. We round the resulting amounts to the next lower multiple 
of $0.10 if not already a multiple of $0.10.
    (b) Based on AWI. When the AWI for the year which ends the measuring 
period is at least 3.0 percent higher than the AWI for the year which 
begins the measuring period and all the other conditions for an AWI-
based increase are met, that percent is the automatic cost-of-living 
increase which is due beginning with benefits payable for December of 
the year after the measuring period ended. If the AWI is the applicable 
index (see Sec. 404.272(d)), we apply that percentage increase (rounded 
to the nearest one-tenth of one percent) to the amounts described in 
Sec. 404.271. We round the resulting amounts to the next lower multiple 
of $0.10 if not already a multiple of $0.10.
    (c) Additional increase. See Sec. 404.278 for the additional 
increase which might be possible.

[51 FR 12604, Apr. 21, 1986]



Sec. 404.276  Publication of notice of increase.

    When we determine that an automatic cost-of-living increase is due, 
we publish in the Federal Register within 45 days of the end of the 
measuring period used in finding the amount of the increase--
    (a) The fact that an increase is due;
    (b) The amount of the increase;
    (c) The increased special minimum primary insurance amounts; and
    (d) The range of increased maximum family benefits that corresponds 
to the range of increased special minimum primary insurance amounts.



Sec. 404.277  When does the frozen minimum primary insurance amount 
increase because of cost-of-living adjustments?

    (a) What is the frozen minimum primary insurance amount (PIA)? The 
frozen minimum is a minimum PIA for certain workers whose benefits are 
computed under the average-indexed-monthly-earnings method. Section 
404.210(a) with Sec. 404.212(e) explains when the frozen minimum 
applies.
    (b) When does the frozen minimum primary insurance amount (PIA) 
increase automatically? The frozen minimum PIA increases automatically 
in every year in which you or your dependents or survivors are entitled 
to benefits and a cost-of-living increase applies.
    (c) When are automatic increases effective for old-age or disability 
benefits based

[[Page 91]]

on a frozen minimum primary insurance amount (PIA)? Automatic cost-of-
living increases apply to your frozen minimum PIA beginning with the 
earliest of:
    (1) December of the year you become entitled to benefits and receive 
at least a partial benefit;
    (2) December of the year you reach full retirement age (as defined 
in Sec. 404.409) if you are entitled to benefits in or before the month 
you attain full retirement age, regardless of whether you receive at 
least a partial benefit; or
    (3) December of the year you become entitled to benefits if that is 
after you attain full retirement age.
    (d) When are automatic increases effective for survivor benefits 
based on a frozen minimum primary insurance amount (PIA)? (1) Automatic 
cost-of-living increases apply to the frozen minimum PIA used to 
determine survivor benefits in December of any year in which your 
child(ren), your surviving spouse caring for your child(ren), or your 
parent(s), are entitled to survivor benefits for at least one month.
    (2) Automatic cost-of-living increases apply beginning with December 
of the earlier of:
    (i) The year in which your surviving spouse or surviving divorced 
spouse (as defined in Sec. Sec. 404.335 and 404.336) has attained full 
retirement age (as defined in Sec. 404.409) and receives at least a 
partial benefit, or
    (ii) The year in which your surviving spouse or surviving disabled 
spouse becomes entitled to benefits and receives at least a partial 
benefit.
    (3) Automatic cost-of-living increases are not applied to the frozen 
minimum PIA in any year in which no survivor of yours is entitled to 
benefits on your social security record.

[68 FR 4702, Jan. 30, 2003]



Sec. 404.278  Additional cost-of-living increase.

    (a) General. In addition to the cost-of-living increase explained in 
Sec. 404.275 for a given year, we will further increase the amounts in 
Sec. 404.271 if--
    (1) The OASDI fund ratio is more than 32.0 percent in the given year 
in which a cost-of-living increase is due; and
    (2) In any prior year, the cost-of-living increase was based on the 
AWI as the lower of the CPI and AWI (or would have been based on the AWI 
except that it was less than the required 3.0 percent increase).
    (b) Measuring period for the additional increase--(1) Beginning. To 
compute the additional increase, we begin with--
    (i) In the case of certain uninsured beneficiaries age 72 and older 
(see Sec. 404.380), the first calendar year in which a cost-of-living 
adjustment was based on the AWI rather than the CPI;
    (ii) For all other individuals and for maximum benefits payable to a 
family, the year in which the insured individual became eligible for 
old-age or disability benefits to which he or she is currently entitled, 
or died before becoming eligible.
    (2) Ending. The end of the measuring period is the year before the 
first year in which a cost-of-living increase is due based on the CPI 
and in which the OASDI fund ratio is more than 32.0 percent.
    (c)Compounded percentage benefit increase. To compute the additional 
cost-of-living increase, we must first compute the compounded percentage 
benefit increase (CPBI) for both the cost-of-living increases that were 
actually paid during the measuring period and for the increases that 
would have been paid if the CPI had been the basis for all the 
increases.
    (d) Computing the CPBI. The computation of the CPBI is as follows--
    (1) Obtain the sum of (i) 1.000 and (ii) the actual cost-of-living 
increase percentage (expressed as a decimal) for each year in the 
measuring period;
    (2) Multiply the resulting amount for the first year by that for the 
second year, then multiply that product by the amount for the third 
year, and continue until the last amount has been multiplied by the 
product of the preceding amounts;
    (3) Subtract 1 from the last product;
    (4) Multiply the remaining product by 100. The result is what we 
call the actual CPBI.
    (5) Substitute the cost-of-living increase percentage(s) that would 
have been used if the increase(s) had been based on the CPI (for some 
years, this will be the percentage that was used),

[[Page 92]]

and do the same computations as in paragraphs (d) (1) through (4) of 
this section. The result is what we call the assumed CPBI.
    (e) Computing the additional cost-of-living increase. To compute the 
precentage increase, we--
    (1) Subtract the actual CPBI from the assumed CPBI;
    (2) Add 100 to the actual CPBI;
    (3) Divide the answer from paragraph (e)(1) of this section by the 
answer from paragraph (e)(2) of this section, multiply the quotient by 
100, and round to the nearest 0.1. The result is the additional increase 
percentage, which we apply to the appropriate amount described in Sec. 
404.271 after that amount has been increased under Sec. 404.275 for a 
given year. If that increased amount is not a multiple of $0.10, we will 
decrease it to the next lower multiple of $0.10.
    (f) Restrictions on paying an additional cost-of-living increase. We 
will pay the additional increase to the extent necessary to bring the 
benefits up to the level they would have been if they had been increased 
based on the CPI. However, we will pay the additional increase only to 
the extent payment will not cause the OASDI fund ratio to drop below 
32.0 percent for the year after the year in which the increase is 
effective.

[51 FR 12604, Apr. 21, 1986]

                Recomputing Your Primary Insurance Amount



Sec. 404.280  Recomputations.

    At times after you or your survivors become entitled to benefits, we 
will recompute your primary insurance amount. Usually we will recompute 
only if doing so will increase your primary insurance amount. However, 
we will also recompute your primary insurance amount if you first became 
eligible for old-age or disability insurance benefits after 1985, and 
later become entitled to a pension based on your noncovered employment, 
as explained in Sec. 404.213. There is no limit on the number of times 
your primary insurance amount may be recomputed, and we do most 
recomputations automatically. In the following sections, we explain:
    (a) Why a recomputation is made (Sec. 404.281),
    (b) When a recomputation takes effect (Sec. 404.282),
    (c) Methods of recomputing (Sec. Sec. 404.283 and 404.284),
    (d) Automatic recomputations (Sec. 404.285),
    (e) Requesting a recomputation (Sec. 404.286),
    (f) Waiving a recomputation (Sec. 404.287), and
    (g) Recomputing when you are entitled to a pension based on 
noncovered employment (Sec. 404.288).

[52 FR 47918, Dec. 17, 1987]



Sec. 404.281  Why your primary insurance amount may be recomputed.

    (a) Earnings not included in earlier computation or recomputation. 
The most common reason for recomputing your primary insurance amount is 
to include earnings of yours that were not used in the first computation 
or in an earlier recomputation, as described in paragraphs (c) through 
(e) of this section. These earnings will result in a revised average 
monthly wage or revised average indexed monthly earnings.
    (b) New computation method enacted. If a new method of computing or 
recomputing primary insurance amounts is enacted into law and you are 
eligible to have your primary insurance amount recomputed under the new 
method, we will recompute it under the new method if doing so would 
increase your primary insurance amount.
    (c) Earnings in the year you reach age 62 or become disabled. In the 
initial computation of your primary insurance amount, we do not use your 
earnings in the year you become entitled to old-age insurance benefits 
or become disabled. However, we can use those earnings (called lag 
earnings) in a recomputation of your primary insurance amount. We 
recompute and begin paying you the higher benefits in the year after the 
year you become entitled to old-age benefits or become disabled.
    (d) Earnings not reported to us in time to use them in the 
computation of your primary insurance amount. Because of the way reports 
of earnings are required to be submitted to us for years after 1977, the 
earnings you have in the year before you become entitled to old-

[[Page 93]]

age insurance benefits, or become disabled or in the year you die might 
not be reported to us in time to use them in computing your primary 
insurance amount. We recompute your primary insurance amount based on 
the new earnings information and begin paying you (or your survivors) 
the higher benefits based on the additional earnings, beginning with the 
month you became entitled or died.
    (e) Earnings after entitlement that are used in a recomputation. 
Earnings that you have after you become entitled to benefits will be 
used in a recomputation of your primary insurance amount.
    (f) Entitlement to a monthly pension. We will recompute your primary 
insurance amount if in a month after you became entitled to old-age or 
disability insurance benefits, you become entitled to a pension based on 
noncovered employment, as explained in Sec. 404.213. Further, we will 
recompute your primary insurance amount after your death to disregard a 
monthly pension based on noncovered employment which affected your 
primary insurance amount.

[47 FR 30734, July 15, 1982, as amended at 52 FR 47918, Dec. 17, 1987]



Sec. 404.282  Effective date of recomputations.

    Most recomputations are effective beginning with January of the 
calendar year after the year in which the additional earnings used in 
the recomputation were paid. However, a recomputation to include 
earnings in the year of death (whether or not paid before death) is 
effective for the month of death. Additionally if you first became 
eligible for old-age or disability insurance benefits after 1985 and you 
later also become entitled to a monthly pension based on noncovered 
employment, we will recompute your primary insurance amount under the 
rules in Sec. 404.213; this recomputed Social Security benefit amount 
is effective for the first month you are entitled to the pension. 
Finally, if your primary insurance amount was affected by your 
entitlement to a pension, we will recompute the amount to disregard the 
pension, effective with the month of your death.

[47 FR 30734, July 15, 1982, as amended at 52 FR 47918, Dec. 17, 1987]



Sec. 404.283  Recomputation under method other than that used to find 
your primary insurance amount.

    In some cases, we may recompute your primary insurance amount under 
a computation method different from the method used in the computation 
(or earlier recomputation) of your primary insurance amount, if you are 
eligible for a computation or recomputation under the different method.



Sec. 404.284  Recomputations for people who reach age 62, or become 
disabled, or die before age 62 after 1978.

    (a) General. Years of your earnings after 1978 not used in the 
computation of your primary insurance amount (or in earlier 
recomputations) under the average-indexed-monthly-earnings method may be 
substituted for earlier years of your indexed earnings in a 
recomputation, but only under the average-indexed-monthly-earnings 
method. See Sec. 404.288 for the rules on recomputing when you are 
entitled to a monthly pension based on noncovered employment.
    (b) Substituting actual dollar amounts in earnings for earlier years 
of indexed earnings. When we recompute your primary insurance amount 
under the average-indexed-monthly earnings method, we use actual dollar 
amounts, i.e., no indexing, for earnings not included in the initial 
computation or earlier recomputation. These later earnings are 
substituted for earlier years of indexed or actual earnings that are 
lower.
    (c) Benefit formula used in recomputation. The formula that was used 
in the first computation of your primary insurance amount is also used 
in recomputations of your primary insurance amount.
    (d) Your recomputed primary insurance amount. We recompute your 
primary insurance amount by applying the benefit formula to your average 
indexed monthly earnings as revised to include additional earnings. See 
Sec. 404.281. We then increase the recomputed PIA by

[[Page 94]]

the amounts of any automatic cost-of-living or ad hoc increases in 
primary insurance amounts that have become effective since you reached 
age 62, or became disabled or died before age 62.
    (e) Minimum increase in primary insurance amounts. Your primary 
insurance amount may not be recomputed unless doing so would increase it 
by at least $1.

    Example 1. Ms. A, whose primary insurance amount we computed to be 
$432.40 in June 1979 in Sec. Sec. 404.210 through 404.212 (based on 
average indexed monthly earnings of $903), had earnings of $11,000 in 
1979 which were not used in the initial computation of her primary 
insurance amount. We may recompute her primary insurance amount 
effective for January 1980. In this recomputation, her 1979 earnings may 
be substituted in their actual dollar amount for the lowest year of her 
indexed earnings that was used in the initial computation. In Ms. A's 
case, we substitute the $11,000 for her 1966 indexed earnings of 
$8,911.36. Her total indexed earnings are now $251,470.05 and her new 
average indexed monthly earnings are $911. We apply to Ms. A's new 
average indexed monthly earnings the same benefit formula we used in the 
initial computation. Doing so produces an amount of $396.00. An 
automatic cost-of-living increase of 9.9 percent was effective in June 
1979. We increase the $396.00 amount by 9.9 percent to find Ms. A's 
recomputed primary insurance amount of $435.30. Later we increased the 
primary insurance amount to $497.60 to reflect the 14.3 percent cost-of-
living increase beginning June 1980 and to $553.40 to reflect the 11.2 
percent cost-of-living increase beginning June 1981.
    Example 2. Mr. B, whose primary insurance amount we computed to be 
$429.20 (based on average monthly wages of $502) in June 1978 in 
Sec. Sec. 404.220 through 404.222, had earnings of $12,000 in 1978 
which were not used in the initial computation of his primary insurance 
amount. We may recompute his primary insurance amount effective for 
January 1979. In this recomputation, his 1978 earnings are substituted 
for the lowest year of earnings used in the initial computation ($2,700 
in 1952). Mr. B's total earnings are now $142,000 and his new average 
monthly wage is $537.
    We next find Mr. B's new average monthly wage in column III of the 
December 1978 benefit table in appendix III. Reading across, we find his 
recomputed primary insurance amount on the same line in column IV, which 
is $407.70. We then apply the 9.9 percent, the 14.3 percent and the 11.2 
percent automatic cost-of-living increases for June 1979, June 1980, and 
June 1981, respectively, to compute Mr. B's primary insurance amount of 
$569.60.

    (f) Guaranteed alternatives. We may recompute your primary insurance 
amount by any of the following methods for which you qualify, if doing 
so would result in a higher amount than the one computed under the 
average-indexed-monthly-earnings method. Earnings in or after the year 
you reach age 62 cannot be used.
    (1) If you reached age 62 after 1978 and before 1984, we may 
recompute to include earnings for years before the year you reached age 
62 by using the guaranteed alternative (Sec. 404.231). We will increase 
the result by any cost-of-living or ad hoc increases in the primary 
insurance amounts that have become effective in and after the year you 
reached age 62.
    (2) We will also recompute under the old-start guarantee (Sec. 
404.242) and the prior-disability guarantee (Sec. 404.252) if you meet 
the requirements of either or both these methods.

[47 FR 30734, July 15, 1982, as amended at 52 FR 47918, Dec. 17, 1987]



Sec. 404.285  Recomputations performed automatically.

    Each year, we examine the earnings record of every retired, 
disabled, and deceased worker to see if the worker's primary insurance 
amount may be recomputed under any of the methods we have described. 
When a recomputation is called for, we perform it automatically and 
begin paying the higher benefits based on your recomputed primary 
insurance amount for the earliest possible month that the recomputation 
can be effective. You do not have to request this service, although you 
may request a recomputation at an earlier date than one would otherwise 
be performed (see Sec. 404.286). Doing so, however, does not allow your 
increased primary insurance amount to be effective any sooner than it 
would be under an automatic recomputation. You may also waive a 
recomputation if one would disadvantage you or your family (see Sec. 
404.287).



Sec. 404.286  How to request an immediate recomputation.

    You may request that your primary insurance amount be recomputed 
sooner than it would be recomputed automatically. To do so, you must 
make

[[Page 95]]

the request in writing to us and provide acceptable evidence of your 
earnings not included in the first computation or earlier recomputation 
of your primary insurance amount. If doing so will increase your primary 
insurance amount, we will recompute it. However, we cannot begin paying 
higher benefits on the recomputed primary insurance amount any sooner 
than we could under an automatic recomputation, i.e., for January of the 
year following the year in which the earnings were paid or derived.



Sec. 404.287  Waiver of recomputation.

    If you or your family would be disadvantaged in some way by a 
recomputation of your primary insurance amount, or you and every member 
of your family do not want your primary insurance amount to be 
recomputed for any other reason, you may waive (that is, give up your 
right to) a recomputation, but you must do so in writing. That you waive 
one recomputation, however, does not mean that you also waive future 
recomputations for which you might be eligible.



Sec. 404.288  Recomputing when you are entitled to a monthly pension 
based on noncovered employment.

    (a) After entitlement to old-age or disability insurance benefits. 
If you first become eligible for old-age or disability insurance 
benefits after 1985 and you later become entitled to a monthly pension 
based on noncovered employment, we may recompute your primary insurance 
amount under the rules in Sec. 404.213. When recomputing, we will use 
the amount of the pension to which you are entitled or deemed entitled 
in the first month that you are concurrently eligible for both the 
pension and old-age or disability insurance benefits. We will disregard 
the rule in Sec. 404.284(e) that the recomputation must increase your 
primary insurance amount by at least $1.
    (b) Already entitled to benefits and to a pension based on 
noncovered employment. If we have already computed or recomputed your 
primary insurance amount to take into account your monthly pension, we 
may later recompute for one of the reasons explained in Sec. 404.281. 
We will recompute your primary insurance amount under the rules in 
Sec. Sec. 404.213 and 404.284. Any increase resulting from the 
recomputation under the rules of Sec. 404.284 will be added to the most 
recent primary insurance amount which we had computed to take into 
account your monthly pension.
    (c) After your death. If one or more survivors are entitled to 
benefits after your death, we will recompute the primary insurance 
amount as though it had never been affected by your entitlement to a 
monthly pension based in whole or in part on noncovered employment.

[52 FR 47918, Dec. 17, 1987]

               Recalculations of Primary Insurance Amounts



Sec. 404.290  Recalculations.

    (a) Your primary insurance amount may be ``recalculated'' in certain 
instances. When we recalculate your primary amount, we refigure it under 
the same method we used in the first computation by taking into 
account--
    (1) Earnings (including compensation for railroad service) 
incorrectly included or excluded in the first computation;
    (2) Special deemed earnings credits including credits for military 
service (see subpart N of this part) and for individuals interned during 
World War II (see subpart K of this part), not available at the time of 
the first computation;
    (3) Correction of clerical or mathematical errors; or
    (4) Other miscellaneous changes in status.
    (b) Unlike recomputations, which may only serve to increase your 
primary insurance amount, recalculations may serve to either increase or 
reduce it.

                Appendixes to Subpart C of Part 404--Note

    The following appendices contain data that are needed in computing 
primary insurance amounts. Appendix I contains average of the total 
wages figures, which we use to index a worker's earnings for purposes of 
computing his or her average indexed monthly earnings. Appendix II 
contains benefit formulas which we apply to a worker's average indexed

[[Page 96]]

monthly earnings to find his or her primary insurance amount. Appendix 
III contains the benefit table we use to find a worker's primary 
insurance amount from his or her average monthly wage. We use the 
figures in appendix IV to find your years of coverage for years after 
1950 for purposes of your special minimum primary insurance amount. 
Appendix V contains the table for computing the special minimum primary 
insurance amount. Appendix VI is a table of the percentage increases in 
primary insurance amounts since 1978. Appendix VII is a table of the 
old-law contribution and benefit base that would have been effective 
under the Social Security Act without enactment of the 1977 amendments.
    The figures in the appendices are by law automatically adjusted each 
year. We are required to announce the changes through timely publication 
in the Federal Register. The only exception to the requirement of 
publication in the Federal Register is the update of benefit amounts 
shown in appendix III. We update the benefit amounts for payment 
purposes but are not required by law to publish this extensive table in 
the Federal Register. We have not updated the table in appendix III, but 
the introductory paragraphs at appendix III explain how you can compute 
the current benefit amount.
    When we publish the figures in the Federal Register, we do not 
change every one of these figures. Instead, we provide new ones for each 
year that passes. We continue to use the old ones for various 
computation purposes, as the regulations show. Most of the new figures 
for these appendices are required by law to be published by November 1 
of each year. Notice of automatic cost-of-living increases in primary 
insurance amounts is required to be published within 45 days of the end 
of the applicable measuring period for the increase (see Sec. Sec. 
404.274 and 404.276). In effect, publication is required within 45 days 
of the end of the third calendar quarter of any year in which there is 
to be an automatic cost-of-living increase.
    We begin to use the new data in computing primary insurance amounts 
as soon as required by law, even before we periodically update these 
appendices. If the data you need to find your primary insurance amount 
have not yet been included in the appendices, you may find the figures 
in the Federal Register on or about November 1.

[52 FR 8247, Mar. 17, 1987]

  Appendix I to Subpart C of Part 404--Average of the Total Wages for 
                            Years After 1950

    Explanation: We use these figures to index your social security 
earnings (as described in Sec. 404.211) for purposes of computing your 
average indexed monthly earnings.

------------------------------------------------------------------------
                                                              Average of
                       Calendar year                          the total
                                                                wages
------------------------------------------------------------------------
1951.......................................................    $2,799.16
1952.......................................................     2,973.32
1953.......................................................     3,139.44
1954.......................................................     3,155.64
1955.......................................................     3,301.44
1956.......................................................     3,532.36
1957.......................................................     3,641.72
1958.......................................................     3,673.80
1959.......................................................     3,855.80
1960.......................................................     4,007.12
1961.......................................................     4,086.76
1962.......................................................     4,291.40
1963.......................................................     4,396.64
1964.......................................................     4,576.32
1965.......................................................     4,658.72
1966.......................................................     4,938.36
1967.......................................................     5,213.44
1968.......................................................     5,571.76
1969.......................................................     5,893.76
1970.......................................................     6,186.24
1971.......................................................     6,497.08
1972.......................................................     7,133.80
1973.......................................................     7,580.16
1974.......................................................     8,030.76
1975.......................................................     8,630.92
1976.......................................................     9,226.48
1977.......................................................     9,779.44
1978.......................................................    10,556.03
1979.......................................................    11,479.46
1980.......................................................    12,513.46
1981.......................................................    13,773.10
1982.......................................................    14,531.34
1983.......................................................    15,239.24
1984.......................................................    16,135.07
1985.......................................................    16,822.51
1986.......................................................    17,321.82
1987.......................................................    18,426.51
1988.......................................................    19,334.04
1989.......................................................    20,099.55
1990.......................................................    21,027.98
------------------------------------------------------------------------


[47 FR 30734, July 15, 1982, as amended at 52 FR 8247, Mar. 17, 1987; 57 
FR 44096, Sept. 24, 1992]

Appendix II to Subpart C of Part 404--Benefit Formulas Used With Average 
                        Indexed Monthly Earnings

    As explained in Sec. 404.212, we use one of the formulas below to 
compute your primary insurance amount from your average indexed monthly 
earnings (AIME). To select the appropriate formula, we find in the left-
hand column the year after 1978 in which you reach age 62, or become 
disabled, or die before age 62. The benefit formula to be used in 
computing your primary insurance amount is on the same line in the 
right-hand columns. For example, if you reach age 62 or become disabled 
or die before age 62 in 1979, then we compute 90 percent of the first 
$180 of AIME, 32 percent of the next $905 of AIME, and 15 percent of 
AIME over $1,085. After we figure your amount for each step in the 
formula, we add the amounts. If the total is not

[[Page 97]]

already a multiple of $0.10, we round the total as follows:
    (1) For computations using the benefit formulas in effect for 1979 
through 1982, we round the total upward to the nearest $0.10, and
    (2) For computations using the benefit formulas in effect for 1983 
and later, we round the total downward to the nearest $0.10.

                            Benefit Formulas
------------------------------------------------------------------------
                                              90     plus 32    plus 15
                                           percent   percent    percent
        Year you reach age 62 \1\           of the    of the    of AIME
                                           first--    next--     over--
------------------------------------------------------------------------
1979.....................................     $180       $905     $1,085
1980.....................................      194        977      1,171
1981.....................................      211      1,063      1,274
1982.....................................      230      1,158      1,388
1983.....................................      254      1,274      1,528
1984.....................................      267      1,345      1,612
1985.....................................      280      1,411      1,691
1986.....................................      297      1,493      1,790
1987.....................................      310      1,556      1,866
1988.....................................      319      1,603      1,922
1989.....................................      339      1,705      2,044
1990.....................................      356      1,789      2,145
1991.....................................      370      1,860      2,230
1992.....................................      387      1,946      2,333
------------------------------------------------------------------------
\1\ Or become disabled or die before age 62.


[57 FR 44096, Sept. 24, 1992; 57 FR 45878, Oct. 5, 1992]

          Appendix III to Subpart C of Part 404--Benefit Table

    This benefit table shows primary insurance amounts and maximum 
family benefits in effect in December 1978 based on cost-of-living 
increases which became effective for June 1978. (See Sec. 404.403 for 
information on maximum family benefits.) You will also be able to find 
primary insurance amounts for an individual whose entitlement began in 
the period June 1977 through May 1978.
    The benefit table in effect in December 1978 had a minimum primary 
insurance amount of $121.80. As explained in Sec. 404.222(b), certain 
workers eligible, or who died without having been eligible, before 1982 
had their benefit computed from this table. However, the minimum benefit 
provision was repealed for other workers by the 1981 amendments to the 
Act (the Omnibus Budget Reconciliation Act of 1981, Pub. L. 97-35 as 
modified by Pub. L. 97-123). As a result, this benefit table includes a 
downward extension from the former minimum of $121.80 to the lowest 
primary insurance amount now possible. The extension is calculated as 
follows. For each single dollar of average monthly wage in the benefit 
table, the primary insurance amount shown for December 1978 is $121.80 
multiplied by the ratio of that average monthly wage to $76. The upper 
limit of each primary insurance benefit range in column I of the table 
is $16.20 multiplied by the ratio of the average monthly wage in column 
III of the table to $76. The maximum family benefit is 150 percent of 
the corresponding primary insurance amount.
    The repeal of the minimum benefit provision is effective with 
January 1982 for most workers and their families where the worker 
initially becomes eligible for benefits after 1981 or dies after 1981 
without having been eligible before January 1982. For members of a 
religious order who are required to take a vow of poverty, as explained 
in 20 CFR 404.1024, and which religious order elected Social Security 
coverage before December 29, 1981, the repeal is effective with January 
1992 based on first eligibility or death in that month or later.
    To use this table, you must first compute the primary insurance 
benefit (column I) or the average monthly wage (column III), then move 
across the same line to either column II or column IV as appropriate. To 
determine increases in primary insurance amounts since December 1978 you 
should see appendix VI. Appendix VI tells you, by year, the percentage 
of the increases. In applying each cost-of-living increase to primary 
insurance amounts, we round the increased primary insurance amount to 
the next lower multiple of $0.10 if not already a multiple of $0.10. 
(For cost-of-living increases which are effective before June 1982, we 
round to the next higher multiple of $0.10.)

     Extended December 1978 Table of Benefits Effective January 1982
                              [In dollars]
------------------------------------------------------------------------
     I. Primary                    III. Average               V. Maximum
 insurance benefit:              monthly wage: Or     IV.       family
 If an individual's      II.        his or her      Primary    benefits:
 primary insurance     Primary    average monthly  insurance    And the
    benefit (as       insurance      wage (as        amount     maximum
  determined under     amount    determined under  effective   amount of
 Sec.  404.241(e))   effective   Sec.  404.221)   January    benefits
        is--         June 1977:        is--          1982:    payable on
--------------------  Or his or ------------------  Then his   the basis
                         her                         or her    of his or
                       primary               But    primary    her wages
   At      But not    insurance     At       not   insurance   and self-
 least--     more    amount is--  least--   more     amount   employment
            than--                         than--     is--    income is--
 
------------------------------------------------------------------------
          .........  ..........  ........       1       1.70       2.60
               0.42  ..........        2        2       3.30       5.00
   0.43         .63  ..........        3        3       4.90       7.40
    .64         .85  ..........        4        4       6.50       9.80

[[Page 98]]

 
    .86        1.06  ..........        5        5       8.10      12.20
   1.07        1.27  ..........        6        6       9.70      14.60
   1.28        1.49  ..........        7        7      11.30      17.00
   1.50        1.70  ..........        8        8      12.90      19.40
   1.71        1.91  ..........        9        9      14.50      21.80
   1.92        2.13  ..........       10       10      16.10      24.20
   2.14        2.34  ..........       11       11      17.70      26.60
   2.35        2.55  ..........       12       12      19.30      29.00
   2.56        2.77  ..........       13       13      20.90      31.40
   2.78        2.98  ..........       14       14      22.50      33.80
   2.99        3.19  ..........       15       15      24.10      36.20
   3.20        3.41  ..........       16       16      25.70      38.60
   3.42        3.62  ..........       17       17      27.30      41.00
   3.63        3.83  ..........       18       18      28.90      43.40
   3.84        4.05  ..........       19       19      30.50      45.80
   4.06        4.26  ..........       20       20      32.10      48.20
   4.27        4.47  ..........       21       21      33.70      50.60
   4.48        4.68  ..........       22       22      35.30      53.00
   4.69        4.90  ..........       23       23      36.90      55.40
   4.91        5.11  ..........       24       24      38.50      57.80
   5.12        5.32  ..........       25       25      40.10      60.20
   5.33        5.54  ..........       26       26      41.70      62.60
   5.55        5.75  ..........       27       27      43.30      65.00
   5.76        5.96  ..........       28       28      44.90      67.40
   5.97        6.18  ..........       29       29      46.50      69.80
   6.19        6.39  ..........       30       30      48.10      72.20
   6.40        6.60  ..........       31       31      49.70      74.60
   6.61        6.82  ..........       32       32      51.30      77.00
   6.83        7.03  ..........       33       33      52.90      79.40
   7.04        7.24  ..........       34       34      54.50      81.80
   7.25        7.46  ..........       35       35      56.10      84.20
   7.47        7.67  ..........       36       36      57.70      86.60
   7.68        7.88  ..........       37       37      59.30      89.00
   7.89        8.10  ..........       38       38      60.90      91.40
   8.11        8.31  ..........       39       39      62.60      93.90
   8.32        8.52  ..........       40       40      64.20      96.30
   8.53        8.73  ..........       41       41      65.80      98.70
   8.74        8.95  ..........       42       42      67.40     101.10
   8.96        9.16  ..........       43       43      69.00     103.50
   9.17        9.37  ..........       44       44      70.60     105.90
   9.38        9.59  ..........       45       45      72.20     108.30
   9.60        9.80  ..........       46       46      73.80     110.70
   9.81       10.01  ..........       47       47      75.40     113.10
  10.02       10.23  ..........       48       48      77.00     115.50
  10.24       10.44  ..........       49       49      78.60     117.90
  10.45       10.65  ..........       50       50      80.20     120.30
  10.66       10.87  ..........       51       51      81.80     122.70
  10.88       11.08  ..........       52       52      83.40     125.10
  11.09       11.29  ..........       53       53      85.00     127.50
  11.30       11.51  ..........       54       54      86.60     129.90
  11.52       11.72  ..........       55       55      88.20     132.30
  11.73       11.93  ..........       56       56      89.80     134.70
  11.94       12.15  ..........       57       57      91.40     137.10
  12.16       12.36  ..........       58       58      93.00     139.50
  12.37       12.57  ..........       59       59      94.60     141.90
  12.58       12.78  ..........       60       60      96.20     144.30
  12.79       13.00  ..........       61       61      97.80     146.70
  13.01       13.21  ..........       62       62      99.40     149.10
  13.22       13.42  ..........       63       63     101.00     151.50
  13.43       13.64  ..........       64       64     102.60     153.90
  13.65       13.85  ..........       65       65     104.20     156.30
  13.86       14.06  ..........       66       66     105.80     158.70
  14.07       14.28  ..........       67       67     107.40     161.10

[[Page 99]]

 
  14.29       14.49  ..........       68       68     109.00     163.50
  14.50       14.70  ..........       69       69     110.60     165.90
  14.71       14.92  ..........       70       70     112.20     168.30
  14.93       15.13  ..........       71       71     113.80     170.70
  15.14       15.34  ..........       72       72     115.40     173.10
  15.35       15.56  ..........       73       73     117.00     175.50
  15.57       15.77  ..........       74       74     118.60     177.90
  15.78       15.98  ..........       75       75     120.20     180.30
  15.99       16.20  ..........       76       76     121.80     182.70
------------------------------------------------------------------------


              Table of Benefits in Effect in December 1978
                              [In dollars]
------------------------------------------------------------------------
     I. Primary                    III. Average               V. Maximum
 insurance benefit:              monthly wage: Or     IV.       family
 If an individual's      II.        his or her      Primary    benefits:
 primary insurance     Primary    average monthly  insurance    And the
    benefit (as       insurance      wage (as        amount     maximum
  determined under     amount    determined under  effective   amount of
 Sec.  404.241(e))   effective   Sec.  404.221)     June     benefits
        is--         June 1977:        is--          1978:    payable on
--------------------  Or his or ------------------  Then his   the basis
                         her                         or her    of his or
                       primary               But    primary    her wages
   At      But not    insurance     At       not   insurance   and self-
 least--     more    amount is--  least--   more     amount   employment
            than--                         than--     is--    income is--
 
------------------------------------------------------------------------
              16.20     114.30   ........      76     121.80     182.70
  16.21       16.84     116.10        77       78     123.70     185.60
  16.85       17.60     118.80        79       80     126.60     189.90
  17.61       18.40     121.00        81       81     128.90     193.50
  18.41       19.24     123.00        82       83     131.20     196.80
  19.25       20.00     125.80        84       85     134.00     201.00
  20.01       20.64     128.10        86       87     136.50     204.80
  20.65       21.28     130.10        88       89     138.60     207.90
  21.29       21.88     132.70        90       90     141.40     212.10
  21.89       22.28     135.00        91       92     143.80     215.70
  22.29       22.68     137.20        93       94     146.20     219.20
  22.59       23.08     139.40        95       96     148.50     222.80
  23.09       23.44     142.00        97       97     151.30     227.00
  23.45       23.76     144.30        98       99     153.70     230.60
  23.77       24.20     147.10       100      101     156.70     235.10
  24.21       24.60     149.20       102      102     158.90     238.50
  24.61       25.00     151.70       103      104     161.60     242.40
  25.01       25.48     154.50       105      106     164.60     246.90
  25.49       25.92     157.00       107      107     167.30     251.00
  25.93       26.40     159.40       108      109     169.80     254.80
  26.41       26.94     161.90       110      113     172.50     258.80
  26.95       27.46     164.20       114      118     174.90     262.40
  27.47       28.00     166.70       119      122     177.60     266.50
  28.01       28.68     169.30       123      127     180.40     270.60
  28.69       29.25     171.80       128      132     183.00     274.60
  29.26       29.68     174.10       133      136     185.50     278.30
  29.69       30.36     176.50       137      141     188.00     282.10
  30.37       30.92     179.10       142      146     190.80     286.20
  30.93       31.36     181.70       147      150     193.60     290.40
  31.37       32.00     183.90       151      155     195.90     293.90
  32.01       32.60     186.50       156      160     198.70     298.10
  32.61       33.20     189.00       161      164     201.30     302.00
  33.21       33.88     191.40       165      169     203.90     305.90
  33.89       34.50     194.00       170      174     206.70     310.10
  34.51       35.00     196.30       175      178     209.10     313.70
  35.01       35.80     198.90       179      183     211.90     318.00
  35.81       36.40     201.30       184      188     214.40     321.70
  36.41       37.08     203.90       189      193     217.20     326.00
  37.09       37.60     206.40       194      197     219.90     329.90

[[Page 100]]

 
  37.61       38.20     208.80       198      202     222.40     333.60
  38.21       39.12     211.50       203      207     225.30     338.00
  39.13       39.68     214.00       208      211     228.00     342.00
  39.69       40.33     216.00       212      216     230.10     345.20
  40.34       41.12     218.70       217      221     233.00     349.50
  41.13       41.76     221.20       222      225     235.60     353.40
  41.77       42.44     223.90       226      230     238.50     357.80
  42.45       43.20     226.30       231      235     241.10     361.70
  43.21       43.76     229.10       236      239     244.00     366.10
  43.77       44.44     231.20       240      244     246.30     371.10
  44.45       44.88     233.50       245      249     248.70     378.80
  44.89       45.60     236.40       250      253     251.80     384.90
          .........     238.70       254      258     254.30     392.50
          .........     240.80       259      263     256.50     400.00
          .........     243.70       264      267     259.60     206.00
          .........     246.10       268      272     262.10     413.70
          .........     248.70       273      277     264.90     421.20
          .........     251.00       278      281     267.40     427.20
          .........     253.50       282      286     270.00     434.90
          .........     256.20       287      291     272.90     442.60
          .........     258.30       292      295     275.10     448.50
          .........     261.10       296      300     278.10     456.10
          .........     263.50       301      305     280.70     463.80
          .........     265.80       306      309     283.10     469.80
          .........     268.50       310      314     286.00     477.40
          .........     270.70       315      319     288.30     485.10
          .........     273.20       320      323     291.00     491.10
          .........     275.80       324      328     293.80     498.70
          .........     278.10       329      333     296.20     506.20
          .........     281.00       334      337     299.30     512.50
          .........     283.00       338      342     301.40     519.90
          .........     285.60       343      347     304.20     527.50
          .........     288.30       348      351     307.10     533.60
          .........     290.50       352      356     309.40     541.20
          .........     293.30       357      361     312.40     548.80
          .........     295.60       362      365     314.90     554.90
          .........     297.90       366      370     317.30     562.50
          .........     300.60       371      375     320.20     569.90
          .........     303.10       376      379     322.90     576.30
          .........     305.70       380      384     325.60     583.90
          .........     307.90       385      389     328.00     591.30
          .........     310.30       390      393     330.50     597.40
          .........     313.00       394      398     333.40     605.10
          .........     315.40       399      403     336.00     612.70
          .........     318.20       404      407     338.90     618.60
          .........     320.20       408      412     341.10     626.30
          .........     322.50       413      417     343.50     633.80
          .........     324.80       418      421     346.00     639.90
          .........     327.40       422      426     348.70     647.50
          .........     329.60       427      431     351.10     655.10
          .........     331.60       432      436     353.20     662.70
          .........     334.40       437      440     356.20     665.70
          .........     336.50       441      445     358.40     669.70
          .........     338.70       446      450     360.80     673.40
          .........     341.30       451      454     363.50     676.30
          .........     343.50       455      459     365.90     680.10
          .........     345.80       460      464     368.30     683.80
          .........     347.90       465      468     370.60     687.10
          .........     350.70       469      473     373.50     690.80
          .........     352.60       474      478     375.60     694.60
          .........     354.90       479      482     378.00     697.70
          .........     357.40       483      487     380.70     701.60
          .........     359.70       488      492     383.10     705.40

[[Page 101]]

 
          .........     361.90       493      496     385.50     708.40
          .........     364.50       497      501     388.20     712.10
          .........     366.60       502      506     390.50     715.80
          .........     368.90       507      510     392.90     719.00
          .........     371.10       511      515     395.30     722.80
          .........     373.70       516      520     398.00     726.70
          .........     375.80       521      524     400.30     729.50
          .........     378.10       525      529     402.70     733.40
          .........     380.80       530      534     405.60     737.10
          .........     382.80       535      538     407.70     740.20
          .........     385.10       539      543     410.20     744.10
          .........     387.60       544      548     412.80     747.80
          .........     389.90       549      553     415.30     751.60
          .........     392.10       554      556     417.60     753.90
          .........     393.90       557      560     419.60     756.90
          .........     396.10       561      563     421.90     759.30
          .........     398.20       564      567     424.10     762.30
          .........     400.40       568      570     426.50     764.50
          .........     402.30       571      574     428.50     767.50
          .........     404.40       575      577     430.70     769.90
          .........     406.20       578      581     432.70     772.80
          .........     408.40       582      584     435.00     775.20
          .........     410.20       585      588     436.90     778.20
          .........     412.60       589      591     439.50     780.50
          .........     414.60       592      595     441.60     783.50
          .........     416.70       596      598     443.80     785.60
          .........     418.70       599      602     446.00     788.90
          .........     420.70       603      605     448.10     791.10
          .........     422.80       606      609     450.30     794.00
          .........     424.90       610      612     452.60     796.50
          .........     426.90       613      616     454.70     799.50
          .........     428.90       617      620     456.80     802.50
          .........     431.00       621      623     459.10     804.80
          .........     433.00       624      627     461.20     807.90
          .........     435.10       628      630     463.40     810.70
          .........     437.10       631      634     465.60     814.70
          .........     439.20       635      637     467.80     818.50
          .........     441.40       638      641     470.10     822.40
          .........     443.20       642      644     472.10     826.10
          .........     445.40       645      648     474.40     830.10
          .........     447.40       649      652     476.50     833.70
          .........     448.60       653      656     477.80     836.10
          .........     449.90       657      660     479.20     838.40
          .........     451.50       661      665     480.90     841.50
          .........     453.10       666      670     482.60     844.50
          .........     454.80       671      675     484.40     847.40
          .........     456.40       676      680     486.10     850.50
          .........     458.00       681      685     487.80     853.50
          .........     459.80       686      690     489.70     856.40
          .........     461.20       691      695     491.20     859.60
          .........     462.80       696      700     492.90     862.60
          .........     464.50       701      705     494.70     865.60
          .........     466.10       706      710     496.40     868.60
          .........     467.70       711      715     498.20     871.50
          .........     469.40       716      720     500.00     874.60
          .........     471.00       721      725     501.70     877.60
          .........     472.60       726      730     503.40     880.70
          .........     474.20       731      735     505.10     883.80
          .........     475.90       736      740     506.90     886.70
          .........     477.40       741      745     508.50     889.90
          .........     478.90       746      750     510.10     892.70
          .........     480.40       751      755     511.70     896.40
          .........     481.80       756      760     513.20     897.80

[[Page 102]]

 
          .........     483.20       761      765     514.70     900.40
          .........     484.50       766      770     516.00     903.00
          .........     485.80       771      775     517.40     905.40
          .........     487.20       776      780     518.90     907.90
          .........     488.60       781      785     520.40     910.40
          .........     489.80       786      790     521.70     912.90
          .........     491.10       791      795     523.10     915.40
          .........     492.50       796      800     524.60     918.00
          .........     494.00       801      805     526.20     920.50
          .........     495.30       806      810     527.50     923.00
          .........     496.70       811      815     529.00     925.60
          .........     498.00       816      820     530.40     928.00
          .........     499.40       821      825     531.90     930.60
          .........     500.70       826      830     533.30     933.10
          .........     502.00       831      835     534.70     935.70
          .........     503.30       836      840     536.10     938.10
          .........     504.70       841      845     537.60     940.80
          .........     506.00       846      850     538.90     943.00
          .........     507.50       851      855     540.50     945.70
          .........     508.80       856      860     541.90     948.10
          .........     510.20       861      865     543.40     950.70
          .........     511.50       866      870     544.80     953.20
          .........     512.90       871      875     546.30     955.70
          .........     514.10       876      880     547.60     958.20
          .........     515.50       881      885     549.10     960.80
          .........     516.80       886      890     550.40     963.20
          .........     518.20       891      895     551.90     966.00
          .........     519.60       896      900     553.40     968.30
          .........     521.00       901      905     554.90     970.90
          .........     522.30       906      910     556.30     973.50
          .........     523.70       911      915     557.80     976.00
          .........     525.10       916      920     559.30     978.30
          .........     526.30       921      925     560.60     961.00
          .........     527.60       926      930     561.90     983.40
          .........     529.00       931      935     563.40     985.90
          .........     530.40       936      940     564.90     988.50
          .........     531.70       941      945     566.30     991.00
          .........     533.00       946      950     567.70     993.50
          .........     534.50       951      955     569.30     996.10
          .........     535.90       956      960     570.80     998.60
          .........     537.30       961      965     572.30   1,001.00
          .........     538.40       966      970     573.40   1,003.60
          .........     539.80       971      975     574.90   1,006.20
          .........     541.20       976      980     576.40   1,008.50
          .........     542.60       981      985     577.90   1,011.10
          .........     543.80       986      990     579.20   1,013.60
          .........     545.20       991      995     580.70   1,016.20
          .........     546.60       996    1,000     582.20   1,018.60
          .........     547.80     1,001    1,005     583.50   1,020.70
          .........     548.90     1,006    1,010     584.60   1,023.20
          .........     550.20     1,011    1,015     586.00   1,025.30
          .........     551.50     1,016    1,020     587.40   1,027.80
          .........     552.60     1,021    1,025     588.60   1,029.90
          .........     553.80     1,026    1,030     589.80   1,032.20
          .........     555.10     1,031    1,035     591.20   1,034.50
          .........     556.20     1,036    1,040     592.40   1,036.70
          .........     557.50     1,041    1,045     593.80   1,039.10
          .........     558.80     1,046    1,050     595.20   1,041.30
          .........     559.80     1,051    1,055     596.20   1,043.40
          .........     561.10     1,056    1,060     597.60   1,045.90
          .........     562.40     1,061    1,065     599.00   1,048.00
          .........     563.60     1,066    1,070     600.30   1,050.50
          .........     564.80     1,071    1,075     601.60   1,052.60

[[Page 103]]

 
          .........     566.00     1,076    1,080     602.80   1,054.90
          .........     567.30     1,081    1,085     604.20   1,057.10
          .........     568.40     1,086    1,090     605.40   1,059.40
          .........     569.70     1,091    1,095     606.80   1,061.70
          .........     571.00     1,096    1,100     608.20   1,064.00
          .........     572.00     1,101    1,105     609.20   1,066.10
          .........     573.30     1,106    1,110     610.60   1.068.50
          .........     574.60     1,111    1,115     612.00   1,070.70
          .........     575.70     1,116    1,120     613.20   1,073.10
          .........     577.00     1,121    1,125     614.60   1,075.30
          .........     578.20     1,126    1,130     615.80   1,077.60
          .........     579.40     1,131    1,135     617.10   1,079.70
          .........     580.60     1,136    1,140     618.40   1,082.20
          .........     581.90     1,141    1,145     619.80   1,084.40
          .........     583.10     1,146    1,150     621.10   1,086.70
          .........     584.20     1,151    1,555     622.20   1,088.80
          .........     585.50     1,156    1,160     623.60   1,091.10
          .........     586.70     1,161    1,165     624.90   1,093.40
          .........     587.90     1,166    1,170     626.20   1,095.80
          .........     589.20     1,171    1,175     627.50   1,098.00
          .........     590.30     1,176    1,180     628.70   1,100.20
          .........     591.40     1,181    1,185     629.90   1,102.20
          .........     592.60     1,186    1,190     631.20   1,104.30
          .........     593.70     1,191    1,195     632.30   1,106.50
          .........     594.80     1,196    1,200     633.50   1,108.60
          .........     595.90     1,201    1,205     634.70   1,110.60
          .........     597.10     1,206    1,210     636.00   1,112.90
          .........     598.20     1,211    1,215     637.10   1,114.90
          .........     599.30     1,216    1,220     638.30   1,117.00
          .........     600.40     1,221    1,225     639.50   1,119.00
          .........     601.60     1,226    1,230     640.80   1,121.20
          .........     602.70     1,231    1,235     641.90   1,123.30
          .........     603.80     1,236    1,240     643.10   1,125.40
          .........     605.00     1,241    1,245     644.40   1,127.50
          .........     606.10     1,246    1,250     645.50   1,129.60
          .........     607.20     1,251    1,255     646.70   1,131.60
          .........     608.30     1,256    1,260     647.90   1,133.80
          .........     609.50     1,261    1,265     649.20   1,135.90
          .........     610.60     1,266    1,270     650.30   1,138.00
          .........     611.70     1,271    1,275     651.50   1,140.00
          .........     612.80     1,276    1,280     652.70   1,142.20
          .........     613.80     1,281    1,285     653.70   1,144.10
          .........     614.80     1,286    1,290     654.90   1,146.10
          .........     616.00     1,291    1,295     656.10   1,148.00
          .........     617.00     1,296    1,300     657.20   1,150.00
          .........     618.10     1,301    1,305     658.30   1,152.00
          .........     619.10     1,306    1,310     659.40   1,154.00
          .........     620.20     1,311    1,315     660.60   1,155.90
          .........     621.30     1,316    1,320     661.70   1,157.90
          .........     622.30     1,321    1,325     662.80   1,159.80
          .........     623.40     1,326    1,330     664.00   1,161.90
          .........     624.40     1,331    1,335     665.00   1,163.80
          .........     625.50     1,336    1,340     666.20   1,165.80
          .........     626.60     1,341    1,345     667.40   1,167.70
          .........     627.60     1,346    1,350     668.40   1,169.70
          .........     628.70     1,351    1,355     669.60   1,171.70
          .........     629.70     1,356    1,360     670.70   1,173.70
          .........     630.80     1,361    1,365     671.90   1,175.60
          .........     631.80     1,366    1,370     672.90   1,177.70
          .........     632.90     1,371    1,375     674.10   1,179.60
          .........     633.90     1,376    1,380     675.20   1,181.60
          .........     634.90     1,381    1,385     676.20   1,183.40
          .........     635.90     1,386    1,390     677.30   1,185.30

[[Page 104]]

 
          .........     636.90     1,391    1,395     678.30   1,187.10
          .........     637.90     1,396    1,400     679.40   1,189.00
          .........     638.90     1,401    1,405     680.50   1,190.80
          .........     639.90     1,406    1,410     681.50   1,192.70
          .........     640.90     1,411    1,415     682.60   1,194.60
          .........     641.90     1,416    1,420     683.70   1,196.50
          .........     642.90     1,421    1,425     685.70   1,198.30
          .........     643.90     1,426    1,430     684.80   1,200.20
          .........     644.90     1,431    1,435     686.90   1,202.00
          .........     645.90     1,436    1,440     687.90   1,203.90
          .........     646.90     1,441    1,445     689.00   1,205.70
          .........     647.90     1,446    1,450     690.10   1,207.70
          .........     648.90     1,451    1,455     691.10   1,209.50
          .........     649.90     1,456    1,460     692.20   1,211.40
          .........     650.90     1,461    1,465     693.30   1,213.20
          .........     651.90     1,466    1,470     694.30   1,215.10
          .........     652.90     1,471    1,475     695.40   1,216.90
------------------------------------------------------------------------


[47 FR 30734, July 15, 1982; 47 FR 35479, Aug. 16, 1982, as amended at 
48 FR 46143, Oct. 11, 1983; 48 FR 50076, Oct. 31, 1983]

  Appendix IV to Subpart C of Part 404--Earnings Needed for a Year of 
                           Coverage After 1950

Minimum Social Security Earnings to Qualify for a Year of Coverage After
                       1950 for Purposes of the--
------------------------------------------------------------------------
                                              Special        Benefit
                                              minimum      computations
                   Year                       primary      described in
                                             insurance       section
                                               amount     404.213(d) \2\
------------------------------------------------------------------------
1951-1954.................................         $900             $900
1955-1958.................................        1,050            1,050
1959-1965.................................        1,200            1,200
1966-1967.................................        1,650            1,650
1968-1971.................................        1,950            1,950
1972......................................        2,250            2,250
1973......................................        2,700            2,700
1974......................................        3,300            3,300
1975......................................        3,525            3,525
1976......................................        3,825            3,825
1977......................................        4,125            4,125
1978......................................        4,425            4,425
1979......................................        4,725            4,725
1980......................................        5,100            5,100
1981......................................        5,550            5,550
1982......................................        6,075            6,075
1983......................................        6,675            6,675
1984......................................        7,050            7,050
1985......................................        7,425            7,425
1986......................................        7,875            7,875
1987......................................        8,175            8,175
1988......................................        8,400            8,400
1989......................................        8,925            8,925
1990......................................        9,525            9,525
1991......................................        5,940            9,900
1992......................................        6,210           10,350
------------------------------------------------------------------------
\2\ Applies only to certain individuals with pensions from noncovered
  employment.

    Note: For 1951-78, the amounts shown are 25 percent of the 
contribution and benefit base (the contribution and benefit base is the 
same as the annual wage limitation as shown in Sec. 404.1047) in 
effect. For years after 1978, however, the amounts are 25 percent of 
what the contribution and benefit base would have been if the 1977 
Social Security Amendments had not been enacted, except, for special 
minimum benefit purposes, the applicable percentage is 15 percent for 
years after 1990.

[57 FR 44096, Sept. 24, 1992]

[[Page 105]]

   Appendix V to Subpart C of Part 404--Computing the Special Minimum 
      Primary Insurance Amount and Related Maximum Family Benefits

    These tables are based on section 215(a)(1)(C)(i) of the Social 
Security Act, as amended. They include the percent cost-of-living 
increase shown in appendix VI for each effective date.

                                June 1979
------------------------------------------------------------------------
                                                      II.        III.
                                                    Primary     Maximum
              I. Years of coverage                 insurance    family
                                                    amount      benefit
------------------------------------------------------------------------
11..............................................      $12.70      $19.10
12..............................................       25.30       38.00
13..............................................       38.00       57.00
14..............................................       50.60       75.90
15..............................................       63.20       94.90
16..............................................       75.90      113.90
17..............................................       88.50      132.80
18..............................................      101.20      151.80
19..............................................      113.80      170.70
20..............................................      126.40      189.60
21..............................................      139.10      208.70
22..............................................      151.70      227.60
23..............................................      164.40      246.60
24..............................................      177.00      265.50
25..............................................      189.60      284.50
26..............................................      202.30      303.50
27..............................................      214.90      322.40
28..............................................      227.50      341.30
29..............................................      240.20      360.30
30..............................................      252.80      379.20
------------------------------------------------------------------------


                                June 1980
------------------------------------------------------------------------
                                                      II.        III.
                                                    Primary     Maximum
              I. Years of coverage                 insurance    family
                                                    amount      benefit
------------------------------------------------------------------------
11..............................................      $14.60      $21.90
12..............................................       29.00       43.50
13..............................................       43.50       65.30
14..............................................       57.90       86.90
15..............................................       72.30      108.50
16..............................................       86.80      130.20
17..............................................      101.20      151.80
18..............................................      115.70      173.60
19..............................................      130.10      195.20
20..............................................      144.50      216.80
21..............................................      159.00      238.60
22..............................................      173.40      260.20
23..............................................      188.00      282.00
24..............................................      202.40      303.60
25..............................................      216.80      325.20
26..............................................      231.30      347.00
27..............................................      245.70      368.60
28..............................................      260.10      390.20
29..............................................      274.60      411.90
30..............................................      289.00      433.50
------------------------------------------------------------------------


                                June 1981
------------------------------------------------------------------------
                                                      II.        III.
                                                    Primary     Maximum
              I. Years of coverage                 insurance    family
                                                    amount     benefits
------------------------------------------------------------------------
11..............................................      $16.30      $24.50
12..............................................       32.30       48.50
13..............................................       48.40       72.70
14..............................................       64.40       96.70
15..............................................       80.40      120.70
16..............................................       96.60      144.90
17..............................................      112.60      168.90
18..............................................      128.70      193.10
19..............................................      144.70      217.10
20..............................................      160.70      241.10
21..............................................      176.90      265.40
22..............................................      192.90      289.40
23..............................................      209.10      313.70
24..............................................      225.10      337.70
25..............................................      241.10      361.70
26..............................................      257.30      386.00
27..............................................      273.30      410.00
28..............................................      289.30      434.00
29..............................................      305.40      458.10
30..............................................      321.40      482.10
------------------------------------------------------------------------


                                June 1982
------------------------------------------------------------------------
                                                      II.        III.
                                                    Primary     Maximum
              I. Years of coverage                 insurance    family
                                                    amount      benefit
------------------------------------------------------------------------
11..............................................      $17.50      $26.30
12..............................................       34.60       52.00
13..............................................       51.90       78.00
14..............................................       69.10      103.80
15..............................................       86.30      129.60
16..............................................      103.70      155.60
17..............................................      120.90      181.30
18..............................................      138.20      207.30
19..............................................      155.40      233.10
20..............................................      172.50      258.90
21..............................................      189.90      285.00
22..............................................      207.10      310.80
23..............................................      224.50      336.90
24..............................................      241.70      362.60
25..............................................      258.90      388.40
26..............................................      276.30      414.50
27..............................................      293.50      440.30
28..............................................      310.70      466.10
29..............................................      327.90      491.90
30..............................................      345.10      517.70
------------------------------------------------------------------------


                              December 1983
------------------------------------------------------------------------
                                                      II.        III.
                                                    Primary     Maximum
              I. Years of coverage                 insurance    family
                                                    amount      benefit
------------------------------------------------------------------------
11..............................................      $18.10      $27.20
12..............................................       35.80       53.80
13..............................................       53.70       80.70
14..............................................       71.50      107.40
15..............................................       89.30      134.10
16..............................................      107.30      161.00
17..............................................      125.10      187.60
18..............................................      143.00      214.50
19..............................................      160.80      241.20
20..............................................      178.50      267.90
21..............................................      196.50      294.90
22..............................................      214.30      321.60
23..............................................      232.30      348.60
24..............................................      250.10      375.20
25..............................................      267.90      401.90
26..............................................      285.90      429.00

[[Page 106]]

 
27..............................................      303.70      455.70
28..............................................      321.50      482.40
29..............................................      339.30      509.10
30..............................................      357.10      535.80
------------------------------------------------------------------------


                              December 1984
------------------------------------------------------------------------
                                                      II.        III.
                                                    Primary     Maximum
              I. Years of coverage                 insurance    family
                                                    amount      benefit
------------------------------------------------------------------------
11..............................................      $18.70      $28.10
12..............................................       37.00       55.60
13..............................................       55.50       83.50
14..............................................       74.00      111.10
15..............................................       92.40      138.70
16..............................................      111.00      166.60
17..............................................      129.40      194.10
18..............................................      148.00      222.00
19..............................................      166.40      249.60
20..............................................      184.70      277.20
21..............................................      203.30      305.20
22..............................................      221.80      332.80
23..............................................      240.40      360.80
24..............................................      258.80      388.30
25..............................................      277.20      415.90
26..............................................      295.90      444.00
27..............................................      314.30      471.60
28..............................................      332.70      499.20
29..............................................      351.10      526.90
30..............................................      369.50      554.50
------------------------------------------------------------------------


                              December 1985
------------------------------------------------------------------------
                                                      II.        III.
                                                    Primary     Maximum
              I. Years of coverage                 insurance    family
                                                    amount      benefit
------------------------------------------------------------------------
11..............................................      $19.20      $28.90
12..............................................       38.10       57.30
13..............................................       57.20       86.00
14..............................................       76.20      114.50
15..............................................       95.20      142.90
16..............................................      114.40      171.70
17..............................................      133.40      200.10
18..............................................      152.50      228.80
19..............................................      171.50      257.30
20..............................................      190.40      285.70
21..............................................      209.60      314.60
22..............................................      228.60      343.10
23..............................................      247.80      371.90
24..............................................      266.80      400.30
25..............................................      285.70      428.70
26..............................................      305.00      457.70
27..............................................      324.00      486.20
28..............................................      343.00      514.60
29..............................................      361.90      543.20
30..............................................      380.90      571.60
------------------------------------------------------------------------


                              December 1986
------------------------------------------------------------------------
                                                      II.        III.
                                                    Primary     Maximum
              I. Years of coverage                 insurance    family
                                                    amount      benefit
------------------------------------------------------------------------
11..............................................      $19.40      $29.20
12..............................................       38.50       58.00
13..............................................       57.90       87.10
14..............................................       77.10      115.90
15..............................................       96.40      144.70
16..............................................      115.80      173.90
17..............................................      135.10      202.70
18..............................................      154.40      231.70
19..............................................      173.70      260.60
20..............................................      192.80      289.40
21..............................................      212.30      318.60
22..............................................      231.50      347.50
23..............................................      251.00      376.70
24..............................................      270.20      405.50
25..............................................      289.40      434.20
26..............................................      308.90      463.60
27..............................................      328.20      492.50
28..............................................      347.40      521.20
29..............................................      366.60      550.20
30..............................................      385.80      579.00
------------------------------------------------------------------------


                              December 1987
------------------------------------------------------------------------
                                                                 III.
                                                II. Primary    Maximum
             I. Years of coverage                insurance      family
                                                   amount      benefit
------------------------------------------------------------------------
11............................................       $20.20       $30.40
12............................................        40.10        60.40
13............................................        60.30        90.70
14............................................        80.30       120.70
15............................................       100.40       150.70
16............................................       120.60       181.20
17............................................       140.70       211.20
18............................................       160.80       241.40
19............................................       180.90       271.50
20............................................       200.80       301.50
21............................................       221.20       331.90
22............................................       241.20       362.00
23............................................       261.50       392.50
24............................................       281.50       422.50
25............................................       301.50       452.40
26............................................       321.80       483.00
27............................................       341.90       513.10
28............................................       361.90       543.00
29............................................       381.90       573.30
30............................................       402.00       603.30
------------------------------------------------------------------------


                              December 1988
------------------------------------------------------------------------
                                                                 III.
                                                II. Primary    Maximum
             I. Years of coverage                insurance      family
                                                   amount      benefit
------------------------------------------------------------------------
11............................................       $21.00       $31.60
12............................................        41.70        62.80
13............................................        62.70        94.30
14............................................        83.50       125.50
15............................................       104.40       156.70
16............................................       125.40       188.40
17............................................       146.30       219.60
18............................................       167.20       251.00
19............................................       188.10       282.30
20............................................       208.80       313.50
21............................................       230.00       345.10
22............................................       250.80       376.40
23............................................       271.90       408.20
24............................................       292.70       439.40
25............................................       313.50       470.40
26............................................       334.60       502.30
27............................................       355.50       533.60
28............................................       376.30       564.70
29............................................       397.10       596.20

[[Page 107]]

 
30............................................       418.00       627.40
------------------------------------------------------------------------


                              December 1989
------------------------------------------------------------------------
                                                                 III.
                                                II. Primary    Maximum
             I. Years of coverage                insurance      family
                                                   amount      benefit
------------------------------------------------------------------------
11............................................       $21.90       $33.00
12............................................        43.60        65.70
13............................................        65.60        98.70
14............................................        87.40       131.30
15............................................       109.30       164.00
16............................................       131.20       197.20
17............................................       153.10       229.90
18............................................       175.00       262.70
19............................................       196.90       295.50
20............................................       218.60       328.20
21............................................       240.80       361.30
22............................................       262.50       394.00
23............................................       284.60       427.30
24............................................       306.40       460.00
25............................................       328.20       492.50
26............................................       350.30       525.90
27............................................       372.20       558.60
28............................................       393.90       591.20
29............................................       415.70       624.20
30............................................       437.60       656.80
------------------------------------------------------------------------


                              December 1990
------------------------------------------------------------------------
                                                                 III.
                                                II. Primary    Maximum
             I. Years of coverage                insurance      family
                                                   amount      benefit
------------------------------------------------------------------------
11............................................       $23.00       $34.70
12............................................        45.90        69.20
13............................................        69.10       104.00
14............................................        92.10       138.30
15............................................       115.20       172.80
16............................................       138.20       207.80
17............................................       161.30       242.30
18............................................       184.40       276.80
19............................................       207.50       311.40
20............................................       230.40       345.90
21............................................       253.80       380.80
22............................................       276.60       415.20
23............................................       299.90       450.30
24............................................       322.90       484.80
25............................................       345.90       519.00
26............................................       369.20       554.20
27............................................       392.20       588.70
28............................................       415.10       623.10
29............................................       438.10       657.90
30............................................       461.20       692.20
------------------------------------------------------------------------


                              December 1991
------------------------------------------------------------------------
                                                                 III.
                                                II. Primary    Maximum
             I. Years of coverage                insurance      family
                                                   amount      benefit
------------------------------------------------------------------------
11............................................       $23.80       $35.90
12............................................        47.50        71.70
13............................................        71.60       107.80
14............................................        95.50       143.40
15............................................       119.40       179.10
16............................................       143.30       215.40
17............................................       167.20       251.20
18............................................       191.20       287.00
19............................................       215.10       322.90
20............................................       238.90       358.60
21............................................       263.10       394.80
22............................................       286.80       430.50
23............................................       310.90       466.90
24............................................       334.80       502.70
25............................................       358.60       538.20
26............................................       382.80       574.70
27............................................       406.70       610.40
28............................................       430.40       646.10
29............................................       454.30       682.20
30............................................       478.20       717.80
------------------------------------------------------------------------
Note: The amounts shown in the above table for years of coverage less
  than 19 are not payable for June 1981 through December 1981 because
  the corresponding values shown in column II are less than the $135.70
  minimum primary insurance amount payable for that period. For months
  after December 1981, a special minimum primary insurance amount of
  $128.70 will be payable.


[47 FR 30734, July 15, 1982, as amended at 52 FR 8248, Mar. 17, 1987; 57 
FR 44097, Sept. 24, 1992; 57 FR 45878, Oct. 5, 1992]

Appendix VI to Subpart C of Part 404--Percentage of Automatic Increases 
                 in Primary Insurance Amounts Since 1978

------------------------------------------------------------------------
                                                              Percentage
                       Effective date                          increase
------------------------------------------------------------------------
06/79......................................................          9.9
06/80......................................................         14.3
06/81......................................................         11.2
06/82......................................................          7.4
12/83......................................................          3.5
12/84......................................................          3.5
12/85......................................................          3.1
12/86......................................................          1.3
12/87......................................................          4.2
12/88......................................................          4.0
12/89......................................................          4.7
12/90......................................................          5.4
12/91......................................................          3.7
------------------------------------------------------------------------


[57 FR 44097, Sept. 24, 1992]

  Appendix VII to Subpart C of Part 404--``Old-Law'' Contribution and 
                              Benefit Base

    Explanation: We use these figures to determine the earnings needed 
for a year of coverage for years after 1978 (see Sec. 404.261 and 
appendix IV). This is the contribution and benefit base that would have 
been effective under the Social Security Act without the enactment of 
the 1977 amendments.

------------------------------------------------------------------------
                            Year                                Amount
------------------------------------------------------------------------
1979.......................................................      $18,900
1980.......................................................       20,400
1981.......................................................       22,200
1982.......................................................       24,300

[[Page 108]]

 
1983.......................................................       26,700
1984.......................................................       28,200
1985.......................................................       29,700
1986.......................................................       31,500
1987.......................................................       32,700
1988.......................................................       33,600
1989.......................................................       35,700
1990.......................................................       38,100
1991.......................................................       39,600
1992.......................................................       41,400
------------------------------------------------------------------------


[52 FR 8248, Mar. 17, 1987, as amended at 57 FR 44097, Sept. 24, 1992; 
57 FR 45878, Oct. 5, 1992]



  Subpart D_Old-Age, Disability, Dependents' and Survivors' Insurance 
                     Benefits; Period of Disability

    Authority: Secs. 202, 203 (a) and (b), 205(a), 216, 223, 225, 
228(a)-(e), and 702(a)(5) of the Social Security Act (42 U.S.C. 402, 403 
(a) and (b), 405(a), 416, 423, 425, 428(a)-(e), and 902(a)(5)).

    Source: 44 FR 34481, June 15, 1979, unless otherwise noted.

                                 General



Sec. 404.301  Introduction.

    This subpart sets out what requirements you must meet to qualify for 
social security benefits, how your benefit amounts are figured, when 
your right to benefits begins and ends, and how family relationships are 
determined. These benefits are provided by title II of the Social 
Security Act. They include--
    (a) For workers, old-age and disability benefits and benefit 
protection during periods of disability;
    (b) For a worker's dependents, benefits for a worker's wife, 
divorced wife, husband, divorced husband, and child;
    (c) For a worker's survivors, benefits for a worker's widow, 
widower, divorced wife, child, and parent, and a lump-sum death payment; 
and
    (d) For uninsured persons age 72 or older, special payments.



Sec. 404.302  Other regulations related to this subpart.

    This subpart is related to several others. Subpart H sets out what 
evidence you need to prove you qualify for benefits. Subpart P describes 
what is needed to prove you are disabled. Subpart E describes when your 
benefits may be reduced or stopped for a time. Subpart G describes the 
need for and the effect of an application for benefits. Part 410 
describes when you may qualify for black lung benefits. Part 416 
describes when you may qualify for supplemental security income. Also 42 
CFR part 405 describes when you may qualify for hospital and medical 
insurance if you are aged, disabled, or have chronic kidney disease.



Sec. 404.303  Definitions.

    As used in this subpart:
    Apply means to sign a form or statement that the Social Security 
Administration accepts as an application for benefits under the rules 
set out in subpart G.
    Eligible means that a person would meet all the requirements for 
entitlement to benefits for a period of time but has not yet applied.
    Entitled means that a person has applied and has proven his or her 
right to benefits for a period of time.
    Insured person or the insured means someone who has enough earnings 
under social security to permit payment of benefits on his or her 
earnings record. The requirements for becoming insured are described in 
subpart B.
    Permanent home means the true and fixed home (legal domicile) of a 
person. It is the place to which a person intends to return whenever he 
or she is absent.
    Primary insurance amount means an amount that is determined from the 
average monthly earnings creditable to the insured person. This term and 
the manner in which it is computed are explained in subpart C.
    We or Us means the Social Security Administration.
    You means the person who has applied for benefits or the person for 
whom someone else has applied.



Sec. 404.304  What are the general rules on benefit amounts?

    This subpart describes how we determine the highest monthly benefit 
amount you ordinarily could qualify for under each type of benefit. 
However, the highest monthly benefit amount you could qualify for may 
not

[[Page 109]]

be the amount you will be paid. In a particular month, your benefit 
amount may be reduced or not paid at all. Under some circumstances, your 
benefit amount may be increased. The most common reasons for a change in 
your benefit amount are listed below.
    (a) Age. Sections 404.410 through 404.413 explain how your old-age, 
wife's or husband's, or widow's or widower's benefits may be reduced if 
you choose to receive them before you attain full retirement age (as 
defined in Sec. 404.409).
    (b) Earnings. Sections 404.415 through 404.418 explain how 
deductions will be made from your benefits if your earnings or the 
insured person's earnings go over certain limits.
    (c) Overpayments and underpayments. Your benefits may be increased 
or decreased to make up for any previous overpayment or underpayment 
made on the insured person's record. For more information about this, 
see subpart F of this part.
    (d) Family maximum. Sections 404.403 through 404.406 explain that 
there is a maximum amount payable on each insured person's earnings 
record. If you are entitled to benefits as the insured's dependent or 
survivor, your benefits may be reduced to keep total benefits payable to 
the insured's family within these limits.
    (e) Government pension offset. If you are entitled to wife's, 
husband's, widow's, widower's, mother's or father's benefits and receive 
a Government pension for work that was not covered under social 
security, your monthly benefits may be reduced because of that pension. 
Special age 72 payments may also be reduced because of a Government 
pension. For more information about this, see Sec. 404.408a which 
covers reductions for Government pensions and Sec. 404.384(c) which 
covers special age 72 payments.
    (f) Rounding. After all other deductions or reductions, we reduce 
any monthly benefit that is not a multiple of $1 to the next lower 
multiple of $1.

[68 FR 4702, Jan. 30, 2003]



Sec. 404.305  When you may not be entitled to benefits.

    In addition to the situations described in Sec. 404.304 when you 
may not receive a benefit payment, there are special circumstances when 
you may not be entitled to benefits. These circumstances are--
    (a) Waiver of benefits. If you have waived benefits and been granted 
a tax exemption on religious grounds as described in Sec. Sec. 404.1039 
and 404.1075, no one may become entitled to any benefits or payments on 
your earnings record and you may not be entitled to benefits on anyone 
else's earnings record; and
    (b) Person's death caused by an intentional act. You may not become 
entitled to or continue to receive any survivor's benefits or payments 
on the earnings record of any person, or receive any underpayment due a 
person, if you were convicted of a felony or an act in the nature of a 
felony of intentionally causing that person's death. If you were subject 
to the juvenile justice system, you may not become entitled to or 
continue to receive survivor's benefits or payments on the earnings 
record of any person, or receive any underpayment due a person, if you 
were found by a court of competent jurisdiction to have intentionally 
caused that person's death by committing an act which, if committed by 
an adult, would have been considered a felony or an act in the nature of 
a felony.

[44 FR 34481, June 15, 1979, as amended at 47 FR 42098, Sept. 24, 1982; 
52 FR 19136, May 21, 1987, 52 FR 21410, June 5, 1987; 58 FR 64888, Dec. 
10, 1993]

                     Old-Age and Disability Benefits



Sec. 404.310  When am I entitled to old-age benefits?

    We will find you entitled to old-age benefits if you meet the 
following three conditions:
    (a) You are at least 62 years old;
    (b) You have enough social security earnings to be fully insured as 
defined in Sec. Sec. 404.110 through 404.115; and
    (c) You apply; or you are entitled to disability benefits up to the 
month you attain full retirement age (as defined in Sec. 404.409). When 
you attain full retirement age, your disability benefits automatically 
become old-age benefits.

[68 FR 4702, Jan. 30, 2003]

[[Page 110]]



Sec. 404.311  When does my entitlement to old-age benefits begin and end?

    (a) We will find you entitled to old-age benefits beginning with:
    (1) If you have attained full retirement age (as defined in Sec. 
404.409), the first month covered by your application in which you meet 
all requirements for entitlement; or
    (2) If you have attained age 62, but have not attained full 
retirement age (as defined in Sec. 404.409), the first month covered by 
your application throughout which you meet all requirements for 
entitlement.
    (b) We will find your entitlement to old-age benefits ends with the 
month before the month you die.

[68 FR 4702, Jan. 30, 2003]



Sec. 404.312  How is my old-age benefit amount calculated?

    (a) If your old-age benefits begin in the month you attain full 
retirement age (as defined in Sec. 404.409), your monthly benefit is 
equal to the primary insurance amount (as explained in subpart C of this 
part).
    (b) If your old-age benefits begin after the month you attain full 
retirement age, your monthly benefit is your primary insurance amount 
plus an increase for retiring after full retirement age. See Sec. 
404.313 for a description of these increases.
    (c) If your old-age benefits begin before the month you attain full 
retirement age, your monthly benefit amount is the primary insurance 
amount minus a reduction for each month you are entitled before you 
attain full retirement age. These reductions are described in Sec. Sec. 
404.410 through 404.413.

[68 FR 4702, Jan. 30, 2003]



Sec. 404.313  What are delayed retirement credits and how do they 
increase my old-age benefit amount?

    (a) What are delayed retirement credits and how do I earn them? 
Delayed retirement credits (DRCs) are credits we use to increase the 
amount of your old-age benefit amount. You may earn a credit for each 
month during the period beginning with the month you attain full 
retirement age (as defined in Sec. 404.409) and ending with the month 
you attain age 70 (72 before 1984). You earn a credit for each month for 
which you are fully insured and eligible but do not receive an old-age 
benefit either because you do not apply for benefits or because you 
elect to voluntarily suspend your benefits to earn DRCs. Even if you 
were entitled to old-age benefits before full retirement age you may 
still earn DRCs for months during the period from full retirement age to 
age 70, if you voluntarily elect to suspend those benefits.
    (b) How is the amount of the increase because of delayed retirement 
credits computed? (1) Computation of the increase amount. The amount of 
the increase depends on your date of birth and the number of credits you 
earn. We total the number of credits (which need not be consecutive) and 
multiply that number by the applicable percentage from paragraph (b)(2) 
of this section. We then multiply the result by your benefit amount and 
round the answer to the next lower multiple of 10 cents (if the answer 
is not already a multiple of 10 cents). We add the result to your 
benefit amount. If a supplementary medical insurance premium is involved 
it is then deducted. The result is rounded to the next lower multiple of 
$1 (if the answer is not already a multiple of $1).
    (2) Credit percentages. The applicable credit amount for each month 
of delayed retirement can be found in the table below.

------------------------------------------------------------------------
                                          The credit for each month you
       If your date of birth is:              delay  retirement is:
------------------------------------------------------------------------
Before 1/2/1917........................  \1/12\ of 1%
1/2/1917--1/1/1925.....................  \1/4\ of 1%
1/2/1925--1/1/1927.....................  \7/24\ of 1%
1/2/1927--1/1/1929.....................  \1/3\ of 1%
1/2/1929--1/1/1931.....................  \3/8\ of 1%
1/2/1931--1/1/1933.....................  \5/12\ of 1%
1/2/1933--1/1/1935.....................  \11/24\ of 1%
1/2/1935--1/1/1937.....................  \1/2\ of 1%
1/2/1937--1/1/1939.....................  \13/24\ of 1%
1/2/1939--1/1/1941.....................  \7/12\ of 1%
1/2/1941--1/1/1943.....................  \5/8\ of 1%
After 1/1/1943.........................  \2/3\ of 1%
------------------------------------------------------------------------

    Example: Alan was qualified for old-age benefits when he reached age 
65 on January 15, 1998. He decided not to apply for old-age benefits 
immediately because he was still working. When he became age 66 in 
January 1999, he stopped working and applied for benefits beginning with 
that month. Based on his earnings, his primary insurance amount

[[Page 111]]

was $782.60. However, because he did not receive benefits immediately 
upon attainment of full retirement age (65), he is due an increase based 
on his delayed retirement credits. He earned 12 credits, one for each 
month from January 1998 through December 1998. Based on his date of 
birth of 1/15/1933 he is entitled to a credit of 11/24 of one percent 
for each month of delayed retirement. 12 credits multiplied by 11/24 of 
one percent equals a credit of 5.5 percent. 5.5% of the primary 
insurance amount of $782.60 is $43.04 which is rounded to $43.00, the 
next lower multiple of 10 cents. $43.00 is added to the primary 
insurance amount, $782.60. The result, $825.60 is the monthly benefit 
amount. If a supplementary medical insurance premium is involved it is 
then deducted. The result is rounded to the next lower multiple of $1 
(if the answer is not already a multiple of $1).

    (c) When is the increase because of delayed retirement credits 
effective?--(1) Credits earned after entitlement and before the year of 
attainment of age 70. If you are entitled to benefits, we examine our 
records after the end of each calendar year to determine whether you 
have earned delayed retirement credits during the previous year for 
months when you were at or over full retirement age and you were fully 
insured and eligible for benefits but did not receive them. Any increase 
in your benefit amount is effective beginning with January of the year 
after the year the credits were earned.
    (2) Credits earned after entitlement in the year of attainment of 
age 70. If you are entitled to benefits in the month you attain age 70, 
we examine our records to determine if you earned any additional delayed 
retirement credits during the calendar year in which you attained age 
70. Any increase in your benefit amount is effective beginning with the 
month you attained age 70.
    (3) Credits earned prior to entitlement. If you are full retirement 
age or older and eligible for old-age benefits but do not apply for 
benefits, your delayed retirement credits for months from the month of 
attainment of full retirement age through the end of the year prior to 
the year of filing will be included in the computation of your initial 
benefit amount. Credits earned in the year you attain age 70 will be 
added in the month you attain age 70.
    (d) How do delayed retirement credits affect the special minimum 
primary insurance amount? We do not add delayed retirement credits to 
your old-age benefit if your benefit is based on the special minimum 
primary insurance amount described in Sec. 404.260. We add the delayed 
retirement credits only to your old-age benefit based on your regular 
primary insurance amount, i.e. as computed under one of the other 
provisions of subpart C of this part. If your benefit based on the 
regular primary insurance amount plus your delayed retirement credits is 
higher than the benefit based on your special minimum primary insurance 
amount, we will pay the higher amount to you. However, if the special 
minimum primary insurance amount is higher than the regular primary 
insurance amount without the delayed retirement credits, we will use the 
special minimum primary insurance amount to determine the family maximum 
and the benefits of others entitled on your earnings record.
    (e) What is the effect of my delayed retirement credits on the 
benefit amount of others entitled on my earnings record?--(1) Surviving 
spouse or surviving divorced spouse. If you earn delayed retirement 
credits during your lifetime, we will compute benefits for your 
surviving spouse or surviving divorced spouse based on your regular 
primary insurance amount plus the amount of those delayed retirement 
credits. All delayed retirement credits, including any earned during the 
year of death, can be used in computing the benefit amount for your 
surviving spouse or surviving divorced spouse beginning with the month 
of your death. We compute delayed retirement credits up to but not 
including the month of death.
    (2) Other family member. We do not use your delayed retirement 
credits to increase the benefits of other family members entitled on 
your earnings record.
    (3) Family maximum. We add delayed retirement credits to your 
benefit after we compute the family maximum. However, we add delayed 
retirement credits to your surviving spouse's or surviving divorced 
spouse's benefit before we reduce for the family maximum.

[68 FR 4703, Jan. 30, 2003]

[[Page 112]]



Sec. 404.315  Who is entitled to disability benefits?

    (a) General. You are entitled to disability benefits while disabled 
before attaining full retirement age as defined in Sec. 404.409 if--
    (1) You have enough social security earnings to be insured for 
disability, as described in Sec. 404.130;
    (2) You apply;
    (3) You have a disability, as defined in Sec. 404.1505, or you are 
not disabled, but you had a disability that ended within the 12-month 
period before the month you applied; and
    (4) You have been disabled for 5 full consecutive months. This 5-
month waiting period begins with a month in which you were both insured 
for disability and disabled. Your waiting period can begin no earlier 
than the 17th month before the month you apply--no matter how long you 
were disabled before then. No waiting period is required if you were 
previously entitled to disability benefits or to a period of disability 
under Sec. 404.320 any time within 5 years of the month you again 
became disabled.
    (b) Prohibition against reentitlement to disability benefits if drug 
addiction or alcoholism is a contributing factor material to the 
determination of disability. You cannot be entitled to a period of 
disability payments if drug addiction or alcoholism is a contributing 
factor material to the determination of disability and your earlier 
entitlement to disability benefits on the same basis terminated after 
you received benefits for 36 months during which treatment was 
available.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21930, May 16, 1983; 51 
FR 10616, Mar. 28, 1986; 51 FR 16166, May 1, 1986; 53 FR 43681, Oct. 28, 
1988; 57 FR 30119, July 8, 1992; 60 FR 8145, Feb. 10, 1995; 68 FR 4704, 
Jan. 30, 2003]



Sec. 404.316  When entitlement to disability benefits begins and ends.

    (a) You are entitled to disability benefits beginning with the first 
month covered by your application in which you meet all the other 
requirements for entitlement. If a waiting period is required, your 
benefits cannot begin earlier than the first month following that 
period.
    (b) Your entitlement to disability benefits ends with the earliest 
of these months:
    (1) The month before the month of your death;
    (2) The month before the month you attain full retirement age as 
defined in Sec. 404.409 (at full retirement age your disability 
benefits will be automatically changed to old-age benefits);
    (3) The second month after the month in which your disability ends 
as provided in Sec. 404.1594(b)(1), unless continued subject to 
paragraph (c); or (4) subject to the provisions of paragraph (d) of this 
section, the month before your termination month (Sec. 404.325).
    (c)(1) Your benefits, and those of your dependents, may be continued 
after your impairment is no longer disabling if--
    (i) Your disability did not end before December 1980, the effective 
date of this provision of the law;
    (ii) You are participating in an appropriate program of vocational 
rehabilitation, that is, one that has been approved under a State plan 
approved under title I of the Rehabilitation Act of 1973 and which meets 
the requirements outlined in 34 CFR part 361 for a rehabilitation 
program;
    (iii) You began the program before your disability ended; and
    (iv) We have determined that your completion of the program, or your 
continuation in the program for a specified period of time, will 
significantly increase the likelihood that you will not have to return 
to the disability benefit rolls.

    Example: While under a disability from a severe back impairment, 
``A'' begins a vocational rehabilitation program under the direction of 
a State vocational rehabilitation agency with a vocational goal of 
jewelry repairman. ``A'' is 50 years old, has a high school education, 
and worked as a route salesman for a bread company for 6 years before 
becoming disabled. Before ``A'' completes his training, his disability 
status is reviewed and a determination is made that he is able to do 
light work. Considering his age, education and work experience, ``A'' is 
no longer disabled. However, if ``A'' is able to work as a jewelry 
repairman, he will be considered able to engage in substantial gainful 
activity even if he can do only sedentary work. Therefore, it is 
determined that ``A's'' completion of the vocational rehabilitation

[[Page 113]]

program will significantly increase the likelihood that he will be 
permanently removed from the disability rolls. ``A'' will continue to 
receive payments until he completes or stops his program, or until it is 
determined that continued participation will no longer significantly 
increase the likelihood of permanent removal from the disability rolls.

    (2) Your benefits generally will be stopped with the month--
    (i) You complete the program;
    (ii) You stop participating in the program for any reason; or
    (iii) We determine that your continuing participation in the program 
will no longer significantly increase the likelihood that you will be 
permanently removed from the disability benefit rolls.
    Exception: In no case will your benefits be stopped with a month 
earlier than the second month after the month your disability ends.
    (d) If, after November 1980, you have a disabling impairment (Sec. 
404.1511), you will be paid benefits for all months in which you do not 
do substantial gainful activity during the reentitlement period (Sec. 
404.1592a) following the end of your trial work period (Sec. 404.1592). 
If you are unable to do substantial gainful activity in the first month 
following the reentitlement period, we will pay you benefits until you 
are able to do substantial gainful activity. (Earnings during your trial 
work period do not affect the payment of your benefit.) You will also be 
paid benefits for the first month after the trial work period in which 
you do substantial gainful activity and the two succeeding months, 
whether or not you do substantial gainful activity during those 
succeeding months. After those three months, you cannot be paid benefits 
for any months in which you do substantial gainful activity.
    (e) If drug addiction or alcoholism is a contributing factor 
material to the determination of disability as described in Sec. 
404.1535, you may receive disability benefits on that basis for no more 
than 36 months regardless of the number of entitlement periods you may 
have. Not included in these 36 months are months in which treatment for 
your drug addiction or alcoholism is not available, months before March 
1995, and months for which your benefit payments were suspended for any 
reason. Benefits to your dependents may continue after the 36 months of 
benefits if, but for the operation of this paragraph, you would 
otherwise be entitled to benefits based on disability. The 36-month 
limit is no longer effective for benefits for months beginning after 
September 2004.
    (f) If drug addiction or alcoholism is a contributing factor 
material to the determination of disability as described in Sec. 
404.1535 and your disability benefits are suspended for 12 consecutive 
months because of your failure to comply with treatment requirements, 
your disability benefits will be terminated effective the first month 
after such 12-month period. Benefits to your dependents may continue 
after the 12-month period if, but for the operation of this paragraph, 
you would otherwise be entitled to benefits based on disability.

[44 FR 34481, June 15, 1979, as amended at 47 FR 31542, July 21, 1982; 
47 FR 52693, Nov. 23, 1982; 49 FR 22270, May 29, 1984; 51 FR 17617, May 
14, 1986; 60 FR 8145, Feb. 10, 1995; 68 FR 4704, Jan. 30, 2003]



Sec. 404.317  How is the amount of my disability benefit calculated?

    Your monthly benefit is equal to the primary insurance amount (PIA). 
This amount is computed under the rules in subpart C of this part as if 
it was an old-age benefit, and as if you were 62 years of age at the 
beginning of the 5-month waiting period mentioned in Sec. 404.315(a). 
If the 5-month waiting period is not required because of your previous 
entitlement, your PIA is figured as if you were 62 years old when you 
become entitled to benefits this time. Your monthly benefit amount may 
be reduced if you receive worker's compensation or public disability 
payments before you become 65 years old as described in Sec. 404.408. 
Your benefits may also be reduced if you were entitled to other 
retirement-age benefits before you attained full retirement age (as 
defined in Sec. 404.409).

[68 FR 4704, Jan. 30, 2003]



Sec. 404.320  Who is entitled to a period of disability.

    (a) General. A period of disability is a continuous period of time 
during which

[[Page 114]]

you are disabled. If you become disabled, you may apply to have our 
records show how long your disability lasts. You may do this even if you 
do not qualify for disability benefits. If we establish a period of 
disability for you, the months in that period of time will not be 
counted in figuring your average earnings. If benefits payable on your 
earnings record would be denied or reduced because of a period of 
disability, the period of disability will not be taken into 
consideration.
    (b) Who is entitled. You are entitled to a period of disability if 
you meet all the following conditions:
    (1) You have or had a disability as defined in Sec. 404.1505.
    (2) You are insured for disability, as defined in Sec. 404.130 in 
the calendar quarter in which you became disabled, or in a later 
calendar quarter in which you were disabled.
    (3) You file an application while disabled, or no later than 12 
months after the month in which your period of disability ended. If you 
were unable to apply within the 12-month period after your period of 
disability ended because of a physical or mental condition as described 
in Sec. 404.322, you may apply not more than 36 months after the month 
your disability ended.
    (4) At least 5 consecutive months go by from the month in which your 
period of disability begins and before the month in which it would end.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21930, May 16, 1983; 51 
FR 10616, Mar. 28, 1986]



Sec. 404.321  When a period of disability begins and ends.

    (a) When a period of disability begins. Your period of disability 
begins on the day your disability begins if you are insured for 
disability on that day. If you are not insured for disability on that 
day, your period of disability will begin on the first day of the first 
calendar quarter after your disability began in which you become insured 
for disability. Your period of disability may not begin after you have 
attained full retirement age as defined in Sec. 404.409.
    (b) When disability ended before December 1, 1980. Your period of 
disability ends on the last day of the month before the month in which 
you become 65 years old or, if earlier, the last day of the second month 
following the month in which your disability ended.
    (c) When disability ends after November 1980. Your period of 
disability ends with the close of whichever of the following is the 
earliest--
    (1) The month before the month in which you attain full retirement 
age as defined in Sec. 404.409.
    (2) The month immediately preceding your termination month (Sec. 
404.325); or
    (3) If you perform substantial gainful activity during the 
reentitlement period described in Sec. 404.1592a, the last month for 
which you received benefits.
    (d) When drug addiction or alcoholism is a contributing factor 
material to the determination of disability. (1) Your entitlement to 
receive disability benefit payments ends the month following the month 
in which, regardless of the number of entitlement periods you may have 
had based on disability where drug addiction or alcoholism is a 
contributing factor material to the determination of disability (as 
described in Sec. 404.1535)--
    (i) You have received a total of 36 months of disability benefits. 
Not included in these 36 months are months in which treatment for your 
drug addiction or alcoholism is not available, months before March 1995, 
and months for which your benefits were suspended for any reason; or
    (ii) Your benefits have been suspended for 12 consecutive months 
because of your failure to comply with treatment requirements.
    (2) For purposes other than payment of your disability benefits, 
your period of disability continues until the termination month as 
explained in Sec. 404.325.

[49 FR 22271, May 29, 1984, as amended at 60 FR 8145, Feb. 10, 1995; 65 
FR 42782, July 11, 2000; 68 FR 4704, Jan. 30, 2003]



Sec. 404.322  When you may apply for a period of disability after a 
delay due to a physical or mental condition.

    If because of a physical or mental condition you did not apply for a 
period of disability within 12 months after your period of disability 
ended, you may apply not more than 36 months after the month in which 
your disability ended. Your failure to apply within the 12-month time 
period will be

[[Page 115]]

considered due to a physical or mental condition if during this time--
    (a) Your physical condition limited your activities to such an 
extent that you could not complete and sign an application; or
    (b) You were mentally incompetent.



Sec. 404.325  The termination month.

    If you do not have a disabling impairment, your termination month is 
the third month following the month in which your impairment is not 
disabling even if it occurs during the trial work period or the 
reentitlement period. If you continue to have a disabling impairment and 
complete 9 months of trial work, your termination month will be the 
third month following the earliest month you perform substantial gainful 
activity or are determined able to perform substantial gainful activity; 
however, in no event will the termination month under these 
circumstances be earlier than the first month after the end of the 
reentitlement period described in Sec. 404.1592a.

    Example 1: You complete your trial work period in December 1999. You 
then work at the substantial gainful activity level and continue to do 
so throughout the 36 months following completion of your trial work 
period and thereafter. Your termination month will be January 2003, 
which is the first month in which you performed substantial gainful 
activity after the end of your 36-month reentitlement period. This is 
because, for individuals who have disabling impairments (see Sec. 
404.1511) and who work, the termination month cannot occur before the 
first month after the end of the 36-month reentitlement period.
    Example 2: You complete your trial work period in December 1999, but 
you do not do work showing your ability to do substantial gainful 
activity during your trial work period or throughout your 36-month 
reentitlement period. In April 2003, 4 months after your reentitlement 
period ends, you become employed at work that we determine is 
substantial gainful activity, considering all of our rules in Sec. 
Sec. 404.1574 and 404.1574a. Your termination month will be July 2003; 
that is, the third month after the earliest month you performed 
substantial gainful activity.

[65 FR 42782, July 11, 2000]

                Benefits for Spouses and Divorced Spouses



Sec. 404.330  Who is entitled to wife's or husband's benefits.

    You are entitled to benefits as the wife or husband of an insured 
person who is entitled to old-age or disability benefits if--
    (a) You are the insured's wife or husband based upon a relationship 
described in Sec. Sec. 404.345 through 404.346 and one of the following 
conditions is met:
    (1) Your relationship to the insured as a wife or husband has lasted 
at least 1 year. (You will be considered to meet the 1-year duration 
requirement throughout the month in which the first anniversary of the 
marriage occurs.)
    (2) You and the insured are the natural parents of a child; or
    (3) In the month before you married the insured you were entitled 
to, or if you had applied and been old enough you could have been 
entitled to, any of these benefits or payments: Wife's, husband's, 
widow's, widower's, or parent's benefits; disabled child's benefits; or 
annuity payments under the Railroad Retirement Act for widows, widowers, 
parents, or children 18 years old or older;
    (b) You apply;
    (c) You are age 62 or older throughout a month and you meet all 
other conditions of entitlement, or you are the insured's wife or 
husband and have in your care (as defined in Sec. Sec. 404.348 through 
404.349), throughout a month in which all other conditions of 
entitlement are met, a child who is entitled to child's benefits on the 
insured's earnings record and the child is either under age 16 or 
disabled; and
    (d) You are not entitled to an old-age or disability benefit based 
upon a primary insurance amount that is equal to or larger than the full 
wife's or husband's benefit.

[44 FR 34481, June 15, 1979; 44 FR 56691, Oct. 2, 1979, as amended at 45 
FR 68932, Oct. 17, 1980; 48 FR 21926, May 16, 1983]

[[Page 116]]



Sec. 404.331  Who is entitled to wife's or husband's benefits as a 
divorced spouse.

    You are entitled to wife's or husband's benefits as the divorced 
wife or divorced husband of an insured person who is entitled to old-age 
or disability benefits if you meet the requirements of paragraphs (a) 
through (e). You are entitled to these benefits even though the insured 
person is not yet entitled to benefits, if the insured person is at 
least age 62 and if you meet the requirements of paragraphs (a) through 
(f). The requirements are that--
    (a) You are the insured's divorced wife or divorced husband and--
    (1) You were validly married to the insured under State law as 
described in Sec. 404.345 or you were deemed to be validly married as 
described in Sec. 404.346; and
    (2) You were married to the insured for at least 10 years 
immediately before your divorce became final;
    (b) You apply;
    (c) You are not married. (For purposes of meeting this requirement, 
you will be considered not to be married throughout the month in which 
the divorce occurred);
    (d) You are age 62 or older throughout a month in which all other 
conditions of entitlement are met; and
    (e) You are not entitled to an old-age or disability benefit based 
upon a primary insurance amount that is equal to or larger than the full 
wife's or husband's benefit.
    (f) You have been divorced from the insured person for at least 2 
years.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21926, May 16, 1983; 51 
FR 11911, Apr. 8, 1986; 58 FR 64891, Dec. 10, 1993]



Sec. 404.332  When wife's and husband's benefits begin and end.

    (a) You are entitled to wife's or husband's benefits beginning with 
the first month covered by your application in which you meet all the 
other requirements for entitlement under Sec. 404.330 or Sec. 404.331. 
However, if you are entitled as a divorced spouse before the insured 
person becomes entitled, your benefits cannot begin before January 1985 
based on an application filed no earlier than that month.
    (b) Your entitlement to benefits ends with the month before the 
month in which one of the following events first occurs:
    (1) You become entitled to an old-age or disability benefit based 
upon a primary insurance amount that is equal to or larger than the full 
wife's or husband's benefit.
    (2) You are the wife or husband and are divorced from the insured 
person unless you meet the requirements for benefits as a divorced wife 
or divorced husband as described in Sec. 404.331.
    (3) You are the divorced wife or divorced husband and you marry 
someone, other than the insured who is entitled to old-age benefits, 
unless that other person is someone entitled to benefits as a wife, 
husband, widow, widower, father, mother, parent or disabled child. Your 
benefits will end if you remarry the insured who is not yet entitled to 
old-age benefits.
    (4) If you are under age 62, there is no longer a child of the 
insured who is under age 16 or disabled and entitled to child's benefits 
on the insured's earnings record. (See paragraph (c) of this section if 
you were entitled to wife's or husband's benefits for August 1981 on the 
basis of having a child in care.) (If you no longer have in your care a 
child who is under age 16 or disabled and entitled to child's benefits 
on the insured's earnings record, your benefits may be subject to 
deductions as provided in Sec. 404.421.)
    (5) The insured person dies or is no longer entitled to old age or 
disability benefits. Exception: Your benefits will continue if the 
insured person was entitled to disability benefits based on a finding 
that drug addiction or alcoholism was a contributing factor material to 
the determination of his or her disability (as described in Sec. 
404.1535), the insured person's benefits ended after 36 months of 
benefits (see Sec. 404.316(e)) or 12 consecutive months of suspension 
for noncompliance with treatment (see Sec. 404.316(f)), and but for the 
operation of these provisions, the insured person would remain entitled 
to benefits based on disability.
    (6) If your benefits are based upon a deemed valid marriage and you 
have not divorced the insured, you marry someone other than the insured.

[[Page 117]]

    (7) You die.
    (8) You became entitled as the divorced wife or the divorced husband 
before the insured person became entitled, but he or she is no longer 
insured.
    (c) If you were entitled to wife's or husband's benefits for August 
1981 on the basis of having a child in care, your entitlement will 
continue until September 1983, until the child reaches 18 (unless 
disabled) or is otherwise no longer entitled to child's benefits, or 
until one of the events described in paragraph (b) (1), (2), (3), (5), 
(6) or (7) of this section occurs, whichever is earliest.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21926, May 16, 1983; 49 
FR 24115, June 12, 1984; 51 FR 11911, Apr. 8, 1986; 58 FR 64891, Dec. 
10, 1993; 60 FR 8145, Feb. 10, 1995; 64 FR 14608, Mar. 26, 1999]



Sec. 404.333  Wife's and husband's benefit amounts.

    Your wife's or husband's monthly benefit is equal to one-half the 
insured person's primary insurance amount. If you are entitled as a 
divorced wife or as a divorced husband before the insured person becomes 
entitled, we will compute the primary insurance amount as if he or she 
became entitled to old-age benefits in the first month you are entitled 
as a divorced wife or as a divorced husband. The amount of your monthly 
benefit may change as explained in Sec. 404.304.

[51 FR 11912, Apr. 8, 1986]



Sec. 404.335  How do I become entitled to widow's or widower's benefits?

    We will find you entitled to benefits as the widow or widower of a 
person who died fully insured if you meet the requirements in paragraphs 
(a) through (e) of this section:
    (a) You are the insured's widow or widower based upon a relationship 
described in Sec. Sec. 404.345 through 404.346, and you meet one of the 
conditions in paragraphs (a)(1) through (4) of this section:
    (1) Your relationship to the insured as a wife or husband lasted for 
at least 9 months immediately before the insured died.
    (2) Your relationship to the insured as a wife or husband did not 
last 9 months before the insured died, but at the time of your marriage 
the insured was reasonably expected to live for 9 months, and you meet 
one of the conditions in paragraphs (a)(2)(i) through (iii) of this 
section:
    (i) The death of the insured was accidental. The death is accidental 
if it was caused by an event that the insured did not expect; it was the 
result of bodily injuries received from violent and external causes; and 
as a direct result of these injuries, death occurred not later than 3 
months after the day on which the bodily injuries were received. An 
intentional and voluntary suicide will not be considered an accidental 
death.
    (ii) The death of the insured occurred in the line of duty while he 
or she was serving on active duty as a member of the uniformed services 
as defined in Sec. 404.1019.
    (iii) You had been previously married to the insured for at least 9 
months.
    (3) You and the insured were the natural parents of a child; or you 
were married to the insured when either of you adopted the other's child 
or when both of you adopted a child who was then under 18 years old.
    (4) In the month before you married the insured, you were entitled 
to or, if you had applied and had been old enough, could have been 
entitled to any of these benefits or payments: widow's, widower's, 
father's (based on the record of a fully insured individual), mother's 
(based on the record of a fully insured individual), wife's, husband's, 
parent's, or disabled child's benefits; or annuity payments under the 
Railroad Retirement Act for widows, widowers, parents, or children age 
18 or older.
    (b) You apply, except that you need not apply again if you meet one 
of the conditions in paragraphs (b)(1) through (4) of this section:
    (1) You are entitled to wife's or husband's benefits for the month 
before the month in which the insured dies and you have attained full 
retirement age (as defined in Sec. 404.409) or you are not entitled to 
either old-age or disability benefits.
    (2) You are entitled to mother's or father's benefits for the month 
before the month in which you attained full retirement age (as defined 
in Sec. 404.409).
    (3) You are entitled to wife's or husband's benefits and to either 
old-age or disability benefits in the month before

[[Page 118]]

the month of the insured's death, you are under full retirement age (as 
defined in Sec. 404.409) in the month of death, and you have filed a 
Certificate of Election in which you elect to receive reduced widow's or 
widower's benefits.
    (4) You applied in 1990 for widow's or widower's benefits based on 
disability and you meet both of the conditions in paragraphs (b)(4)(i) 
and (ii) of this section:
    (i) You were entitled to disability insurance benefits for December 
1990, or eligible for supplemental security income or federally 
administered State supplementary payments, as specified in subparts B 
and T of part 416 of this chapter, respectively, for January 1991.
    (ii) You were found not disabled for any month based on the 
definition of disability in Sec. Sec. 404.1577 and 404.1578, as in 
effect prior to January 1991, but would have been entitled if the 
standard in Sec. 404.1505(a) had applied. (This exception to the 
requirement for filing an application is effective only with respect to 
benefits payable for months after December 1990.)
    (c) You are at least 60 years old; or you are at least 50 years old 
and have a disability as defined in Sec. 404.1505 and you meet all of 
the conditions in paragraphs (c)(1) through (4) of this section:
    (1) Your disability started not later than 7 years after the insured 
died or 7 years after you were last entitled to mother's or father's 
benefits or to widow's or widower's benefits based upon a disability, 
whichever occurred last.
    (2) Your disability continued during a waiting period of 5 full 
consecutive months, unless months beginning with the first month of 
eligibility for supplemental security income or federally administered 
State supplementary payments are counted, as explained in the Exception 
in paragraph (c)(3) of this section. The waiting period may begin no 
earlier than the 17th month before you applied; the fifth month before 
the insured died; or if you were previously entitled to mother's, 
father's, widow's, or widower's benefits, the 5th month before your 
entitlement to benefits ended. If you were previously entitled to 
widow's or widower's benefits based upon a disability, no waiting period 
is required.
    (3) Exception: For monthly benefits payable for months after 
December 1990, if you were or have been eligible for supplemental 
security income or federally administered State supplementary payments, 
as specified in subparts B and T of part 416 of this chapter, 
respectively, your disability need not have continued through a 
separate, full 5-month waiting period before you may begin receiving 
benefits. We will include as months of the 5-month waiting period the 
months in a period beginning with the first month you received 
supplemental security income or a federally administered State 
supplementary payment and continuing through all succeeding months, 
regardless of whether the months in the period coincide with the months 
in which your waiting period would have occurred, or whether you 
continued to be eligible for supplemental security income or a federally 
administered State supplementary payment after the period began, or 
whether you met the nondisability requirements for entitlement to 
widow's or widower's benefits. However, we will not pay you benefits 
under this provision for any month prior to January 1991.
    (4) You have not previously received 36 months of payments based on 
disability when drug addiction or alcoholism was a contributing factor 
material to the determination of disability (as described in Sec. 
404.1535), regardless of the number of entitlement periods you may have 
had, or your current application for widow's or widower's benefits is 
not based on a disability where drug addiction or alcoholism is a 
contributing factor material to the determination of disability.
    (d) You are not entitled to an old-age benefit that is equal to or 
larger than the insured person's primary insurance amount.
    (e) You are unmarried, unless for benefits for months after 1983 you 
meet one of the conditions in paragraphs (e)(1) through (3) of this 
section:
    (1) You remarried after you became 60 years old.
    (2) You are now age 60 or older and you meet both of the conditions 
in paragraphs (e)(2)(i) and (ii) of this section:

[[Page 119]]

    (i) You remarried after attaining age 50 but before attaining age 
60.
    (ii) At the time of the remarriage, you were entitled to widow's or 
widower's benefits as a disabled widow or widower.
    (3) You are now at least age 50, but not yet age 60 and you meet 
both of the conditions in paragraphs (e)(3)(i) and (ii) of this section:
    (i) You remarried after attaining age 50.
    (ii) You met the disability requirements in paragraph (c) of this 
section at the time of your remarriage (i.e., your disability began 
within the specified time and before your remarriage).

[68 FR 4704, Jan. 30, 2003]



Sec. 404.336  How do I become entitled to widow's or widower's benefits 
as a surviving divorced spouse?

    We will find you entitled to widow's or widower's benefits as the 
surviving divorced wife or the surviving divorced husband of a person 
who died fully insured if you meet the requirements in paragraphs (a) 
through (e) of this section:
    (a) You are the insured's surviving divorced wife or surviving 
divorced husband and you meet both of the conditions in paragraphs 
(a)(1) and (2) of this section:
    (1) You were validly married to the insured under State law as 
described in Sec. 404.345 or are deemed to have been validly married as 
described in Sec. 404.346.
    (2) You were married to the insured for at least 10 years 
immediately before your divorce became final.
    (b) You apply, except that you need not apply again if you meet one 
of the conditions in paragraphs (b)(1) through (4) of this section:
    (1) You are entitled to wife's or husband's benefits for the month 
before the month in which the insured dies and you have attained full 
retirement age (as defined in Sec. 404.409) or you are not entitled to 
old-age or disability benefits.
    (2) You are entitled to mother's or father's benefits for the month 
before the month in which you attain full retirement age (as defined in 
Sec. 404.409).
    (3) You are entitled to wife's or husband's benefits and to either 
old-age or disability benefits in the month before the month of the 
insured's death, you have not attained full retirement age (as defined 
in Sec. 404.409) in the month of death, and you have filed a 
Certificate of Election in which you elect to receive reduced widow's or 
widower's benefits.
    (4) You applied in 1990 for widow's or widower's benefits based on 
disability, and you meet the requirements in both paragraphs (b)(4)(i) 
and (ii) of this section:
    (i) You were entitled to disability insurance benefits for December 
1990 or eligible for supplemental security income or federally 
administered State supplementary payments, as specified in subparts B 
and T of part 416 of this chapter, respectively, for January 1991.
    (ii) You were found not disabled for any month based on the 
definition of disability in Sec. Sec. 404.1577 and 404.1578, as in 
effect prior to January 1991, but would have been entitled if the 
standard in Sec. 404.1505(a) had applied. (This exception to the 
requirement for filing an application is effective only with respect to 
benefits payable for months after December 1990.)
    (c) You are at least 60 years old; or you are at least 50 years old 
and have a disability as defined in Sec. 404.1505 and you meet all of 
the conditions in paragraphs (c)(1) through (4) of this section:
    (1) Your disability started not later than 7 years after the insured 
died or 7 years after you were last entitled to mother's or father's 
benefits or to widow's or widower's benefits based upon a disability, 
whichever occurred last.
    (2) Your disability continued during a waiting period of 5 full 
consecutive months, unless months beginning with the first month of 
eligibility for supplemental security income or federally administered 
State supplementary payments are counted, as explained in the Exception 
in paragraph (c)(3) of this section. This waiting period may begin no 
earlier than the 17th month before you applied; the fifth month before 
the insured died; or if you were previously entitled to mother's, 
father's, widow's, or widower's benefits, the 5th month before your 
previous entitlement to benefits ended. If you were previously entitled 
to widow's or widower's benefits based upon a disability, no waiting 
period is required.

[[Page 120]]

    (3) Exception: For monthly benefits payable for months after 
December 1990, if you were or have been eligible for supplemental 
security income or federally administered State supplementary payments, 
as specified in subparts B and T of part 416 of this chapter, 
respectively, your disability does not have to have continued through a 
separate, full 5-month waiting period before you may begin receiving 
benefits. We will include as months of the 5-month waiting period the 
months in a period beginning with the first month you received 
supplemental security income or a federally administered State 
supplementary payment and continuing through all succeeding months, 
regardless of whether the months in the period coincide with the months 
in which your waiting period would have occurred, or whether you 
continued to be eligible for supplemental security income or a federally 
administered State supplementary payment after the period began, or 
whether you met the nondisability requirements for entitlement to 
widow's or widower's benefits. However, we will not pay you benefits 
under this provision for any month prior to January 1991.
    (4) You have not previously received 36 months of payments based on 
disability when drug addiction or alcoholism was a contributing factor 
material to the determination of disability (as described in Sec. 
404.1535), regardless of the number of entitlement periods you may have 
had, or your current application for widow's or widower's benefits is 
not based on a disability where drug addiction or alcoholism is a 
contributing factor material to the determination of disability.
    (d) You are not entitled to an old-age benefit that is equal to or 
larger than the insured person's primary insurance amount.
    (e) You are unmarried, unless for benefits for months after 1983 you 
meet one of the conditions in paragraphs (e)(1) through (3) of this 
section:
    (1) You remarried after you became 60 years old.
    (2) You are now age 60 or older and you meet both of the conditions 
in paragraphs (e)(2)(i) and (ii) of this section:
    (i) You remarried after attaining age 50 but before attaining age 
60.
    (ii) At the time of the remarriage, you were entitled to widow's or 
widower's benefits as a disabled widow or widower.
    (3) You are now at least age 50 but not yet age 60 and you meet one 
of the conditions in paragraphs (e)(3)(i) and (ii) of this section:
    (i) You remarried after attaining age 50.
    (ii) You met the disability requirements in paragraph (c) of this 
section at the time of your remarriage (i.e., your disability began 
within the specified time and before your remarriage).

[68 FR 4705, Jan. 30, 2003]



Sec. 404.337  When does my entitlement to widow's and widower's benefits 
start and end?

    (a) We will find you entitled to widow's or widower's benefits under 
Sec. 404.335 or Sec. 404.336 beginning with the first month covered by 
your application in which you meet all other requirements for 
entitlement.
    (b) We will end your entitlement to widow's or widower's benefits at 
the earliest of the following times:
    (1) The month before the month in which you become entitled to an 
old-age benefit that is equal to or larger than the insured's primary 
insurance amount.
    (2) The second month after the month your disability ends or, where 
disability ends on or after December 1, 1980, the month before your 
termination month (Sec. 404.325). However your payments are subject to 
the provisions of paragraphs (c) and (d) of this section. Note: You may 
remain eligible for payment of benefits if you attained full retirement 
age (as defined in Sec. 404.409) before your termination month and you 
meet the other requirements for widow's or widower's benefits.
    (3) If drug addiction or alcoholism is a contributing factor 
material to the determination of disability as described in Sec. 
404.1535, the month after the 12th consecutive month of suspension for 
noncompliance with treatment or after 36 months of benefits on that 
basis when treatment is available regardless of the number of 
entitlement

[[Page 121]]

periods you may have had, unless you are otherwise disabled without 
regard to drug addiction or alcoholism.
    (4) The month before the month in which you die.
    (c)(1) If you are entitled to widow's or widower's benefits based on 
a disability and your impairment is no longer disabling, generally, we 
will continue your benefits if you meet all the conditions in paragraphs 
(c)(1)(i) through (iv) of this section:
    (i) Your disability did not end before December 1980, the effective 
date of this provision of the law.
    (ii) You are participating in an appropriate program of vocational 
rehabilitation as described in Sec. 404.316(c)(1)(ii).
    (iii) You began the program before your disability ended.
    (iv) We determined that your completion of the program, or your 
continuation in the program for a specified period of time, would 
significantly increase the likelihood that you will not have to return 
to the disability benefit rolls.
    (2) Generally, we will stop your benefits with the month you meet 
one of the conditions in paragraphs (c)(2)(i) through (iii) of this 
section:
    (i) You complete the program.
    (ii) You stop participating in the program for any reason.
    (iii) We determined that your continuing participation in the 
program would no longer significantly increase the likelihood that you 
will be permanently removed from the disability benefit rolls.
    (iv) Exception: In no case will we stop your benefits with a month 
earlier than the second month after the month your disability ends.
    (d) If, after November 1980, you have a disabling impairment (Sec. 
404.1511), we will pay you benefits for all months in which you do not 
do substantial gainful activity during the reentitlement period (Sec. 
404.1592a) following the end of your trial work period (Sec. 404.1592). 
If you are unable to do substantial gainful activity in the first month 
following the reentitlement period, we will pay you benefits until you 
are able to do substantial gainful activity. (Earnings during your trial 
work period do not affect the payment of your benefits.) We will also 
pay you benefits for the first month after the trial work period in 
which you do substantial gainful activity and the two succeeding months, 
whether or not you do substantial gainful activity during those 
succeeding months. After those three months, we cannot pay you benefits 
for any months in which you do substantial gainful activity.

[68 FR 4706, Jan. 30, 2003]



Sec. 404.338  How is the amount of my widow's or widower's benefit 
calculated?

    Your widow's or widower's monthly benefit is equal to the insured 
person's primary insurance amount. If the insured person died before 
reaching age 62 and you are first eligible after 1984, we may compute a 
special primary insurance amount to determine the amount of your monthly 
benefit (see Sec. 404.212(b)). We may increase your monthly benefit 
amount if the insured person earned delayed retirement credit after full 
retirement age (as defined in Sec. 404.409) by working or by delaying 
filing for benefits (see Sec. 404.313). The amount of your monthly 
benefit may change as explained generally in Sec. 404.304. In addition, 
your monthly benefit will be reduced if the insured person was entitled 
to old-age benefits that were reduced for age because he or she chose to 
receive them before attaining full retirement age. In this instance, 
your benefit is reduced, if it would otherwise be higher, to either the 
amount the insured would have been entitled to if still alive or 82\1/2\ 
percent of his or her primary insurance amount, whichever is larger.

[68 FR 4706, Jan. 30, 2003]



Sec. 404.339  Who is entitled to mother's or father's benefits.

    You may be entitled as the widow or widower to mother's or father's 
benefits on the earnings record of someone who was fully or currently 
insured when he or she died. You are entitled to these benefits if--
    (a) You are the widow or widower of the insured and meet the 
conditions described in Sec. 404.335(a)(1);

[[Page 122]]

    (b) You apply for these benefits; or you were entitled to wife's 
benefits for the month before the insured died;
    (c) You are unmarried;
    (d) You are not entitled to widow's or widower's benefits, or to an 
old-age benefit that is equal to or larger than the full mother's or 
father's benefit; and
    (e) You have in your care the insured's child who is entitled to 
child's benefits and he or she is under 16 years old or is disabled. 
Sections 404.348 and 404.349 describe when a child is in your care.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21927, May 16, 1983]



Sec. 404.340  Who is entitled to mother's or father's benefits as a 
surviving divorced spouse.

    You may be entitled to mother's or father's benefits as the suviving 
divorced wife or the surviving divorced husband of someone who was fully 
or currently insured when he or she died. You are entitled to these 
benefits if--
    (a) You were validly married to the insured under State law as 
described in Sec. 404.345 or you were deemed to be validly married as 
described in Sec. 404.346 but the marriage ended in a final divorce 
and--
    (1) You are the mother or father of the insured's child; or
    (2) You were married to the insured when either of you adopted the 
other's child or when both of you adopted a child and the child was then 
under 18 years old;
    (b) You apply for these benefits; or you were entitled to wife's or 
husband's benefits for the month before the insured died;
    (c) You are unmarried;
    (d) You are not entitled to widow's or widower's benefits, or to an 
old-age benefit that is equal to or larger than the full mother's or 
father's benefit; and
    (e) You have in your care the insured's child who is under age 16 or 
disabled, is your natural or adopted child, and is entitled to child's 
benefits on the insured person's record. Sections 404.348 and 404.349 
describe when a child is in your care.

[44 FR 34481, June 15, 1979, as amended at 45 FR 68932, Oct. 17, 1980; 
48 FR 21927, May 16, 1983; 58 FR 64891, Dec. 10, 1993]



Sec. 404.341  When mother's and father's benefits begin and end.

    (a) You are entitled to mother's or father's benefits beginning with 
the first month covered by your application in which you meet all the 
other requirements for entitlement.
    (b) Your entitlement to benefits ends with the month before the 
month in which one of the following events first occurs:
    (1) You become entitled to a widow's or widower's benefit or to an 
old-age benefit that is equal to or larger than the full mother's or 
father's benefit.
    (2) There is no longer a child of the insured who is under age 16 or 
disabled and entitled to a child's benefit on the insured's earnings 
record. (See paragraph (c) of this section if you were entitled to 
mother's or father's benefits for August 1981.) (If you no longer have 
in your care a child who is under age 16 or disabled and entitled to 
child's benefits on the insured's earnings record, your benefits may be 
subject to deductions as provided in Sec. 404.421.)
    (3) You remarry. Your benefits will not end, however, if you marry 
someone entitled to old-age, disability, wife's, husband's, widow's, 
widower's, father's, mother's, parent's or disabled child's benefits.
    (4) You die.
    (c) If you were entitled to spouse's benefits on the basis of having 
a child in care, or to mother's or father's benefits for August 1981, 
your entitlement will continue until September 1983, until the child 
reaches 18 (unless disabled) or is otherwise no longer entitled to 
child's benefits, or until one of the events described in paragraph (b) 
(1), (3), or (4) of this section occurs, whichever is earliest.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21927, May 16, 1983; 49 
FR 24115, June 12, 1984; 58 FR 64891, Dec. 10, 1993; 64 FR 14608, Mar. 
26, 1999]

[[Page 123]]



Sec. 404.342  Mother's and father's benefit amounts.

    Your mother's or father's monthly benefit is equal to 75 percent of 
the insured person's primary insurance amount. The amount of your 
monthly benefit may change as explained in Sec. 404.304.



Sec. 404.344  Your relationship by marriage to the insured.

    You may be eligible for benefits if you are related to the insured 
person as a wife, husband, widow, or widower. To decide your 
relationship to the insured, we look first to State laws. The State laws 
that we use are discussed in Sec. 404.345. If your relationship cannot 
be established under State law, you may still be eligible for benefits 
if your relationship as the insured's wife, husband, widow, or widower 
is based upon a deemed valid marriage as described in Sec. 404.346.



Sec. 404.345  Your relationship as wife, husband, widow, or widower 
under State law.

    To decide your relationship as the insured's wife or husband, we 
look to the laws of the State where the insured had a permanent home 
when you applied for wife's or husband's benefits. To decide your 
relationship as the insured's widow or widower, we look to the laws of 
the State where the insured had a permanent home when he or she died. If 
the insured's permanent home is not or was not in one of the 50 States, 
the Commonwealth of Puerto Rico, the Virgin Islands, Guam, or American 
Samoa, we look to the laws of the District of Columbia. For a definition 
of permanent home, see Sec. 404.303. If you and the insured were 
validly married under State law at the time you apply for wife's or 
husband's benefits or at the time the insured died if you apply for 
widow's, widower's, mother's, or father's benefits, the relationship 
requirement will be met. The relationship requirement will also be met 
if under State law you would be able to inherit a wife's, husband's, 
widow's, or widower's share of the insured's personal property if he or 
she were to die without leaving a will.



Sec. 404.346  Your relationship as wife, husband, widow, or widower 
based upon a deemed valid marriage.

    (a) General. If your relationship as the insured's wife, husband, 
widow, or widower cannot be established under State law as explained in 
Sec. 404.345, you may be eligible for benefits based upon a deemed 
valid marriage. You will be deemed to be the wife, husband, widow, or 
widower of the insured if, in good faith, you went through a marriage 
ceremony with the insured that would have resulted in a valid marriage 
except for a legal impediment. A legal impediment includes only an 
impediment which results because a previous marriage had not ended at 
the time of the ceremony or because there was a defect in the procedure 
followed in connection with the intended marriage. For example, a defect 
in the procedure may be found where a marriage was performed through a 
religious ceremony in a country that requires a civil ceremony for a 
valid marriage. Good faith means that at the time of the ceremony you 
did not know that a legal impediment existed, or if you did know, you 
thought that it would not prevent a valid marriage.
    (b) Entitlement based upon a deemed valid marriage. To be entitled 
to benefits as a wife, husband, widow or widower as the result of a 
deemed valid marriage, you and the insured must have been living in the 
same household (see Sec. 404.347) at the time the insured died or, if 
the insured is living, at the time you apply for benefits. However, a 
marriage that had been deemed valid, shall continue to be deemed valid 
if the insured individual and the person entitled to benefits as the 
wife or husband of the insured individual are no longer living in the 
same household at the time of death of the insured individual.

[44 FR 34481, June 15, 1979, as amended at 45 FR 65540, Oct. 3, 1980; 48 
FR 21927, May 16, 1983; 58 FR 64892, Dec. 10, 1993]



Sec. 404.347  ``Living in the same household'' defined.

    Living in the same household means that you and the insured 
customarily lived together as husband and wife in the same residence. 
You may be considered to be living in the same household

[[Page 124]]

although one of you is temporarily absent from the residence. An absence 
will be considered temporary if:
    (a) It was due to service in the U.S. Armed Forces;
    (b) It was 6 months or less and neither you nor the insured were 
outside of the United States during this time and the absence was due to 
business, employment, or confinement in a hospital, nursing home, other 
medical institution, or a penal institution;
    (c) It was for an extended separation, regardless of the duration, 
due to the confinement of either you or the insured in a hospital, 
nursing home, or other medical institution, if the evidence indicates 
that you were separated solely for medical reasons and you otherwise 
would have resided together; or
    (d) It was based on other circumstances, and it is shown that you 
and the insured reasonably could have expected to live together in the 
near future.

[61 FR 41330, Aug. 8, 1996]



Sec. 404.348  When a child living with you is ``in your care''.

    To become entitled to wife's benefits before you become 62 years old 
or to mother's or father's benefits, you must have the insured's child 
in your care. A child who has been living with you for at least 30 days 
is in your care unless--
    (a) The child is in active military service;
    (b) The child is 16 years old or older and not disabled;
    (c) The child is 16 years old or older with a mental disability, but 
you do not actively supervise his or her activities and you do not make 
important decisions about his or her needs, either alone or with help 
from your spouse; or
    (d) The child is 16 years old or older with a physical disability, 
but it is not necessary for you to perform personal services for him or 
her. Personal services are services such as dressing, feeding, and 
managing money that the child cannot do alone because of a disability.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21927, May 16, 1983]



Sec. 404.349  When a child living apart from you is ``in your care''.

    (a) In your care. A child living apart from you is in your care if--
    (1) The child lived apart from you for not more than 6 months, or 
the child's current absence from you is not expected to last over 6 
months;
    (2) The child is under 16 years old, you supervise his or her 
activities and make important decisions about his or her needs, and one 
of the following circumstances exist:
    (i) The child is living apart because of school but spends at least 
30 days vacation with you each year unless some event makes having the 
vacation unreasonable; and if you and the child's other parent are 
separated, the school looks to you for decisions about the child's 
welfare;
    (ii) The child is living apart because of your employment but you 
make regular and substantial contributions to his or her support; see 
Sec. 404.366(a) for a definition of contributions for support;
    (iii) The child is living apart because of a physical disability 
that the child has or that you have; or
    (3) The child is 16 years old or older, is mentally disabled, and 
you supervise his or her activities, make important decisions about his 
or her needs, and help in his or her upbringing and development.
    (b) Not in your care. A child living apart from you is not in your 
care if--
    (1) The child is in active military service;
    (2) The child is living with his or her other parent;
    (3) The child is removed from your custody and control by a court 
order;
    (4) The child is 16 years old or older, is mentally competent, and 
either has been living apart from you for 6 months or more or begins 
living apart from you and is expected to be away for more than 6 months;
    (5) You gave your right to have custody and control of the child to 
someone else; or
    (6) You are mentally disabled.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21927, May 16, 1983]

[[Page 125]]

                            Child's Benefits



Sec. 404.350  Who is entitled to child's benefits.

    (a) General. You are entitled to child's benefits on the earnings 
record of an insured person who is entitled to old-age or disability 
benefits or who has died if--
    (1) You are the insured person's child, based upon a relationship 
described in Sec. Sec. 404.355 through 404.359;
    (2) You are dependent on the insured, as defined in Sec. Sec. 
404.360 through 404.365;
    (3) You apply;
    (4) You are unmarried; and
    (5) You are under age 18; you are 18 years old or older and have a 
disability that began before you became 22 years old; or you are 18 
years or older and qualify for benefits as a full-time student as 
described in Sec. 404.367.
    (b) Entitlement preclusion for certain disabled children. If you are 
a disabled child as referred to in paragraph (a)(5) of this section, and 
your disability was based on a finding that drug addiction or alcoholism 
was a contributing factor material to the determination of disability 
(as described in Sec. 404.1535) and your benefits ended after your 
receipt of 36 months of benefits, you will not be entitled to benefits 
based on disability for any month following such 36 months regardless of 
the number of entitlement periods you have had if, in such following 
months, drug addiction or alcoholism is a contributing factor material 
to the later determination of disability (as described in Sec. 
404.1535).

[44 FR 34481, June 15, 1979, as amended at 48 FR 21927, May 16, 1983; 60 
FR 8146, Feb. 10, 1995; 61 FR 38363, July 24, 1996]



Sec. 404.351  Who may be reentitled to child's benefits.

    If your entitlement to child's benefits has ended, you may be 
reentitled on the same earnings record if you have not married and if 
you apply for reentitlement. Your reentitlement may begin with--
    (a) The first month in which you qualify as a full-time student. 
(See Sec. 404.367.)
    (b) The first month in which you are disabled, if your disability 
began before you became 22 years old; or
    (c) The first month you are under a disability that began before the 
end of the 84th month following the month in which your benefits had 
ended because an earlier disability had ended.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21927, May 16, 1983; 61 
FR 38363, July 24, 1996]



Sec. 404.352  When does my entitlement to child's benefits begin and end?

    (a) We will find your entitlement to child's benefits begins at the 
following times:
    (1) If the insured is deceased, with the first month covered by your 
application in which you meet all other requirements for entitlement.
    (2) If the insured is living and your first month of entitlement is 
September 1981 or later, with the first month covered by your 
application throughout which you meet all other requirements for 
entitlement.
    (3) If the insured is living and your first month of entitlement is 
before September 1981, with the first month covered by your application 
in which you meet all other requirements for entitlement.
    (b) We will find your entitlement to child's benefits ends at the 
earliest of the following times:
    (1) With the month before the month in which you become 18 years 
old, if you are not disabled or a full-time student.
    (2) With the second month following the month in which your 
disability ends, if you become 18 years old and you are disabled. If 
your disability ends on or after December 1, 1980, your entitlement to 
child's benefits continues, subject to the provisions of paragraphs (c) 
and (d) of this section, until the month before your termination month 
(Sec. 404.325).
    (3) With the last month you are a full-time student or, if earlier, 
with the month before the month you become age 19, if you become 18 
years old and you qualify as a full-time student who is not disabled. If 
you become age 19 in a month in which you have not completed the 
requirements for, or received, a diploma or equivalent certificate from 
an elementary or secondary school and you are required to enroll for 
each quarter or semester, we will

[[Page 126]]

find your entitlement ended with the month in which the quarter or 
semester in which you are enrolled ends. If the school you are attending 
does not have a quarter or semester system which requires reenrollment, 
we will find your entitlement to benefits ended with the month you 
complete the course or, if earlier, the first day of the third month 
following the month in which you become 19 years old.
    (4) With the month before the month you marry. We will not find your 
benefits ended, however, if you are age 18 or older, disabled, and you 
marry a person entitled to child's benefits based on disability or 
person entitled to old-age, divorced wife's, divorced husband's, 
widow's, widower's, mother's, father's, parent's, or disability 
benefits.
    (5) With the month before the month the insured's entitlement to 
old-age or disability benefits ends for a reason other than death or the 
attainment of full retirement age (as defined in Sec. 404.409). 
Exception: We will continue your benefits if the insured person was 
entitled to disability benefits based on a finding that drug addiction 
or alcoholism was a contributing factor material to the determination of 
his or her disability (as described in Sec. 404.1535), the insured 
person's benefits ended after 36 months of payment (see Sec. 
404.316(e)) or 12 consecutive months of suspension for noncompliance 
with treatment (see Sec. 404.316(f)), and the insured person remains 
disabled.
    (6) With the month before the month you die.
    (c) If you are entitled to benefits as a disabled child age 18 or 
over and your disability is based on a finding that drug addiction or 
alcoholism was a contributing factor material to the determination of 
disability (as described in Sec. 404.1535), we will find your 
entitlement to benefits ended under the following conditions:
    (1) If your benefits have been suspended for a period of 12 
consecutive months for failure to comply with treatment, with the month 
following the 12 months unless you are otherwise disabled without regard 
to drug addiction or alcoholism (see Sec. 404.470(c)).
    (2) If you have received 36 months of benefits on that basis when 
treatment is available, regardless of the number of entitlement periods 
you may have had, with the month following such 36-month payment period 
unless you are otherwise disabled without regard to drug addiction or 
alcoholism.
    (d)(1) Generally, we will continue your benefits after your 
impairment is no longer disabling if you meet all the following 
conditions:
    (i) Your disability did not end before December 1980, the effective 
date of this provision of the law.
    (ii) You are participating in an appropriate program of vocational 
rehabilitation as described in Sec. 404.316(c)(1)(ii).
    (iii) You began the program before your disability ended.
    (iv) We have determined that your completion of the program, or your 
continuation in the program for a specified period of time, will 
significantly increase the likelihood that you will not have to return 
to the disability benefit rolls.
    (2) Generally, we will end your entitlement to benefits with the 
month you meet one of the following conditions:
    (i) You complete the program.
    (ii) You stop participating in the program for any reason.
    (iii) We determine that your continuing participation in the program 
will no longer significantly increase the likelihood that you will be 
permanently removed from the disability benefit rolls.
    (iv) Exception: In no case will we stop your benefits with a month 
earlier than the second month after the month your disability ends.
    (e) If, after November 1980, you have a disabling impairment (Sec. 
404.1511), we will pay you benefits for all months in which you do not 
do substantial gainful activity during the reentitlement period (Sec. 
404.1592a) following the end of your trial work period (Sec. 404.1592). 
If you are unable to do substantial gainful activity in the first month 
following the reentitlement period, we will pay you benefits until you 
are able to do substantial gainful activity. (Earnings during your trial 
work period do not affect the payment of your benefits during that 
period.) We will also pay you benefits for the first month after the 
trial work period in

[[Page 127]]

which you do substantial gainful activity and the two succeeding months, 
whether or not you do substantial gainful activity during those 
succeeding months. After those three months, we cannot pay you benefits 
for any months in which you do substantial gainful activity.

[68 FR 4707, Jan. 30, 2003]



Sec. 404.353  Child's benefit amounts.

    (a) General. Your child's monthly benefit is equal to one-half of 
the insured person's primary insurance amount if he or she is alive and 
three-fourths of the primary insurance amount if he or she has died. The 
amount of your monthly benefit may change as explained in Sec. 404.304.
    (b) Entitlement to more than one benefit. If you are entitled to a 
child's benefit on more than one person's earnings record, you will 
ordinarily receive only the benefit payable on the record with the 
highest primary insurance amount. If your benefit before any reduction 
would be larger on an earnings record with a lower primary insurance 
amount and no other person entitled to benefits on any earnings record 
would receive a smaller benefit as a result of your receiving benefits 
on the record with the lower primary insurance amount, you will receive 
benefits on that record. See Sec. 404.407(d) for a further explanation. 
If you are entitled to a child's benefit and to other dependent's or 
survivor's benefits, you can receive only the highest of the benefits.

[44 FR 34481, June 15, 1979; 44 FR 56691, Oct. 2, 1979, as amended at 48 
FR 21928, May 16, 1983; 51 FR 12606, Apr. 14, 1986; 61 FR 38363, July 
24, 1996]



Sec. 404.354  Your relationship to the insured.

    You may be related to the insured person in one of several ways and 
be entitled to benefits as his or her child, i.e., as a natural child, 
legally adopted child, stepchild, grandchild, stepgrandchild, or 
equitably adopted child. For details on how we determine your 
relationship to the insured person, see Sec. Sec. 404.355 through 
404.359.

[63 FR 57593, Oct. 28, 1998]



Sec. 404.355  Who is the insured's natural child?

    (a) Eligibility as a natural child. You may be eligible for benefits 
as the insured's natural child if any of the following conditions is 
met:
    (1) You could inherit the insured's personal property as his or her 
natural child under State inheritance laws, as described in paragraph 
(b) of this section.
    (2) You are the insured's natural child and the insured and your 
mother or father went through a ceremony which would have resulted in a 
valid marriage between them except for a ``legal impediment'' as 
described in Sec. 404.346(a).
    (3) You are the insured's natural child and your mother or father 
has not married the insured, but the insured has either acknowledged in 
writing that you are his or her child, been decreed by a court to be 
your father or mother, or been ordered by a court to contribute to your 
support because you are his or her child. If the insured is deceased, 
the acknowledgment, court decree, or court order must have been made or 
issued before his or her death. To determine whether the conditions of 
entitlement are met throughout the first month as stated in Sec. 
404.352(a), the written acknowledgment, court decree, or court order 
will be considered to have occurred on the first day of the month in 
which it actually occurred.
    (4) Your mother or father has not married the insured but you have 
evidence other than the evidence described in paragraph (a)(3) of this 
section to show that the insured is your natural father or mother. 
Additionally, you must have evidence to show that the insured was either 
living with you or contributing to your support at the time you applied 
for benefits. If the insured is not alive at the time of your 
application, you must have evidence to show that the insured was either 
living with you or contributing to your support when he or she died. See 
Sec. 404.366 for an explanation of the terms ``living with'' and 
``contributions for support.''
    (b) Use of State Laws--(1) General. To decide whether you have 
inheritance rights as the natural child of the insured, we use the law 
on inheritance rights that the State courts would use

[[Page 128]]

to decide whether you could inherit a child's share of the insured's 
personal property if the insured were to die without leaving a will. If 
the insured is living, we look to the laws of the State where the 
insured has his or her permanent home when you apply for benefits. If 
the insured is deceased, we look to the laws of the State where the 
insured had his or her permanent home when he or she died. If the 
insured's permanent home is not or was not in one of the 50 States, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, 
or the Northern Mariana Islands, we will look to the laws of the 
District of Columbia. For a definition of permanent home, see Sec. 
404.303. For a further discussion of the State laws we use to determine 
whether you qualify as the insured's natural child, see paragraphs 
(b)(3) and (b)(4) of this section. If these laws would permit you to 
inherit the insured's personal property as his or her child, we will 
consider you the child of the insured.
    (2) Standards. We will not apply any State inheritance law 
requirement that an action to establish paternity must be taken within a 
specified period of time measured from the worker's death or the child's 
birth, or that an action to establish paternity must have been started 
or completed before the worker's death. If applicable State inheritance 
law requires a court determination of paternity, we will not require 
that you obtain such a determination but will decide your paternity by 
using the standard of proof that the State court would use as the basis 
for a determination of paternity.
    (3) Insured is living. If the insured is living, we apply the law of 
the State where the insured has his or her permanent home when you file 
your application for benefits. We apply the version of State law in 
effect when we make our final decision on your application for benefits. 
If you do not qualify as a child of the insured under that version of 
State law, we look at all versions of State law that were in effect from 
the first month for which you could be entitled to benefits up until the 
time of our final decision and apply the version of State law that is 
most beneficial to you.
    (4) Insured is deceased. If the insured is deceased, we apply the 
law of the State where the insured had his or her permanent home when he 
or she died. We apply the version of State law in effect when we make 
our final decision on your application for benefits. If you do not 
qualify as a child of the insured under that version of State law, we 
will apply the version of State law that was in effect at the time the 
insured died, or any version of State law in effect from the first month 
for which you could be entitled to benefits up until our final decision 
on your application. We will apply whichever version is most beneficial 
to you. We use the following rules to determine the law in effect as of 
the date of death:
    (i) If a State inheritance law enacted after the insured's death 
indicates that the law would be retroactive to the time of death, we 
will apply that law; or
    (ii) If the inheritance law in effect at the time of the insured's 
death was later declared unconstitutional, we will apply the State law 
which superseded the unconstitutional law.

[63 FR 57593, Oct. 28, 1998]



Sec. 404.356  Who is the insured's legally adopted child.

    You may be eligible for benefits as the insured's child if you were 
legally adopted by the insured. If you were legally adopted after the 
insured's death by his or her surviving spouse you may also be 
considered the insured's legally adopted child. We apply the adoption 
laws of the State or foreign country where the adoption took place, not 
the State inheritance laws described in Sec. 404.355, to determine 
whether you are the insured's legally adopted child.

[44 FR 34481, June 15, 1979, as amended at 63 FR 57594, Oct. 28, 1998]



Sec. 404.357  Who is the insured's stepchild.

    You may be eligible for benefits as the insured's stepchild if, 
after your birth, your natural or adopting parent married the insured. 
You also may be eligible as a stepchild if you were conceived prior to 
the marriage of your natural parent to the insured but were

[[Page 129]]

born after the marriage and the insured is not your natural parent. The 
marriage between the insured and your parent must be a valid marriage 
under State law or a marriage which would be valid except for a legal 
impediment described in Sec. 404.346(a). If the insured is alive when 
you apply, you must have been his or her stepchild for at least 1 year 
immediately preceding the day you apply. For purposes of determining 
whether the conditions of entitlement are met throughout the first month 
as stated in Sec. 404.352(a)(2)(i), you will be considered to meet the 
one year duration requirement throughout the month in which the 
anniversary of the marriage occurs. If the insured is not alive when you 
apply, you must have been his or her stepchild for at least 9 months 
immediately preceding the day the insured died. This 9-month requirement 
will not have to be met if the marriage between the insured and your 
parent lasted less than 9 months under the conditions described in 
Sec. 404.335(a)(2).

[48 FR 21928, May 16, 1983, as amended at 64 FR 14608, Mar. 26, 1999]



Sec. 404.358  Who is the insured's grandchild or stepgrandchild.

    (a) Grandchild and stepgrandchild defined. You may be eligible for 
benefits as the insured's grandchild or stepgrandchild if you are the 
natural child, adopted child, or stepchild of a person who is the 
insured's child as defined in Sec. Sec. 404.355 through 404.357, or 
Sec. 404.359. Additionally, for you to be eligible as a grandchild or 
stepgrandchild, your natural or adoptive parents must have been either 
deceased or under a disability, as defined in Sec. 404.1501(a), at the 
time your grandparent or stepgrandparent became entitled to old-age or 
disability benefits or died; or if your grandparent or stepgrandparent 
had a period of disability that continued until he or she became 
entitled to benefits or died, at the time the period of disability 
began. If your parent is deceased, for purposes of determining whether 
the conditions of entitlement are met throughout the first month as 
stated in Sec. 404.352(a)(2)(i), your parent will be considered to be 
deceased as of the first day of the month of death.
    (b) Legally adopted grandchild or stepgrandchild. If you are the 
insured's grandchild or stepgrandchild and you are legally adopted by 
the insured or by the insured's surviving spouse after his or her death, 
you are considered an adopted child and the dependency requirements of 
Sec. 404.362 must be met.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21928, May 16, 1983]



Sec. 404.359  Who is the insured's equitably adopted child.

    You may be eligible for benefits as an equitably adopted child if 
the insured had agreed to adopt you as his or her child but the adoption 
did not occur. The agreement to adopt you must be one that would be 
recognized under State law so that you would be able to inherit a 
child's share of the insured's personal property if he or she were to 
die without leaving a will. The agreement must be in whatever form, and 
you must meet whatever requirements for performance under the agreement, 
that State law directs. If you apply for child's benefits after the 
insured's death, the law of the State where the insured had his or her 
permanent home at the time of his or her death will be followed. If you 
apply for child's benefits during the insured's life, the law of the 
State where the insured has his or her permanent home at the time or 
your application will be followed.



Sec. 404.360  When a child is dependent upon the insured person.

    One of the requirements for entitlement to child's benefits is that 
you be dependent upon the insured. The evidence you need to prove your 
dependency is determined by how you are related to the insured. To prove 
your dependency you may be asked to show that at a specific time you 
lived with the insured, that you received contributions for your support 
from the insured, or that the insured provided at least one-half of your 
support. These dependency requirements, and the time at which they must 
be met, are explained in Sec. Sec. 404.361 through 404.365. The terms 
living with, contributions for support, and one-half support are defined 
in Sec. 404.366.

[[Page 130]]



Sec. 404.361  When a natural child is dependent.

    (a) Dependency of natural child. If you are the insured's natural 
child, as defined in Sec. 404.355, you are considered dependent upon 
him or her, except as stated in paragraph (b) of this section.
    (b) Dependency of natural child legally adopted by someone other 
than the insured. (1) Except as indicated in paragraph (b)(2) of this 
section, if you are legally adopted by someone other than the insured 
(your natural parent) during the insured's lifetime, you are considered 
dependent upon the insured only if the insured was either living with 
you or contributing to your support at one of the following times:
    (i) When you applied;
    (ii) When the insured died; or
    (iii) If the insured had a period of disability that lasted until he 
or she became entitled to disability or old-age benefits or died, at the 
beginning of the period of disability or at the time he or she became 
entitled to disability or old-age benefits.
    (2) You are considered dependent upon the insured (your natural 
parent) if:
    (i) You were adopted by someone other than the insured after you 
applied for child's benefits; or
    (ii) The insured had a period of disability that lasted until he or 
she became entitled to old-age or disability benefits or died, and you 
are adopted by someone other than the insured after the beginning of 
that period of disability.

[64 FR 14608, Mar. 26, 1999]



Sec. 404.362  When a legally adopted child is dependent.

    (a) General. If you were legally adopted by the insured before he or 
she became entitled to old-age or disability benefits, you are 
considered dependent upon him or her. If you were legally adopted by the 
insured after he or she became entitled to old-age or disability 
benefits and you apply for child's benefits during the life of the 
insured, you must meet the dependency requirements stated in paragraph 
(b) of this section. If you were legally adopted by the insured after he 
or she became entitled to old-age or disability benefits and you apply 
for child's benefits after the death of the insured, you are considered 
dependent upon him or her. If you were adopted after the insured's death 
by his or her surviving spouse, you may be considered dependent upon the 
insured only under the conditions described in paragraph (c) of this 
section.
    (b) Adoption by the insured after he or she became entitled to 
benefits. (1) General. If you are legally adopted by the insured after 
he or she became entitled to benefits and you are not the insured's 
natural child or stepchild, you are considered dependent on the insured 
during his or her lifetime only if--
    (i) You had not attained age 18 when adoption proceedings were 
started, and your adoption was issued by a court of competent 
jurisdiction within the United States; or
    (ii) You had attained age 18 before adoption proceedings were 
started; your adoption was issued by a court of competent jurisdiction 
within the United States; and you were living with or receiving at least 
one-half of your support from the insured for the year immediately 
preceding the month in which your adoption was issued.
    (2) Natural child and stepchild. If you were legally adopted by the 
insured after he or she became entitled to benefits and you are the 
insured's natural child or stepchild, you are considered dependent upon 
the insured.
    (c) Adoption by the insured's surviving spouse--(1) General. If you 
are legally adopted by the insured's surviving spouse after the 
insured's death, you are considered dependent upon the insured as of the 
date of his or her death if--
    (i) You were either living with or receiving at least one-half of 
your support from the insured at the time of his or her death; and,
    (ii) The insured had started adoption proceedings before he or she 
died; or if the insured had not started the adoption proceedings before 
he or she died, his or her surviving spouse began and completed the 
adoption within 2 years of the insured's death.
    (2) Grandchild or stepgrandchild adopted by the insured's surviving 
spouse. If

[[Page 131]]

you are the grandchild or step grand child of the insured and any time 
after the death of the insured you are legally adopted by the insured's 
surviving spouse, you are considered the dependent child of the insured 
as of the date of his or her death if--
    (i) Your adoption took place in the United States;
    (ii) At the time of the insured's death, your natural, adopting or 
stepparent was not living in the insured's household and making regular 
contributions toward your support; and
    (iii) You meet the dependency requirements stated in Sec. 404.364.

[44 FR 34481, June 15, 1979; 44 FR 56691, Oct. 2, 1979, as amended at 56 
FR 24000, May 28, 1991; 57 FR 3938, Feb. 3, 1992]



Sec. 404.363  When a stepchild is dependent.

    If you are the insured's stepchild, as defined in Sec. 404.357, you 
are considered dependent upon him or her if you were either living with 
or receiving at least one-half of your support from him or her at one of 
these times--
    (a) When you applied;
    (b) When the insured died; or
    (c) If the insured had a period of disability that lasted until his 
or her death or entitlement to disability or old-age benefits, at the 
beginning of the period of disability or at the time the insured became 
entitled to benefits.



Sec. 404.364  When a grandchild or step grand child is dependent.

    If you are the insured's grandchild or stepgrandchild, as defined in 
Sec. 404.358(a), you are considered dependent upon the insured if--
    (a) You began living with the insured before you became 18 years 
old; and
    (b) You were living with the insured in the United States and 
receiving at least one-half of your support from him for the year before 
he or she became entitled to old-age or disability benefits or died; or 
if the insured had a period of disability that lasted until he or she 
became entitled to benefits or died, for the year immediately before the 
month in which the period of disability began. If you were born during 
the 1-year period, the insured must have lived with you and provided at 
least one-half of your support for substantially all of the period that 
begins on the date of your birth. The term substantially all is defined 
in Sec. 404.362(b)(1)(iii).



Sec. 404.365  When an equitably adopted child is dependent.

    If you are the insured's equitably adopted child, as defined in 
Sec. 404.359, you are considered dependent upon him or her if you were 
either living with or receiving contributions for your support from the 
insured at the time of his or her death. If your equitable adoption is 
found to have occurred after the insured became entitled to old-age or 
disability benefits, your dependency cannot be established during the 
insured's life. If your equitable adoption is found to have occurred 
before the insured became entitled to old-age or disability benefits, 
you are considered dependent upon him or her if you were either living 
with or receiving contributions for your support from the insured at one 
of these times--
    (a) When you applied; or
    (b) If the insured had a period of disability that lasted until he 
or she became entitled to old-age or disability benefits, at the 
beginning of the period of disability or at the time the insured became 
entitled to benefits.



Sec. 404.366  ``Contributions for support,'' ``one-half support,'' and 
``living with'' the insured defined--determining first month of entitlement.

    To be eligible for child's or parent's benefits, and in certain 
Government pension offset cases, you must be dependent upon the insured 
person at a particular time or be assumed dependent upon him or her. 
What it means to be a dependent child is explained in Sec. Sec. 404.360 
through 404.365; what it means to be a dependent parent is explained in 
Sec. 404.370(f); and the Government pension offset is explained in 
Sec. 404.408a. Your dependency upon the insured person may be based 
upon whether at a specified time you were receiving contributions for 
your support or one-half of your support from the insured person, or 
whether you were living with him or her. These terms are defined in 
paragraphs (a) through (c) of this section.

[[Page 132]]

    (a) Contributions for support. The insured makes a contribution for 
your support if the following conditions are met:
    (1) The insured gives some of his or her own cash or goods to help 
support you. Support includes food, shelter, routine medical care, and 
other ordinary and customary items needed for your maintenance. The 
value of any goods the insured contributes is the same as the cost of 
the goods when he or she gave them for your support. If the insured 
provides services for you that would otherwise have to be paid for, the 
cash value of his or her services may be considered a contribution for 
your support. An example of this would be work the insured does to 
repair your home. The insured person is making a contribution for your 
support if you receive an allotment, allowance, or benefit based upon 
his or her military pay, veterans' pension or compensation, or social 
security earnings.
    (2) Contributions must be made regularly and must be large enough to 
meet an important part of your ordinary living costs. Ordinary living 
costs are the costs for your food, shelter, routine medical care, and 
similar necessities. If the insured person only provides gifts or 
donations once in a while for special purposes, they will not be 
considered contributions for your support. Although the insured's 
contributions must be made on a regular basis, temporary interruptions 
caused by circumstances beyond the insured person's control, such as 
illness or unemployment, will be disregarded unless during this 
interrruption someone else takes over responsibility for supporting you 
on a permanent basis.
    (b) One-half support. The insured person provides one-half of your 
support if he or she makes regular contributions for your ordinary 
living costs; the amount of these contributions equals or exceeds one-
half of your ordinary living costs; and any income (from sources other 
than the insured person) you have available for support purposes is one-
half or less of your ordinary living costs. We will consider any income 
which is available to you for your support whether or not that income is 
actually used for your ordinary living costs. Ordinary living costs are 
the costs for your food, shelter, routine medical care, and similar 
necessities. A contribution may be in cash, goods, or services. The 
insured is not providing at least one-half of your support unless he or 
she has done so for a reasonable period of time. Ordinarily we consider 
a reasonable period to be the 12-month period immediately preceding the 
time when the one-half support requirement must be met under the rules 
in Sec. Sec. 404.362(c)(1) and 404.363 (for child's benefits), in Sec. 
404.370(f) (for parent's benefits) and in Sec. 404.408a(c) (for 
benefits where the Government pension offset may be applied). A shorter 
period will be considered reasonable under the following circumstances:
    (1) At some point within the 12-month period, the insured either 
begins or stops providing at least one-half of your support on a 
permanent basis and this is a change in the way you had been supported 
up to then. In these circumstances, the time from the change up to the 
end of the 12-month period will be considered a reasonable period, 
unless paragraph (b)(2) of this section applies. The change in your 
source of support must be permanent and not temporary. Changes caused by 
seasonal employment or customary visits to the insured's home are 
considered temporary.
    (2) The insured provided one-half or more of your support for at 
least 3 months of the 12-month period, but was forced to stop or reduce 
contributions because of circumstances beyond his or her control, such 
as illness or unemployment, and no one else took over the responsibility 
for providing at least one-half of your support on a permanent basis. 
Any support you received from a public assistance program is not 
considered as a taking over of responsibility for your support by 
someone else. Under these circumstances, a reasonable period is that 
part of the 12-month period before the insured was forced to reduce or 
stop providing at least one-half of your support.
    (c) ``Living with'' the insured. You are living with the insured if 
you ordinarily live in the same home with the insured and he or she is 
exercising, or has the right to exercise, parental control and authority 
over your activities. You are living with the insured during

[[Page 133]]

temporary separations if you and the insured expect to live together in 
the same place after the separation. Temporary separations may include 
the insured's absence because of active military service or imprisonment 
if he or she still exercises parental control and authority. However, 
you are not considered to be living with the insured if you are in 
active military service or in prison. If living with is used to 
establish dependency for your eligibility to child's benefits and the 
date your application is filed is used for establishing the point for 
determining dependency, you must have been living with the insured 
throughout the month your application is filed in order to be entitled 
to benefits for that month.
    (d) Determining first month of entitlement. In evaluating whether 
dependency is established under paragraph (a), (b), or (c) of this 
section, for purposes of determining whether the conditions of 
entitlement are met throughout the first month as stated in Sec. 
404.352(a)(2)(i), we will not use the temporary separation or temporary 
interruption rules.

[44 FR 34481, June 15, 1979, as amended at 45 FR 65540, Oct. 3, 1980; 48 
FR 21928, May 16, 1983; 52 FR 26955, July 17, 1987; 64 FR 14608, Mar. 
26, 1999]



Sec. 404.367  When you are a ``full-time elementary or secondary school 
student''.

    You may be eligible for child's benefits if you are a full-time 
elementary or secondary school student. For the purposes of determining 
whether the conditions of entitlement are met throughout the first month 
as stated in Sec. 404.352(a)(2)(i), if you are entitled as a student on 
the basis of attendance at an elementary or secondary school, you will 
be considered to be in full-time attendance for a month during any part 
of which you are in full-time attendance. You are a full-time elementary 
or secondary school student if you meet all the following conditions:
    (a) You attend a school which provides elementary or secondary 
education as determined under the law of the State or other jurisdiction 
in which it is located. Participation in the following programs also 
meets the requirements of this paragraph:
    (1) You are instructed in elementary or secondary education at home 
in accordance with a home school law of the State or other jurisdiction 
in which you reside; or
    (2) You are in an independent study elementary or secondary 
education program in accordance with the law of the State or other 
jurisdiction in which you reside which is administered by the local 
school or school district/jurisdiction.
    (b) You are in full-time attendance in a day or evening 
noncorrespondence course of at least 13 weeks duration and you are 
carrying a subject load which is considered full-time for day students 
under the institution's standards and practices. If you are in a home 
schooling program as described in paragraph (a)(1) of this section, you 
must be carrying a subject load which is considered full-time for day 
students under standards and practices set by the State or other 
jurisdiction in which you reside;
    (c) To be considered in full-time attendance, your scheduled 
attendance must be at the rate of at least 20 hours per week unless one 
of the exceptions in paragraphs (c) (1) and (2) of this section applies. 
If you are in an independent study program as described in paragraph 
(a)(2) of this section, your number of hours spent in school attendance 
are determined by combining the number of hours of attendance at a 
school facility with the agreed upon number of hours spent in 
independent study. You may still be considered in full-time attendance 
if your scheduled rate of attendance is below 20 hours per week if we 
find that:
    (1) The school attended does not schedule at least 20 hours per week 
and going to that particular school is your only reasonable alternative; 
or
    (2) Your medical condition prevents you from having scheduled 
attendance of at least 20 hours per week. To prove that your medical 
condition prevents you from scheduling 20 hours per week, we may request 
that you provide appropriate medical evidence or a statement from the 
school.
    (d) You are not being paid while attending the school by an employer 
who has requested or required that you attend the school;

[[Page 134]]

    (e) You are in grade 12 or below; and
    (f) You are not subject to the provisions in Sec. 404.468 for 
nonpayment of benefits to certain prisoners and certain other inmates of 
publicly funded institutions.

[48 FR 21928, May 16, 1983, as amended at 48 FR 55452, Dec. 13, 1983; 56 
FR 35999, July 30, 1991; 61 FR 38363, July 24, 1996]



Sec. 404.368  When you are considered a full-time student during a period 
of nonattendance.

    If you are a full-time student, your eligibility may continue during 
a period of nonattendance (including part-time attendance) if all the 
following conditions are met:
    (a) The period of nonattendance is 4 consecutive months or less;
    (b) You show us that you intend to resume your studies as a full-
time student at the end of the period or at the end of the period you 
are a full-time student; and
    (c) The period of nonattendance is not due to your expulsion or 
suspension from the school.

[48 FR 21929, May 16, 1983]

                            Parent's Benefits



Sec. 404.370  Who is entitled to parent's benefits.

    You may be entitled to parent's benefits on the earnings record of 
someone who has died and was fully insured. You are entitled to these 
benefits if all the following conditions are met:
    (a) You are related to the insured person as his or her parent in 
one of the ways described in Sec. 404.374.
    (b) You are at least 62 years old.
    (c) You have not married since the insured person died.
    (d) You apply.
    (e) You are not entitled to an old-age benefit equal to or larger 
than the parent's benefit amount.
    (f) You were receiving at least one-half of your support from the 
insured at the time he or she died, or at the beginning of any period of 
disability he or she had that continued up to death. See Sec. 
404.366(b) for a definition of one-half support. If you were receiving 
one-half of your support from the insured at the time of the insured's 
death, you must give us proof of this support within 2 years of the 
insured's death. If you were receiving one-half of your support from the 
insured at the time his or her period of disability began, you must give 
us proof of this support within 2 years of the month in which the 
insured filed his or her application for the period of disability. You 
must file the evidence of support even though you may not be eligible 
for parent's benefits until a later time. There are two exceptions to 
the 2-year filing requirement:
    (1) If there is a good cause for failure to provide proof of support 
within the 2-year period, we will consider the proof you give us as 
though it were provided within the 2-year period. Good cause does not 
exist if you were informed of the need to provide the proof within the 
2-year period and you neglected to do so or did not intend to do so. 
Good cause will be found to exist if you did not provide the proof 
within the time limit due to--
    (i) Circumstances beyond your control, such as extended illness, 
mental or physical incapacity, or a language barrier;
    (ii) Incorrect or incomplete information we furnished you;
    (iii) Your efforts to get proof of the support without realizing 
that you could submit the proof after you gave us some other evidence of 
that support; or
    (iv) Unusual or unavoidable circumstances that show you could not 
reasonably be expected to know of the 2-year time limit.
    (2) The Soldiers' and Sailors' Civil Relief Act of 1940 provides for 
extending the filing time.



Sec. 404.371  When parent's benefits begin and end.

    (a) You are entitled to parent's benefits beginning with the first 
month covered by your application in which you meet all the other 
requirements for entitlement.
    (b) Your entitlement to benefits ends with the month before the 
month in which one of the following events first occurs:
    (1) You become entitled to an old-age benefit equal to or larger 
than the parent's benefit.

[[Page 135]]

    (2) You marry, unless your marriage is to someone entitled to 
wife's, husband's, widow's, widower's, mother's, father's, parent's or 
disabled child's benefits. If you marry a person entitled to these 
benefits, the marriage does not affect your benefits.
    (3) You die.

[44 FR 34481, June 15, 1979, as amended at 49 FR 24116, June 12, 1984]



Sec. 404.373  Parent's benefit amounts.

    Your parent's monthly benefit before any reduction that may be made 
as explained in Sec. 404.304, is figured in one of the following ways:
    (a) One parent entitled. Your parent's monthly benefit is equal to 
82\1/2\ percent of the insured person's primary insurance amount if you 
are the only parent entitled to benefits on his or her earnings record.
    (b) More than one parent entitled. Your parent's monthly benefit is 
equal to 75 percent of the insured person's primary insurance amount if 
there is another parent entitled to benefits on his or her earnings 
record.



Sec. 404.374  Parent's relationship to the insured.

    You may be eligible for benefits as the insured person's parent if--
    (a) You are the mother or father of the insured and would be 
considered his or her parent under the laws of the State where the 
insured had a permanent home when he or she died;
    (b) You are the adoptive parent of the insured and legally adopted 
him or her before the insured person became 16 years old; or
    (c) You are the stepparent of the insured and you married the 
insured's parent or adoptive parent before the insured became 16 years 
old. The marriage must be valid under the laws of the State where the 
insured had his or her permanent home when he or she died. See Sec. 
404.303 for a definition of permanent home.

                       Special Payments at Age 72



Sec. 404.380  General.

    Some older persons had little or no chance to become fully insured 
for regular social security benefits during their working years. For 
those who became 72 years old several years ago but are not fully 
insured, a special payment may be payable as described in the following 
sections.



Sec. 404.381  Who is entitled to special age 72 payments.

    You are entitled to a special age 72 payment if--
    (a) You have attained the age of 72; and
    (1) You attained such age before 1968; or
    (2) You attained such age after 1967--or, for applications filed 
after November 5, 1990, you attained age 72 after 1967 and before 1972--
and have at least 3 quarters of coverage for each calendar year elapsing 
after 1966 and before the year in which you attained age 72 (see subpart 
B for a description of quarters of coverage);
    (b) You reside in one of the 50 States, the District of Columbia, or 
the Northern Mariana Islands;
    (c) You apply; and
    (d) You are a U.S. citizen or a citizen of the Northern Mariana 
Islands; or you are an alien who was legally admitted for permanent 
residence in the United States and who has resided here continuously for 
5 years. Residence in the United States includes residence in the 
Northern Mariana Islands, Guam, American Samoa, Puerto Rico, and the 
Virgin Islands.

[44 FR 34481, June 15, 1979, as amended at 57 FR 21598, May 21, 1992]



Sec. 404.382  When special age 72 payments begin and end.

    (a) Your entitlement to the special age 72 payment begins with the 
first month covered by your application in which you meet all the other 
requirements for entitlement.
    (b) Your entitlement to this payment ends with the month before the 
month of your death.



Sec. 404.383  Special age 72 payment amounts.

    (a) Payment from May 1983 on. If you are entitled to special age 72 
payments from May 1983 on, you will receive a monthly payment of 
$125.60. If your spouse is also entitled to special age 72 payments, he 
or she will also receive $125.60. This amount, first payable for

[[Page 136]]

June 1982, will be increased when cost-of-living adjustments of Social 
Security benefits occur. This special payment may be reduced, suspended 
or not paid at all as explained in Sec. 404.384.
    (b) Payment prior to May 1983. If a husband or a single individual 
is entitled to special age 72 payments for months prior to May 1983, the 
amount payable was $125.60 for the months since June 1982. The wife 
received an amount approximiately one-half the husband's amount (i.e., 
$63.00 for months in the period June 1982-April 1983).

[49 FR 24116, June 12, 1984]



Sec. 404.384  Reductions, suspensions, and nonpayments of special age 72 
payments.

    (a) General. Special age 72 payments may not be paid for any month 
you receive public assistance payments. The payment may be reduced if 
you or your spouse are eligible for a government pension. In some 
instances, the special payment may not be paid while you are outside the 
United States. The rules on when special payments may be suspended, 
reduced, or not paid are provided in paragraphs (b) through (e) of this 
section.
    (b) Suspension of special age 72 payments when you receive certain 
assistance payments. You cannot receive the special payment if 
supplemental security income or aid to families with dependent children 
(AFDC) payments are payable to you, or if your needs are considered in 
setting the amounts of these assistance payments made to someone else. 
However, if these assistance payments are stopped, you may receive the 
special payment beginning with the last month for which the assistance 
payments were paid.
    (c) Reduction of special age 72 payments when you or your spouse are 
eligible for a government pension. Special payments are reduced for any 
regular government pension (or lump-sum payment given instead of a 
pension) that you or your spouse are eligible for at retirement. A 
government pension is any annuity, pension, or retirement pay from the 
Federal Government, a State government or political subdivision, or any 
organization wholly owned by the Federal or State government. Also 
included as a government pension is any social security benefit. The 
term government pension does not include workmen's compensation payments 
or Veterans Administration payments for a service-connected disability 
or death.
    (d) Amount of reduction because of a government pension. If you are 
eligible for a government pension, the amount of the pension will be 
subtracted from your special age 72 payment. If your spouse is eligible 
for a government pension but is not entitled to the special payment, 
your special payment is reduced (after any reduction due to your own 
government pension) by the difference between the pension amount and the 
full special payment amount. If both you and your spouse are entitled to 
the special payment, each spouse's payment is first reduced by the 
amount of his or her own government pension (if any). Then, the wife's 
special payment is reduced by the amount that the husband's government 
pension exceeds the full special payment. The husband's special payment 
is also reduced by the amount that the wife's government pension exceeds 
the full special payment.
    (e) Nonpayment of special age 72 payments when you are not residing 
in the United States. No special payment is due you for any month you 
are not a resident of one of the 50 States, the District of Columbia, or 
the Northern Mariana Islands. Also, payment to you may not be permitted 
under the rules in Sec. 404.463 if you are an alien living outside the 
United States.

[44 FR 34481, June 15, 1979, as amended at 49 FR 24116, June 12, 1984]

                         Lump-Sum Death Payment



Sec. 404.390  General.

    If a person is fully or currently insured when he or she dies, a 
lump-sum death payment of $255 may be paid to the widow or widower of 
the deceased if he or she was living in the same household with the 
deceased at the time of his or her death. If the insured is not survived 
by a widow(er) who meets this

[[Page 137]]

requirement, all or part of the $255 payment may be made to someone else 
as described in Sec. 404.392.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21929, May 16, 1983; 61 
FR 41330, Aug. 8, 1996]



Sec. 404.391  Who is entitled to the lump-sum death payment as a widow 
or widower who was living in the same household.

    You are entitled to the lump-sum death payment as a widow or widower 
who was living in the same household if--
    (a) You are the widow or widower of the deceased insured individual 
based upon a relationship described in Sec. 404.345 or Sec. 404.346;
    (b) You apply for this payment within two years after the date of 
the insured's death. You need not apply again if, in the month prior to 
the death of the insured, you were entitled to wife's or husband's 
benefits on his or her earnings record; and
    (c) You were living in the same household with the insured at the 
time of his or her death. The term living in the same household is 
defined in Sec. 404.347.

[44 FR 34481, June 15, 1979, as amended at 48 FR 21929, May 16, 1983]



Sec. 404.392  Who is entitled to the lump-sum death payment when there 
is no widow(er) who was living in the same household.

    (a) General. If the insured individual is not survived by a 
widow(er) who meets the requirements of Sec. 404.391, the lump-sum 
death payment shall be paid as follows:
    (1) To a person who is entitled (or would have been entitled had a 
timely application been filed) to widow's or widower's benefits (as 
described in Sec. 404.335) or mother's or father's benefits (as 
described in Sec. 404.339) on the work record of the deceased worker 
for the month of that worker's death; or
    (2) If no person described in (1) survives, in equal shares to each 
person who is entitled (or would have been entitled had a timely 
application been filed) to child's benefits (as described in Sec. 
404.350) on the work record of the deceased worker for the month of that 
worker's death.
    (b) Application requirement. A person who meets the requirements of 
paragraph (a)(1) of this section need not apply to receive the lump-sum 
death payment if, for the month prior to the death of the insured, that 
person was entitled to wife's or husband's benefits on the insured's 
earnings record. Otherwise, an application must be filed within 2 years 
of the insured's death.

[48 FR 21929, May 16, 1983; 61 FR 41330, Aug. 8, 1996]



      Subpart E_Deductions; Reductions; and Nonpayments of Benefits

    Authority: Secs. 202, 203, 204(a) and (e), 205(a) and (c), 216(l), 
223(e), 224, 225, 702(a)(5), 1129A and 1147 of the Social Security Act 
(42 U.S.C. 402, 403, 404(a) and (e), 405(a) and (c), 416(l), 423(e), 
424a, 425, 902(a)(5), 1320a-8a and 1320b-17).

    Source: 32 FR 19159, Dec. 20, 1967, unless otherwise noted.



Sec. 404.401  Deduction, reduction, and nonpayment of monthly benefits 
or lump-sum death payments.

    Under certain conditions, the amount of a monthly insurance benefit 
(see Sec. Sec. 404.380 through 404.384 of this part for provisions 
concerning special payments at age 72) or the lump-sum death payment as 
calculated under the pertinent provisions of sections 202 and 203 of the 
Act (including reduction for age under section 202(q) of a monthly 
benefit) must be increased or decreased to determine the amount to be 
actually paid to a beneficiary. Increases in the amount of a monthly 
benefit or lump-sum death payment are based upon recomputation and 
recalculations of the primary insurance amount (see subpart C of this 
part). A decrease in the amount of a monthly benefit or lump-sum death 
payment is required in the following instances:
    (a) Reductions. A reduction of a person's monthly benefit is 
required where:
    (1) The total amount of the monthly benefits payable on an earnings 
record exceeds the maximum that may be paid (see Sec. 404.403);
    (2) An application for monthly benefits is effective for a month 
during a retroactive period, and the maximum

[[Page 138]]

has already been paid for that month or would be exceeded if such 
benefit were paid for that month (see Sec. 404.406);
    (3) An individual is entitled to old-age or disability insurance 
benefits in addition to any other monthly benefit (see Sec. 404.407);
    (4) An individual under age 65 is concurrently entitled to 
disability insurance benefits and to certain public disability benefits 
(see Sec. 404.408);
    (5) An individual is entitled in a month to a widow's or widower's 
insurance benefit that is reduced under section 202 (e)(4) or (f)(5) of 
the Act and to any other monthly insurance benefit other than an old-age 
insurance benefit (see Sec. 404.407(b)); or
    (6) An individual is entitled in a month to old-age, disability, 
wife's, husband's, widow's, or widower's insurance benefit and reduction 
is required under section 202(q) of the Act (see Sec. 404.410).
    (b) Deductions. A deduction from a monthly benefit or a lump-sum 
death payment may be required because of:
    (1) An individual's earnings or work (see Sec. Sec. 404.415 and 
404.417);
    (2) Failure of certain beneficiaries receiving wife's or mother's 
insurance benefits to have a child in her care (see Sec. 404.421);
    (3) The earnings or work of an old-age insurance beneficiary where a 
wife, husband, or child is also entitled to benefits (see Sec. Sec. 
404.415 and 404.417);
    (4) Failure to report within the prescribed period either certain 
work outside the United States or not having the care of a child (see 
Sec. 404.451);
    (5) Failure to report within the prescribed period earnings from 
work in employment or self-employment (see Sec. 404.453); or
    (6) Certain taxes which were neither deducted from the wages of 
maritime employees nor paid to the Federal Government (see Sec. 
404.457).
    (c) Adjustments. We may adjust your benefits to correct errors in 
payments under title II of the Act. We may also adjust your benefits if 
you received more than the correct amount due under title XVI of the 
Act. For the title II rules on adjustments to your benefits, see subpart 
F of this part. For the rules on adjusting your benefits to recover 
title XVI overpayments, see Sec. 416.572 of this chapter.
    (d) Nonpayments. Nonpayment of monthly benefits may be required 
because:
    (1) The individual is an alien who has been outside the United 
States for more than 6 months (see Sec. 404.460);
    (2) The individual on whose earnings record entitlement is based has 
been deported (see Sec. 404.464);
    (3) The individual is engaged in substantial gainful activity while 
entitled to disability insurance benefits based on ``statutory 
blindness'' (see Sec. 404.467); or
    (4) The individual has not provided satisfactory proof that he or 
she has a Social Security number or has not properly applied for a 
Social Security number (see Sec. 404.469).
    (e) Recalculation. A reduction by recalculation of a benefit amount 
may be prescribed because an individual has been convicted of certain 
offenses (see Sec. 404.465) or because the primary insurance amount is 
recalculated (see subpart C of this part).
    (f) Suspensions. Suspension of monthly benefits may be required 
pursuant to section 203(h)(3) of the Act (the Social Security 
Administration has information indicating that work deductions may 
reasonably be expected for the year), or pursuant to section 225 of the 
Act (the Social Security Administration has information indicating a 
beneficiary is no longer disabled).

[40 FR 30813, July 23, 1975, as amended at 48 FR 37016, Aug. 16, 1983; 
56 FR 41789, Aug. 23, 1991; 65 FR 16813, Mar. 30, 2000; 66 FR 38906, 
July 26, 2001; 68 FR 40122, July 7, 2003]



Sec. 404.401a  When we do not pay benefits because of a disability 
beneficiary's work activity.

    If you are receiving benefits because you are disabled or blind as 
defined in title II of the Social Security Act, we will stop your 
monthly benefits even though you have a disabling impairment (Sec. 
404.1511), if you engage in substantial gainful activity during the 
reentitlement period (Sec. 404.1592a) following completion of the trial 
work period (Sec. 404.1592). You will, however, be paid benefits for 
the first month after the trial work period in which you do substantial 
gainful activity and the

[[Page 139]]

two succeeding months, whether or not you do substantial gainful 
activity in those two months. If anyone else is receiving monthly 
benefits based on your earnings record, that individual will not be paid 
benefits for any month for which you cannot be paid benefits during the 
reentitlement period. Earnings from work activity during a trial work 
period will not stop your benefits.

[49 FR 22271, May 29, 1984, as amended at 58 FR 64883, Dec. 10, 1993]



Sec. 404.402  Interrelationship of deductions, reductions, adjustments, 
and nonpayment of benefits.

    (a) Deductions, reductions, adjustment. Deductions because of 
earnings or work (see Sec. Sec. 404.415 and 404.417); failure to have a 
child ``in his or her care'' (see Sec. 404.421); as a penalty for 
failure to timely report noncovered work outside the United States, 
failure to report that he or she no longer has a child ``in his or her 
care,'' or failure to timely report earnings (see Sec. Sec. 404.451 and 
404.453); because of unpaid maritime taxes (see Sec. 404.457); or 
nonpayments because of drug addiction and alcoholism to individuals 
other than an insured individual who are entitled to benefits on the 
insured individual's earnings record are made:
    (1) Before making any reductions because of the maximum (see Sec. 
404.403),
    (2) Before applying the benefit rounding provisions (see Sec. 
404.304(f)), and,
    (3) Except for deductions imposed as a penalty (see Sec. Sec. 
404.451 and 404.453), before making any adjustment necessary because an 
error has been made in the payment of benefits (see subpart F). However, 
for purposes of charging excess earnings for taxable years beginning 
after December 1960 or ending after June 1961, see paragraph (b) of this 
section and Sec. 404.437 for reductions that apply before such 
charging.
    (b) Reductions, nonpayments. (1) Reduction because of the maximum 
(see Sec. 404.403) is made:
    (i) Before reduction because of simultaneous entitlement to old-age 
or disability insurance benefits and to other benefits (see Sec. 
404.407);
    (ii) Before reduction in benefits for age (see Sec. Sec. 404.410 
through 404.413);
    (iii) Before adjustment necessary because an error has been made in 
the payment of benefits (see subpart F of this part);
    (iv) Before reduction because of entitlement to certain public 
disability benefits provided under Federal, State, or local laws or 
plans (see Sec. 404.408);
    (v) Before nonpayment of an individual's benefits because he is an 
alien living outside the United States for 6 months (see Sec. 404.460), 
or because of deportation (see Sec. 404.464);
    (vi) Before the redetermination of the amount of benefit payable to 
an individual who has been convicted of certain offenses (see Sec. 
404.465); and
    (vii) Before suspension of benefits due to earnings (see Sec. 
404.456), for benefits payable or paid for months after December 1995 to 
a non-working auxiliary or survivor who resides in a different household 
than the working auxiliary or survivor whose benefits are suspended.
    (2) Reduction of benefits because of entitlement to certain public 
disability benefits (see Sec. 404.408) is made before deduction under 
section 203 of the Act relating to work (see Sec. Sec. 404.415, 
404.417, 404.451, and 404.453) and failure to have care of a child (see 
Sec. Sec. 404.421 and 404.451).
    (3) Reduction of the benefit of a spouse who is receiving a 
Government pension (see Sec. 404.408(a)) is made after the withholding 
of payments as listed in paragraph (d)(1) of this section and after 
reduction because of receipt of certain public disability benefits 
(paragraph (b)(2) of this section).
    (c) Alien outside the United States; deportation nonpayment--
deduction. If an individual is subject to nonpayment of a benefit for a 
month under Sec. 404.460 or Sec. 404.464, no deduction is made from 
his benefit for that month under Sec. 404.415, Sec. 404.417, or Sec. 
404.421, and no deduction is made because of that individual's work from 
the benefit of any person entitled or deemed entitled to benefits under 
Sec. 404.420, on his earnings record, for that month.
    (d) Order of priority--deductions and other withholding provisions. 
Deductions and other withholding provisions are applied in accordance 
with the following order of priority:
    (1) Current nonpayments under Sec. Sec. 404.460, 404.464, 404.465, 
404.467, and 404.469;

[[Page 140]]

    (2) Current reductions under Sec. 404.408;
    (3) Current reductions under Sec. 404.408a;
    (4) Current deductions under Sec. Sec. 404.417 and 404.421;
    (5) Current withholding of benefits under Sec. 404.456;
    (6) Unpaid maritime tax deductions (Sec. 404.457);
    (7) Withholdings to recover overpayments (see subpart F of this 
part);
    (8) Penalty deductions under Sec. Sec. 404.451 and 404.453.

[40 FR 30813, July 23, 1975, as amended at 44 FR 29047, May 18, 1979; 48 
FR 37016, Aug. 16, 1983; 48 FR 46148, Oct. 11, 1983; 56 FR 41789, Aug. 
23, 1991; 60 FR 8146, Feb. 10, 1995; 68 FR 15659, Apr. 1, 2003; 68 FR 
40122, July 7, 2003]



Sec. 404.403  Reduction where total monthly benefits exceed maximum 
family benefits payable.

    (a) General. (1) The Social Security Act limits the amount of 
monthly benefits that can be paid for any month based on the earnings of 
an insured individual. If the total benefits to which all persons are 
entitled on one earnings record exceed a maximum amount prescribed by 
law, then those benefits must be reduced so that they do not exceed that 
maximum.
    (2) The method of determining the total benefits payable (the family 
maximum) depends on when the insured individual died or became eligible, 
whichever is earlier. For purposes of this section, the year in which 
the insured individual becomes eligible refers generally to the year in 
which the individual attains age 62 or becomes disabled. However, where 
eligibility or death is in 1979 or later, the year of death, attainment 
of age 62, or beginning of current disability does not control if the 
insured individual was entitled to a disability benefit within the 12 
month period preceding current eligibility or death. Instead the year in 
which the individual became eligible for the former disability insurance 
benefit is the year of eligibility.
    (3) The benefits of an individual entitled as a divorced spouse or 
surviving divorced spouse will not be reduced pursuant to this section. 
The benefits of all other individuals entitled on the same record will 
be determined under this section as if no such divorced spouse or 
surviving divorced spouse were entitled to benefits.
    (4) In any case where more than one individual is entitled to 
benefits as the spouse or surviving spouse of a worker for the same 
month, and at least one of those individuals is entitled based on a 
marriage not valid under State law (see Sec. Sec. 404.345 and 404.346), 
the benefits of the individual whose entitlement is based on a valid 
marriage under State law will not be reduced pursuant to this section. 
The benefits of all other individuals entitled on the same record 
(unless excluded by paragraph (a)(3) of this section) will be determined 
under this section as if such validly married individual were not 
entitled to benefits.
    (5) When a person entitled on a worker's earnings record is also 
entitled to benefits on another earnings record, we consider only the 
amount of benefits actually due or payable on the worker's record to the 
dually-entitled person when determining how much to reduce total monthly 
benefits payable on the worker's earnings record because of the maximum. 
We do not include, in total benefits payable, any amount not paid 
because of that person's entitlement on another earnings record (see 
Sec. 404.407). The effect of this provision is to permit payment of up 
to the full maximum benefits to other beneficiaries who are not subject 
to a deduction or reduction. (See Sec. 404.402 for other situations 
where we apply deductions or reductions before reducing total benefits 
for the maximum.)

    Example 1: A wage earner, his wife and child are entitled to 
benefits. The wage earner's primary insurance amount is $600.00. His 
maximum is $900.00. Due to the maximum limit, the monthly benefits for 
the wife and child must be reduced to $150.00 each. Their original 
benefit rates are $300.00 each.

Maximum--$900.00
Subtract primary insurance amount--$600.00
Amount available for wife and child--$300.00
Divide by 2--$150.00 each for wife and child

    The wife is also entitled to benefits on her own record of $120.00 
monthly. This reduces her wife's benefit to $30.00. The following table 
illustrates this calculation.

Wife's benefit, reduced for maximum--$150.00
Subtract reduction due to dual entitlement--$120.00
Wife's benefit--$30.00


[[Page 141]]


    In computing the total benefits payable on the record, we disregard 
the $120.00 we cannot pay the wife. This allows us to increase the 
amount payable to the child to $270.00. The table below shows the steps 
in our calculation.

Amount available under maximum--$300.00
Subtract amount due wife after reduction due to entitlement to her own 
benefit--$30.00
Child's benefit--$270.00
    Example 2: A wage earner, his wife and 2 children are entitled to 
benefits. The wage earner's primary insurance amount is $1,250.00. His 
maximum is $2,180.00. Due to the maximum limit, the monthly benefits for 
the wife and children must be reduced to $310.00 each. Their original 
rates (50 percent of the worker's benefit) are $625.00 each. The 
following shows the calculation.

Maximum--$2,180.00
Subtract primary insurance amount--$1,250.00
Amount available for wife and children--$930.00
Divide by 3--$310 each for wife and children

    The children are also entitled to benefits on their own records. 
Child one is entitled to $390.00 monthly and child two is entitled to 
$280.00 monthly. This causes a reduction in the benefit to child one to 
0.00 and the benefit to child two to $30.00. Again, the following 
illustrates the calculation.

Benefit payable to child 1 reduced for maximum--$310.00
Subtract reduction due to dual entitlement--$390.00
Benefit payable to child 1--$0.00
Benefit payable to child 2, reduced for maximum--$310.00
Subtract reduction for dual entitlement--$280.00
Benefit payable to child 2--$30.00

    In computing the total benefits payable on the record, we consider 
only the benefits actually paid to the children, or $30. This allows 
payment of an additional amount to the wife, increasing her benefit to 
$625.00. This is how the calculation works.
Amount available under maximum for wife and children--$930.00
Subtract amount due children after reduction due to entitlement to their 
own benefits--$30.00
Amount available for wife--$900.00
Amount payable to wife (original benefit)--$625.00
    Example 3: A wage earner, his wife and 4 children are entitled to 
benefits. The wage earner's primary insurance amount is $1,250.00. His 
maximum is $2,180.00. Due to the maximum limit, the monthly benefits for 
the wife and children must be reduced to $186.00 each. Their original 
rates are $625.00 each. This is how the calculation works.

Maximum--$2,180.00
Subtract primary insurance amount--$1,250.00
Amount available for wife and children--$930.00
Divide by 5--$186.00 each for wife and four children

    Two children are also entitled to benefits on their own records. 
Child one is entitled to $390.00 monthly and child two is entitled to 
$280.00 monthly. This causes a reduction in the benefit to child one to 
$0.00 and the benefit to child two to $0.00. This calculation is as 
follows.

Benefit to child 1, reduced for maximum--$186.00
Subtract reduction due to dual entitlement--$390.00
Benefit payable to child 1--$0.00

Benefit to child 2, reduced for maximum--$186.00
Subtract reduction for dual entitlement--$280.00
Benefit payable to child two--$0.00

    In computing the total benefits payable on the record, we disregard 
the $372.00 we cannot pay the children. This allows payment of an 
additional amount to the wife, and the two remaining children as 
follows:

Amount available under maximum for wife and children--$930.00
Subtract amount due child one and child two after reduction due to 
entitlement to their own benefits--$0.00
Amount available for wife and the other two children--$930.00
Amount payable to the wife and each of the remaining two children--
$310.00

    (b) Eligibility or death before 1979. Where more than one individual 
is entitled to monthly benefits for the same month on the same earnings 
record, a reduction in the total benefits payable for that month may be 
required (except in cases involving a saving clause--see Sec. 404.405) 
if the maximum family benefit is exceeded. The maximum is exceeded if 
the total of the monthly benefits exceeds the amount appearing in column 
V of the applicable table in section 215(a) of the Act on the line on 
which appears in column IV the primary insurance amount of the insured 
individual whose earnings record is the basis for the benefits payable. 
Where the maximum is exceeded, the total benefits for each month after 
1964 are reduced to the amount appearing in column V. However, when any 
of the persons entitled to benefits on the insured individual's earnings 
would, except for the limitation described in

[[Page 142]]

Sec. 404.353(b), be entitled to child's insurance benefits on the basis 
of the earnings record of one or more other insured individuals, the 
total benefits payable may not be reduced to less than the smaller of--
    (1) The sum of the maximum amounts of benefits payable on the basis 
of the earnings records of all such insured individuals, or
    (2) The last figure in column V of the applicable table in (or 
deemed to be in) section 215(a) of the Act. The applicable table refers 
to the table which is effective for the month the benefit is payable.
    (c) Eligible for old-age insurance benefits or dies in 1979. If an 
insured individual becomes eligible for old-age insurance benefits or 
dies in 1979, the monthly maximum is as follows--
    (1) 150 percent of the first $230 of the individual's primary 
insurance amount, plus
    (2) 272 percent of the primary insurance amount over $230 but not 
over $332, plus
    (3) 134 percent of the primary insurance amount over $332 but not 
over $433, plus
    (4) 175 percent of the primary insurance amount over $433.


If the total of this computation is not a multiple of $0.10, it will be 
rounded to the next lower multiple of $0.10.
    (d) Eligible for old-age insurance benefits or dies after 1979. (1) 
If an insured individual becomes eligible for old-age insurance benefits 
or dies after 1979, the monthly maximum is computed as in paragraph (c) 
of this section. However, the dollar amounts shown there will be updated 
each year as average earnings rise. This updating is done by first 
dividing the average of the total wages (see Sec. 404.203(m)) for the 
second year before the individual dies or becomes eligible, by the 
average of the total wages for 1977. The result of that computation is 
then multiplied by each dollar amount in the formula in paragraph (c) of 
this section. Each updated dollar amount will be rounded to the nearer 
dollar; if the amount is an exact multiple of $0.50 (but not of $1), it 
will be rounded to the next higher $1.
    (2) Before November 2 of each calendar year after 1978, the 
Commissioner will publish in the Federal Register the formula and 
updated dollar amounts to be used for determining the monthly maximum 
for the following year.
    (d-1) Entitled to disability insurance benefits after June 1980. If 
you first become eligible for old-age or disability insurance benefits 
after 1978 and first entitled to disability insurance benefits after 
June 1980, we compute the monthly family maximum under a formula which 
is different from that in paragraphs (c) and (d) of this section. The 
computation under the new formula is as follows:
    (1) We take 85 percent of your average indexed monthly earnings and 
compare that figure with your primary insurance amount (see Sec. 
404.212 of this part). We work with the larger of these two amounts.
    (2) We take 150 percent of your primary insurance amount.
    (3) We compare the results of paragraphs (d-1) (1) and (2) of this 
section. The smaller amount is the monthly family maximum. As a result 
of this rule, the entitled spouse and children of some workers will not 
be paid any benefits because the family maximum does not exceed the 
primary insurance amount.
    (e) Person entitled on more than one record during years after 1978 
and before 1984. (1) If any of the persons entitled to monthly benefits 
on the earnings record of an insured individual would, except for the 
limitation described in Sec. 404.353(b), be entitled to child's 
insurance benefits on the earnings record of one or more other insured 
individuals, the total benefits payable may not be reduced to less than 
the smaller of--(i) the sum of the maximum amounts of benefits payable 
on the earnings records of all the insured individuals, or (ii) 1.75 
times the highest primary insurance amount possible for that month based 
on the average indexed monthly earnings equal to one-twelfth of the 
contribution and benefit base determined for that year.
    (2) If benefits are payable on the earnings of more than one 
individual and the primary insurance amount of one of the insured 
individuals was computed under the provisions in effect before 1979 and 
the primary insurance amount of the others was computed

[[Page 143]]

under the provisions in effect after 1978, the maximum monthly benefits 
cannot be more than the amount computed under paragraph (e)(1) of this 
section.
    (f) Person entitled on more than one record for years after 1983. 
(1) If any person for whom paragraphs (c) and (d) would apply is 
entitled to monthly benefits on the earnings record of an insured 
individual would, except for the limitation described in Sec. 
404.353(b), be entitled to child's insurance benefits on the earnings 
record of one or more other insured individuals, the total benefits 
payable to all persons on the earnings record of any of those insured 
individuals may not be reduced to less than the smaller of:
    (i) The sum of the maximum amounts of benefits payable on the 
earnings records of all the insured individuals, or
    (ii) 1.75 times the highest primary insurance amount possible for 
January 1983, or if later, January of the year that the person becomes 
entitled or reentitled on more than one record.

This highest primary insurance amount possible for that year will be 
based on the average indexed monthly earnings equal to one-twelfth of 
the contribution and benefit base determined for that year. Thereafter, 
the total monthly benefits payable to persons on the earnings record of 
those insured individuals will then be increased only when monthly 
benefits are increased because of cost-of-living adjustments (see Sec. 
404.270ff).
    (2) If benefits are payable on the earnings of more than one 
individual and the primary insurance amount of one of the insured 
individuals was computed under the provisions in effect before 1979 and 
the primary insurance amount of the other was computed under the 
provisions in effect after 1978, the maximum monthly benefits cannot be 
more than the amount computed under paragraph (f)(1) of this section.
    (g) Person previously entitled to disability insurance benefits. If 
an insured individual who was previously entitled to disability 
insurance benefits becomes entitled to a ``second entitlement'' as 
defined in Sec. 404.250, or dies, after 1995, and the insured 
individual's primary insurance amount is determined under Sec. Sec. 
404.251(a)(1), 404.251(b)(1), or 404.252(b), the monthly maximum during 
the second entitlement is determined under the following rules:
    (1) If the primary insurance amount is determined under Sec. Sec. 
404.251(a)(1) or 404.251(b)(1), the monthly maximum equals the maximum 
in the last month of the insured individual's earlier entitlement to 
disability benefits, increased by any cost-of-living or ad hoc increases 
since then.
    (2) If the primary insurance amount is determined under Sec. 
404.252(b), the monthly maximum equals the maximum in the last month of 
the insured individual's earlier entitlement to disability benefits.
    (3) Notwithstanding paragraphs (g)(1) and (g)(2) of this section, if 
the second entitlement is due to the insured individual's retirement or 
death, and the monthly maximum in the last month of the insured 
individual's earlier entitlement to disability benefits was computed 
under paragraph (d-1) of this section, the monthly maximum is equal to 
the maximum that would have been determined for the last month of such 
earlier entitlement if computed without regard for paragraph (d-1) of 
this section.

[45 FR 1611, Jan. 8, 1980, as amended at 46 FR 25601, May 8, 1981; 48 FR 
46148, Oct. 11, 1983; 51 FR 12606, Apr. 14, 1986; 58 FR 64892, Dec. 10, 
1993; 62 FR 38450, July 18, 1997; 64 FR 17101, Apr. 8, 1999; 64 FR 
57775, Oct. 27, 1999; 65 FR 16813, Mar. 30, 2000]



Sec. 404.404  How reduction for maximum affects insured individual and 
other persons entitled on his earnings record.

    If a reduction of monthly benefits is required under the provisions 
of Sec. 404.403, the monthly benefit amount of each of the persons 
entitled to a monthly benefits on the same earnings record (with the 
exception of the individual entitled to old-age or disability insurance 
benefits) is proportionately reduced so that the total benefits that can 
be paid in 1 month (including an amount equal to the primary insurance 
amount of the old-age or disability insurance beneficiary, when 
applicable) does not exceed the maximum family benefit (except as 
provided in Sec. 404.405

[[Page 144]]

where various savings clause provisions are described).



Sec. 404.405  Situations where total benefits can exceed maximum because 
of ``savings clause.''

    The following provisions are savings clauses and describe exceptions 
to the rules concerning the maximum amount payable on an individual's 
earnings record in a month as described in Sec. 404.403. The effect of 
a savings clause is to avoid lowering benefit amounts or to guarantee 
minimum increases to certain persons entitled on the earnings record of 
the insured individual when a statutory change has been made that would 
otherwise disadvantage them. The reduction described in Sec. 404.403 
does not apply in the following instances:
    (a)-(m) [Reserved]
    (n) Months after August 1972. The reduction described in Sec. 
404.403(a) shall not apply to benefits for months after August 1972 
where two or more persons were entitled to benefits for August 1972 
based upon the filing of an application in August 1972 or earlier and 
the total of such benefits was subject to reduction for the maximum 
under Sec. 404.403 (or would have been subject to such reduction except 
for this paragraph) for January 1971. In such a case, maximum family 
benefits on the insured individual's earnings record for any month after 
August 1972 may not be less than the larger of:
    (1) The maximum family benefits for such month determined under the 
applicable table in section 215(a) of the Act (the applicable table in 
section 215(a) is that table which is effective for the month the 
benefit is payable or in the case of a lump-sum payment, the month the 
individual died); or
    (2) The total obtained by multiplying each benefit for August 1972 
after reduction for the maximum but before deduction or reduction for 
age, by 120 percent and raising each such increased amount, if it is not 
a multiple of 10 cents, to the next higher multiple of 10 cents.
    (o) Months after December 1972. The reduction described in Sec. 
404.403 shall not apply to benefits for months after December 1972 in 
the following cases:
    (1) In the case of a redetermination of widow's or widower's 
benefits, the reduction described in Sec. 404.403 shall not apply if:
    (i) Two or more persons were entitled to benefits for December 1972 
on the earnings records of a deceased individual and at least one such 
person is entitled to benefits as the deceased individual's widow or 
widower for December 1972 and for January 1973; and
    (ii) The total of benefits to which all persons are entitled for 
January 1973 is reduced (or would be reduced if deductions were not 
applicable) for the maximum under Sec. 404.403.

In such case, the benefit of each person referred to in paragraph 
(o)(1)(i) of this section for months after December 1972 shall be no 
less than the amount it would have been if the widow's or widower's 
benefit had not been redetermined under the Social Security Amendments 
of 1972.
    (2) In the case of entitlement to child's benefits based upon 
disability which began between ages 18 and 22 the reduction described in 
Sec. 404.403 shall not apply if:
    (i) One or more persons were entitled to benefits on the insured 
individual's earnings record for December 1972 based upon an application 
filed in that month or earlier; and
    (ii) One or more persons not included in paragraph (o)(2)(i) of this 
section are entitled to child's benefits on that earnings record for 
January 1973 based upon disability which began in the period from ages 
18 to 22; and
    (iii) The total benefits to which all persons are entitled on that 
record for January 1973 is reduced (or would be reduced if deductions 
were not applicable) for the maximum under Sec. 404.403.

In such case, the benefit of each person referred to in paragraph 
(o)(2)(i) of this section for months after December 1972 shall be no 
less than the amount it would have been if the person entitled to 
child's benefits based upon disability in the period from ages 18 to 22 
were not so entitled.
    (3) In the case of entitlement of certain surviving divorced 
mothers, the reduction described in Sec. 404.403 shall not apply if:
    (i) One or more persons were entitled to benefits on the insured 
individual's

[[Page 145]]

earnings record for December 1972 based upon an application filed in 
December 1972 or earlier; and
    (ii) One or more persons not included in paragraph (o)(3)(i) of this 
section are entitled to benefits on that earnings record as a surviving 
divorced mother for a month after December 1972; and
    (iii) The total of benefits to which all persons are entitled on 
that record for any month after December 1972 is reduced (or would be 
reduced if deductions were not applicable) for the maximum under Sec. 
404.403.

In such case, the benefit of each such person referred to in paragraph 
(o)(3)(i) of this section for months after December 1972 in which any 
person referred to in paragraph (o)(3)(ii) of this section is entitled 
shall be no less than it would have been if the person(s) referred to in 
paragraph (o)(3)(ii) of this section had not become entitled to 
benefits.
    (p) Months after December 1973. The reduction described in Sec. 
404.403 shall not apply to benefits for months after December 1973 where 
two or more persons were entitled to monthly benefits for January 1971 
or earlier based upon applications filed in January 1971 or earlier, and 
the total of such benefits was subject to reduction for the maximum 
under Sec. 404.403 for January 1971 or earlier. In such a case, maximum 
family benefits payable on the insured individual's earnings record for 
any month after January 1971 may not be less than the larger of:
    (1) The maximum family benefit for such month shown in the 
applicable table in section 215(a) of the Act (the applicable table in 
section 215(a) of the Act is that table which is effective for the month 
the benefit is payable or in the case of a lump-sum payment, the month 
the individual died); or
    (2) The largest amount which has been determined payable for any 
month for persons entitled to benefits on the insured individual's 
earnings records; or
    (3) In the case of persons entitled to benefits on the insured 
individual's earnings record for the month immediately preceding the 
month of a general benefit or cost-of-living increase after September 
1972, an amount equal to the sum of the benefit amount for each person 
(excluding any part of an old-age insurance benefit increased because of 
delayed retirement under the provisions of Sec. 404.305(a) for the 
month immediately before the month of increase in the primary insurance 
amount (after reduction for the family maximum but before deductions or 
reductions for age) multiplied by the percentage of increase. Any such 
increased amount, if it is not a multiple of $0.10, will be raised to 
the next higher multiple of $0.10 for months before June 1982 and 
reduced to the next lower multiple of $0.10 for months after May 1982.
    (q) Months after May 1978. The family maximum for months after May 
1978 is figured for all benefici aries just as it would have been if 
none of them had gotten a benefit increase because of the retirement 
credit if:
    (1) One or more persons were entitled (without the reduction 
required by Sec. 404.406) to monthly benefits for May 1978 on the wages 
and self-employment income of a deceased wage earner;
    (2) The benefit for June 1978 of at least one of those persons is 
increased by reason of a delayed retirement credit (see Sec. 
404.330(b)(4) or Sec. 404.333(b)(4)); and
    (3) The total amount of monthly benefits to which all those persons 
are entitled is reduced because of the maximum or would be so reduced 
except for certain restrictions (see Sec. 404.403 and Sec. 
404.402(a)).

[32 FR 19159, Dec. 20, 1967, as amended at 40 FR 30814, July 23, 1975; 
43 FR 8132, Feb. 28, 1978; 43 FR 29277, July 7, 1978; 48 FR 46148, Oct. 
11, 1983]



Sec. 404.406  Reduction for maximum because of retroactive effect of 
application for monthly benefits.

    Under the provisions described in Sec. 404.403, beginning with the 
month in which a person files an application and becomes entitled to 
benefits on an insured individual's earnings record, the benefit rate of 
other persons entitled on the same earnings record (aside from the 
individual on whose earnings record entitlement is based) are adjusted 
downward, if necessary, so that the maximum benefits payable on one 
earnings record will not be exceeded. An application may also be 
effective (retroactively) for benefits for months before the month of 
filing (see Sec. 404.603).

[[Page 146]]

For any month before the month of filing, however, benefits that have 
been previously certified by the Administration for payment to other 
persons (on the same earnings record) are not changed. Rather, the 
benefit payment of the person filing the application in the later month 
is reduced for each month of the retroactive period to the extent that 
may be necessary, so that no earlier payment to some other person is 
made erroneous. This means that for each month of the retroactive period 
the amount payable to the person filing the later application is the 
difference, if any, between (a) the total amount of benefits actually 
certified for payment to other persons for that month, and (b) the 
maximum amount of benefits payable for that month to all persons, 
including the person filing later.

[32 FR 19159, Dec. 20, 1967, as amended at 64 FR 14608, Mar. 26, 1999]



Sec. 404.407  Reduction because of entitlement to other benefits.

    (a) Entitlement to old-age or disability insurance benefit and other 
monthly benefit. If an individual is entitled to an old-age insurance 
benefit or disability insurance benefit for any month after August 1958 
and to any other monthly benefit payable under the provisions of title 
II of the Act (see subpart D of this part) for the same month, such 
other benefit for the month, after any reduction under section 202(q) of 
the Act because of entitlement to such benefit for months before 
retirement age and any reduction under section 203(a) of the Act, is 
reduced (but not below zero) by an amount equal to such old-age 
insurance benefit (after reduction under section 202(q) of the Act) or 
such disability insurance benefit, as the case may be.
    (b) Entitlement to widow's or widower's benefit and other monthly 
benefit. If an individual is entitled for any month after August 1965 to 
a widow's or widower's insurance benefit under the provisions of section 
202 (e)(4) or (f)(5) of the Act and to any other monthly benefit payable 
under the provisions of title II of the Act (see subpart D) for the same 
month, except an old-age insurance benefit, such other insurance benefit 
for that month, after any reduction under paragraph (a) of this section, 
any reduction for age under section 202(q) of the Act, and any reduction 
under the provisions described in section 203(a) of the Act, shall be 
reduced, but not below zero, by an amount equal to such widow's or 
widower's insurance benefit after any reduction or reductions under 
paragraph (a) of this section or section 203(a) of the Act.
    (c) Entitlement to old-age insurance benefit and disability 
insurance benefit. Any individual who is entitled for any month after 
August 1965 to both an old-age insurance benefit and a disability 
insurance benefit shall be entitled to only the larger of such benefits 
for such month, except that where the individual so elects, he or she 
shall instead be entitled to only the smaller of such benefits for such 
month. Only a person defined in Sec. 404.612 (a), (c), or (d) may make 
the above described election.
    (d) Child's insurance benefits. A child may, for any month, be 
simultaneously entitled to a child's insurance benefit on more than one 
individual's earnings if all the conditions for entitlement described in 
Sec. 404.350 are met with respect to each claim. Where a child is 
simultaneously entitled to child's insurance benefits on more than one 
earnings record, the general rule is that the child will be paid an 
amount which is based on the record having the highest primary insurance 
amount. However, the child will be paid a higher amount which is based 
on the earnings record having a lower primary insurance amount if no 
other beneficiary entitled on any record would receive a lower benefit 
because the child is paid on the record with the lower primary insurance 
amount. (See Sec. 404.353(b).)
    (e) Entitlement to more than one benefit where not all benefits are 
child's insurance benefits and no benefit is an old-age or disability 
insurance benefit. If an individual (other than an individual to whom 
section 202 (e)(4) or (f)(5) of the Act applies) is entitled for any 
month to more than one monthly benefit payable under the provisions of 
this subpart, none of which is an old-age or disability insurance 
benefit and all of which are not child's insurance benefits, only the 
greater of the monthly

[[Page 147]]

benefits to which he would (but for the provisions of this paragraph) 
otherwise be entitled is payable for such month. For months after August 
1965, an individual who is entitled for any month to more than one 
widow's or widower's insurance benefit to which section 202 (e)(4) or 
(f)(5) of the Act applies is entitled to only one such benefit for such 
month, such benefit to be the largest of such benefits.

[32 FR 19159, Dec. 20, 1967, as amended at 51 FR 12606, Apr. 14, 1986; 
54 FR 5603, Feb. 6, 1989]



Sec. 404.408  Reduction of benefits based on disability on account of 

receipt of certain other disability benefits provided under Federal, 
State, or local laws or plans.

    (a) When reduction required. Under section 224 of the Act, a 
disability insurance benefit to which an individual is entitled under 
section 223 of the Act for a month (and any monthly benefit for the same 
month payable to others under section 202 on the basis of the same 
earnings record) is reduced (except as provided in paragraph (b) of this 
section) by an amount determined under paragraph (c) of this section if:
    (1) The individual first became entitled to disability insurance 
benefits after 1965 but before September 1981 based on a period of 
disability that began after June 1, 1965, and before March 1981, and
    (i) The individual entitled to the disability insurance benefit is 
also entitled to periodic benefits under a workers' compensation law or 
plan of the United States or a State for that month for a total or 
partial disability (whether or not permanent), and
    (ii) The Commissioner has, in a month before that month, received a 
notice of the entitlement, and
    (iii) The individual has not attained age 62, or
    (2) The individual first became entitled to disability insurance 
benefits after August 1981 based on a disability that began after 
February 1981, and
    (i) The individual entitled to the disability insurance benefit is 
also, for that month, concurrently entitled to a periodic benefit 
(including workers' compensation or any other payments based on a work 
relationship) on account of a total or partial disability (whether or 
not permanent) under a law or plan of the United States, a State, a 
political subdivision, or an instrumentality of two or more of these 
entities, and
    (ii) The individual has not attained age 65.
    (b) When reduction not made. (1) The reduction of a benefit 
otherwise required by paragraph (a)(1) of this section is not made if 
the workers' compensation law or plan under which the periodic benefit 
is payable provides for the reduction of such periodic benefit when 
anyone is entitled to a benefit under title II of the Act on the basis 
of the earnings record of an individual entitled to a disability 
insurance benefit under section 223 of the Act.
    (2) The reduction of a benefit otherwise required by paragraph 
(a)(2) of this section is not to be made if:
    (i) The law or plan under which the periodic public disability 
benefit is payable provides for the reduction of that benefit when 
anyone is entitled to a benefit under title II of the Act on the basis 
of the earnings record of an individual entitled to a disability 
insurance benefit under section 223 of the Act and that law or plan so 
provided on February 18, 1981. (The reduction required by paragraph 
(a)(2) of this section will not be affected by public disability 
reduction provisions not actually in effect on this date or by changes 
made after February 18, 1981, to provisions that were in effect on this 
date providing for the reduction of benefits previously not subject to a 
reduction); or
    (ii) The benefit is a Veterans Administration benefit, a public 
disability benefit (except workers' compensation) payable to a public 
employee based on employment covered under Social Security, a public 
benefit based on need, or a wholly private pension or private insurance 
benefit.
    (c) Amount of reduction--(1) General. The total of benefits payable 
for a month under sections 223 and 202 of the Act to which paragraph (a) 
of this section applies is reduced monthly (but not below zero) by the 
amount by which the sum of the monthly disability insurance benefits 
payable on the disabled individual's earnings

[[Page 148]]

record and the other public disability benefits payable for that month 
exceeds the higher of:
    (i) Eighty percent of his average current earnings, as defined in 
paragraph (c)(3) of this section, or
    (ii) The total of such individual's disability insurance benefit for 
such month and all other benefits payable for such month based on such 
individual's earnings record, prior to reduction under this section.
    (2) Limitation on reduction. In no case may the total of monthly 
benefits payable for a month to the disabled worker and to the persons 
entitled to benefits for such month on his earnings record be less than:
    (i) The total of the benefits payable (after reduction under 
paragraph (a) of this section) to such beneficiaries for the first month 
for which reduction under this section is made, and
    (ii) Any increase in such benefits which is made effective for 
months after the first month for which reduction under this section is 
made.
    (3) Average current earnings defined. (i) Beginning January 1, 1979, 
for purposes of this section, an individual's average current earnings 
is the largest of either paragraph (c)(3)(i) (a), (b) or (c) of this 
section (after reducing the amount to the next lower multiple of $1 when 
the amount is not a multiple of $1):
    (A) The average monthly wage (determined under section 215(b) of the 
Act as in effect prior to January 1979) used for purposes of computing 
the individual's disability insurance benefit under section 223 of the 
Act;
    (B) One-sixtieth of the total of the individual's wages and earnings 
from self-employment, without the limitations under sections 209(a) and 
211(b)(1) of the Act (see paragraph (c)(3)(ii) of this section), for the 
5 consecutive calendar years after 1950 for which the wages and earnings 
from self-employment were highest; or
    (C) One-twelfth of the total of the individual's wages and earnings 
from self-employment, without the limitations under sections 209(a) and 
211(b)(1) of the Act (see paragraph (c)(3)(ii) of this section), for the 
calendar year in which the individual had the highest wages and earnings 
from self-employment during the period consisting of the calendar year 
in which the individual became disabled and the 5 years immediately 
preceding that year. Any amount so computed which is not a multiple of 
$1 is reduced to the next lower multiple of $1.
    (ii) Method of determining calendar year earnings in excess of the 
limitations under sections 209(a) and 211(b)(1) of the Act. For the 
purposes of paragraph (c)(3)(i) of this section, the extent by which the 
wages or earnings from self-employment of an individual exceed the 
maximum amount of earnings creditable under sections 209(a) and 
211(b)(1) of the Act in any calendar year after 1950 and before 1978 
will ordinarily be estimated on the basis of the earnings information 
available in the records of Administration. (See subpart I of this 
part.) If an individual provides satisfactory evidence of his actual 
earnings in any year, the extent, if any, by which his earnings exceed 
the limitations under sections 209(a) and 211(b)(1) of the Act shall be 
determined by the use of such evidence instead of by the use of 
estimates.
    (4) Reentitlement to disability insurance benefits. If an 
individual's entitlement to disability insurance benefits terminates and 
such individual again becomes entitled to disability insurance benefits, 
the amount of the reduction is again computed based on the figures 
specified in this paragraph (c) applicable to the subsequent 
entitlement.
    (5) Computing disability insurance benefits. When reduction is 
required, the total monthly Social Security disability insurance 
benefits payable after reduction can be more easily computed by 
subtracting the monthly amount of the other public disability benefit 
from the higher of paragraph (c)(1) (i) or (ii). This is the method 
employed in the examples used in this section.
    (d) Items not counted for reduction. Amounts paid or incurred, or to 
be incurred, by the individual for medical, legal, or related expenses 
in connection with the claim for public disability payments (see Sec. 
404.408 (a) and (b)) or the injury or occupational disease on which the 
public disability award or settlement agreement is based, are excluded 
in computing the reduction under paragraph (a) of this section to the 
extent they are consonant with the

[[Page 149]]

applicable Federal, State, or local law or plan and reflect either the 
actual amount of expenses already incurred or a reasonable estimate, 
given the circumstances in the individual's case, of future expenses. 
Any expenses not established by evidence required by the Administration 
or not reflecting a reasonable estimate of the individual's actual 
future expenses will not be excluded. These medical, legal, or related 
expenses may be evidenced by the public disability award, compromise 
agreement, a court order, or by other evidence as the Administration may 
require. This other evidence may consist of:
    (1) A detailed statement by the individual's attorney, physician, or 
the employer's insurance carrier; or
    (2) Bills, receipts, or canceled checks; or
    (3) Other clear and convincing evidence indicating the amount of 
expenses; or
    (4) Any combination of the foregoing evidence from which the amount 
of expenses may be determinable.
    (e) Certification by individual concerning eligibility for public 
disability benefits. Where it appears that an individual may be eligible 
for a public disability benefit which would give rise to a reduction 
under paragraph (a) of this section, the individual may be required, as 
a condition of certification for payment of any benefit under section 
223 of the Act to any individual for any month, and of any benefit under 
section 202 of the Act for any month based on such individual's earnings 
record, to furnish evidence as requested by the Administration and to 
certify as to:
    (1) Whether he or she has filed or intends to file any claim for a 
public disability benefit, and
    (2) If he or she has so filed, whether there has been a decision on 
the claim. The Commissioner may rely, in the absence of evidence to the 
contrary, upon a certification that he or she has not filed and does not 
intend to file such a claim, or that he or she has filed and no decision 
has been made, in certifying any benefit for payment pursuant to section 
205(i) of the Act.
    (f) Verification of eligibility or entitlement to a public 
disability benefit under paragraph (a). Section 224 of the Act requires 
the head of any Federal agency to furnish the Commissioner information 
from the Federal agency's records which is needed to determine the 
reduction amount, if any, or verify other information to carry out the 
provisions of this section. The Commissioner is authorized to enter into 
agreements with States, political subdivisions, and other organizations 
that administer a law or plan of public disability benefits in order to 
obtain information that may be required to carry out the provisions of 
this section.
    (g) Public disability benefit payable on other than a monthly basis. 
Where public disability benefits are paid periodically but not monthly, 
or in a lump sum as a commutation of or a substitute for periodic 
benefits, such as a compromise and release settlement, the reduction 
under this section is made at the time or times and in the amounts that 
the Administration determines will approximate as nearly as practicable 
the reduction required under paragraph (a) of this section.
    (h) Priorities. (1) For an explanation of when a reduction is made 
under this section where other reductions, deductions, etc., are 
involved, see Sec. 404.402.
    (2) Whenever a reduction in the total of benefits for any month 
based on an individual's earnings record is made under paragraph (a) of 
this section, each benefit, except the disability insurance benefit, is 
first proportionately decreased. Any excess reduction over the sum of 
all the benefits, other than the disability insurance benefit, is then 
applied to the disability insurance benefit.

    Example 1: Effective September 1981, Harold is entitled to a monthly 
disability primary insurance amount of $507.90 and a monthly public 
disability benefit of $410.00 from the State. Eighty percent of Harold's 
average current earnings is $800.00. Because this amount ($800.00) is 
higher than Harold's disability insurance benefit ($507.90), we subtract 
Harold's monthly public disability benefit ($410.00) from eighty percent 
of his average current earnings ($800.00). This leaves Harold a reduced 
monthly disability benefit of $390.00.
    Example 2: In September 1981, Tom is entitled to a monthly 
disability primary insurance amount of $559.30. His wife and two 
children are also entitled to monthly benefits of $93.20 each. The total 
family benefit is

[[Page 150]]

$838.90. Tom is also receiving a monthly workers' compensation benefit 
of $500.00 from the State. Eighty percent of Tom's average current 
earnings is $820.10. Because the total family benefit ($838.90) is 
higher than 80 percent of the average current earnings ($820.10), we 
subtract the monthly workers' compensation benefit ($500.00) from the 
total family benefit ($838.90), leaving $338.90 payable. This means the 
monthly benefits to Tom's wife and children are reduced to zero, and 
Tom's monthly disability benefit is reduced to $338.90.

    (i) Effect of changes in family composition. The addition or 
subtraction in the number of beneficiaries in a family may cause the 
family benefit to become, or cease to be, the applicable limit for 
reduction purposes under this section. When the family composition 
changes, the amount of the reduction is recalculated as though the new 
number of beneficiaries were entitled for the first month the reduction 
was imposed. If the applicable limit both before and after the change is 
80 percent of the average current earnings and the limitation on maximum 
family benefits is in effect both before and after the change, the 
amount payable remains the same and is simply redistributed among the 
beneficiaries entitled on the same earnings record.

    Example 1: Frank is receiving $500.00 a month under the provisions 
of a State workers' compensation law. He had a prior period of 
disability which terminated in June 1978. In September 1981, Frank 
applies for a second period of disability and is awarded monthly 
disability insurance benefits with a primary insurance amount of 
$370.20. His child, Doug, qualifies for benefits of $135.10 a month on 
Frank's earnings record. The total family benefits is $505.30 monthly.
    Frank's average monthly wage (as used to compute the primary 
insurance amount) is $400.00; eighty percent of his average current 
earnings (computed by using the 5 consecutive years in which his 
earnings were highest) is $428.80 (80% of $536.00); eighty percent of 
Frank's average current earnings (computed by using the 1 calendar year 
in which his earnings were highest) is $509.60 (80% of $637.00). The 
highest value for 80 percent of average current earnings is therefore 
$509.60 (80%). Since this is higher than the total family benefit 
($505.30), the $509.60 is the applicable limit in determining the amount 
of the reduction (or offset). The amount payable after the reduction 
is--

80% of Frank's average current earnings......................    $509.60
Frank's monthly workers' compensation benefit................    -500.00
                                                              ----------
   Monthly benefit payable to Frank..........................       9.60
 

    No monthly benefits are payable to Doug because the reduction is 
applied to Doug's benefit first. In December 1981, another child, Mike, 
becomes entitled on Frank's earnings record. The monthly benefit to each 
child before reduction is now $109.10, the amount payable when there are 
two beneficiaries in addition to the wage earner. Thus, the total family 
benefit becomes $588.40. Because this is now higher than $509.60 (80% of 
Frank's average current earnings), $588.40 becomes the applicable limit 
in determining the amount of reduction. The amount payable after the 
increase in the total family benefit is--

The new total family benefit.................................    $588.40
Frank's monthly workers' compensation rate...................    -500.00
                                                              ----------
   Monthly benefit payable to Frank..........................      88.40
 


No monthly benefits are payable to either child because the reduction 
(or offset) is applied to the family benefits first.
    Example 2: Jack became entitled to disability insurance benefits in 
December 1973 (12/73), with a primary insurance amount (PIA) of $220.40. 
He was also receiving a workers' compensation benefit. An offset was 
imposed against the disability insurance benefit. By June 1977 (6/77), 
Jack's PIA had increased to $298.00 because of several statutory benefit 
increases. In December 1977 (12/77), his wife, Helen, attained age 65 
and filed for unreduced wife's benefits. (She was not entitled to a 
benefit on her own earnings record.) This benefit was terminated in May 
1978 (5/78), at her death. Helen's benefit was computed back to 12/73 as 
though she were entitled in the first month that offset was imposed 
against Jack. Since there were no other beneficiaries entitled and 
Helen's entire monthly benefit amount is subject to offset, the benefit 
payable to her for 12/77 through April 1978 (4/78), would be $38.80. 
This gives Helen the protected statutory benefit increases since 12/73. 
The table below shows how Helen's benefit was computed beginning with 
the first month offset was imposed.

------------------------------------------------------------------------
                                                     Helen's
                                          Jack's     benefit    Helen's
Month of entitlement/statutory increase     PIA     prior to   statutory
                                                     offset     increase
------------------------------------------------------------------------
December 1973..........................   $220.40     $110.20  .........
March 1974.............................    236.00      118.00      $7.80
June 1974..............................    244.80      122.40      +4.40
June 1975..............................    264.40      132.20      +9.80
June 1976..............................    281.40      140.70      +8.50
June 1977..............................    298.00      149.00      +8.30
                                        -----------
December 1977 through April 1978 \1\...  ........  ..........      38.80
------------------------------------------------------------------------
\1\ Monthly benefit payable to Helen.



[[Page 151]]

    (j) Effect of social security disability insurance benefit 
increases. Any increase in benefits due to a recomputation or a 
statutory increase in benefit rates is not subject to the reduction for 
public disability benefits under paragraph (a) and does not change the 
amount to be deducted from the family benefit. The increase is simply 
added to what amount, if any, is payable. If a new beneficiary becomes 
entitled to monthly benefits on the same earnings record after the 
increase, the amount of the reduction is redistributed among the new 
beneficiaries entitled under section 202 of the Act and deducted from 
their current benefit rate.

    Example: In March 1981, Chuck became entitled to disability 
insurance benefits with a primary insurance amount of $362.40 a month. 
He has a wife and two children who are each entitled to a monthly 
benefit of $60.40. Chuck is receiving monthly disability compensation 
from a worker's compensation plan of $410.00. Eighty percent of his 
average current earnings is $800.00. Because this is higher than the 
total family benefit ($543.60), $800.00 is the applicable limit in 
computing the amount of reduction. The amount of monthly benefits 
payable after the reduction is--

Applicable limit.............................................    $800.00
Chuck's monthly disability compensation......................    -410.00
                                                              ----------
Total amount payable to Chuck and the family after reduction.    $390.00
Amount payable to Chuck......................................    -362.40
                                                              ----------
Total amount payable to the family...........................     $27.60
$9.20 payable to each family member equals...................     $27.60
                                                              ----------
                                                                   3
 

    In June 1981, the disability benefit rates were raised to reflect an 
increase in the cost-of-living. Chuck is now entitled to $403.00 a month 
and each family member is entitled to $67.20 a month (an increase of 
$6.80 to each family member). The monthly amounts payable after the 
cost-of-living increase are now $403.00 to Chuck and $16.00 to each 
family member ($9.20 plus the $6.80 increase).
    In September 1981, another child becomes entitled to benefits based 
on Chuck's earnings record. The monthly amount payable to the family 
(excluding Chuck) must now be divided by 4:

$6.90 payable to each family member equals...................     $27.60
                                                              ----------
                                                                   4
 

    The June 1981 cost-of-living increase is added to determine the 
amount payable. Chuck continues to receive $403.00 monthly. Each family 
member receives a cost-of-living increase of $5.10. Thus, the amount 
payable to each is $12.00 in September 1981 ($6.90 plus the $5.10 
increase). (See Example 2 under (i).)

    (k) Effect of changes in the amount of the public disability 
benefit. Any change in the amount of the public disability benefit 
received will result in a recalculation of the reduction under paragraph 
(a) and, potentially, an adjustment in the amount of such reduction. If 
the reduction is made under paragraph (a)(1) of this section, any 
increased reduction will be imposed effective with the month after the 
month the Commissioner received notice of the increase in the public 
disability benefit (it should be noted that only workers' compensation 
can cause this reduction). Adjustments due to a decrease in the amount 
of the public disability benefit will be effective with the actual date 
the decreased amount was effective. If the reduction is made under 
paragraph (a)(2) of this section, any increase or decrease in the 
reduction will be imposed effective with the actual date of entitlement 
to the new amount of the public disability benefit.

    Example: In September 1981, based on a disability which began March 
12, 1981, Theresa became entitled to Social Security disability 
insurance benefits with a primary insurance amount of $445.70 a month. 
She had previously been entitled to Social Security disability insurance 
benefits from March 1967 through July 1969. She is receiving a temporary 
total workers' compensation payment of $227.50 a month. Eighty percent 
of her average current earnings is $610.50. The amount of monthly 
disability insurance benefit payable after reduction is--

80 percent of Theresa's average current earnings.............    $610.50
Theresa's monthly workers' compensation payment..............    -227.50
                                                              ----------
  Total amount payable to Theresa after reduction............     383.00
 

    On November 15, 1981, the Commissioner was notified that Theresa's 
workers' compensation rate was increased to $303.30 a month effective 
October 1, 1981. This increase reflected a cost-of-living adjustment 
granted to all workers' compensation recipients in her State. The 
reduction to her monthly disability insurance benefit is recomputed to 
take this increase into account--

80 percent of Theresa's average current earnings.............    $610.50
Theresa's monthly workers' compensation payment beginning        -303.30
 October 1, 1981.............................................
                                                              ----------

[[Page 152]]

 
  Total new amount payable to Theresa beginning October 1981     $307.20
   after recalculation of the reduction......................
 

    Effective January, 1, 1982, Theresa's workers' compensation payment 
is decreased to $280.10 a month when she begins to receive a permanent 
partial payment. The reduction to her monthly disability insurance 
benefit is again recalculated to reflect her decreased workers' 
compensation amount--

80 percent of Theresa's average current earnings.............    $610.50
Theresa's monthly workers' compensation payment beginning        -280.10
 January 1, 1982.............................................
                                                              ----------
  Total new amount payable to Theresa beginning January 1982     $330.40
   after recalculation of the reduction......................
 

    If, in the above example, Theresa had become entitled to disability 
insurance benefits in August 1981, the increased reduction to her 
benefit, due to the October 1, 1981 increase in her workers' 
compensation payment, would have been imposed beginning with December 
1981, the month after the month she notified the Social Security 
Administration of the increase. The later decrease in her workers' 
compensation payment would still affect her disability insurance benefit 
beginning with January 1982.

    (l) Redetermination of benefits--(1) General. In the second calendar 
year after the year in which reduction under this section in the total 
of an individual's benefits under section 223 of the Act and any 
benefits under section 202 of the Act based on his or her wages and 
self-employment income is first required (in a continuous period of 
months), and in each third year thereafter, the amount of those benefits 
which are still subject to reduction under this section are 
redetermined, provided this redetermination does not result in any 
decrease in the total amount of benefits payable under title II of the 
Act on the basis of the workers' wages and self-employment income. The 
redetermined benefit is effective with the January following the year in 
which the redetermination is made.
    (2) Average current earnings. In making the redetermination required 
by paragraph (l)(1) of this section, the individual's average current 
earnings (as defined in paragraph (c)(3) of this section) is deemed to 
be the product of his average current earnings as initially determined 
under paragraph (c)(3) of this section and:
    (i) The ratio of the average of the total wages (as defined in Sec. 
404.1049) of all persons for whom wages were reported to the Secretary 
of the Treasury or his delegate for the calendar year before the year in 
which the redetermination is made, to the average of the total wages of 
all person reported to the Secretary of the Treasury or his delegate for 
calendar year 1977 or, if later, the calendar year before the year in 
which the reduction was first computed (but not counting any reduction 
made in benefits for a previous period of disability); and
    (ii) In any case in which the reduction was first computed before 
1978, the ratio of the average of the taxable wages reported to the 
Commissioner of Social Security for the first calendar quarter of 1977 
to the average of the taxable wages reported to the Commissioner of 
Social Security for the first calendar quarter of the calendar year 
before the year in which the reduction was first computed (but not 
counting any reduction made in benefits for a previous period of 
disability). Any amount determined under the preceding two sentences 
which is not a multiple of $1 is reduced to the next lower multiple of 
$1.
    (3) Effect of redetermination. Where the applicable limit on total 
benefits previously used was 80 percent of the average current earnings, 
a redetermination under this paragraph may cause an increase in the 
amount of benefits payable. Also, where the limit previously used was 
the total family benefit, the redetermination may cause the average 
current earnings to exceed the total family benefit and thus become the 
new applicable limit. If for some other reason (such as a statutory 
increase or recomputation) the benefit has already been increased to a 
level which equals or exceeds the benefit resulting from a 
redetermination under this paragraph, no additional increase is made. A 
redetermination is designed to bring benefits into line with current 
wage levels when no other change in payments has done so.

    Example: In October 1978, Alice became entitled to disability 
insurance benefits with a primary insurance amount of $505.10. Her two 
children were also entitled to monthly benefits of $189.40 each. Alice 
was also entitled to

[[Page 153]]

monthly disability compensation benefits of $667.30 from the State. 
Eighty percent of Alice's average current earnings is $1340.80, and that 
amount is the applicable limit. The amount of monthly benefits payable 
after the reduction is--

Applicable limit...........................................    $1,340.80
Alice's State disability compensation benefit..............      -667.30
                                                            ------------
Total benefits payable to Alice and both children after          $673.50
 reduction.................................................
Alice's disability insurance benefit.......................      -505.10
Payable to the children....................................      $168.40
$84.20 payable to each child after reduction equals........      $168.40
                                                            ------------
                                                                  2
 

    In June 1979 and June 1980, cost-of-living increases in Social 
Security benefits raise Alice's benefit by $50.10 (to $555.20) and 
$79.40 (to $634.60) respectively. The children's benefits (before 
reduction) are each raised by $18.80 (to $208.20) and $29.80 (to 
$238.00). These increases in Social Security benefits are not subject to 
the reduction (i.e., offset).
    In 1980, Alice's average current earnings are redetermined as 
required by law. The offset is recalculated, and if the amount payable 
to the family is higher than the current amount payable to the family, 
that higher amount becomes payable the following January (i.e., January 
1981). The current amount payable to the family after the reduction is 
recalculated--

Alice's 1978 benefit after reduction.........................    $505.10
Alice's cost-of-living increase in June 1979.................     +50.10
Alice's cost-of-living increase in June 1980.................     +79.40
One child's 1978 benefit after reduction.....................     +84.20
That child's cost-of-living increase in June 1979............     +18.70
That child's cost-of-living increase in June 1980............     +29.70
The other child's 1978 benefit after reduction...............     +84.20
The other child's cost-of-living increase in June 1979.......     +18.70
The other child's cost-of-living increase in June 1980.......     +29.70
                                                              ----------
Total amount payable to the family after reduction in January     899.80
 1981........................................................
 

    The amount payable to the family after reduction is then 
recalculated using the redetermined average current earnings--

Average current earnings before redetermination............    $1,676.00
Redetermination ratio effective for January 1981...........       x1.174
                                                            ------------
Redetermined average current earnings......................    $1,967.00
                                                                    x80%
                                                            ------------
80% of the redetermined average current earnings...........    $1,573.60
Alice's State disability compensation benefit..............      -667.30
                                                            ------------
Total benefits payable to the family after offset..........      $906.30
 

    We then compare the total amount currently being paid to the family 
($899.80) to the total amount payable after the redetermination 
($906.30). In this example, the redetermination yields a higher amount 
and, therefore, becomes payable the following January (i.e., January 
1981). Additional computations are required to determine the amount that 
will be paid to each family member--

Total benefits payable to the family using the redetermined      $906.30
 average current earnings....................................
Total cost-of-living increases to both children..............     -96.80
                                                              ----------
Balance payable..............................................     809.50
Alice's current benefit amount before reduction..............    -634.60
                                                              ----------
Payable to the children......................................     174.90
Total cost-of-living increases to both children..............     +96.80
                                                              ----------
Total payable to children after reduction....................     271.70
$135.90 (rounded from $135.85) payable to each child equals..    $271.70
                                                              ----------
                                                                   2
 


[32 FR 19159, Dec. 20, 1967; 33 FR 3060, Feb. 16, 1968, as amended at 37 
FR 3425, Feb. 16, 1972; 48 FR 37017, Aug. 16, 1983; 48 FR 38814, Aug. 
26, 1983; 62 FR 38450, July 18, 1997]



Sec. 404.408a  Reduction where spouse is receiving a Government pension.

    (a) When reduction is required. Unless you meet one of the 
exceptions in paragraph (b) of this section, your monthly Social 
Security benefits as a wife, husband, widow, widower, mother, or father 
will be reduced each month you are receiving a monthly pension from a 
Federal, State, or local government agency (Government pension) for 
which you were employed in work not covered by Social Security on the 
last day of such employment. Your monthly Social Security benefit as a 
spouse will always be reduced because of your Government pension even if 
you afterwards return to work for a government agency and that work is 
covered by Social Security. For purposes of this section, Federal 
Government employees are not considered to be covered by Social Security 
if they are covered for Medicare but are not otherwise covered by Social 
Security. If the government pension is not paid monthly or is paid in a 
lump-sum, we will determine how much the pension would be if it were 
paid monthly and then reduce the monthly Social

[[Page 154]]

Security benefit accordingly. The number of years covered by a lump-sum 
payment, and thus the period when the Social Security benefit will be 
reduced, will generally be clear from the pension plan. If one of the 
alternatives to a lump-sum payment is a life annuity, and the amount of 
the monthly benefit for the life annuity can be determined, the 
reduction will be based on that monthly benefit amount. Where the period 
or the equivalent monthly pension benefit is not clear it may be 
necessary for us to determine the reduction period on an individual 
basis.
    (b) Exceptions. The reduction does not apply:
    (1) If you are receiving a Government pension based on employment 
for an interstate instrumentality.
    (2) If you received or are eligible to receive a Government pension 
for one or more months in the period December 1977 through November 1982 
and you meet the requirements for Social Security benefits that were 
applied in January 1977, even though you don't claim benefits, and you 
don't actually meet the requirements for receiving benefits until a 
later month. The January 1977 requirements are, for a man, a one-half 
support test (see paragraph (c) of this section), and, for a woman 
claiming benefits as a divorced spouse, marriage for at least 20 years 
to the insured worker. You are considered eligible for a Government 
pension for any month in which you meet all the requirements for payment 
except that you are working or have not applied.
    (3) If you were receiving or were eligible (as defined in paragraph 
(b)(2) of this section) to receive a Government pension for one or more 
months before July 1983, and you meet the dependency test of one-half 
support that was applied to claimants for husband's and widower's 
benefits in 1977, even though you don't claim benefits, and you don't 
actually meet the requirements for receiving benefits until a later 
month. If you meet the exception in this paragraph but you do not meet 
the exception in paragraph (b)(2), December 1982 is the earliest month 
for which the reduction will not affect your benefits.
    (4) If you would have been eligible for a pension in a given month 
except for a requirement which delayed eligibility for such pension 
until the month following the month in which all other requirements were 
met, we will consider you to be eligible in that given month for the 
purpose of meeting one of the exceptions in paragraphs (b) (2) and (3) 
of this section. If you meet an exception solely because of this 
provision, your benefits will be unreduced for months after November 
1984 only.
    (5) If, with respect to monthly benefits payable for months after 
December 1994, you are receiving a Government pension based wholly upon 
service as a member of a uniformed service, regardless of whether on 
active or inactive duty and whether covered by social security. However, 
if the earnings on the last day of employment as a military reservist 
were not covered, January 1995 is the earliest month for which the 
reduction will not affect your benefits.
    (c) The one-half support test. For a man to meet the January 1977 
requirement as provided in the exception in paragraph (b)(2) and for a 
man or a woman to meet the exception in paragraph (b)(3) of this 
section, he or she must meet a one-half support test. One-half support 
is defined in Sec. 404.366 of this part. One-half support must be met 
at one of the following times:
    (1) If the insured person had a period of disability which did not 
end before he or she became entitled to old-age or disability insurance 
benefits, or died, you must have been receiving at least one-half 
support from the insured either--
    (i) At the beginning of his or her period of disability;
    (ii) At the time he or she became entitled to old-age or disability 
insurance benefits; or
    (iii) If deceased, at the time of his or her death.
    (2) If the insured did not have a period of disability at the time 
of his or her entitlement or death, you must have been receiving at 
least one-half support from the insured either--
    (i) At the time he or she became entitled to old-age insurance 
benefits; or
    (ii) If deceased, at the time of his or her death.
    (d) Amount and priority of reduction. (1) If you became eligible for 
a Government pension after June 1983, we will reduce (to zero, if 
necessary) your

[[Page 155]]

monthly Social Security benefits as a spouse by two-thirds the amount of 
your monthly pension. If the reduction is not a multiple of 10 cents, we 
will round it to the next higher multiple of 10 cents.
    (2) If you became eligible for a Government pension before July 1983 
and do not meet one of the exceptions in paragraph (b) of this section, 
we will reduce (to zero, if necessary) your monthly Social Security 
benefits as a spouse by the full amount of your pension for months 
before December 1984 and by two-thirds the amount of your monthly 
pension for months after November 1984. If the reduction is not a 
multiple of 10 cents, we will round it to the next higher multiple of 10 
cents.
    (3) Your benefit as a spouse will be reduced, if necessary, for age 
and for simultaneous entitlement to other Social Security benefits 
before it is reduced because you are receiving a Government pension. In 
addition, this reduction follows the order of priority as stated in 
Sec. 404.402(b).
    (4) If the monthly benefit payable to you after the required 
reduction(s) is not a multiple of $1.00, we will reduce it to the next 
lower multiple of $1.00 as required by Sec. 404.304(f).
    (e) When effective. This reduction was put into the Social Security 
Act by the Social Security Amendments of 1977. It only applies to 
applications for benefits filed in or after December 1977 and only to 
benefits for December 1977 and later.

[49 FR 41245, Oct. 22, 1984; 50 FR 20902, May 21, 1985, as amended at 51 
FR 23052, June 25, 1986; 60 FR 56513, Nov. 9, 1995]



Sec. 404.408b  Reduction of retroactive monthly social security benefits 

where supplemental security income (SSI) payments were received for the 
same period.

    (a) When reduction is required. We will reduce your retroactive 
social security benefits if--
    (1) You are entitled to monthly social security benefits for a month 
or months before the first month in which those benefits are paid; and
    (2) SSI payments (including federally administered State 
supplementary payments) which were made to you for the same month or 
months would have been reduced or not made if your social security 
benefits had been paid when regularly due instead of retroactively.
    (b) Amount of reduction. Your retroactive monthly social security 
benefits will be reduced by the amount of the SSI payments (including 
federally administered State supplementary payments) that would not have 
been paid to you, if you had received your monthly social security 
benefits when they were regularly due instead of retroactively.
    (c) Benefits subject to reduction. The reduction described in this 
section applies only to monthly social security benefits. Social 
security benefits which we pay to you for any month after you have begun 
receiving recurring monthly social security benefits, and for which you 
did not have to file a new application, are not subject to reduction. 
The lump-sum death payment, which is not a monthly benefit, is not 
subject to reduction.
    (d) Refiguring the amount of the reduction. We will refigure the 
amount of the reduction if there are subsequent changes affecting your 
claim which relate to the reduction period described in paragraph (a) of 
this section. Refiguring is generally required where there is a change 
in your month of entitlement or the amount of your social security 
benefits or SSI payments (including federally administered State 
supplementary payments) for the reduction period.
    (e) Reimbursement of reduced retroactive monthly social security 
benefits. The amount of the reduction will be--
    (1) First used to reimburse the States for the amount of any 
federally administered State supplementary payments that would not have 
been made to you if the monthly social security benefits had been paid 
when regularly due instead of retroactively; and
    (2) The remainder, if any, shall be covered into the general fund of 
the U.S. Treasury for the amount of SSI benefits that would not have 
been paid to you if the monthly social security benefits had been paid 
to you when regularly due instead of retroactively.

[47 FR 4988, Feb. 3, 1982]

[[Page 156]]



Sec. 404.409  What is full retirement age?

    Full retirement age is the age at which you may receive unreduced 
old-age, wife's, husband's, widow's, or widower's benefits. Full 
retirement age has been 65 but is being gradually raised to age 67 
beginning with people born after January 1, 1938. See Sec. 404.102 
regarding determination of age.
    (a) What is my full retirement age for old-age benefits or wife's or 
husband's benefits? You may receive unreduced old-age, wife's, or 
husband's benefits beginning with the month you attain the age shown.

------------------------------------------------------------------------
          If your birth date is:               Full retirement age is:
------------------------------------------------------------------------
Before 1/2/1938...........................  65 years.
1/2/1938--1/1/1939........................  65 years and 2 months.
1/2/1939--1/1/1940........................  65 years and 4 months.
1/2/1940--1/1/1941........................  65 years and 6 months.
1/2/1941--1/1/1942........................  65 years and 8 months.
1/2/1942--1/1/1943........................  65 years and 10 months.
1/2/1943--1/1/1955........................  66 years.
1/2/1955--1/1/1956........................  66 years and 2 months.
1/2/1956--1/1/1957........................  66 years and 4 months.
1/2/1957--1/1/1958........................  66 years and 6 months.
1/2/1958--1/1/1959........................  66 years and 8 months.
1/2/1959--1/1/1960........................  66 years and 10 months.
1/2/1960 and later........................  67 years.
------------------------------------------------------------------------

    (b) What is my full retirement age for widow's or widower's 
benefits? You may receive unreduced widow's or widower's benefits 
beginning with the month you attain the age shown.

------------------------------------------------------------------------
          If your birth date is:               Full retirement age is:
------------------------------------------------------------------------
Before 1/2/1912...........................  62 years.
1/2/1912--1/1/1940........................  65 years.
1/2/1940--1/1/1941........................  65 years and 2 months.
1/2/1941--1/1/1942........................  65 years and 4 months.
1/2/1942--1/1/1943........................  65 years and 6 months.
1/2/1943--1/1/1944........................  65 years and 8 months.
1/2/1944--1/1/1945........................  65 years and 10 months.
1/2/1945--1/1/1957........................  66 years.
1/2/1957--1/1/1958........................  66 years and 2 months.
1/2/1958--1/1/1959........................  66 years and 4 months.
1/2/1959--1/1/1960........................  66 years and 6 months.
1/2/1960--1/1/1961........................  66 years and 8 months.
1/2/1961--1/1/1962........................  66 years and 10 months.
1/2/1962 and later........................  67 years.
------------------------------------------------------------------------

    (c) Can I still retire before full retirement age? You may still 
elect early retirement. You may receive old-age, wife's or husband's 
benefits at age 62. You may receive widow's or widower's benefits at age 
60. Those benefits will be reduced as explained in Sec. 404.410.

[68 FR 4707, Jan. 30, 2003]



Sec. 404.410  How does SSA reduce my benefits when my entitlement begins 
before full retirement age?

    Generally your old-age, wife's, husband's, widow's, or widower's 
benefits are reduced if entitlement begins before the month you attain 
full retirement age (as defined in Sec. 404.409). However, your 
benefits as a wife or husband are not reduced for any month in which you 
have in your care a child of the worker on whose earnings record you are 
entitled. The child must be entitled to child's benefits. Your benefits 
as a widow or widower are not reduced below the benefit amount you would 
receive as a mother or father for any month in which you have in your 
care a child of the worker on whose record you are entitled. The child 
must be entitled to child's benefits. Subject to Sec. Sec. 404.411 
through 404.413, reductions in benefits are made in the amounts 
described.
    (a) How does SSA reduce my old-age benefits? The reduction in your 
primary insurance amount is based on the number of months of entitlement 
prior to the month you attain full retirement age. The reduction is \5/
9\ of 1 percent for each of the first 36 months and \5/12\ of 1 percent 
for each month in excess of 36.

    Example: Alex's full retirement age for unreduced benefits is 65 
years and 8 months. She elects to begin receiving benefits at age 62. 
Her primary insurance amount of $980.50 must be reduced because of her 
entitlement to benefits 44 months prior to full retirement age. The 
reduction is 36 months at \5/9\ of 1 percent and 8 months at \5/12\ of 1 
percent.


980.50 x 36 x \5/9\ x .01 = $196.10
980.50 x 8 x \5/12\ x .01 = $ 32.68

The two added together equal a total reduction of $228.78. This amount 
is rounded to $228.80 (the next higher multiple of 10 cents) and 
deducted from the primary insurance amount. The resulting $751.70 is the 
monthly benefit payable.

    (b) How does SSA reduce my wife's or husband's benefits? Your wife's 
or husband's benefits before any reduction (see Sec. Sec. 404.304 and 
404.333) are reduced first (if necessary) for the family maximum under 
Sec. 404.403. They are then reduced based on the number of months of 
entitlement prior to the month you attain full retirement age. This does 
not include any month in which you have a child of the worker on whose

[[Page 157]]

earnings record you are entitled in your care. The child must be 
entitled to child benefits. The reduction is \25/36\ of 1 percent for 
each of the first 36 months and \5/12\ of 1 percent for each month in 
excess of 36.

    Example: Sam is entitled to old-age benefits. His spouse Ashley 
elects to begin receiving wife's benefits at age 63. Her full retirement 
age for unreduced benefits is 65 and 4 months. Her benefit will be 
reduced for 28 months of entitlement prior to full retirement age. If 
her unreduced benefit is $412.40 the reduction will be $412.40 x 28 x 
\25/36\ x .01. The resulting $80.18 is rounded to $80.20 (the next 
higher multiple of 10 cents) and subtracted from $412.40 to determine 
the monthly benefit amount of $332.20.

    (c) How does SSA reduce my widow's or widower's benefits? Your 
entitlement to widow's or widower's benefits may begin at age 60 based 
on age or at age 50 based on disability. Refer to Sec. 404.335 for more 
information on the requirements for entitlement. Both types are reduced 
if entitlement begins prior to attainment of full retirement age (as 
defined in Sec. 404.409).
    (1) Widow's or widower's benefits based on age. Your widow's or 
widower's unreduced benefit amount (the worker's primary insurance 
amount after any reduction for the family maximum under Sec. 404.403), 
is reduced or further reduced based on the number of months of 
entitlement prior to the month you attain full retirement age. This does 
not include any month in which you have in your care a child of the 
worker on whose earnings record you are entitled. The child must be 
entitled to child's benefits. The number of months of entitlement prior 
to full retirement age is multiplied by .285 and then divided by the 
number of months in the period beginning with the month of attainment of 
age 60 and ending with the month immediately before the month of 
attainment of full retirement age.

    Example: Ms. Bogle is entitled to an unreduced widow benefit of 
$785.70 beginning at age 64. Her full retirement age for unreduced old-
age benefits is 65 years and 4 months. She will receive benefits for 16 
months prior to attainment of full retirement age. The number of months 
in the period from age 60 through full retirement age of 65 and 4 months 
is 64. The reduction in her benefit is $785.70 x 16 x .285 divided by 64 
or $55.98. $55.98 is rounded to the next higher multiple of 10 cents 
($56.00) and subtracted from $785.70. The result is a monthly benefit of 
$729.70.

    (2) Widow's or widower's benefits based on disability. (i) For 
months after December 1983, your widow's or widower's benefits are not 
reduced for months of entitlement prior to age 60. You are deemed to be 
age 60 in your month of entitlement to disabled widow's or widower's 
benefits and your benefits are reduced only under paragraph (c)(1) of 
this section.
    (ii) For months from January 1973 through December 1983, benefits as 
a disabled widow or widower were reduced under paragraph (c)(1) of this 
section. The benefits were then subject to an additional reduction of 
\43/240\ of one percent for each month of entitlement prior to age 60 
based on disability.
    (3) Widow's or widower's benefits prior to 1973. For months prior to 
January 1973 benefits as a widow or widower were reduced only for months 
of entitlement prior to age 62. The reduction was \5/9\ of one percent 
for each month of entitlement from the month of attainment of age 60 
through the month prior to the month of attainment of age 62. There was 
an additional reduction of \43/198\ of one percent for each month of 
entitlement prior to age 60 based on disability.
    (d) If my benefits are reduced under this section does SSA ever 
change the reduction? The reduction computed under paragraphs (a), (b) 
or (c) of this section may later be adjusted to eliminate reduction for 
certain months of entitlement prior to full retirement age as provided 
in Sec. 404.412. For special provisions on reducing benefits for months 
prior to full retirement age involving entitlement to two or more 
benefits, see Sec. 404.411.
    (e) Are my widow's or widower's benefits affected if the deceased 
worker was entitled to old-age benefits? If the deceased individual was 
entitled to old-age benefits, see Sec. 404.338 for special rules that 
may affect your reduced widow's or widower's benefits.

[68 FR 4708, Jan. 30, 2003]

[[Page 158]]



Sec. 404.411  How are benefits reduced for age when a person is entitled 
to two or more benefits?

    (a) What is the general rule? Except as specifically provided in 
this section, benefits of an individual entitled to more than one 
benefit will be reduced for months of entitlement before full retirement 
age (as defined in Sec. 404.409) according to the provisions of Sec. 
404.410. Such age reductions are made before any reduction under the 
provisions of Sec. 404.407.
    (b) How is my disability benefit reduced after entitlement to an 
old-age benefit or widow's or widower's benefit? A person's disability 
benefit is reduced following entitlement to an old-age or widow's or 
widower's benefit (or following the month in which all conditions for 
entitlement to the widow's or widower's benefit are met except that the 
individual is entitled to an old-age benefit which equals or exceeds the 
primary insurance amount on which the widow's or widower's benefit is 
based) in accordance with the following provisions:
    (1) Individuals born January 2, 1928, or later whose disability 
began January 1, 1990, or later. When an individual is entitled to a 
disability benefit for a month after the month in which she or he 
becomes entitled to an old-age benefit which is reduced for age under 
Sec. 404.410, the disability benefit is reduced by the amount by which 
the old-age benefit would be reduced under Sec. 404.410 if she or he 
attained full retirement age in the first month of the most recent 
period of entitlement to the disability benefit.
    (2) Individuals born January 2, 1928, or later whose disability 
began before January 1, 1990, and, all individuals born before January 
2, 1928, regardless of when their disability began--(i) First entitled 
to disability in or after the month of attainment of age 62. When an 
individual is first entitled to a disability benefit in or after the 
month in which she or he attains age 62 and for which she or he is first 
entitled to a widow's or widower's benefit (or would be so entitled 
except for entitlement to an equal or higher old-age benefit) before 
full retirement age, the disability benefit is reduced by the larger of:
    (A) The amount the disability benefit would have been reduced under 
paragraph (b)(1) of this section; or
    (B) The amount equal to the sum of the amount the widow's or 
widower's benefit would have been reduced under the provisions of Sec. 
404.410 if full retirement age for unreduced benefits were age 62 plus 
the amount by which the disability benefit would have been reduced under 
paragraph (b)(1) of this section if the benefit were equal to the excess 
of such benefit over the amount of the widow's or widower's benefit 
(without consideration of this paragraph).
    (ii) First entitled to disability before age 62. When a person is 
first entitled to a disability benefit for a month before the month in 
which she or he attains age 62 and she or he is also entitled to a 
widow's or widower's benefit (or would be so entitled except for 
entitlement to an equal or higher old-age benefit), the disability 
benefit is reduced as if the widow or widower attained full retirement 
age in the first month of her or his most recent period of entitlement 
to the disability benefits.
    (c) How is my old-age benefit reduced after entitlement to a widow's 
or widower's benefit?--(1) Individual born after January 1, 1928. The 
old-age benefit is reduced in accordance with Sec. 404.410(a). There is 
no further reduction.
    (2) Individual born before January 2, 1928. The old-age benefit is 
reduced if, in the first month of entitlement, she or he is also 
entitled to a widow's or widower's benefit to which she or he was first 
entitled for a month before attainment of full retirement age or if, 
before attainment of full retirement age, she or he met all conditions 
for entitlement to widow's or widower's benefits in or before the first 
month for which she or he was entitled to old-age benefits except that 
the old-age benefit equals or exceeds the primary insurance amount on 
which the widow's or widower's benefit would be based. Under these 
circumstances, the old-age benefit is reduced by the larger of the 
following:
    (i) The amount by which the old-age benefit would be reduced under 
the regular age reduction provisions of Sec. 404.410; or
    (ii) An amount equal to the sum of:

[[Page 159]]

    (A) The amount by which the widow's or widower's benefit would be 
reduced under Sec. 404.410 for months prior to age 62; and
    (B) The amount by which the old-age benefit would be reduced under 
Sec. 404.410 if it were equal to the excess of the individual's primary 
insurance amount over the widow's or widower's benefit before any 
reduction for age (but after any reduction for the family maximum under 
Sec. 404.403).
    (d) How is my wife's or husband's benefit reduced when I am entitled 
to a reduced old-age benefit in the same month? When a person is first 
entitled to a wife's or husband's benefit in or after the month of 
attainment of age 62, that benefit is reduced if, in the first month of 
entitlement, she or he is also entitled to an old-age benefit (but is 
not entitled to a disability benefit) to which she or he was first 
entitled before attainment of full retirement age. Under these 
circumstances, the wife's or husband's benefit is reduced by the sum of:
    (1) The amount by which the old-age benefit would be reduced under 
the provisions of Sec. 404.410; and
    (2) The amount by which the spouse benefit would be reduced under 
the provisions of Sec. 404.410 if it were equal to the excess of such 
benefit (before any reduction for age but after reduction for the family 
maximum under Sec. 404.403) over the individual's own primary insurance 
amount.
    (e) How is my wife's or husband's or widow's or widower's benefit 
reduced when I am entitled to a reduced disability benefit in the same 
month? When a person is first entitled to a spouse or widow's or 
widower's benefit in or after the month of attainment of age 62 (or in 
the case of widow's or widower's benefits, age 50) that benefit is 
reduced if, in the first month of entitlement to that benefit, he or she 
is also entitled to a reduced disability benefit. Under these 
circumstances, the wife's or husband's or widow's or widower's benefit 
is reduced by the sum of:
    (1) The amount (if any) by which the disability benefit is reduced 
under paragraph (b)(1) of this section, and
    (2) The amount by which the wife's or husband's or widow's or 
widower's benefit would be reduced under Sec. 404.410 if it were equal 
to the excess of such benefit (before any reduction for age but after 
reduction for the family maximum under Sec. 404.403) over the 
disability benefit (before any reduction under paragraph (b) of this 
section).

[68 FR 4709, Jan. 30, 2003]



Sec. 404.412  After my benefits are reduced for age when and how will 
adjustments to that reduction be made?

    (a) When may adjustment be necessary? The following months are not 
counted for purposes of reducing benefits in accordance with Sec. 
404.410;
    (1) Months subject to deduction under Sec. 404.415 or Sec. 
404.417;
    (2) In the case of a wife's or husband's benefit, any month in which 
she or he had a child of the insured individual in her or his care and 
for which the child was entitled to child's benefits;
    (3) In the case of a wife's or husband's benefit, any month for 
which entitlement to such benefits is precluded because the insured 
person's disability ceased (and, as a result, the insured individual's 
entitlement to disability benefits ended);
    (4) In the case of a widow's or widower's benefit, any month in 
which she or he had in her or his care a child of the deceased insured 
individual and for which the child was entitled to child's benefits;
    (5) In the case of a widow's or widower's benefit, any month before 
attainment of full retirement age for which she or he was not entitled 
to such benefits;
    (6) In the case of an old-age benefit, any month for which the 
individual was entitled to disability benefits.
    (b) When is the adjustment made? We make automatic adjustments in 
benefits to exclude the months of entitlement described in paragraphs 
(a)(1) through (6) of this section from consideration when determining 
the amount by which such benefits are reduced. Each year we examine 
beneficiary records to identify when an individual has attained full 
retirement age and one or more months described in paragraphs (a)(1) 
through (6) of this section occurred prior to such age during the period 
of entitlement to benefits reduced for age. Increases in benefit

[[Page 160]]

amounts based upon this adjustment are effective with the month of 
attainment of full retirement age. In the case of widow's or widower's 
benefits, this adjustment is made in the month of attainment of age 62 
as well as the month of attainment of full retirement age.

[68 FR 4710, Jan. 30, 2003, as amended at 68 FR 40122, July 7, 2003]



Sec. 404.413  After my benefits are reduced for age what happens if 
there is an increase in my primary insurance amount?

    (a) What is the general rule on reduction of increases? After an 
individual's benefits are reduced for age under Sec. Sec. 404.410 
through 404.411, the primary insurance amount on which such benefits are 
based may subsequently be increased because of a recomputation, a 
general benefit increase pursuant to an amendment of the Act, or 
increases based upon a rise in the cost-of-living under section 215(i) 
of the Social Security Act. When the primary insurance amount increases 
the monthly benefit amount also increases.
    (b) How are subsequent increases in the primary insurance amount 
reduced after 1977? After 1977, when an individual's benefits have been 
reduced for age and the benefit is increased due to an increase in the 
primary insurance amount, the amount of the increase to which the 
individual is entitled is proportionately reduced as provided in 
paragraph (c) of this section. The method of reduction is determined by 
whether entitlement to reduced benefits began before 1978 or after 1977. 
When an individual is entitled to more than one benefit which is reduced 
for age, the rules for reducing the benefit increases apply to each 
reduced benefit.
    (c) How is the reduction computed for increases after 1977?--(1) 
Entitlement to reduced benefits after 1977. If an individual becomes 
entitled after 1977 to a benefit reduced for age, and the primary 
insurance amount on which the reduced benefit is based is increased, the 
amount of the increase payable to the individual is reduced by the same 
percentage as we use to reduce the benefit in the month of initial 
entitlement. Where the reduced benefit of an individual has been 
adjusted at full retirement age (age 62 and full retirement age for 
widows or widowers), any increase to which the individual becomes 
entitled thereafter is reduced by the adjusted percentage.
    (2) Entitlement to reduced benefits before 1978. For an individual, 
who became entitled to a benefit reduced for age before 1978, whose 
benefit may be increased as a result of an increase in the primary 
insurance amount after 1977, we increase the amount of the benefit by 
the same percentage as the increase in the primary insurance amount.
    (d) How was the reduction computed for increases prior to 1978? When 
the individual's primary insurance amount increased, the amount of the 
increase was reduced separately under Sec. Sec. 404.410 and 404.411. 
The separate reduction was based on the number of months from the 
effective date of the increase through the month of attainment of age 
65. This reduced increase amount was then added to the reduced benefit 
that was in effect in the month before the effective date of the 
increase. The result was the new monthly benefit amount.

[68 FR 4710, Jan. 30, 2003]



Sec. 404.415  Deductions because of excess earnings; annual earnings test.

    (a) Deductions because of beneficiary's earnings. Under the annual 
earnings test, deductions are made from monthly benefits (except 
disability insurance benefits, child's insurance benefits based on the 
child's disability, or widow's or widower's insurance benefits based on 
the widow's or widower's disability) payable to a beneficiary for each 
month in a taxable year (whether a calendar year or a fiscal year) 
beginning after December 1954 in which the beneficiary is under age 72 
(age 70 after December 1982) and to which excess earnings are charged 
under the provisions described in Sec. 404.434.
    (b) Deductions from husband's, wife's, or child's benefits because 
of excess earnings of the insured individual. Deductions are made from 
the wife's, husband's, or child's insurance benefits payable (or deemed 
payable--see Sec. 404.420) on the insured individual's earnings record 
because of the excess earnings of the insured individual

[[Page 161]]

under the provisions described in Sec. 404.416. However, beginning with 
January 1985, deductions will not be made from the benefits payable to a 
divorced wife or a divorced husband who has been divorced from the 
insured individual for at least 2 years.

[32 FR 19159, Dec. 20, 1967, as amended at 48 FR 4281, Jan. 31, 1983; 51 
FR 11912, Apr. 8, 1986]



Sec. 404.416  Amount of deduction because of excess earnings.

    (a) Deductions because of excess earnings of insured individual. For 
taxable years beginning after 1960, or ending after June 1961, if excess 
earnings (as described in Sec. 404.430) of an insured individual are 
chargeable under the annual earnings test to a month, a deduction is 
made from the total of the benefits payable to him and to all other 
persons entitled (or deemed entitled--see Sec. 404.420) on his earnings 
record for that month. This deduction is an amount equal to that amount 
of the excess earnings so charged. (See Sec. 404.434 concerning the 
manner of charging such excess earnings.) However, beginning with 
January 1985, deductions will not be made from the benefits payable to a 
divorced wife or a divorced husband who has been divorced from the 
insured individual for at least 2 years, and the divorced spouse will be 
considered as not entitled for purposes of computing the amount of 
deductions from other beneficiaries.
    (b) Deductions because of excess earnings of other beneficiary. For 
taxable years beginning after 1960, or ending after June 1961, if 
benefits are payable to a person entitled (or deemed entitled--see Sec. 
404.420) on the earnings record of the insured individual, and such 
person has excess earnings (as described in Sec. 404.430) charged to a 
month, a deduction is made from his benefits only for that month. This 
deduction is an amount equal to the amount of the excess earnings so 
charged. (See Sec. 404.434 for charging of excess earnings where both 
the insured individual and such person have excess earnings.)

[43 FR 8132, Feb. 28, 1978, as amended at 51 FR 11912, Apr. 8, 1986]



Sec. 404.417  Deductions because of noncovered remunerative activity 
outside the United States; 45 hour and 7-day work test.

    (a) Deductions because of individual's activity--(1) Prior to May 
1983. For months prior to May 1983, a 7-day work test applies in a month 
before benefit deductions are made for noncovered remunerative activity 
outside the United States. A deduction is made from any monthly benefit 
(except disability insurance benefits, child's insurance benefits based 
on the child's disability, or widow's or widower's insurance benefits 
based on the widow's or widower's disability) payable to an individual 
for each month in a taxable year beginning after December 1954 in which 
the beneficiary, while under age 72 (age 70 after December 1982), 
engages in noncovered remunerative activity (see Sec. 404.418) outside 
the United States on 7 or more different calendar days. The deduction is 
for an amount equal to the benefit payable to the individual for that 
month.
    (2) From May 1983 on. Effective May 1983, a 45-hour work test 
applies before a benefit deduction is made for the non-covered 
remunerative activity performed outside the United States in a month by 
the type of beneficiary described in paragraph (a)(1) of this section.
    (b) Deductions from benefits because of the earnings or work of an 
insured individual--(1) Prior to September 1984. Where the insured 
individual entitled to old-age benefits works on 7 or more days in a 
month prior to September 1984 while under age 72 (age 70 after December 
1982), a deduction is made for that month from any:
    (i) Wife's, husband's, or child's insurance benefit payable on the 
insured individual's earnings record; and
    (ii) Mother's, father's, or child's insurance benefit based on 
child's disability, which under Sec. 404.420 is deemed payable on the 
insured individual's earnings record because of the beneficiary's 
marriage to the insured individual.
    (2) From September 1984 on. Effective September 1984, a benefit 
deduction is made for a month from the benefits described in paragraph 
(b)(1) of this section only if the insured individual,

[[Page 162]]

while under age 70, has worked in excess of 45 hours in that month.
    (3) Amount of deduction. The amount of the deduction required by 
this paragraph (b) is equal to the wife's, husband's or child's benefit.
    (4) From January 1985 on. Effective January 1985, no deduction will 
be made from the benefits payable to a divorced wife or a divorced 
husband who has been divorced from the insured individual for at least 2 
years.

[49 FR 24117, June 12, 1984, as amended at 51 FR 11912, Apr. 21, 1986; 
52 FR 26145, July 13, 1987]



Sec. 404.418  ``Noncovered remunerative activity outside the United States,'' 
defined.

    An individual is engaged in noncovered remunerative activity outside 
the United States for purposes of deductions described in Sec. 404.417 
if:
    (a) He performs services outside the United States as an employee 
and the services do not constitute employment as defined in subpart K of 
this part and, for taxable years ending after 1955, the services are not 
performed in the active military or naval service of the United States; 
or
    (b) He carries on a trade or business outside the United States 
(other than the performance of services as an employee) the net income 
or loss of which is not includable in computing his net earnings from 
self-employment (as defined in Sec. 404.1050) for a taxable year and 
would not be excluded from net earnings from self-employment (see Sec. 
404.1052) if the trade or business were carried on in the United States. 
When used in the preceding sentence with respect to a trade or business, 
the term United States does not include the Commonwealth of Puerto Rico, 
the Virgin Islands and, with respect to taxable years beginning after 
1960, Guam or American Samoa, in the case of an alien who is not a 
resident of the United States (including the Commonwealth of Puerto 
Rico, the Virgin Islands and, with respect to taxable years beginning 
after 1960, Guam and American Samoa), and the term trade or business 
shall have the same meaning as when used in section 162 of the Internal 
Revenue Code of 1954.



Sec. 404.420  Persons deemed entitled to benefits based on an individual's 
earnings record.

    For purposes of imposing deductions under the annual earnings test 
(see Sec. 404.415) and the foreign work test (see Sec. 404.417), a 
person who is married to an old-age insurance beneficiary and who is 
entitled to a mother's or father's insurance benefit or a child's 
insurance benefit based on the child's disability (and all these 
benefits are based on the earnings record of some third person) is 
deemed entitled to such benefit based on the earnings record of the old-
age insurance beneficiary to whom he or she is married. This section is 
effective for months in any taxable year of the old-age insurance 
beneficiary that begins after August 1958.

[49 FR 24117, June 12, 1984]



Sec. 404.421  How are deductions made when a beneficiary fails to have 
a child in his or her care?

    Deductions for failure to have a child in care (as defined in 
subpart D of this part) are made as follows:
    (a) Wife's or husband's benefit. A deduction is made from the wife's 
or husband's benefits to which he or she is entitled for any month if he 
or she is under full retirement age and does not have in his or her care 
a child of the insured entitled to child's benefits. However, a 
deduction is not made for any month in which he or she is age 62 or 
over, but under full retirement age, and there is in effect a 
certificate of election for him or her to receive actuarially reduced 
wife's or husband's benefits for such month (see subpart D of this 
part).
    (b) Mother's or father's benefits--(1) Widow or widower. A deduction 
is made from the mother's or father's benefits to which he or she is 
entitled as the widow or widower (see subpart D of this part) of the 
deceased individual upon whose earnings such benefit is based, for any 
month in which he or she does not have in his or her care a child who is 
entitled to child's benefits based on the earnings of the deceased 
insured individual.
    (2) Surviving divorced mother or father. A deduction is made from 
the mother's or father's benefits to which he or she is entitled as the 
surviving divorced

[[Page 163]]

mother or father (see subpart D of this part) of the deceased individual 
upon whose earnings record such benefit is based, for any month in which 
she or he does not have in care a child of the deceased individual who 
is her or his son, daughter, or legally adopted child and who is 
entitled to child's benefits based on the earnings of the deceased 
insured individual.
    (c) Amount to be deducted. The amount deducted from the benefits, as 
described in paragraphs (a) and (b) of this section, is equal to the 
amount of the benefits which is otherwise payable for the month in which 
she or he does not have a child in his or her care.
    (d) When a child is considered not entitled to benefits. For 
purposes of paragraphs (a) and (b) of this section, a person is 
considered not entitled to child's benefits for any month in which she 
or he is age 18 or over and is entitled to child's benefits because she 
or he is a full-time student at an educational institution. This 
paragraph applies to benefits for months after December 1964.

[68 FR 4710, Jan. 30, 2003, as amended at 68 FR 40122, July 7, 2003]



Sec. 404.423  Manner of making deductions.

    Deductions provided for in Sec. Sec. 404.415, 404.417, and 404.421 
(as modified in Sec. 404.458) are made by withholding benefits (in 
whole or in part, depending upon the amount to be withheld) for each 
month in which an event causing a deduction occurred. If the amount to 
be deducted is not withheld from the benefits payable in the month in 
which the event causing the deduction occurred, such amount constitutes 
a deduction overpayment and is subject to adjustment or recovery in 
accordance with the provisions of subpart F of this part.

[32 FR 19159, Dec. 20, 1967, as amended at 68 FR 40122, July 7, 2003]



Sec. 404.424  Total amount of deductions where more than one deduction 
event occurs in a month.

    If more than one of the deduction events specified in Sec. Sec. 
404.415, 404.417, and 404.421 occurred in any 1 month, each of which 
would occasion a deduction equal to the benefit for such month, only an 
amount equal to such benefit is deducted.



Sec. 404.425  Total amount of deductions where deduction events occur 
in more than 1 month.

    If a deduction event described in Sec. Sec. 404.415, 404.417, and 
404.421 occurs in more than 1 month, the total amount deducted from an 
individual's benefits is equal to the sum of the deductions for all 
months in which any such event occurred.

[68 FR 40122, July 7, 2003]



Sec. 404.428  Earnings in a taxable year.

    (a) General. (1) In applying the annual earnings test (see Sec. 
404.415(a)) under this subpart, all of a beneficiary's earnings (as 
defined in Sec. 404.429) for all months of the beneficiary's taxable 
year are used even though the individual may not be entitled to benefits 
during all months of the taxable year. (See, however, Sec. 404.430 for 
the rule which applies to earnings of a beneficiary who attains age 72 
during the taxable year (age 70 for months after December 1982)).
    (2) The taxable year of an employee is presumed to be a calendar 
year until it is shown to the satisfaction of the Social Security 
Administration that the individual has a different taxable year. A self-
employed individual's taxable year is a calendar year unless the 
individual has a different taxable year for the purposes of subtitle A 
of the Internal Revenue Code of 1954. In either case, the number of 
months in a taxable year is not affected by--(i) The time a claim for 
social security benefits is filed, (ii) attainment of any particular 
age, (iii) marriage or the termination of marriage, or (iv) adoption. 
For beneficiaries who die on or before November 10, 1988, a taxable year 
ends with the month of the death of the beneficiary. The month of death 
is counted as a month of the deceased beneficiary's taxable year in 
determining whether the beneficiary had excess earnings for the year 
under Sec. 404.430. For beneficiaries who die after November 10, 1988, 
the number of months used in determining whether the beneficiary had 
excess earnings for the year under Sec. 404.430 is 12.

[[Page 164]]

    (b) When derived. Wages as defined in Sec. 404.429(c) are derived 
and includable as earnings for the months and year in which the 
beneficiary rendered the services. Net earnings from self-employment, or 
net losses therefrom, are derived, or incurred, and are includable as 
earnings or losses, in the year for which such earnings or losses are 
reportable for Federal income tax purposes.

[32 FR 19159, Dec. 20, 1967, as amended at 45 FR 48116, July 18, 1980; 
48 FR 4282, Jan. 31, 1983; 55 FR 37461, Sept. 12, 1990]



Sec. 404.429  Earnings; defined.

    (a) General. When the term earnings is used in this subpart other 
than as a part of the phrase net earnings from self-employment, it means 
an individual's earnings for a taxable year after 1954. It includes the 
sum of his wages for services rendered in such year, and his net 
earnings from self-employment for the taxable year, minus any net loss 
from self-employment for the same taxable year.
    (b) Net earnings from self-employment; net loss from self-
employment. An individual's net earnings from self-employment and his 
net loss from self-employment are determined under the provisions in 
subpart K of this part except that:
    1) For the purposes of this section, the provisions in subpart K of 
this part shall not apply that exclude from the definition of trade or 
business the following occupations:
    (i) The performance of the functions of a public office;
    (ii) The performance of a service of a duly ordained, commissioned, 
or licensed minister of a church in the exercise of his ministry or by a 
member of a religious order in the exercise of duties required by the 
order;
    (iii) The performance of service by an individual in the exercise of 
his profession as a Christian Science practitioner;
    (iv) For taxable years ending before 1965, the performance by an 
individual in the exercise of his profession as a doctor of medicine;
    (v) For taxable years ending before 1956, the performance of service 
by an individual in the exercise of his profession as a lawyer, dentist, 
osteopath, veterinarian, chiropractor, naturopath, or optometrist.
    (2) For the sole purpose of the earnings test under this subpart--
    (i) An individual who has attained age 65 on or before the last day 
of his or her taxable year shall have excluded from his or her gross 
earnings from self-employment, royalties attributable to a copyright or 
patent obtained before the taxable year in which he or she attained age 
65 if the copyright or patent is on property created by his or her own 
personal efforts; and
    (ii) An individual entitled to insurance benefits, under title II of 
the Act, other than disability insurance benefits or child's insurance 
benefits payable by reason of being under a disability, shall have 
excluded from gross earnings for any year after 1977 any self-employment 
income received in a year after his or her initial year of entitlement 
that is not attributable to services performed after the first month he 
or she became entitled to benefits. As used in this paragraph (b)(2)(ii) 
of this section, services means any significant work activity performed 
by the individual in the operation or management of a trade, profession, 
or business which can be related to the income received. Such services 
will be termed significant services. Where a portion of the income 
received in a year is not related to any significant services performed 
after the month of initial entitlement, only that portion may be 
excluded from gross earnings for deduction purposes. The balance of the 
income counts for deduction purposes. Not counted as significant 
services are--
    (A) Actions taken after the initial month of entitlement to sell a 
crop or product if the crop or product was completely produced or 
created in or before the month of entitlement. This rule does not apply 
to income received by an individual from a trade or business of buying 
and selling products produced or made by others; for example, a grain 
broker.
    (B) Those activities that are related solely to protecting an 
investment in a currently operating business or that are too irregular, 
occasional, or minor to be considered as having a bearing on the income 
received, such as--

[[Page 165]]

    (1) Hiring an agent, manager, or other employee to operate the 
business;
    (2) Signing contracts where the owner's signature is required so 
long as the major contract negotiations were handled by the owner's 
agent, manager, or other employees in running the business for the 
owner;
    (3) Looking over the company's financial records to assess the 
effectiveness of those agents, managers, or employees in running the 
business for the owner;
    (4) Personally contacting an old and valued customer solely for the 
purpose of maintaining good will when such contact has a minimal effect 
on the ongoing operation of the trade or business; or
    (5) Occasionally filling in for an agent, manager, or other employee 
or partner in an emergency.
    (iii) An individual is presumed to have royalties or other self-
employment income countable for purposes of the earnings test until it 
is shown to the satisfaction of the Social Security Administration that 
such income may be excluded under Sec. 404.429(b)(2) (i) or (ii).
    (3) In figuring an individual's net earnings or net loss from self-
employment, all net income or net loss is includable even though (i) the 
individual did not perform personal services in carrying on the trade or 
business, (ii) the net profit was less than $400, (iii) the net profit 
was in excess of the maximum amount creditable to his earnings record, 
or (iv) the net profit was not reportable for social security tax 
purposes.
    (4) An individual's net earnings from self-employment is the excess 
of gross income over the allowable business deductions (allowed under 
the Internal Revenue Code). An individual's net loss from self-
employment is the excess of business deductions (that are allowed under 
the Internal Revenue Code) over gross income. Expenses arising in 
connection with the production of income excluded from gross income 
under Sec. 404.429(b)(2)(ii) cannot be deducted from wages or net 
earnings from self-employment that are not excluded under that section.
    (c) Wages defined. Wages include the gross amount of an individual's 
wages rather than the net amount paid after deductions by the employer 
for items such as taxes and insurance. For purposes of this section, an 
individual's wages are determined under the provisions of subpart K of 
this part, except that, notwithstanding the provisions of subpart K, 
wages also includes:
    (1) Remuneration in excess of the amounts in the annual wage 
limitation table in Sec. 404.1047;
    (2) Cash remuneration of less than $50 paid in a calendar quarter to 
an employee for (i) domestic service in the private home of the 
employer, or (ii) service not in the course of the employer's trade or 
business; and
    (3) Payments for agricultural labor excluded under Sec. 404.1055.
    (4) Remuneration, cash and noncash, for service as a homeworker even 
though the cash remuneration paid the employee is less than $50 in a 
calendar quarter; and
    (5) For taxable years ending after 1955, services performed outside 
the United States in the military or naval service of the United States; 
and
    (6) Remuneration for services excepted from employment performed 
within the United States by an individual as an employee that are for 
that reason not considered wages under subpart K of this part, if the 
remuneration for such services is not includable in computing his net 
earnings from self-employment or net loss from self-employment, as 
defined in paragraph (b) of this section.
    (d) Presumptions concerning wages. For purposes of this section, 
where reports received by the Administration show wages (as defined in 
paragraph (c) of this section) were paid to an individual during a 
taxable year, it is presumed that they were paid to him for services 
rendered in that year until such time as it is shown to the satisfaction 
of the Administration that the wages were paid for services rendered in 
another taxable year. If the reports of wages paid to an individual show 
his wages for a calendar year, the individual's taxable year is presumed 
to be a calendar year for purposes of this section until it is shown to 
the satisfaction of

[[Page 166]]

the Administration that his taxable year is not a calendar year.

[32 FR 19159, Dec. 20, 1967, as amended at 41 FR 13912, Apr. 1, 1976; 47 
FR 46690, Oct. 20, 1982; 52 FR 8249, Mar. 17, 1987; 57 FR 59913, Dec. 
17, 1992]



Sec. 404.430  Excess earnings defined for taxable years ending after 
December 1972; monthly exempt amount defined.

    (a) Method of determining excess earnings for years ending after 
December 1972. For taxable years ending after 1972, an individual's 
excess earnings for a taxable year are 50 percent of his or her earnings 
(as described in Sec. 404.429) for the year which are above the exempt 
amount. For an individual who has attained retirement age, as defined in 
section 216(l) of the Act, excess earnings for a taxable year beginning 
after December 31, 1989, are 33\1/3\ percent of his or her earnings (as 
described in Sec. 404.429) for the year which are above the exempt 
amount. For deaths after November 10, 1988, an individual who dies in 
the taxable year in which he or she would have attained retirement age 
shall have his or her excess earnings computed as if he or she had 
attained retirement age. The exempt amount is obtained by multiplying 
the number of months in the taxable year (except that the number of 
months in the taxable year in which the individual dies shall be 12, if 
death occurs after November 10, 1988) by the following applicable 
monthly exempt amount.
    (1) $175 for taxable years ending after December 1972 and before 
January 1974;
    (2) $200 for taxable years beginning after December 1973 and before 
January 1975; and
    (3) The exempt amount for taxable years ending after December 1974, 
as determined under paragraphs (c) and (d) of this section. However, 
earnings in and after the month an individual attains age 72 will not be 
used to figure excess earnings for retirement test purposes. For the 
employed individual, wages for months prior to the month of attainment 
of age 72 are used to figure the excess earnings for retirement test 
purposes. For the self-employed individual, the pro rata share of the 
net earnings or net loss for the taxable year for the period prior to 
the month of attainment of age 72 is used to figure the excess earnings. 
If the beneficiary was not engaged in self-employment prior to the month 
of attainment of age 72, any subsequent earnings or losses from self-
employment in the taxable year will not be used to figure the excess 
earnings. Where the excess amount figured under the provisions of this 
section is not a multiple of $1, it is reduced to the next lower dollar. 
(All references to age 72 will be age 70 for months after December 
1982.)

    Example 1. The self-employed beneficiary attained age 72 in July 
1979. His net earnings for 1979, his taxable year, were $12,000. The pro 
rata share of the net earnings for the period prior to July is $6,000. 
His excess earnings for 1979 for retirement test purposes are $750. This 
is computed by subtracting $4,500 ($375x12), the exempt amount for 1979, 
from $6,000 and dividing the result by 2.
    Example 2. The beneficiary attained age 72 in July 1979. His taxable 
year was calendar year 1979. His wages for the period prior to July were 
$6,000. From August through December 1979, he worked in self-employment 
and had net earnings in the amount of $2,000. His net earnings from 
self-employment are not used to figure his excess earnings. Only his 
wages for the period prior to July 1979 ($6,000) are used to figure his 
excess earnings. As in example 1, his excess earnings are $750.
    Example 3. The facts are the same as in example 2, except that the 
beneficiary worked in self-employment throughout all of 1979 and had a 
net loss of $500 from the self-employment activity. The pro rata share 
of the net loss for the period prior to July is $250. His earnings for 
the taxable year to be used in figuring excess earnings are $5,750.
    This is computed by subtracting the $250 net loss from self-
employment from the $6,000 in wages. The excess earnings are $625 
(($5,750 - $4,500) / 2).

    (b) Monthly exempt amount defined. The retirement test monthly 
exempt amount is the amount of wages which a social security beneficiary 
may earn in any month without part of his or her monthly benefit being 
deducted because of excess earnings. For benefits payable for months 
after 1977, the monthly exempt amount applies only in a beneficiary's 
grace year or years. (See Sec. 404.435 (a) and (c)).
    (c) Method of determining monthly exempt amount for taxable years 
ending after December 1974. (1) Except as provided under paragraph (d) 
of this section, for purposes of paragraph (a)(3) of this section, the 
applicable monthly

[[Page 167]]

exempt amount effective for an individual's taxable year that ends in 
the calendar year after the calendar year in which an automatic cost-of-
living increase in old-age, survivors, and disability insurance benefits 
is effective is the larger of--
    (i) The exempt amount in effect for months in the taxable year in 
which the exempt amount determination is being made; or
    (ii) The amount determined by:
    (A) Multiplying the monthly exempt amount effective during the 
taxable year in which the exempt amount determination is being made by 
the ratio of:
    (1) The average amount, per employee, of the taxable wages of all 
employees as reported to the Commissioner for the first calendar quarter 
of the calendar year in which the exempt amount determination is made, 
to
    (2) The average amount, per employee, of the taxable wages of all 
employees as reported to the Commissioner for the first calendar quarter 
of the most recent calendar year in which an increase in the exempt 
amount was enacted or a determination resulting in such an increase was 
made, and
    (B) Rounding the result of such multiplication:
    (1) To the next higher multiple of $10 where such result is a 
multiple of $5 but not of $10, or
    (2) to the nearest multiple of $10 in any other case.
    (2) For purposes of paragraph (c)(1) of this section, reported for 
the first calendar quarter means reported for such first calendar 
quarter and posted to the earnings records by the Commissioner on or 
before the last day of the Social Security Administration's quarterly 
updating operations in September of the same year. Earnings items 
received or posted thereafter are not counted even though they pertain 
to the first quarter.
    (d) Method of determining monthly exempt amount for taxable years 
ending after December 1977 for beneficiaries, age 65 or over. (1) For 
purposes of paragraph (a)(3) of this section, for all months of taxable 
years ending after 1977, the applicable monthly exempt amount for an 
individual who has attained (or, but for the individual's death 
occurring after November 10, 1988, would have attained) retirement age 
as defined in section 216(l) of the Act before the close of the taxable 
year involved is--
    (i) $333.33\1/3\ for each month of any taxable year ending in 1978;
    (ii) $375 for each month of any taxable year ending in 1979;
    (iii) $416.66\2/3\ for each month of any taxable year ending in 
1980; and
    (iv) $458.33\1/3\ for each month of any taxable year ending in 1981;
    (v) $500 for each month of any taxable year ending in 1982;
    (vi) $550 for each month of any taxable year ending in 1983;
    (vii) $580 for each month of any taxable year ending in 1984;
    (viii) $610 for each month of any taxable year ending in 1985;
    (ix) $650 for each month of any taxable year ending in 1986;
    (x) $680 for each month of any taxable year ending in 1987;
    (xi) $700 for each month of any taxable year ending in 1988;
    (xii) $740 for each month of any taxable year ending in 1989; and
    (xiii) $780 for each month of any taxable year ending in 1990.
    (2) Fractional amounts listed in paragraph (d)(1) of this section 
shall be rounded to the next higher whole dollar amount, unless the 
individual shows that doing so results in a different grace year (see 
Sec. 404.435 (a) and (c)).

[40 FR 42865, Sept. 17, 1975; 40 FR 45805, Oct. 3, 1975, as amended at 
45 FR 48117, July 18, 1980; 45 FR 58107, Sept. 2, 1980; 48 FR 4282, Jan. 
31, 1983; 55 FR 37461, Sept. 12, 1990; 62 FR 38450, July 18, 1997]



Sec. 404.434  Excess earnings; method of charging.

    (a) Months charged. For purposes of imposing deductions for taxable 
years after 1960, the excess earnings (as described in Sec. 404.430) of 
an individual are charged to each month beginning with the first month 
the individual is entitled in the taxable year in question and 
continuing, if necessary, to each succeeding month in such taxable year 
until all of the individual's excess earnings have been charged. Excess 
earnings, however, are not charged to any month described in Sec. Sec. 
404.435 and 404.436.

[[Page 168]]

    (b) Amount of excess earnings charged--(1) Insured individual's 
excess earnings. The insured individual's excess earnings are charged on 
the basis of $1 of excess earnings for each $1 of monthly benefits to 
which he and all other persons are entitled (or deemed entitled--see 
Sec. 404.420) for such month on the insured individual's earnings 
record. (See Sec. 404.439 where the excess earnings for a month are 
less than the total benefits payable for that month.)
    (2) Excess earnings of beneficiary other than insured individual. 
The excess earnings of a person other than the insured individual are 
charged on the basis of $1 of excess earnings for each $1 of monthly 
benefits to which he is entitled (see Sec. 404.437) for such month. The 
excess earnings of such person, however, are charged only against his 
own benefits.
    (3) Insured individual and person entitled (or deemed entitled) on 
his earnings record both have excess earnings. If both the insured 
individual and a person entitled (or deemed entitled) on his earnings 
record have excess earnings (as described in Sec. 404.430), the insured 
individual's excess earnings are charged first against the total family 
benefits payable (or deemed payable) on his earnings record, as 
described in paragraph (b)(1) of this section. Next, the excess earnings 
of a person entitled on the insured individual's earnings record are 
charged (as described in paragraph (c)(2) of this section) against his 
own benefits, but only to the extent that his benefits have not already 
been charged with the excess earnings of the insured individual. See 
Sec. 404.441 for an example of this process and the manner in which 
partial monthly benefits are apportioned.

[32 FR 19159, Dec. 20, 1967, as amended at 38 FR 17716, July 3, 1973; 43 
FR 8133, Feb. 28, 1978]



Sec. 404.435  Excess earnings; months to which excess earnings cannot 
be charged.

    (a) Monthly benefits payable for months after 1977. Beginning with 
monthly benefits payable for months after 1977, no matter how much a 
beneficiary earns in a given taxable year, no deduction on account of 
excess earnings will be made in the benefits payable for any month--
    (1) In which he or she was not entitled to a monthly benefit;
    (2) In which he or she was considered not entitled to benefits (due 
to noncovered work outside the United States or no child in care as 
described in Sec. 404.436);
    (3) In which he or she was age 72 or over (age 70 for months after 
December 1982);
    (4) In which he or she was entitled to payment of disability 
insurance benefit;
    (5) In which he or she was age 18 or over and entitled to a child's 
insurance benefit based on disability;
    (6) In which he or she was entitled to a widow's or widower's 
insurance benefit based on disability; or
    (7) Which was a nonservice month (see paragraph (b) of this section) 
in the beneficiary's grace year (see paragraph (c) of this section).
    (b) Nonservice month defined. A nonservice month is any month in 
which an individual, while entitled to retirement or survivors 
benefits--(1) does not work in self-employment (see paragraphs (d) and 
(e) of this section); (2) does not perform services for wages greater 
than the monthly exempt amount set for that month (see paragraph (f) of 
this section and Sec. 404.430 (b), (c), and (d)); and (3) does not work 
in noncovered remunerative activity on 7 or more days in a month while 
outside the United States. A nonservice month occurs even if there are 
no excess earnings in the year.
    (c) Grace year defined. (1) A beneficiary's initial grace year is 
the first taxable year after 1977 in which the beneficiary has a 
nonservice month (see paragraph (b) of this section) in or after the 
month in which he or she is entitled to a retirement, auxiliary, or 
survivor's benefit.
    (2) A beneficiary may have another grace year each time his or her 
entitlement to one type of benefit ends and, after a break in 
entitlement of at least one month, he or she becomes entitled to a 
different type of retirement or survivors benefit. The new grace year 
would then be the taxable year in which occurs the first nonservice 
month after the break in entitlement.

[[Page 169]]

    (3) A month will not be counted as a nonservice month for purposes 
of determining whether a given year is a beneficiary's grace year if the 
nonservice month occurred while the beneficiary was entitled to 
disability benefits under section 223 of the Social Security Act or as a 
disabled widow, widower, or child under section 202.
    (4) A beneficiary entitled to child's benefits, to young wife's or 
young husband's benefits (entitled only by reason of having a child in 
his or her care), or to mother's or father's benefits, is entitled to a 
termination grace year in any year(s) the beneficiary's entitlement to 
these types of benefits terminates. This provision does not apply if the 
termination is because of death or if the beneficiary is entitled to a 
Social Security benefit for the month following the month in which the 
entitlement ended. The beneficiary is entitled to a termination grace 
year in addition to any other grace year(s) available to him or her.

    Example 1: Don, age 65, will retire from his regular job in April of 
next year. Although he will have earned $11,000 for January-April of 
that year and plans to work part time, he will not earn over the monthly 
exempt amount after April. Don's taxable year is the calendar year. 
Since next year will be the first year in which he has a nonservice 
month while entitled to benefits, it will be his grace year and he will 
be entitled to the monthly earnings test for that year only. He will 
receive benefits for all months in which he does not earn over the 
monthly exempt amount (May-December) even though his earnings have 
substantially exceeded the annual exempt amount. However, in the years 
that follow, only the annual earnings test will be applied if he has 
earnings that exceed the annual exempt amount, regardless of his monthly 
earnings.
    Example 2: Marion was entitled to mother's insurance benefits from 
1978 because she had a child in her care under age 18. Because she had a 
nonservice month in 1978, 1978 was her initial grace year. Marion's 
child married in May 1980 and entitlement to mother's benefits 
terminated in April 1980. Since Marion's entitlement did not terminate 
by reason of her death and she was not entitled to another type of 
Social Security benefit in the month after her entitlement to mother's 
benefit ended, she is entitled to a termination grace year for 1980, the 
year in which her entitlement to mother's insurance benefits terminated.
    She applied for and became entitled to widow's insurance benefits 
effective February 1981. Because there was a break in entitlement to 
benefits of at least one month before entitlement to another type of 
benefit, 1981 will be a subsequent grace year if Marion has a nonservice 
month in 1981.

    (d) When an individual works in self-employment. An individual works 
in self-employment in any month in which he or she performs substantial 
services (see Sec. 404.446) in the operation of a trade or business (or 
in a combination of trades and businesses if there are more than one) as 
an owner or partner even though there may be no earnings or net earnings 
caused by the individual's services during the month.
    (e) Presumption regarding work in self-employment. An individual is 
presumed to have worked in self-employment in each month of the 
individual's taxable year until it is shown to the satisfaction of the 
Social Security Administration that in a particular month the individual 
did not perform substantial services (see Sec. 404.446(c)) in any trade 
or business (or in a combination of trades and businesses if there are 
more than one) from which the net income or loss is included in 
computing the individual's annual earnings (see Sec. 404.429).
    (f) Presumption regarding services for wages. An individual is 
presumed to have performed services in any month for wages (as defined 
in Sec. 404.429) of more than the applicable monthly exempt amount set 
for that month until it is shown to the satisfaction of the Social 
Security Administration that the individual did not perform services in 
that month for wages of more than the monthly exempt amount.

[45 FR 48117, July 18, 1980, as amended at 47 FR 46691, Oct. 20, 1982; 
48 FR 4282, Jan. 31, 1983; 68 FR 40123, July 7, 2003]



Sec. 404.436  Excess earnings; months to which excess earnings cannot 
be charged because individual is deemed not entitled to benefits.

    Under the annual earnings test, excess earnings (as described in 
Sec. 404.430) are not charged to any month in which an individual is 
deemed not entitled to a benefit. A beneficiary (i.e., the insured 
individual or any person entitled or deemed entitled on the individual's 
earnings record) is deemed not entitled to a benefit for a month if he 
is subject

[[Page 170]]

to a deduction for that month because of:
    (a) Engaging in noncovered remunerative activity outside the United 
States (as described in Sec. Sec. 404.417 and 404.418); or
    (b) Failure to have a child in his or her care (as described in 
Sec. 404.421).

[32 FR 19159, Dec. 20, 1967, as amended at 38 FR 9429, Apr. 16, 1973; 38 
FR 17716, July 3, 1973; 43 FR 8133, Feb. 28, 1978; 68 FR 40123, July 7, 
2003]



Sec. 404.437  Excess earnings; benefit rate subject to deductions because 
of excess earnings.

    For purposes of deductions because of excess earnings (as described 
in Sec. 404.430), the benefit rate against which excess earnings are 
charged is the amount of the benefit (other than a disability insurance 
benefit) to which the person is entitled for the month:
    (a) After reduction for the maximum (see Sec. Sec. 404.403 and 
404.404). The rate as reduced for the maximum as referred to in this 
paragraph is the one applicable to remaining entitled beneficiaries 
after exclusion of beneficiaries deemed not entitled under Sec. 404.436 
(due to a deduction for engaging in noncovered remunerative activity 
outside the United States or failure to have a child in his or her 
care);
    (b) After any reduction under section 202(q) of the Act because of 
entitlement to benefits for months before age 65 (this applies only to 
old-age, wife's, widow's, or husband's benefits);
    (c) After any reduction in benefits payable to a person entitled (or 
deemed entitled; see Sec. 404.420) on the earnings record of the 
insured individual because of entitlement on his own earnings record to 
other benefits (see Sec. 404.407); and
    (d) After any reduction of benefits payable to a person entitled or 
deemed entitled on the earnings record of an individual entitled to a 
disability insurance benefit because of such individual's entitlement to 
workmen's compensation for months after 1965 (see Sec. 404.408).

[32 FR 19159, Dec. 20, 1967, as amended at 38 FR 17716, July 3, 1973; 43 
FR 8133, Feb. 28, 1978; 68 FR 40123, July 7, 2003]



Sec. 404.439  Partial monthly benefits; excess earnings of the individual 

charged against his benefits and the benefits of persons entitled (or deemed 
entitled) to benefits on his earnings record.

    Deductions are made against the total family benefits where the 
excess earnings (as described in Sec. 404.430) of an individual 
entitled to old-age insurance benefits are charged to a month and 
require deductions in an amount less than the total family benefits 
payable on his earnings record for that month (including the amount of a 
mother's or child's insurance benefit payable to a spouse who is deemed 
entitled on the individual's earnings record--see Sec. 404.420). The 
difference between the total benefits payable and the deductions made 
under the annual earnings test for such month is paid (if otherwise 
payable under title II of the Act) to each person in the proportion that 
the benefit to which each is entitled (before the application of the 
reductions described in Sec. 404.403 for the family maximum, Sec. 
404.407 for entitlement to more than one type of benefit, and section 
202(q) of the Act for entitlement to benefits before retirement age) and 
before the application of Sec. 404.304(f) to round to the next lower 
dollar bears to the total of the benefits to which all of them are 
entitled, except that the total amount payable to any such person may 
not exceed the benefits which would have been payable to that person if 
none of the insured individual's excess earnings had been charged to 
that month.

    Example: A is entitled to an old-age insurance benefit of $165 and 
his wife is entitled to $82.50 before rounding, making a total of 
$247.50. After A's excess earnings have been charged to the appropriate 
months, there remains a partial benefit of $200 payable for October, 
which is apportioned as follows:

------------------------------------------------------------------------
                                                    Fraction
                                      Original         of     Benefit\1\
                                       benefit      original
------------------------------------------------------------------------
A................................         $165           2/3        $133
Wife.............................           82.50        1/3          66
                                  -----------------
  Total..........................          247.50  .........         199
------------------------------------------------------------------------
\1\ After deductions for excess earnings and after rounding per Sec.
  404.304(f).


[38 FR 9429, Apr. 16, 1973, as amended at 38 FR 17717, July 3, 1973; 43 
FR 8133, Feb. 28, 1978; 48 FR 46149, Oct. 11, 1983]

[[Page 171]]



Sec. 404.440  Partial monthly benefits; pro-rated share of partial 
payment exceeds the benefit before deduction for excess earnings.

    Where, under the apportionment described in Sec. 404.439, a 
person's prorated share of the partial benefit exceeds the benefit rate 
to which he was entitled before excess earnings of the insured 
individual were charged, such person's share of the partial benefit is 
reduced to the amount he would have been paid had there been no 
deduction for excess earnings (see example). The remainder of the 
partial benefit is then paid to other persons eligible to receive 
benefits in the proportion that the benefit of each such other person 
bears to the total of the benefits to which all such other persons are 
entitled (before reduction for the family maximum). Thus, if only two 
beneficiaries are involved, payment is made to one as if no deduction 
had been imposed; and the balance of the partial benefit is paid to the 
other. If three or more beneficiaries are involved, however, 
reapportionment of the excess of the beneficiary's share of the partial 
benefit over the amount he would have been paid without the deduction is 
made in proportion to his original entitlement rate (before reduction 
for the family maximum). If the excess amount involved at any point 
totals less than $1, it is not reapportioned; instead, each beneficiary 
is paid on the basis of the last calculation.

    Example: Family maximum is $150. Insured individual's excess 
earnings charged to the month are $25. The remaining $125 is prorated as 
partial payment.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Benefit after
                                                                                             deductions for     Benefit reduced for     Benefit payable
                                                              Original     Fraction of      excess earnings     maximum but without        after both
                                                              benefit     original total       but before      deductions for excess     deductions and
                                                                             benefit         reduction for            earnings          reductions (and
                                                                                             family maximum                                 rounded)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Insured Individual.........................................       $100              \2/5\                 50                   100.00                 75
Wife.......................................................         50              \1/5\                 25                    16.60                 16
Child......................................................         50              \1/5\                 25                    16.60                 16
Child......................................................         50              \1/5\                 25                    16.60                 16
--------------------------------------------------------------------------------------------------------------------------------------------------------


[32 FR 19159, Dec. 20, 1967, as amended at 48 FR 46149, Oct. 11, 1983]



Sec. 404.441  Partial monthly benefits; insured individual and another 

person entitled (or deemed entitled) on the same earnings record both 
have excess earnings.

    Where both the insured individual and another person entitled (or 
deemed entitled) on the same earnings record have excess earnings (as 
described in Sec. 404.430), their excess earnings are charged, and 
their partial monthly benefit is apportioned, as follows:

    Example: M and his wife are initially entitled to combined total 
benefits of $264 per month based on M's old-age insurance benefit of 
$176. For the taxable year in question, M's excess earnings were $1,599 
and his wife's excess earnings were $265. Both were under age 65. M had 
wages of more than $340 in all months of the year except February, while 
his wife had wages of more than $340 in all months of the year. After 
M's excess earnings have been charged to the appropriate months (all 
months through July except February), there remains a partial benefit 
payment for August of $249, which is allocated to M and his wife in the 
ratio that the original benefit of each bears to the sum of their 
original benefits: $166 and $83. His wife's excess earnings are charged 
against her full benefit for February ($88), her partial benefit for 
August ($83), her full benefit for September, and from $6 of her October 
benefit, leaving an $82 benefit payable to her for that month.

[48 FR 46149, Oct. 11, 1983]



Sec. 404.446  Definition of ``substantial services'' and ``services.''

    (a) General. In general, the substantial services test will be 
applicable only in a grace year (including a termination grace year) as 
defined in Sec. 404.435(c)(1). It is a test of whether, in view of all 
the services rendered by the individual and the surrounding 
circumstances, the individual reasonably can be considered retired in 
the month in question. In determining whether an individual has or has 
not performed

[[Page 172]]

substantial services in any month, the following factors are considered:
    (1) The amount of time the individual devoted to all trades and 
businesses;
    (2) The nature of the services rendered by the individual;
    (3) The extent and nature of the activity performed by the 
individual before he allegedly retired as compared with that performed 
thereafter;
    (4) The presence or absence of an adequately qualified paid manager, 
partner, or family member who manages the business;
    (5) The type of business establishment involved;
    (6) The amount of capital invested in the trade or business; and
    (7) The seasonal nature of the trade or business.
    (b) Individual engaged in more than one trade or business. When an 
individual, in any month, performs services in more than one trade or 
business, his services in all trades or businesses are considered 
together in determining whether he performed substantial services in 
self-employment in such month.
    (c) Evidentiary requirements. An individual who alleges that he did 
not render substantial services in any month, or months, shall submit 
detailed information about the operation of the trades or businesses, 
including the individual's activities in connection therewith. When 
requested to do so by the Administration, the individual shall also 
submit such additional statements, information, and other evidence as 
the Administration may consider necessary for a proper determination of 
whether the individual rendered substantial services in self-employment. 
Failure of the individual to submit the requested statements, 
information, and other evidence is a sufficient basis for a 
determination that the individual rendered substantial services in self-
employment during the period in question.

[32 FR 19159, Dec. 20, 1967, as amended at 47 FR 46691, Oct. 20, 1982]



Sec. 404.447  Evaluation of factors involved in substantial services test.

    In determining whether an individual's services are substantial, 
consideration is given to the following factors:
    (a) Amount of time devoted to trades or businesses. Consideration is 
first given to the amount of time the self-employed individual devotes 
to all trades or businesses, the net income or loss of which is 
includable in computing his earnings as defined in Sec. 404.429. For 
the purposes of this paragraph, the time devoted to a trade or business 
includes all the time spent by the individual in any activity, whether 
physical or mental, at the place of business or elsewhere in furtherance 
of such trade or business. This includes the time spent in advising and 
planning the operation of the business, making business contacts, 
attending meetings, and preparing and maintaining the facilities and 
records of the business. All time spent at the place of business which 
cannot reasonably be considered unrelated to business activities is 
considered time devoted to the trade or business. In considering the 
weight to be given to the time devoted to trades or businesses the 
following rules are applied:
    (1) Forty-five hours or less in a month devoted to trade or 
business. Where the individual establishes that the time devoted to his 
trades and businesses during a calendar month was not more than 45 
hours, the individual's services in that month are not considered 
substantial unless other factors (see paragraphs (b), (c), and (d) of 
this section) make such a finding unreasonable. For example, an 
individual who worked only 15 hours in a month might nevertheless be 
found to have rendered substantial services if he was managing a sizable 
business or engaging in a highly skilled occupation. However, the 
services of less than 15 hours rendered in all trades and businesses 
during a calendar month are not substantial.
    (2) More than 45 hours in a month devoted to trades and businesses. 
Where an individual devotes more than 45 hours to all trades and 
businesses during a calendar month, it will be found that the 
individual's services are substantial unless it is established that the 
individual could reasonably be considered retired in the month and, 
therefore, that such services were not, in fact, substantial.
    (b) Nature of services rendered. Consideration is also given to the 
nature of

[[Page 173]]

the services rendered by the individual in any case where a finding that 
the individual was retired would be unreasonable if based on time alone 
(see paragraph (a) of this section). The more highly skilled and 
valuable his services in self-employment are, the more likely the 
individual rendering such services could not reasonably be considered 
retired. The performance of services regularly also tends to show that 
the individual has not retired. Services are considered in relation to 
the technical and management needs of the business in which they are 
rendered. Thus, skilled services of a managerial or technical nature may 
be so important to the conduct of a sizable business that such services 
would be substantial even though the time required to render the 
services is considerably less than 45 hours.
    (c) Comparison of services rendered before and after retirement. 
Where consideration of the amount of time devoted to a trade or business 
(see paragraph (a) of this section) and the nature of services rendered 
(see paragraph (b) of this section) is not sufficient to establish 
whether an individual's services were substantial, consideration is 
given to the extent and nature of the services rendered by the 
individual before his retirement, as compared with the services 
performed during the period in question. A significant reduction in the 
amount or importance of services rendered in the business tends to show 
that the individual is retired; absence of such reduction tends to show 
that the individual is not retired.
    (d) Setting in which services performed. Where consideration of the 
factors described in paragraphs (a), (b), and (c) of this section is not 
sufficient to establish that an individual's services in self-employment 
were or were not substantial, all other factors are considered. The 
presence or absence of a capable manager, the kind and size of the 
business, the amount of capital invested and whether the business is 
seasonal, as well as any other pertinent factors, are considered in 
determining whether the individual's services are such that he can 
reasonably be considered retired.



Sec. 404.450  Required reports of work outside the United States or 
failure to have care of a child.

    (a) Beneficiary engaged in noncovered remunerative activity; report 
by beneficiary. Any individual entitled to a benefit which is subject to 
a deduction in that month because of noncovered remunerative activity 
outside the United States (see Sec. 404.417) shall report the 
occurrence of such an event to the Social Security Administration before 
the receipt and acceptance of a benefit for the second month following 
the month in which such event occurred.
    (b) Beneficiary receiving wife's, husband's, mother's or father's 
insurance benefits does not have care of a child; report by beneficiary. 
Any person receiving wife's, husband's, mother's, or father's insurance 
benefits which are subject to a deduction (as described in Sec. 
404.421) because he or she did not have a child in his or her care shall 
report the occurrence of such an event to the Social Security 
Administration before the receipt and acceptance of a benefit for the 
second month following the month in which the deduction event occurred.
    (c) Report required by person receiving benefits on behalf of 
another. Where a person is receiving benefits on behalf of a beneficiary 
(see subpart U of this part) it is his duty to make the report to the 
Administration required by paragraph (a) or (b) of this section, on 
behalf of the beneficiary.
    (d) Report; content and form. A report required under the provisions 
of this section shall be filed with the Social Security Administration. 
(See Sec. 404.614 of this part for procedures concerning place of 
filing and date of receipt of such a report.) The report should be made 
on a form prescribed by the Administration and in accordance with 
instructions, printed thereon or attached thereto, as prescribed by the 
Administration. Prescribed forms may be obtained at any office of the 
Administration. If the prescribed form is not used, the report should be 
properly identified (e.g., show the name and social security claim 
number of the beneficiary about whom the report is made), describe the 
events being reported, tell when the events occurred, furnish any other 
pertinent data (e.g.,

[[Page 174]]

who has care of the children), and be properly authenticated (e.g., bear 
the signature and address of the beneficiary making the report or the 
person reporting on his behalf). The report should contain all the 
information needed for a proper determination of whether a deduction 
applies and, if it does, the period for which such deductions should be 
made.

[32 FR 19159, Dec. 20, 1967, as amended at 49 FR 24117, June 12, 1984; 
51 FR 10616, Mar. 28, 1986; 65 FR 16813, Mar. 30, 2000]



Sec. 404.451  Penalty deductions for failure to report within prescribed 

time limit noncovered remunerative activity outside the United States or 
not having care of a child.

    (a) Penalty for failure to report. If an individual (or the person 
receiving benefits on his behalf) fails to comply with the reporting 
obligations of Sec. 404.450 within the time specified in Sec. 404.450 
and it is found that good cause for such failure does not exist (see 
Sec. 404.454), a penalty deduction is made from the individual's 
benefits in addition to the deduction described in Sec. 404.417 
(relating to noncovered remunerative activity outside the United States) 
or Sec. 404.421 (relating to failure to have care of a child).
    (b) Determining amount of penalty deduction. The amount of the 
penalty deduction for failure to report noncovered remunerative activity 
outside the United States or not having care of a child within the 
prescribed time is determined as follows:
    (1) First failure to make timely report. The penalty deduction for 
the first failure to make a timely report is an amount equal to the 
individual's benefit or benefits for the first month for which the 
deduction event was not reported timely.
    (2) Second failure to make timely report. The penalty deduction for 
the second failure to make a timely report is an amount equal to twice 
the amount of the individual's benefit or benefits for the first month 
for which the deduction event in the second failure period was not 
reported timely.
    (3) Subsequent failures to make timely reports. The penalty 
deduction for the third or subsequent failure to file a timely report is 
an amount equal to three times the amount of the individual's benefit or 
benefits for the first month for which the deduction event in the third 
failure period was not reported timely.
    (c) Determining whether a failure to file a timely report is first, 
second, third, or subsequent failure--(1) Failure period. A failure 
period runs from the date of one delinquent report (but initially 
starting with the date of entitlement to monthly benefits) to the date 
of the next succeeding delinquent report, excluding the date of the 
earlier report and including the date of the later report. The failure 
period includes each month for which succeeding delinquent report, 
excluding a report becomes overdue during a failure period, but it does 
not include any month for which a report is not yet overdue on the 
ending date of such period. If good cause (see Sec. 404.454) is found 
for the entire period, the period is not regarded as a failure period.
    (2) First failure. When no penalty deduction under paragraph (b) of 
this section has previously been imposed against the beneficiary for 
failure to report noncovered remunerative activity outside the United 
States or for failure to report not having care of a child, the earliest 
month in the first failure period for which a report is delinquent and 
for which good cause (see Sec. 404.454) for failure to make the 
required report is not found is considered to be the first failure.
    (3) Second failure. After one penalty deduction under paragraph (b) 
of this section has been imposed against the beneficiary, the first 
month for which a report is delinquent in the second failure period is 
considered to be the second failure.
    (4) Third and subsequent failures. After a second penalty deduction 
under paragraph (b) of this section has been imposed against the 
beneficiary, the first month for which a report is delinquent in the 
third failure period is considered to be the third failure. Subsequent 
failures will be determined in the same manner.

    Example: M became entitled in January 1966 to mother's benefits; 
these benefits are not payable for any month in which the mother does 
not have a child in her care. M

[[Page 175]]

accepted benefits for each month from January 1966 through June 1967. In 
July 1967 she reported that she had not had a child in her care in 
January 1967. As she was not eligible for a benefit for any month in 
which she did not have a child in her care, M's July 1967 benefit was 
withheld to recover the overpayment she had received for January 1967, 
and the next payment she received was for August 1967. No penalty was 
imposed for her failure to make a timely report of the deduction event 
that occurred in January 1967 because it was determined that good cause 
existed.
    In March 1968 M reported that she had not had a child in her care in 
September or October 1967; however, she had accepted benefit payments 
for each month from August 1967 through February 1968. Her benefits for 
March and April 1968 were withheld to recover the overpayment for 
September and October 1967. Also, it was determined that good cause was 
not present for M's failure to make a timely report of the deduction 
event that had occurred in September 1967. A penalty equal to her 
benefit for September 1967 was deducted from M's May 1968 payment since 
this was her first failure to report not having a child in her care. 
Payments to her then were continued.
    On November 4, 1968, it was learned that M had not had a child in 
her care in November 1967 or in June, July, or August 1968 although she 
had accepted benefits for June through October 1968. Consequently, M's 
benefits for November 1968 through February 1969 were withheld to 
recover the 4 months' overpayment she received for months in which she 
did not have a child in her care. In addition, it was determined that 
good cause was not present for M's failure to report the deduction 
events, and a penalty was imposed equal to twice the amount of M's 
benefit for the month of June 1968. This was M's second failure to 
report not having a child in her care. No further penalty applied for 
November 1967 because that month was included in M's first-failure 
period.

    (5) Penalty deductions imposed under Sec. 404.453 not considered. A 
failure to make a timely report of earnings as required by Sec. 404.452 
for which a penalty deduction is imposed under Sec. 404.453 is not 
counted as a failure to report in determining the first or subsequent 
failure to report noncovered remunerative activity outside the United 
States or not having care of a child.
    (d) Limitation on amount of penalty deduction. Notwithstanding the 
provisions described in paragraph (b) of this section, the amount of the 
penalty deduction imposed for failure to make a timely report of 
noncovered remunerative activity outside the United States or for 
failure to report not having care of a child may not exceed the number 
of months in that failure period for which the individual received and 
accepted a benefit and for which a deduction is imposed by reason of his 
noncovered remunerative activity outside the United States or failure to 
have care of a child. (See Sec. 404.458 for other limitations on the 
amount of the penalty deduction.)

[38 FR 3596, Feb. 8, 1973, as amended at 38 FR 9430, Apr. 16, 1973]



Sec. 404.452  Reports to Social Security Administration of earnings; 
wages; net earnings from self-employment.

    (a) Conditions under which a report of earnings, wages, and net 
earnings from self-employment is required. An individual who, during a 
taxable year, is entitled to a monthly benefit (except if in each month 
of his taxable year he was entitled only to a disability insurance 
benefit) is required to report to the Social Security Administration the 
total amount of his earnings (as defined in Sec. 404.429) for each such 
taxable year. A report is required when the individual's total earnings 
or wages (as defined in Sec. 404.429) for any taxable year ending after 
1972 exceed the product of $175 multiplied by the number of months in 
his taxable year, except that the report is not required for a taxable 
year if:
    (1) The individual attained the age of 70 in or before the first 
month of entitlement to benefits in the taxable year, or
    (2) The individual's benefit payments were suspended under the 
provisions described in Sec. 404.456 for all months in a taxable year 
in which the individual was entitled to benefits and was under age 70.
    (b) Time within which report must be filed. The report for any 
taxable year beginning after 1954 shall be filed with the Social 
Security Administration on or before the 15th day of the fourth month 
following the close of the taxable year; for example, April 15 when the 
beneficiary's taxable year is a calendar year. (See Sec. 404.3(c) where 
the last day for filing the report falls on a Saturday, Sunday, or legal 
holiday, or any other day all or part of which is

[[Page 176]]

declared to be a nonwork day for Federal employees by statute or 
Executive order.) The filing of an income tax return or a form W-2 with 
the Internal Revenue Service may serve as the report required to be 
filed under the provisions of this section where the income tax return 
or form W-2 shows the same wages and net earnings from self-employment 
that must be reported to the Administration under this section.
    (c) Report required by person receiving benefits on behalf of 
another. Where a person is receiving benefits on behalf of a beneficiary 
(see subpart U of this part), it is his duty to make the report to the 
Administration required by this section.
    (d) Information to be provided to us. The report should show the 
name and social security claim number of the beneficiary about whom the 
report is made; identify the taxable year for which the report is made; 
show the total amount of wages for which the beneficiary rendered 
services during the taxable year (if applicable), the amount of net 
earnings from self-employment for such year (if applicable); and show 
the name and address of the individual making the report. To overcome 
the presumption that the beneficiary rendered services for wages 
exceeding the allowable amount and rendered substantial services in 
self-employment in each month (see Sec. 404.435), we must also be told 
the specific months in which the beneficiary did not render services in 
employment for wages of more than the allowable amount (as described in 
Sec. 404.435) and did not render substantial services in self-
employment (as described in Sec. Sec. 404.446 and 404.447).
    (e) Requirement to furnish requested information. A beneficiary, or 
the person reporting on his behalf, is required to furnish any other 
information about the beneficiary's earnings and services that the 
Administration requests for the purpose of determining the correct 
amount of benefits payable for a taxable year (see Sec. 404.455).
    (f) Extension of time for filing report--(1) General. 
Notwithstanding the provision described in paragraph (b) of this 
section, the Administration may grant a reasonable extension of time for 
making the report of earnings required under this section if it finds 
that there is valid reason for a delay, but in no case may the period be 
extended more than 4 months for any taxable year.
    (2) Requirements applicable to requests for extensions. Before his 
annual report of earnings is due, a beneficiary may request an extension 
of time for filing his report. The request must meet all of these 
requirements:
    (i) Be in writing, and
    (ii) Be made by the beneficiary, his representative payee, or his 
authorized agent,
    (iii) Be made before the required report is overdue (If an extension 
of time already has been granted, a request for further extension must 
be made before the due date as extended previously),
    (iv) Be made to an office of the Administration,
    (v) Name the beneficiary for whom the annual report must be made and 
furnish his claim number,
    (vi) Identify the year for which an annual report is due and for 
which an extension of time is requested,
    (vii) Explain in the requester's own words the reasons why an 
extension of time is needed, and how much extended time is needed,
    (viii) Show the date the request is made, and
    (ix) Be signed by the requester.
    (3) Valid reason defined. A valid reason is a bona fide need, 
problem, or situation which makes it impossible or difficult for a 
beneficiary (or his representative payee) to meet the annual report due 
date prescribed by law. This may be illness or disability of the one 
required to make the report, absence or travel so far from home that he 
does not have and cannot readily obtain the records needed for making 
his report, inability to obtain evidence required from another source 
when such evidence is necessary in making the report, inability of his 
accountant to compile the data needed for the annual report, or any 
similar situation which has a direct bearing on the individual's ability 
to comply with his reporting obligation within the specified time limit.
    (4) Evidence that extension of time has been granted. In the absence 
of written

[[Page 177]]

evidence of a properly approved extension of time for making an annual 
report of earnings, it will be presumed that no extension of filing time 
was granted. In such case it will be necessary for the beneficiary to 
establish whether he otherwise had good cause (Sec. 404.454) for filing 
his annual report after the normal due date.

[32 FR 19159, Dec. 20, 1967, as amended at 38 FR 9430, Apr. 16, 1973; 43 
FR 8133, Feb. 28, 1978; 51 FR 10616, Mar. 28, 1986; 60 FR 56513, Nov. 9, 
1995; 62 FR 15610, Apr. 2, 1997]



Sec. 404.453  Penalty deductions for failure to report earnings timely.

    (a) Penalty for failure to report earnings; general. Penalty 
deductions are imposed against an individual's benefits, in addition to 
the deductions required because of his excess earnings (see Sec. 
404.415), if:
    (1) He fails to make a timely report of his earnings as specified in 
Sec. 404.452 for a taxable year beginning after 1954;
    (2) It is found that good cause for failure to report earnings 
timely (see Sec. 404.454) does not exist;
    (3) A deduction is imposed because of his earnings (see Sec. 
404.415) for that year; and
    (4) He received and accepted any payment of benefits for that year.
    (b) Determining amount of penalty deduction. The amount of the 
penalty deduction for failure to report earnings for a taxable year 
within the prescribed time is determined as follows:
    (1) First failure to file timely report. The penalty deduction for 
the first failure to file a timely report is an amount equal to the 
individual's benefit or benefits for the last month for which he was 
entitled to such benefit or benefits during the taxable year, except 
that with respect to any deductions imposed on or after January 2, 1968, 
if the amount of the deduction imposed for the taxable year is less than 
the benefit or benefits for the last month of the taxable year for which 
he was entitled to a benefit under section 202 of the Act, the penalty 
deduction is an amount equal to the amount of the deduction imposed but 
not less than $10.
    (2) Second failure to file timely report. The penalty deduction for 
the second failure to file a timely report is an amount equal to twice 
the amount of the individual's benefit or benefits for the last month 
for which he was entitled to such benefit or benefits during such 
taxable year.
    (3) Subsequent failures to file timely reports. The penalty 
deduction for the third or subsequent failure to file a timely report is 
an amount equal to three times the amount of the individual's benefit or 
benefits for the last month for which he was entitled to such benefit or 
benefits during such taxable year.
    (c) Determining whether a failure to file a timely report is first, 
second, or subsequent failure--(1) No prior failure. Where no penalty 
deduction under this section has previously been imposed against the 
beneficiary for failure to make a timely report of his earnings, all 
taxable years (and this may include 2 or more years) for which a report 
of earnings is overdue as of the date the first delinquent report is 
made are included in the first failure. The latest of such years for 
which good cause for failure to make the required report (see Sec. 
404.454) is not found is considered the first failure to file a timely 
report.

    Example: X became entitled to benefits in 1964 and had reportable 
earnings for 1964, 1965, and 1966. He did not make his annual reports 
for those years until July 1967. At that time it was found that 1966 was 
the only year for which he has good cause for not making a timely report 
of his earnings. Since all taxable years for which a report is overdue 
as of the date of the first delinquent report are included in the first 
failure period, it was found that his first failure to make a timely 
report was for 1965. The penalty is equal to his December 1965 benefit 
rate. If good cause had also been found for both 1965 and 1964, then X 
would have no prior failure within the meaning of this subsection.

    (2) Second and subsequent failures. After one penalty deduction 
under paragraph (b) of this section has been imposed against an 
individual, each taxable year for which a timely report of earnings is 
not made (and the count commences with reports of earnings which become 
delinquent after the date the first delinquent report described in 
paragraph (c)(1) of this section was made), and for which good cause for 
failure to make the required report is not found, is considered 
separately in determining whether the failure is the

[[Page 178]]

second or subsequent failure to report timely.

    Example: Y incurred a penalty deduction for not making his 1963 
annual report until July 1964. In August 1966 it was found that he had 
not made a timely report of either his 1964 or 1965 earnings, and good 
cause was not present with respect to either year. The penalty for 1964 
is equal to twice his benefit rate for December 1964. The penalty for 
1965 is equal to three times his benefit rate for December 1965.

    (3) Penalty deduction imposed under Sec. 404.451 not considered. A 
failure to make a report as required by Sec. 404.450, for which a 
penalty deduction is imposed under Sec. 404.451, is not counted as a 
failure to report in determining, under this section, whether a failure 
to report earnings or wages is the first or subsequent failure to 
report.
    (d) Limitation on amount of penalty deduction. Notwithstanding the 
provisions described in paragraph (b) of this section, the amount of the 
penalty deduction imposed for failure to file a timely report of 
earnings for a taxable year may not exceed the number of months in that 
year for which the individual received and accepted a benefit and for 
which deductions are imposed by reason of his earnings for such year. 
(See Sec. 404.458 for other limitations on the amount of the penalty 
deduction.)

[32 FR 19159, Dec. 20, 1967, as amended at 38 FR 3597, Feb. 8, 1973; 38 
FR 9431, Apr. 16, 1973]



Sec. 404.454  Good cause for failure to make required reports.

    (a) General. The failure of an individual to make a timely report 
under the provisions described in Sec. Sec. 404.450 and 404.452 will 
not result in a penalty deduction if the individual establishes to the 
satisfaction of the Administration that his failure to file a timely 
report was due to good cause. Before making any penalty determination as 
described in Sec. Sec. 404.451 and 404.453, the individual shall be 
advised of the penalty and good cause provisions and afforded an 
opportunity to establish good cause for failure to report timely. The 
failure of the individual to submit evidence to establish good cause 
within a specified time may be considered a sufficient basis for a 
finding that good cause does not exist (see Sec. 404.705). In 
determining whether good cause for failure to report timely has been 
established by the individual, consideration is given to whether the 
failure to report within the proper time limit was the result of 
untoward circumstances, misleading action of the Social Security 
Administration, confusion as to the requirements of the Act resulting 
from amendments to the Act or other legislation, or any physical, 
mental, educational, or linguistic limitations (including any lack of 
facility with the English language) the individual may have. For 
example, good cause may be found where failure to file a timely report 
was caused by:
    (1) Serious illness of the individual, or death or serious illness 
in his immediate family;
    (2) Inability of the individual to obtain, within the time required 
to file the report, earnings information from his employer because of 
death or serious illness of the employer or one in the employer's 
immediate family; or unavoidable absence of his employer; or destruction 
by fire or other damage of the employer's business records;
    (3) Destruction by fire, or other damage, of the individual's 
business records;
    (4) Transmittal of the required report within the time required to 
file the report, in good faith to another Government agency even though 
the report does not reach the Administration until after the period for 
reporting has expired;
    (5) Unawareness of the statutory provision that an annual report of 
earnings is required for the taxable year in which the individual 
attained age 72 provided his earnings for such year exceeded the 
applicable amount, e.g., $1,680 for a 12-month taxable year ending after 
December 1967;
    (6) Failure on the part of the Administration to furnish forms in 
sufficient time for an individual to complete and file the report on or 
before the date it was due, provided the individual made a timely 
request to the Administration for the forms;
    (7) Belief that an extension of time for filing income tax returns 
granted by the Internal Revenue Service was also applicable to the 
annual report to be made to the Social Security Administration;

[[Page 179]]

    (8) Reliance upon a written report to the Social Security 
Administration made by, or on behalf of, the beneficiary before the 
close of the taxable year, if such report contained sufficient 
information about the beneficiary's earnings or work, to require 
suspension of his benefits (see Sec. 404.456) and the report was not 
subsequently refuted or rescinded; or
    (9) Failure of the individual to understand reporting 
responsibilities due to his or her physical, mental, educational, or 
linguistic limitation(s).
    (b) Notice of determination. In every case in which it is determined 
that a penalty deduction should be imposed, the individual shall be 
advised of the penalty determination and of his reconsideration rights. 
If it is found that good cause for failure to file a timely report does 
not exist, the notice will include an explanation of the basis for this 
finding; the notice will also explain the right to partial adjustment of 
the overpayment, in accordance with the provisions of Sec. 404.502(c).
    (c) Good cause for subsequent failure. Where circumstances are 
similar and an individual fails on more than one occasion to make a 
timely report, good cause normally will not be found for the second or 
subsequent violation.

[38 FR 3597, Feb. 8, 1973, as amended at 43 FR 8133, Feb. 28, 1978; 59 
FR 1634, Jan. 12, 1994]



Sec. 404.455  Request by Social Security Administration for reports of 
earnings and estimated earnings; effect of failure to comply with request.

    (a) Request by Social Security Administration for report during 
taxable year; effect of failure to comply. The Social Security 
Administration may, during the course of a taxable year, request a 
beneficiary to estimate his or her earnings (as defined in Sec. 
404.429) for the current taxable year and for the next taxable year, and 
to furnish any other information about his or her earnings that the 
Social Security Administration may specify. If a beneficiary fails to 
comply with a request for an estimate of earnings for a taxable year, 
the beneficiary's failure, in itself, constitutes justification under 
section 203(h) of the Act for a determination that it may reasonably be 
expected that the beneficiary will have deductions imposed under the 
provisions described in Sec. 404.415, due to his or her earnings for 
that taxable year. Furthermore, the failure of the beneficiary to comply 
with a request for an estimate of earnings for a taxable year will, in 
itself, constitute justification for the Social Security Administration 
to use the preceding taxable year's estimate of earnings (or, if 
available, reported earnings) to suspend payment of benefits for the 
current or next taxable year.
    (b) Request by Social Security Administration for report after close 
of taxable year; failure to comply. After the close of his or her 
taxable year, the Social Security Administration may request a 
beneficiary to furnish a report of his or her earnings for the closed 
taxable year and to furnish any other information about his or her 
earnings for that year that the Social Security Administration may 
specify. If he or she fails to comply with this request, this failure 
shall, in itself, constitute justification under section 203(h) of the 
Act for a determination that the beneficiary's benefits are subject to 
deductions as described in Sec. 404.415 for each month in the taxable 
year (or only for the months thereof specified by the Social Security 
Administration).

[56 FR 11373, Mar. 18, 1991]



Sec. 404.456  Current suspension of benefits because an individual works 
or engages in self-employment.

    (a) Circumstances under which benefit payments may be suspended. If, 
on the basis of information obtained by or submitted to the 
Administration, it is determined that an individual entitled to monthly 
benefits for any taxable year may reasonably be expected to have 
deductions imposed against his benefits (as described in Sec. 404.415) 
by reason of his earnings for such year, the Administration may, before 
the close of the taxable year, suspend all or part, as the 
Administration may specify, of the benefits payable to the individual 
and to all other persons entitled (or deemed entitled--see Sec. 
404.420) to benefits on the basis of the individual's earnings record.
    (b) Duration of suspension. The suspension described in paragraph 
(a) of this section shall remain in effect with

[[Page 180]]

respect to the benefits for each month until the Administration has 
determined whether or not any deduction under Sec. 404.415 applies for 
such month.
    (c) When suspension of benefits becomes final. For taxable years 
beginning after August 1958, if benefit payments were suspended (as 
described in paragraph (a) of this section) for all months of 
entitlement in an individual's taxable year, no benefit payment for any 
month in that year may be made after the expiration of the period of 3 
years, 3 months, and 15 days following the close of the individual's 
taxable year unless, within that period, the individual, or any person 
entitled to benefits based on his earnings record, files with the 
Administration information showing that a benefit for a month is payable 
to the individual. Subject to the limitations of this paragraph, a 
determination about deductions may be reopened under the circumstances 
described in Sec. 404.907.

[32 FR 19159, Dec. 20, 1967, as amended at 65 FR 16813, Mar. 30, 2000]



Sec. 404.457  Deductions where taxes neither deducted from wages of 
certain maritime employees nor paid.

    (a) When deduction is required. A deduction is required where:
    (1) An individual performed services after September 1941 and before 
the termination of Title I of the First War Powers Act, 1941, on or in 
connection with any vessel as an officer or crew member; and
    (2) The services were performed in the employ of the United States 
and employment was through the War Shipping Administration or, for 
services performed before February 11, 1942, through the United States 
Maritime Commission; and
    (3) The services, under the provisions of Sec. 404.1041 of this 
part, constituted employment for the purposes of title II of the Social 
Security Act; and
    (4) The taxes imposed (by section 1400 of the Internal Revenue Code 
of 1939, as amended) with respect to such services were neither deducted 
from the individual's wages nor paid by the employer.
    (b) Amount of deduction. The deduction required by paragraph (a) of 
this section is an amount equal to 1 percent of the wages with respect 
to which the taxes described in paragraph (a)(4) of this section were 
neither deducted nor paid by the employer.
    (c) How deduction is made. The deduction required by paragraph (a) 
of this section is made by withholding an amount as determined under 
paragraph (b) of this section from any monthly benefit or lump-sum death 
payment based on the earnings record of the individual who performed the 
services described in paragraph (a) of this section.

[32 FR 19159, Dec. 20, 1967, as amended at 65 FR 16813, Mar. 30, 2000]



Sec. 404.458  Limiting deductions where total family benefits payable 
would not be affected or would be only partly affected.

    Notwithstanding the provisions described in Sec. Sec. 404.415, 
404.417, 404.421, 404.451, and 404.453 about the amount of the deduction 
to be imposed for a month, no such deduction is imposed for a month when 
the benefits payable for that month to all persons entitled to benefits 
on the same earnings record and living in the same household remain 
equal to the maximum benefits payable to them on that earnings record. 
Where making such deductions and increasing the benefits to others in 
the household (for the month in which the deduction event occurred) 
would give members of the household less than the maximum (as determined 
under Sec. 404.404) payable to them, the amount of deduction imposed is 
reduced to the difference between the maximum amount of benefits payable 
to them and the total amount which would have been paid if the benefits 
of members of the household not subject to deductions were increased for 
that month. The individual subject to the deduction for such month may 
be paid the difference between the deduction so reduced and his benefit 
as adjusted under Sec. 404.403 (without application of Sec. 
404.402(a)). All other persons in the household are paid, for such 
month, their benefits as adjusted under Sec. 404.403 without 
application of Sec. 404.402(a).

[47 FR 43673, Oct. 4, 1982, as amended at 68 FR 15659, Apr. 1, 2003; 68 
FR 40123, July 7, 2003]

[[Page 181]]



Sec. 404.459  Penalty for false or misleading statements.

    (a) Why would SSA penalize me? You will be subject to a penalty if 
you make, or cause to be made, a statement or representation of a 
material fact for use in determining any initial or continuing right to, 
or the amount of, monthly insurance benefits under title II or benefits 
or payments under title XVI and:
    (1) You know or should know that the statement or representation--
    (i) Is false or misleading; or
    (ii) Omits a material fact; or
    (2) You make the statement with a knowing disregard for the truth.
    (b) What is the penalty? The penalty is nonpayment of benefits under 
title II that we would otherwise pay you and ineligibility for cash 
benefits under title XVI (including State supplementary payments made by 
SSA according to Sec. 416.2005).
    (c) How long will the penalty last? The penalty will last--
    (1) Six consecutive months the first time we penalize you;
    (2) Twelve consecutive months the second time we penalize you; and
    (3) Twenty-four consecutive months the third or subsequent time we 
penalize you.
    (d) Will this penalty affect any of my other government benefits? If 
we penalize you, the penalty will apply only to your eligibility for 
benefits under titles II and XVI (including State supplementary payments 
made by us according to Sec. 416.2005). The penalty will not affect--
    (1) Your eligibility for benefits that you would otherwise be 
eligible for under titles XVIII and XIX but for the imposition of the 
penalty; and
    (2) The eligibility or amount of benefits payable under titles II or 
XVI to another person. For example, another person (such as your spouse 
or child) may be entitled to benefits under title II based on your 
earnings record. Benefits would still be payable to that person to the 
extent that you would be receiving such benefits but for the imposition 
of the penalty. As another example, if you are receiving title II 
benefits that are limited under the family maximum provision (Sec. 
404.403) and we stop your benefits because we impose a penalty on you, 
we will not increase the benefits of other family members who are 
limited by the family maximum provision simply because you are not 
receiving benefits because of the penalty.
    (e) How will SSA make its decision to penalize me? In order to 
impose a penalty on you, we must find that you knowingly (knew or should 
have known or acted with knowing disregard for the truth) made a false 
or misleading statement or omitted a material fact. We will base our 
decision to penalize you on the evidence and the reasonable inferences 
that can be drawn from that evidence, not on speculation or suspicion. 
Our decision to penalize you will be documented with the basis and 
rationale for that decision. In determining whether you knowingly made a 
false or misleading statement or omitted a material fact so as to 
justify imposition of the penalty, we will consider all evidence in the 
record, including any physical, mental, educational, or linguistic 
limitations (including any lack of facility with the English language) 
which you may have had at the time. In determining whether you acted 
knowingly, we will also consider the significance of the false or 
misleading statement or omission in terms of its likely impact on your 
benefits.
    (f) What should I do if I disagree with SSA's initial determination 
to penalize me? If you disagree with our initial determination to impose 
a penalty, you have the right to request reconsideration of the penalty 
decision as explained in Sec. 404.907. We will give you a chance to 
present your case, including the opportunity for a face-to-face 
conference. If you request reconsideration of our initial determination 
to penalize you, you have the choice of a case review, informal 
conference, or formal conference, as described in Sec. 416.1413(a) 
through (c). If you disagree with our reconsidered determination you 
have the right to follow the normal administrative and judicial review 
process by requesting a hearing before an administrative law judge, 
Appeals Council review and Federal court review, as explained in Sec. 
404.900.
    (g) When will the penalty period begin and end? Subject to the 
additional limitations noted in paragraphs (g)(1) and

[[Page 182]]

(g)(2) of this section, the penalty period will begin the first day of 
the month for which you would otherwise receive payment of benefits 
under title II or title XVI were it not for imposition of the penalty. 
Once a sanction begins, it will run continuously even if payments are 
intermittent. If more than one penalty has been imposed, but they have 
not yet run, the penalties will not run concurrently.
    (1) If you do not request reconsideration of our initial 
determination to penalize you, the penalty period will begin no earlier 
than the first day of the second month following the month in which the 
time limit for requesting reconsideration ends. The penalty period will 
end on the last day of the final month of the penalty period. For 
example, if the time period for requesting reconsideration ends on 
January 10, a 6-month period of nonpayment begins on March 1 if you 
would otherwise be eligible to receive benefits for that month, and ends 
on August 31.
    (2) If you request reconsideration of our initial determination to 
penalize you and the reconsidered determination does not change our 
original decision to penalize you, the penalty period will begin no 
earlier than the first day of the second month following the month we 
notify you of our reconsidered determination. The penalty period will 
end on the last day of the final month of the penalty period. For 
example, if we notify you of our reconsidered determination on August 
31, 2001, and you are not otherwise eligible for payment of benefits at 
that time, but would again be eligible to receive payment of benefits on 
October 1, 2003, a 6-month period of nonpayment would begin on October 
1, 2003 and end on March 31, 2004.

[65 FR 42285, July 10, 2000]



Sec. 404.460  Nonpayment of monthly benefits of aliens outside the 
United States.

    (a) Nonpayment of monthly benefits to aliens outside the United 
States more than 6 months. Except as described in paragraph (b) and 
subject to the limitations in paragraph (c) of this section after 
December 1956 no monthly benefit may be paid to any individual who is 
not a citizen or national of the United States, for any month after the 
sixth consecutive calendar month during all of which he is outside the 
United States, and before the first calendar month for all of which he 
is in the United States after such absence. (See Sec. 404.380 regarding 
special payments at age 72.)
    (1) For nonpayment of benefits under this section, it is necessary 
that the beneficiary be an alien and while an alien be outside the 
United States for more than six full consecutive calendar months. In 
determining whether at the time of a beneficiary's initial entitlement 
to benefits he has been outside the United States for a period exceeding 
six full consecutive calendar months, not more than the six calendar 
months immediately preceding the month of initial entitlement may be 
considered. For the purposes of this section, outside the United States 
means outside the territorial boundaries of the 50 States, the District 
of Columbia, Puerto Rico, the Virgin Islands of the United States, Guam, 
and American Samoa.
    (2) Effective with 6-month periods beginning after January 2, 1968, 
after an alien has been outside the United States for any period of 30 
consecutive days, he is deemed to be outside the United States 
continuously until he has returned to the United States and remained in 
the United States for a period of 30 consecutive days.
    (3) Payments which have been discontinued pursuant to the provisions 
of this section will not be resumed until the alien beneficiary has been 
in the United States for a full calendar month. A full calendar month 
includes 24 hours of each day of the calendar month.
    (4) Nonpayment of benefits to an individual under this section does 
not cause nonpayment of benefits to other persons receiving benefits 
based on the individual's earnings record.

    Example: R, an alien, leaves the United States on August 15, 1967, 
and returns on February 1, 1968. He leaves again on February 15, 1968, 
and does not return until May 15, 1968, when he spends 1 day in the 
United States. He has been receiving monthly benefits since July 1967.
    R's first 6-month period of absence begins September 1, 1967. Since 
this period begins before January 2, 1968, his visit (Feb. 1, 1968,

[[Page 183]]

to Feb. 15, 1968) to the United States for less than 30 consecutive days 
is sufficient to break this 6-month period.
    R's second 6-month period of absence begins March 1, 1968. Since 
this period begins after January 2, 1968, and he was outside the United 
States for 30 consecutive days, he must return and spend 30 consecutive 
days in the United States prior to September 1, 1968, to prevent 
nonpayment of benefits beginning September 1968. If R fails to return to 
the United States for 30 consecutive days prior to September 1, 1968, 
payments will be discontinued and will not be resumed until R spends at 
least 1 full calendar month in the United States.

    (b) When nonpayment provisions do not apply. The provisions 
described in paragraph (a) of this section do not apply, subject to the 
limitations in paragraph (c) of this section, to a benefit for any month 
if:
    (1) The individual was, or upon application would have been, 
entitled to a monthly benefit for December 1956, based upon the same 
earnings record; or
    (2)(i) The individual upon whose earnings the benefit is based, 
before that month, has resided in the United States for a period or 
periods aggregating 10 years or more or has earned not less than 40 
quarters of coverage;
    (ii) Except that, effective with the month of July 1968, the 
provisions of paragraph (b)(2)(i) of this section do not apply if (a) 
the beneficiary is a citizen of a country having a social insurance or 
pension system which meets the conditions described in paragraphs (b)(7) 
(i), (ii), and (iii) of this section but does not meet the condition 
described in paragraph (b)(7)(iv) of this section, or (b) the 
beneficiary is a citizen of a country that has no social insurance or 
pension system of general application if at any time within 5 years 
prior to January 1968 (or the first month after December 1967 in which 
his benefits are subject to suspension pursuant to paragraph (a) of this 
section) payments to individuals residing in such country were withheld 
by the Treasury Department under the first section of the Act of October 
9, 1940 (31 U.S.C. 123) (see paragraph (c) of this section);
    (iii) For purposes of this subparagraph a period of residence begins 
with the day the insured individual arrives in the United States with 
the intention of establishing at least a temporary home here; it 
continues so long as he maintains an attachment to an abode in the 
United States, accompanied by actual physical presence in the United 
States for a significant part of the period; and ends with the day of 
departure from the United States with the intention to reside elsewhere; 
or
    (3) The individual is outside the United States while in the active 
military or naval service of the United States; or
    (4) The individual on whose earnings the benefit is based died 
before that month and:
    (i) Death occurred while the individual was on active duty or 
inactive duty training as a member of a uniformed service, or
    (ii) Death occurred after the individual was discharged or released 
from a period of active duty or inactive duty training as a member of a 
uniformed service, and the Administrator of Veterans' Affairs 
determines, and certifies to the Commissioner, that the discharge or 
release was under conditions other than dishonorable and that death was 
as a result of a disease or injury incurred or aggravated in line of 
duty while on active duty or inactive duty training; or
    (5) The individual on whose earnings record the benefit is based 
worked in service covered by the Railroad Retirement Act, and such work 
is treated as employment covered by the Social Security Act under the 
provisions described in subpart O of this part; or
    (6) The nonpayment of monthly benefits under the provisions 
described in paragraph (a) of this section would be contrary to a treaty 
obligation of the United States in effect on August 1, 1956 (see Sec. 
404.463(b)); or
    (7) The individual is a citizen of a foreign country that the 
Commissioner determines has in effect a social insurance or pension 
system (see Sec. 404.463) which meets all of the following conditions:
    (i) Such system pays periodic benefits or the actuarial equivalent 
thereof; and
    (ii) The system is of general application; and

[[Page 184]]

    (iii) Benefits are paid in this system on account of old age, 
retirement, or death; and
    (iv) Individuals who are citizens of the United States but not 
citizens of the foreign country and who qualify for such benefits are 
permitted to receive benefits without restriction or qualification, at 
their full rate, or the actuarial equivalent thereof, while outside of 
the foreign country and without regard to the duration of their absence 
therefrom.
    (c) Nonpayment of monthly benefits to aliens residing in certain 
countries--(1) Benefits for months after June 1968. Notwithstanding the 
provisions of paragraphs (a) and (b) of this section, no monthly benefit 
may be paid for any month after June 1968 to any individual who is not a 
citizen or national of the United States for any month such individual 
resides in a country to which payments to individuals in such country 
are being withheld by the Treasury Department pursuant to the first 
section of the Act of October 9, 1940 (31 U.S.C. 123).
    (2) Benefits for months before July 1968. If any benefits which an 
individual who is not a citizen or national of the United States was 
entitled to receive under title II of the Social Security Act are, on 
June 30, 1968, being withheld by the Treasury Department pursuant to the 
first section of the Act of October 9, 1940 (31 U.S.C. 123), upon 
removal of the restriction such benefits, payable to such individual for 
months after the month in which the determination by the Treasury 
Department that the benefits should be so withheld was made, shall not 
be paid--
    (i) To any person other than such individual, or, if such individual 
dies before such benefits can be paid, to any person other than an 
individual who was entitled for the month in which the deceased 
individual died (with the application of section 202(j)(1) of the Social 
Security Act) to a monthly benefit under title II of such Act on the 
basis of the same wages and self-employment income as such deceased 
individual; or
    (ii) In excess of an amount equal to the amount of the last 12 
months' benefits that would have been payable to such individual.
    (3) List of countries under Treasury Department alien payment 
restriction. Pursuant to the provisions of the first section of the Act 
of October 9, 1940 (31 U.S.C. 123) the Treasury Department is currently 
withholding payments to individuals residing in the following countries. 
Further additions to or deletions from the list of countries will be 
published in the Federal Register.

Cuba
Democratic Kampuchea (formerly Cambodia)
North Korea
Vietnam

    (d) Nonpayment of monthly benefits to certain aliens entitled to 
benefits on a worker's earnings record. An individual who after December 
31, 1984 becomes eligible for benefits on the earnings record of a 
worker for the first time, is an alien, has been outside the United 
States for more than 6 consecutive months, and is qualified to receive a 
monthly benefit by reason of the provisions of paragraphs (b)(2), 
(b)(3), (b)(5), or (b)(7) of this section, must also meet a U.S. 
residence requirement described in this section to receive benefits:
    (1) An alien entitled to benefits as a child of a living or deceased 
worker--
    (i) Must have resided in the U.S. for 5 or more years as the child 
of the parent on whose earnings record entitlement is based; or
    (ii) The parent on whose earnings record the child is entitled and 
the other parent, if any, must each have either resided in the United 
States for 5 or more years or died while residing in the U.S.
    (2) An alien who meets the requirements for child's benefits based 
on paragraph (d)(1) of this section above, whose status as a child is 
based on an adoptive relationship with the living or deceased worker, 
must also--
    (i) Have been adopted within the United States by the worker on 
whose earnings record the child's entitlement is based; and
    (ii) Have lived in the United States with, and received one-half 
support from, the worker for a period, beginning prior to the child's 
attainment of age 18, of
    (A) At least one year immediately before the month in which the 
worker became eligible for old-age benefits or

[[Page 185]]

disability benefits or died (whichever occurred first), or
    (B) If the worker had a period of disability which continued until 
the worker's entitlement to old-age or disability benefits or death, at 
least one year immediately before the month in which that period of 
disability began.
    (3) An alien entitled to benefits as a spouse, surviving spouse, 
divorced spouse, surviving divorced spouse, or surviving divorced mother 
or father must have resided in the United States for 5 or more years 
while in a spousal relationship with the person on whose earnings record 
the entitlement is based. The spousal relationship over the required 
period can be that of wife, husband, widow, widower, divorced wife, 
divorced husband, surviving divorced wife, surviving divorced husband, 
surviving divorced mother, surviving divorced father, or a combination 
of two or more of these categories.
    (4) An alien who is entitled to parent's benefits must have resided 
in the United States for 5 or more years as a parent of the person on 
whose earnings record the entitlement is based.
    (5) Individuals eligible for benefits before January 1, 1985 
(including those eligible for one category of benefits on a particular 
worker's earnings record after December 31, 1984, but also eligible for 
a different category of benefits on the same worker's earnings record 
before January 1, 1985), will not have to meet the residency 
requirement.
    (6) Definitions applicable to paragraph (d) of this section are as 
follows:
    Eligible for benefits means that an individual satisfies the 
criteria described in subpart D of this part for benefits at a 
particular time except that the person need not have applied for those 
benefits at that time.
    Other parent for purposes of paragraph (d)(1)(ii) of this section 
means any other living parent who is of the opposite sex of the worker 
and who is the adoptive parent by whom the child was adopted before the 
child attained age 16 and who is or was the spouse of the person on 
whose earnings record the child is entitled; or the natural mother or 
natural father of the child; or the step-parent of the child by a 
marriage, contracted before the child attained age 16, to the natural or 
adopting parent on whose earnings record the child is entitled. (Note: 
Based on this definition, a child may have more than one living other 
parent. However, the child's benefit will be payable for a month if in 
that month he or she has one other parent who had resided in the U.S. 
for at least 5 years.)
    Resided in the United States for satisfying the residency 
requirement means presence in the United States with the intention of 
establishing at least a temporary home. A period of residence begins 
upon arrival in the United States with that intention and continues so 
long as an attachment to an abode in the United States is maintained, 
accompanied by actual physical presence in the United States for a 
significant part of the period, and ending the day of departure from the 
United States with the intention to reside elsewhere. The period need 
not have been continuous and the requirement is satisfied if the periods 
of U.S. residence added together give a total of 5 full years.
    (7) The provisions described in paragraph (d) of this section shall 
not apply if the beneficiary is a citizen or resident of a country with 
which the United States has a totalization agreement in force, except to 
the extent provided by that agreement.

[32 FR 19159, Dec. 20, 1967, as amended at 34 FR 13366, Aug. 19, 1969; 
52 FR 8249, Mar. 17, 1987; 52 FR 26145, July 13, 1987; 60 FR 17445, Apr. 
6, 1995; 62 FR 38450, July 18, 1997]



Sec. 404.461  Nonpayment of lump sum after death of alien outside United 
States for more than 6 months.

    Where an individual dies outside the United States after January 
1957 and no monthly benefit was or could have been paid to him for the 
month preceding the month in which he died because of the provisions 
described in Sec. 404.460, no lump-sum death payment may be made upon 
the basis of the individual's earnings record.



Sec. 404.462  Nonpayment of hospital and medical insurance benefits of 
alien outside United States for more than 6 months.

    No payments may be made under part A (hospital insurance benefits) 
of

[[Page 186]]

title XVIII for items or services furnished to an individual in any 
month for which the prohibition described in Sec. 404.460 against 
payment of benefits to an individual outside the United States for more 
than six full consecutive calendar months is applicable (or would be if 
he were entitled to any such benefits). Also, no payments may be made 
under part B (supplementary medical insurance benefits) of title XVIII 
for expenses incurred by an individual during any month the individual 
is not paid a monthly benefit by reason of the provisions described in 
Sec. 404.460 or for which no monthly benefit would be paid if he were 
otherwise entitled thereto.



Sec. 404.463  Nonpayment of benefits of aliens outside the United States; 

``foreign social insurance system,'' and ``treaty obligation'' exceptions 
defined.

    (a) Foreign social insurance system exception. The following 
criteria are used to evaluate the social insurance or pension system of 
a foreign country to determine whether the exception described in Sec. 
404.460(b) to the alien nonpayment provisions applies:
    (1) Social insurance or pension system. A social insurance system 
means a governmental plan which pays benefits as an earned right, on the 
basis either of contributions or work in employment covered under the 
plan, without regard to the financial need of the beneficiary. However, 
a plan of this type may still be regarded as a social insurance system 
though it may provide, in a subordinate fashion, for a supplemental 
payment based on need. A pension system means a governmental plan which 
pays benefits based on residence or age, or a private employer's plan 
for which the government has set up uniform standards for coverage, 
contributions, eligibility, and benefit amounts provided that, in both 
of these types of plans, the financial need of the beneficiary is not a 
consideration.
    (2) In effect. The social insurance or pension system of the foreign 
country must be in effect. This means that the foreign social insurance 
or pension system is in full operation with regard to taxes (or 
contributions) and benefits, or is in operation with regard to taxes (or 
contributions), and provision is made for payments to begin immediately 
upon the expiration of the period provided in the law for acquiring 
earliest eligibility. It is not in effect if the law leaves the 
beginning of operation to executive or other administrative action; nor 
is it in effect if the law has been temporarily suspended.
    (3) General application. The term of general application means that 
the social insurance or pension system (or combination of systems) 
covers a substantial portion of the paid labor force in industry and 
commerce, taking into consideration the industrial classification and 
size of the paid labor force and the population of the country, as well 
as occupational, size of employer, and geographical limitations on 
coverage.
    (4) Periodic benefit or actuarial equivalent. The term periodic 
benefit means a benefit payable at stated regular intervals of time such 
as weekly, biweekly, or monthly. Actuarial equivalent of a periodic 
benefit means the commutation of the value of the periodic benefit into 
a lump-sum payment, taking life expectancy and interest into account.
    (5) Benefits payable on account of old age, retirement, or death. 
The requirement that benefits be payable on account of old age, 
retirement, or death, is satisfied if the foreign social insurance plan 
or system includes provision for payment of benefits to aged or retired 
persons and to dependents and survivors of covered workers. The 
requirement is also met where the system pays benefits based only on old 
age or retirement. The requirement is not met where the only benefits 
payable are workmen's compensation payments, cash sickness payments, 
unemployment compensation payments, or maternity insurance benefits.
    (6) System under which U.S. citizens who qualify may receive payment 
while outside the foreign country. The foreign social insurance or 
pension system must permit payments to qualified U.S. citizens while 
outside such foreign country, regardless of the duration of their 
absence therefrom and must make the payments without restriction or 
qualification to these U.S. citizens at full rate, or at the full 
actuarial value. The foreign system is considered to pay benefits at the 
full rate if the U.S. citizen receives the full benefit

[[Page 187]]

rate in effect for qualified beneficiaries at the time of his award, 
whether he is then inside or outside the paying country; and he 
continues to receive the same benefit amount so long as he remains 
outside that country, even though he may not receive any increases going 
into effect after his award provided that in those other countries in 
which such increases are denied to beneficiaries, they are denied to all 
beneficiaries including nationals of the paying country.
    (7) List of countries which meet the social insurance or pension 
system exception in section 202(t)(2) of the act. The following 
countries have been found to have in effect a social insurance or 
pension system which meets the requirements of section 202(t)(2) of the 
Act. Unless otherwise specified, each country meets such requirements 
effective January 1957. The effect of these findings is that 
beneficiaries who are citizens of such countries and not citizens of the 
United States may be paid benefits regardless of the duration of their 
absence from the United States unless for months beginning after June 
1968 they are residing in a country to which payments to individuals are 
being withheld by the Treasury Department pursuant to the first section 
of the Act of October 9, 1940 (31 U.S.C. 123). Further additions to or 
deletions from the list of countries will be published in the Federal 
Register.

Antigua and Barbuda (effective November 1981)
Argentina (effective July 1968)
Austria (except from January 1958 through June 1961)
Bahamas, Commonwealth of the (effective October 1974)
Barbados (effective July 1968)
Belgium (effective July 1968)
Belize (effective September 1981)
Bolivia
Brazil
Burkina Faso, Republic of (formerly Upper Volta)
Canada (effective January 1966)
Chile
Colombia (effective January 1967)
Costa Rica (effective May 1962)
Cyprus (effective October 1964)
Czechoslovakia (effective July 1968)
Denmark (effective April 1964)
Dominica (effective November 1978)
Dominican Republic (effective November 1984)
Ecuador
El Salvador (effective January 1969)
Finland (effective May 1968)
France (effective June 1968)
Gabon (effective June 1964)
Grenada (effective April 1983)
Guatemala (effective October 1978)
Guyana (effective September 1969)
Iceland (effective December 1980)
Ivory Coast
Jamaica (effective July 1968)
Liechtenstein (effective July 1968)
Luxembourg
Malta (effective September 1964)
Mexico (effective March 1968)
Monaco
Netherlands (effective July 1968)
Nicaragua (effective May 1986)
Norway (effective June 1968)
Panama
Peru (effective February 1969)
Philippines (effective June 1960)
Poland (effective March 1957)
Portugal (effective May 1968)
San Marino (effective January 1965)
Spain (effective May 1966)
St. Christopher and Nevis (effective September 1983)
St. Lucia (effective August 1984)
Sweden (effective July 1966)
Switzerland (effective July 1968)
Trinidad and Tobago (effective July 1975)
Trust Territory of the Pacific Islands (Micronesia) (effective July 
1976)
Turkey
United Kingdom
Western Samoa (effective August 1972)
Yugoslavia
Zaire (effective July 1961) (formerly Congo (Kinshasa))

    (b) The ``treaty obligation'' exception. It is determined that the 
Treaties of Friendship, Commerce, and Navigation now in force between 
the United States and the Federal Republic of Germany, Greece, the 
Republic of Ireland, Israel, Italy, and Japan, respectively, create 
treaty obligations precluding the application of Sec. 404.460(a) to 
citizens of such countries; and that the Treaty of Friendship, Commerce, 
and Navigation now in force between the United States and the Kingdom of 
the Netherlands creates treaty obligations precluding the application of 
Sec. 404.460(a) to citizens of that country with respect to monthly 
survivors benefits only. There is no treaty obligation that would 
preclude the application of Sec. 404.460(a) to citizens of any country 
other than those listed above.

[32 FR 19159, Dec. 20, 1967, as amended at 43 FR 2628, Jan. 18, 1978; 52 
FR 8249, Mar. 17, 1987]

[[Page 188]]



Sec. 404.464  Nonpayment of benefits where individual is deported; 

prohibition against payment of lump sum based on deported individual's 
earnings records.

    (a) Old-age or disability insurance benefits. When an individual is 
deported under the provisions of section 241(a) of the Immigration and 
Nationality Act (other than under paragraph (1)(C) or (1)(E) thereof), 
no old-age or disability insurance benefit is payable to the individual 
for any month occurring after the month in which the Commissioner is 
notified by the Attorney General of the United States that the 
individual has been deported and before the month in which the 
individual is thereafter lawfully admitted to the United States for 
permanent residence. An individual is considered lawfully admitted for 
permanent residence as of the month he enters the United States with 
permission to reside here permanently.
    (b) Other monthly benefits. If, under the provisions described in 
paragraph (a) of this section, no old-age or disability insurance 
benefit is payable to an individual for a month, no monthly insurance 
benefit is payable for that month, based upon the individual's earnings 
record, to any other person who is not a citizen of the United States 
and who is outside the United States for any part of that month.
    (c) Lump sum death payment. No lump-sum death payment is payable on 
the basis of the earnings of an individual deported under section 241(a) 
of the Immigration and Nationality Act (other than paragraph (1)(C) or 
(1)(E) thereof) if the individual dies in or after the month in which 
the Commissioner receives notice that he has been deported and before 
the month in which the individual is thereafter lawfully admitted to the 
United States for permanent residence.

[32 FR 19159, Dec. 20, 1967, as amended at 58 FR 64889, Dec. 10, 1993; 
62 FR 38450, July 18, 1997]



Sec. 404.465  Conviction for subversive activities; effect on monthly 
benefits and entitlement to hospital insurance benefits.

    (a) Effect of conviction. Where an individual is convicted of any 
offense (committed after August 1, 1956) under chapter 37 (relating to 
espionage and censorship), chapter 105 (relating to sabotage), or 
chapter 115 (relating to treason, sedition, and subversive activities) 
of title 18 U.S.C., or under section 4, 112, or 113 of the Internal 
Security Act of 1950, as amended, the court, in addition to all other 
penalties provided by law, may order that, in determining whether any 
monthly benefit is payable to the individual for the month in which he 
is convicted or for any month thereafter, and in determining whether the 
individual is entitled to hospital insurance benefits under part A of 
title XVIII for any such month, and in determining the amount of the 
benefit for that month, the following are not to be taken into account:
    (1) Any wages paid to such individual, or to any other individual, 
in the calendar quarter in which such conviction occurred or in any 
prior calendar quarter, and
    (2) Any net earnings from self-employment derived by the individual, 
or any other individual, during the taxable year in which the conviction 
occurred or during any prior taxable year.
    (b) Recalculation of benefit. When notified by the Attorney General 
that the additional penalty as described in paragraph (a) of this 
section has been imposed against any individual entitled to benefits 
under section 202 or section 223 of the Act (see subpart D), the 
Administration, for the purposes of determining the individual's 
entitlement to such benefits as of the month in which convicted and the 
amount of the benefit, will exclude the applicable wages and net 
earnings in accordance with the order of the court.
    (c) Effect of pardon. In the event that an individual, with respect 
to whom the additional penalty as described in paragraph (a) of this 
section has been imposed, is granted a pardon of the offense by the 
President of the United States, such penalty is not applied in 
determining such individual's entitlement to benefits, and the amount of 
such benefit, for any month beginning after the date on which the pardon 
is granted.

[[Page 189]]



Sec. 404.466  Conviction for subversive activities; effect on enrollment 
for supplementary medical insurance benefits.

    An individual may not enroll under part B (supplementary medical 
insurance benefits) of title XVIII if he has been convicted of any 
offense described in Sec. 404.465.



Sec. 404.467  Nonpayment of benefits; individual entitled to disability 

insurance benefits or childhood disability benefits based on statutory 
blindness is engaging in substantial gainful activity.

    (a) Disability insurance benefits. An individual who has attained 
age 55 and who meets the definition of disability for disability 
insurance benefits purposes based on statutory blindness, as defined in 
Sec. 404.1581, may be entitled to disability insurance benefits for 
months in which he is engaged in certain types of substantial gainful 
activity. No payment, however, may be made to the individual or to 
beneficiaries entitled to benefits on his earnings record for any month 
in which such individual engages in any type of substantial gainful 
activity.
    (b) Childhood disability benefits. An individual who has attained 
age 55 and who meets the definition of disability prescribed in Sec. 
404.1583 for childhood disability benefits on the basis of statutory 
blindness may be entitled to childhood disability benefits for months in 
which he engages in certain types of substantial gainful activity. 
However, no payment may be made to such individual for any month after 
December 1972 in which such individual engages in substantial gainful 
activity.

[39 FR 43715, Dec. 18, 1974, as amended at 51 FR 10616, Mar. 28, 1986]



Sec. 404.468  Nonpayment of benefits to prisoners.

    (a) General. No monthly benefits will be paid to any individual for 
any month any part of which the individual is confined in a jail, 
prison, or other penal institution or correctional facility for 
conviction of a felony. This rule applies to disability benefits (Sec. 
404.315) and child's benefits based on disability (Sec. 404.350) 
effective with benefits payable for months beginning on or after October 
1, 1980. For all other monthly benefits, this rule is effective with 
benefits payable for months beginning on or after May 1, 1983. However, 
it applies only to the prisoner; benefit payments to any other person 
who is entitled on the basis of the prisoner's wages and self-employment 
income are payable as though the prisoner were receiving benefits.
    (b) Felonious offenses. An offense will be considered a felony if--
    (1) It is a felony under applicable law: or
    (2) In a jurisdiction which does not classify any crime as a felony, 
it is an offense punishable by death or imprisonment for a term 
exceeding one year.
    (c) Confinement. In general, a jail, prison, or other penal 
institution or correctional facility is a facility which is under the 
control and jurisdiction of the agency in charge of the penal system or 
in which convicted criminals can be incarcerated. Confinement in such a 
facility continues as long as the individual is under a sentence of 
confinement and has not been released due to parole or pardon. An 
individual is considered confined even though he or she is temporarily 
or intermittently outside of that facility (e.g., on work release, 
attending school, or hospitalized).
    (d) Vocational rehabilitation exception. The nonpayment provision of 
paragraph (a) of this section does not apply if a prisoner who is 
entitled to benefits on the basis of disability is actively and 
satisfactorily participating in a rehabilitation program which has been 
specifically approved for the individual by court of law. In addition, 
the Commissioner must determine that the program is expected to result 
in the individual being able to do substantial gainful activity upon 
release and within a reasonable time. No benefits will be paid to the 
prisoner for any month prior to the approval of the program.

[49 FR 48182, Dec. 11, 1984, as amended at 62 FR 38450, July 18, 1997]



Sec. 404.469  Nonpayment of benefits where individual has not furnished 
or applied for a Social Security number.

    No monthly benefits will be paid to an entitled individual unless he 
or she

[[Page 190]]

either furnishes to the Social Security Administration (SSA) 
satisfactory proof of his or her Social Security number, or, if the 
individual has not been assigned a number, he or she makes a proper 
application for a number (see Sec. 422.103). An individual submits 
satisfactory proof of his or her Social Security number by furnishing to 
SSA the number and sufficient additional information that can be used to 
determine whether that Social Security number or another number has been 
assigned to the individual. Sufficient additional information may 
include the entitled individual's date and place of birth, mother's 
maiden name, and father's name. If the individual does not know his or 
her Social Security number, SSA will use this additional information to 
determine the Social Security number, if any, that it assigned to the 
individual. This rule applies to individuals who become entitled to 
benefits beginning on or after June 1, 1989.

[56 FR 41789, Aug. 23, 1991]



Sec. 404.470  Nonpayment of disability benefits due to noncompliance with 
rules regarding treatment for drug addiction or alcoholism.

    (a) Suspension of monthly benefits. (1) For an individual entitled 
to benefits based on a disability (Sec. 404.1505) and for whom drug 
addiction or alcoholism is a contributing factor material to the 
determination of disability (as described in Sec. 404.1535), monthly 
benefits will be suspended beginning with the first month after we 
notify the individual in writing that he or she has been determined not 
to be in compliance with the treatment requirements for such individuals 
(Sec. 404.1536).
    (2) This rule applies to all individuals entitled to disability 
benefits (Sec. 404.315), widow(er)'s benefits (Sec. 404.335), and 
child's benefits based on a disability (Sec. 404.350) effective with 
benefits paid in months beginning on or after March 1, 1995.
    (3) Benefit payments to any other person who is entitled on the 
basis of a disabled wage earner's entitlement to disability benefits are 
payable as though the disabled wage earner were receiving benefits.
    (b) Resumption of monthly benefits. The payment of benefits may be 
resumed only after an individual demonstrates and maintains compliance 
with appropriate treatment requirements for:
    (1) 2 consecutive months for the first determination of 
noncompliance;
    (2) 3 consecutive months for the second determination of 
noncompliance; and
    (3) 6 consecutive months for the third and all subsequent 
determinations of noncompliance.
    (c) Termination of benefits. (1) A suspension of benefit payments 
due to noncompliance with the treatment requirements for 12 consecutive 
months will result in termination of benefits effective with the first 
month following the 12th month of suspension of benefits.
    (2) Benefit payments to any other person who is entitled on the 
basis of a disabled wage earner's entitlement to disability benefits are 
payable as though the disabled wage earner were receiving benefits.

[60 FR 8146, Feb. 10, 1995]



Sec. 404.480  Paying benefits in installments: Drug addiction or alcoholism.

    (a) General. For disabled beneficiaries who receive benefit payments 
through a representative payee because drug addiction or alcoholism is a 
contributing factor material to the determination of disability (as 
described in Sec. 404.1535), certain amounts due the beneficiary for a 
past period will be paid in installments. The amounts subject to payment 
in installments include:
    (1) Benefits due but unpaid which accrued prior to the month payment 
was effectuated;
    (2) Benefits due but unpaid which accrued during a period of 
suspension for which the beneficiary was subsequently determined to have 
been eligible; and
    (3) Any adjustment to benefits which results in an accrual of unpaid 
benefits.
    (b) Installment formula. Except as provided in paragraph (c) of this 
section, the amount of the installment payment in any month is limited 
so that the sum of (1) the amount due for a

[[Page 191]]

past period (and payable under paragraph (a) of this section) paid in 
such month and (2) the amount of any benefit due for the preceding month 
under such entitlement which is payable in such month, does not exceed 
two times the amount of the beneficiary's benefit payment for the 
preceding month. In counting the amount of the beneficiary's benefit 
payment for the previous month, no reductions or deductions under this 
title are taken into account.
    (c) Exception to installment limitation. An exception to the 
installment payment limitation in paragraph (b) of this section can be 
granted for the first month in which a beneficiary accrues benefit 
amounts subject to payment in installments if the beneficiary has unpaid 
housing expenses which result in a high risk of homelessness for the 
beneficiary. In that case, the benefit payment may be increased by the 
amount of the unpaid housing expenses so long as that increase does not 
exceed the amount of benefits which accrued during the most recent 
period of nonpayment. We consider a person to be at risk of homelessness 
if continued nonpayment of the outstanding housing expenses is likely to 
result in the person losing his or her place to live or if past 
nonpayment of housing expenses has resulted in the person having no 
appropriate personal place to live. In determining whether this 
exception applies, we will ask for evidence of outstanding housing 
expenses that shows that the person is likely to lose or has already 
lost his or her place to live. For purposes of this section, 
homelessness is the state of not being under the control of any public 
institution and having no appropriate personal place to live. Housing 
expenses include charges for all items required to maintain shelter (for 
example, mortgage payments, rent, heating fuel, and electricity).
    (d) Payment through a representative payee. If the beneficiary does 
not have a representative payee, payment of amounts subject to 
installments cannot be made until a representative payee is selected.
    (e) Underpaid beneficiary no longer entitled. In the case of a 
beneficiary who is no longer currently entitled to monthly payments, but 
to whom amounts defined in paragraph (a) of this section are still 
owing, we will treat such beneficiary's monthly benefit for the last 
month of entitlement as the beneficiary's benefit for the preceding 
month and continue to make installment payments of such benefits through 
a representative payee.
    (f) Beneficiary currently not receiving Social Security benefits 
because of suspension for noncompliance with treatment. If a beneficiary 
is currently not receiving benefits because his or her benefits have 
been suspended for noncompliance with treatment (as defined in Sec. 
404.1536), the payment of amounts under paragraph (a) of this section 
will stop until the beneficiary has demonstrated compliance with 
treatment as described in Sec. 404.470 and will again commence with the 
first month the beneficiary begins to receive benefit payments.
    (g) Underpaid beneficiary deceased. Upon the death of a beneficiary, 
any remaining unpaid amounts as defined in paragraph (a) of this section 
will be treated as underpayments in accordance with Sec. 404.503(b).

[60 FR 8146, Feb. 10, 1995]



Subpart F_Overpayments, Underpayments, Waiver of Adjustment or Recovery 
         of Overpayments, and Liability of a Certifying Officer

    Authority: Secs. 204, 205(a), and 702(a)(5) of the Social Security 
Act (42 U.S.C. 404, 405(a), and 902(a)); 31 U.S.C. 3720A.



Sec. 404.501  General applicability of section 204 of the Act.

    (a) In general. Section 204 of the Act provides for adjustment as 
set forth in Sec. Sec. 404.502 and 404.503, in cases where an 
individual has received more or less than the correct payment due under 
title II of the Act. As used in this subpart, the term overpayment 
includes a payment in excess of the amount due under title II of the 
Act, a payment resulting from the failure to impose deductions or to 
suspend or reduce benefits under sections 203, 222(b), 224, and 228(c), 
and (d), and (e) of the Act (see subpart E of this part), a payment 
pursuant to section 205(n) of the Act in an

[[Page 192]]

amount in excess of the amount to which the individual is entitled under 
section 202 or 223 of the Act, a payment resulting from the failure to 
terminate benefits, and a payment where no amount is payable under title 
II of the Act. The term underpayment as used in this subpart refers only 
to monthly insurance benefits and includes nonpayment where some amount 
of such benefits was payable. An underpayment may be in the form of an 
accrued unpaid benefit amount for which no check has been drawn or in 
the form of an unnegotiated check payable to a deceased individual. The 
provisions for adjustment also apply in cases where through error:
    (1) A reduction required under section 202(j)(1), 202(k)(3), 203(a), 
or 205(n) of the Act is not made, or
    (2) An increase or decrease required under section 202(d)(2), or 215 
(f) or (g) of the Act is not made, or
    (3) A deduction required under section 203(b) (as may be modified by 
the provisions of section 203(h)), 203(c), 203(d), 203(i), 222(b), or 
223(a)(1)(D) of the Act or section 907 of the Social Security Amendments 
of 1939 is not made, or
    (4) A suspension required under section 202(n) or 202(t) of the Act 
is not made, or
    (5) A reduction under section 202(q) of the Act is not made, or
    (6) A reduction, increase, deduction, or suspension is made which is 
either more or less than required, or
    (7) A payment in excess of the amount due under title XVIII of the 
Act was made to or on behalf of an individual (see 42 CFR 405.350 
through 405.351) entitled to benefits under title II of the Act, or
    (8) A payment of past due benefits is made to an individual and such 
payment had not been reduced by the amount of attorney's fees payable 
directly to an attorney under section 206 of the Act (see Sec. 
404.977).
    (9) A reduction under Sec. 404.408b is made which is either more or 
less than required.
    (b) Payments made on the basis of an erroneous report of death. Any 
monthly benefit or lump sum paid under title II of the Act on the basis 
of an erroneous report by the Department of Defense of the death of an 
individual in the line of duty while such individual was a member of the 
uniformed services (as defined in section 210(m) of the Act) on active 
duty (as defined in section 210(l) of the Act) is deemed a correct 
payment for any month prior to the month such Department notifies the 
Administration that such individual is alive.
    (c) Payments made by direct deposit to a financial institution. When 
a payment in excess of the amount due under title II of the Act is made 
by direct deposit to a financial institution to or on behalf of an 
individual who has died, and the financial institution credits the 
payment to a joint account of the deceased individual and another person 
who was entitled to a monthly benefit on the basis of the same earnings 
record as the deceased individual for the month before the month in 
which the deceased individual died, the amount of the payment in excess 
of the correct amount will be an overpayment to the other person.

[34 FR 14887, Sept. 27, 1969, as amended at 44 FR 34942, June 18, 1979; 
47 FR 4988, Feb. 3, 1982; 48 FR 46149, Oct. 11, 1983; 55 FR 7313, Mar. 
1, 1990]



Sec. 404.502  Overpayments.

    Upon determination that an overpayment has been made, adjustments 
will be made against monthly benefits and lump sums as follows:
    (a) Individual overpaid is living. (1) If the individual to whom an 
overpayment was made is at the time of a determination of such 
overpayment entitled to a monthly benefit or a lump sum under title II 
of the Act, or at any time thereafter becomes so entitled, no benefit 
for any month and no lump sum is payable to such individual, except as 
provided in paragraphs (c) and (d) of this section, until an amount 
equal to the amount of the overpayment has been withheld or refunded. 
Such adjustments will be made against any monthly benefit or lump sum 
under title II of the Act to which such individual is entitled whether 
payable on the basis of such individual's earnings or the earnings of 
another individual.
    (2) If any other individual is entitled to benefits for any month on 
the basis of the same earnings as the overpaid individual, except as 
adjustment is to

[[Page 193]]

be effected pursuant to paragraphs (c) and (d) of this section by 
withholding a part of the monthly benefit of either the overpaid 
individual or any other individual entitled to benefits on the basis of 
the same earnings, no benefit for any month will be paid on such 
earnings to such other individual until an amount equal to the amount of 
the overpayment has been withheld or refunded.
    (b) Individual overpaid dies before adjustment. If an overpaid 
individual dies before adjustment is completed under the provisions of 
paragraph (a) of this section, no lump sum and no subsequent monthly 
benefit will be paid on the basis of earnings which were the basis of 
the overpayment to such deceased individual until full recovery of the 
overpayment has been effected, except as provided in paragraphs (c) and 
(d) of this section or under Sec. 404.515. Such recovery may be 
effected through:
    (1) Payment by the estate of the deceased overpaid individual,
    (2) Withholding of amounts due the estate of such individual under 
title II of the Act,
    (3) Withholding a lump sum or monthly benefits due any other 
individual on the basis of the same earnings which were the basis of the 
overpayment to the deceased overpaid individual, or
    (4) Any combination of the amount above.
    (c) Adjustment by withholding part of a monthly benefit. (1) Where 
it is determined that withholding the full amount each month would 
defeat the purpose of title II, i.e., deprive the person of income 
required for ordinary and necessary living expenses (see Sec. 404.508), 
adjustment under paragraphs (a) and (b) of this section may be effected 
by withholding an amount of not less than $10 of the monthly benefit 
payable to an individual.
    (2) Adjustment as provided by this paragraph will not be available 
if the overpayment was caused by the individual's intentional false 
statement or representation, or willful concealment of, or deliberate 
failure to furnish, material information. In such cases, recovery of the 
overpayment will be accomplished as provided in paragraph (a) of this 
section.
    (d) Individual overpaid enrolled under supplementary insurance plan. 
Notwithstanding the provisions of paragraphs (a), (b), and (c) of this 
section, if the individual liable for the overpayment is an enrollee 
under part B of title XVIII of the Act and the overpayment was not 
caused by such individual's intentional false statement or 
representation, or willful concealment of, or deliberate failure to 
furnish, material information, an amount of such individual's monthly 
benefit which is equal to his obligation for supplementary medical 
insurance premiums will be applied toward payment of such premiums, and 
the balance of the monthly benefit will be applied toward recovery of 
the overpayment. Further adjustment with respect to such balance may be 
made if the enrollee so requests and meets the conditions of paragraph 
(c) of this section.

[35 FR 5943, Apr. 10, 1970, as amended at 44 FR 20653, Apr. 6, 1979]



Sec. 404.502a  Notice of right to waiver consideration.

    Whenever an initial determination is made that more than the correct 
amount of payment has been made, and we seek adjustment or recovery of 
the overpayment, the individual from whom we are seeking adjustment or 
recovery is immediately notified. The notice includes:
    (a) The overpayment amount and how and when it occurred;
    (b) A request for full, immediate refund, unless the overpayment can 
be withheld from the next month's benefit;
    (c) The proposed adjustment of benefits if refund is not received 
within 30 days after the date of the notice and adjustment of benefits 
is available;
    (d) An explanation of the availability of a different rate of 
withholding when full withholding is proposed, installment payments when 
refund is requested and adjustment is not currently available, and/or 
cross-program recovery when refund is requested and the individual is 
receiving another type of payment from SSA (language about cross-program 
recovery is not included

[[Page 194]]

in notices sent to individuals in jurisdictions where this recovery 
option is not available);
    (e) An explanation of the right to request waiver of adjustment or 
recovery and the automatic scheduling of a file review and pre-
recoupment hearing (commonly referred to as a personal conference) if a 
request for waiver cannot be approved after initial paper review;
    (f) An explanation of the right to request reconsideration of the 
fact and/or amount of the overpayment determination;
    (g) Instructions about the availability of forms for requesting 
reconsideration and waiver;
    (h) An explanation that if the individual does not request waiver or 
reconsideration within 30 days of the date of the overpayment notice, 
adjustment or recovery of the overpayment will begin;
    (i) A statement that an SSA office will help the individual complete 
and submit forms for appeal or waiver requests; and
    (j) A statement that the individual receiving the notice should 
notify SSA promptly if reconsideration, waiver, a lesser rate of 
withholding, repayment by installments or cross-program adjustment is 
wanted.

[61 FR 56131, Oct. 31, 1996]



Sec. 404.503  Underpayments.

    Underpayments will be adjusted as follows:
    (a) Individual underpaid is living. If an individual to whom an 
underpayment is due is living, the amount of such underpayment will be 
paid to such individual either in a single payment (if he is not 
entitled to a monthly benefit or a lump-sum death payment) or by 
increasing one or more monthly benefits or a lump-sum death payment to 
which such individual is or becomes entitled.
    (b) Individual dies before adjustment of underpayment. If an 
individual to whom an underpayment is due dies before receiving payment 
or negotiating a check or checks representing such payment, such 
underpayment will be distributed to the living person (or persons) in 
the highest order of priority as follows:
    (1) The deceased individual's surviving spouse as defined in section 
216(c), (g), or (h) of the Act who was either:
    (i) Living in the same household (as defined in Sec. 404.347) with 
the deceased individual at the time of such individual's death, or
    (ii) Entitled to a monthly benefit on the basis of the same earnings 
record as was the deceased individual for the month in which such 
individual died.
    (2) The child or children of the deceased individual (as defined in 
section 216 (e) or (h) of the Act) entitled to a monthly benefit on the 
basis of the same earnings record as was the deceased individual for the 
month in which such individual died (if more than one such child, in 
equal shares to each such child).
    (3) The parent or parents of the deceased individual, entitled to a 
monthly benefit on the basis of the same earnings record as was the 
deceased individual for the month in which such individual died (if more 
than one such parent, in equal shares to each such parent). For this 
purpose, the definition of ``parent'' in Sec. 404.374 includes the 
parent(s) of any deceased individual who was entitled to benefits under 
title II of the Act.
    (4) The surviving spouse of the deceased individual (as defined in 
section 216(c), (g), or (h) of the Act) who does not qualify under 
paragraph (b)(1) of this section.
    (5) The child or children of the deceased individual (as defined in 
section 216 (e) or (h) of the Act) who do not qualify under paragraph 
(b)(2) of this section (if more than one such child, in equal shares to 
each such child).
    (6) The parent or parents of the deceased individual, who do not 
qualify under paragraph (b)(3) of this section (if more than one such 
parent, in equal shares to each such parent). For this purpose, the 
definition of ``parent'' in Sec. 404.374 includes the parent(s) of any 
deceased individual who was entitled to benefits under title II of the 
Act.
    (7) The legal representative of the estate of the deceased 
individual as defined in paragraph (d) of this section.
    (c) In the event that a person who is otherwise qualified to receive 
an underpayment under the provisions of

[[Page 195]]

paragraph (b) of this section, dies before receiving payment or before 
negotiating the check or checks representing such payment, his share of 
the underpayment will be divided among the remaining living person(s) in 
the same order of priority. In the event that there is (are) no other 
such person(s), the underpayment will be paid to the living person(s) in 
the next lower order of priority under paragraph (b) of this section.
    (d) Definition of legal representative. The term legal 
representative, for the purpose of qualifying to receive an 
underpayment, generally means the administrator or executor of the 
estate of the deceased individual. However, it may also include an 
individual, institution or organization acting on behalf of an 
unadministered estate, provided that such person can give the 
Administration good acquittance (as defined in paragraph (e) of this 
section). The following persons may qualify as legal representative for 
the purposes of this subpart, provided they can give the Administration 
good acquittance:
    (1) A person who qualifies under a State's small estate statute,
    (2) A person resident in a foreign country who, under the laws and 
customs of that country, has the right to receive assets of the estate,
    (3) A public administrator, or
    (4) A person who has the authority, under applicable law, to collect 
the assets of the estate of the deceased individual.
    (e) Definition of ``good acquittance.'' A person is considered to 
give the Administration good acquittance when payment to that person 
will release the Administration from further liability for such payment.

[34 FR 14487, Sept. 27, 1969, as amended at 35 FR 14129, Sept. 5, 1970; 
55 FR 7313, Mar. 1, 1990; 60 FR 17445, Apr. 6, 1995]



Sec. 404.504  Relation to provisions for reductions and increases.

    The amount of an overpayment or underpayment is the difference 
between the amount paid to the beneficiary and the amount of the payment 
to which the beneficiary was actually entitled. Such payment, for 
example, would be equal to the difference between the amount of a 
benefit in fact paid to the beneficiary and the amount of such benefit 
as reduced under section 202(j)(1), 202(k)(3), 203(a), or 224(a), or as 
increased under section 202(d)(2), 202(m), or 215 (f) and (g). In 
effecting an adjustment with respect to an overpayment, no amount can be 
considered as having been withheld from a particular benefit which is in 
excess of the amount of such benefit as so decreased.

[34 FR 14888, Sept. 27, 1969]



Sec. 404.505  Relationship to provisions requiring deductions.

    Adjustments required by any of the provisions in this subpart F are 
made in addition to, but after, any deductions required by section 
202(t), 203(b), 203(c), 203(d), and 222(b) of the Act, or section 907 of 
the Social Security Act Amendments of 1939, and before any deductions 
required by section 203(g) or 203(h)(2) of the Act.

[34 FR 14888, Sept. 27, 1969]



Sec. 404.506  When waiver may be applied and how to process the request.

    (a) Section 204(b) of the Act provides that there shall be no 
adjustment or recovery in any case where an overpayment under title II 
has been made to an individual who is without fault if adjustment or 
recovery would either defeat the purpose of title II of the Act, or be 
against equity and good conscience.
    (b) If an individual requests waiver of adjustment or recovery of a 
title II overpayment within 30 days after receiving a notice of 
overpayment that contains the information in Sec. 404.502a, no 
adjustment or recovery action will be taken until after the initial 
waiver determination is made. If the individual requests waiver more 
than 30 days after receiving the notice of overpayment, SSA will stop 
any adjustment or recovery actions until after the initial waiver 
determination is made.
    (c) When waiver is requested, the individual gives SSA information 
to support his/her contention that he/she is without fault in causing 
the overpayment (see Sec. 404.507) and that adjustment or recovery 
would either defeat the purpose of title II of the Act (see Sec. 
404.508) or be against equity and good

[[Page 196]]

conscience (see Sec. 404.509). That information, along with supporting 
documentation, is reviewed to determine if waiver can be approved. If 
waiver cannot be approved after this review, the individual is notified 
in writing and given the dates, times and place of the file review and 
personal conference; the procedure for reviewing the claims file prior 
to the personal conference; the procedure for seeking a change in the 
scheduled dates, times, and/or place; and all other information 
necessary to fully inform the individual about the personal conference. 
The file review is always scheduled at least 5 days before the personal 
conference.
    (d) At the file review, the individual and the individual's 
representative have the right to review the claims file and applicable 
law and regulations with the decisionmaker or another SSA representative 
who is prepared to answer questions. We will provide copies of material 
related to the overpayment and/or waiver from the claims file or 
pertinent sections of the law or regulations that are requested by the 
individual or the individual's representative.
    (e) At the personal conference, the individual is given the 
opportunity to:
    (1) Appear personally, testify, cross-examine any witnesses, and 
make arguments;
    (2) Be represented by an attorney or other representative (see Sec. 
404.1700), although the individual must be present at the conference; 
and
    (3) Submit documents for consideration by the decisionmaker.
    (f) At the personal conference, the decisionmaker:
    (1) Tells the individual that the decisionmaker was not previously 
involved in the issue under review, that the waiver decision is solely 
the decisionmaker's, and that the waiver decision is based only on the 
evidence or information presented or reviewed at the conference;
    (2) Ascertains the role and identity of everyone present;
    (3) Indicates whether or not the individual reviewed the claims 
file;
    (4) Explains the provisions of law and regulations applicable to the 
issue;
    (5) Briefly summarizes the evidence already in file which will be 
considered;
    (6) Ascertains from the individual whether the information presented 
is correct and whether he/she fully understands it;
    (7) Allows the individual and the individual's representative, if 
any, to present the individual's case;
    (8) Secures updated financial information and verification, if 
necessary;
    (9) Allows each witness to present information and allows the 
individual and the individual's representative to question each witness;
    (10) Ascertains whether there is any further evidence to be 
presented;
    (11) Reminds the individual of any evidence promised by the 
individual which has not been presented;
    (12) Lets the individual and the individual's representative, if 
any, present any proposed summary or closing statement;
    (13) Explains that a decision will be made and the individual will 
be notified in writing; and
    (14) Explains repayment options and further appeal rights in the 
event the decision is adverse to the individual.
    (g) SSA issues a written decision to the individual (and his/her 
representative, if any) specifying the findings of fact and conclusions 
in support of the decision to approve or deny waiver and advising of the 
individual's right to appeal the decision. If waiver is denied, 
adjustment or recovery of the overpayment begins even if the individual 
appeals.
    (h) If it appears that the waiver cannot be approved, and the 
individual declines a personal conference or fails to appear for a 
second scheduled personal conference, a decision regarding the waiver 
will be made based on the written evidence of record. Reconsideration is 
then the next step in the appeals process (but see Sec. 404.930(a)(7)).

[61 FR 56131, Oct. 31, 1996]



Sec. 404.507  Fault.

    Fault as used in without fault (see Sec. 404.506 and 42 CFR 
405.355) applies only to the individual. Although the Administration may 
have been at fault in making the overpayment, that fact does not relieve 
the overpaid individual

[[Page 197]]

or any other individual from whom the Administration seeks to recover 
the overpayment from liability for repayment if such individual is not 
without fault. In determining whether an individual is at fault, the 
Social Security Administration will consider all pertinent 
circumstances, including the individual's age and intelligence, and any 
physical, mental, educational, or linguistic limitations (including any 
lack of facility with the English language) the individual has. What 
constitutes fault (except for deduction overpayments--see Sec. 404.510) 
on the part of the overpaid individual or on the part of any other 
individual from whom the Administration seeks to recover the overpayment 
depends upon whether the facts show that the incorrect payment to the 
individual or to a provider of services or other person, or an incorrect 
payment made under section 1814(e) of the Act, resulted from:
    (a) An incorrect statement made by the individual which he knew or 
should have known to be incorrect; or
    (b) Failure to furnish information which he knew or should have 
known to be material; or
    (c) With respect to the overpaid individual only, acceptance of a 
payment which he either knew or could have been expected to know was 
incorrect.

[34 FR 14888, Sept. 27, 1969; 34 FR 15646, Oct. 9, 1969, as amended at 
44 FR 34942, June 18, 1979; 59 FR 1634, Jan. 12, 1994]



Sec. 404.508  Defeat the purpose of Title II.

    (a) General. Defeat the purpose of title II, for purposes of this 
subpart, means defeat the purpose of benefits under this title, i.e., to 
deprive a person of income required for ordinary and necessary living 
expenses. This depends upon whether the person has an income or 
financial resources sufficient for more than ordinary and necessary 
needs, or is dependent upon all of his current benefits for such needs. 
An individual's ordinary and necessary expenses include:
    (1) Fixed living expenses, such as food and clothing, rent, mortgage 
payments, utilities, maintenance, insurance (e.g., life, accident, and 
health insurance including premiums for supplementary medical insurance 
benefits under title XVIII), taxes, installment payments, etc.;
    (2) Medical, hospitalization, and other similar expenses;
    (3) Expenses for the support of others for whom the individual is 
legally responsible; and
    (4) Other miscellaneous expenses which may reasonably be considered 
as part of the individual's standard of living.
    (b) When adjustment or recovery will defeat the purpose of title II. 
Adjustment or recovery will defeat the purposes of title II in (but is 
not limited to) situations where the person from whom recovery is sought 
needs substantially all of his current income (including social security 
monthly benefits) to meet current ordinary and necessary living 
expenses.

[32 FR 18026, Dec. 16, 1967, as amended at 34 FR 14888, Sept. 27, 1969]



Sec. 404.509  Against equity and good conscience; defined.

    (a) Recovery of an overpayment is against equity and good conscience 
(under title II and title XVIII) if an individual--
    (1) Changed his or her position for the worse (Example 1) or 
relinquished a valuable right (Example 2) because of reliance upon a 
notice that a payment would be made or because of the overpayment 
itself; or
    (2) Was living in a separate household from the overpaid person at 
the time of the overpayment and did not receive the overpayment 
(Examples 3 and 4).
    (b) The individual's financial circumstances are not material to a 
finding of against equity and good conscience.

    Example 1. A widow, having been awarded benefits for herself and 
daughter, entered her daughter in private school because the monthly 
benefits made this possible. After the widow and her daughter received 
payments for almost a year, the deceased worker was found to be not 
insured and all payments to the widow and child were incorrect. The 
widow has no other funds with which to pay the daughter's private school 
expenses. Having entered the daughter in private school and thus 
incurred a financial obligation toward which the benefits had been 
applied, she was in a worse position financially than if she and her 
daughter had never been

[[Page 198]]

entitled to benefits. In this situation, the recovery of the payments 
would be against equity and good conscience.
    Example 2. After being awarded old-age insurance benefits, an 
individual resigned from employment on the assumption he would receive 
regular monthly benefit payments. It was discovered 3 years later that 
(due to a Social Security Administration error) his award was erroneous 
because he did not have the required insured status. Due to his age, the 
individual was unable to get his job back and could not get any other 
employment. In this situation, recovery of the overpayments would be 
against equity and good conscience because the individual gave up a 
valuable right.
    Example 3. M divorced K and married L. M died a few years later. 
When K files for benefits as a surviving divorced wife, she learns that 
L had been overpaid $3,200 on M's earnings record. Because K and L are 
both entitled to benefits on M's record of earnings and we could not 
recover the overpayment from L, we sought recovery from K. K was living 
in a separate household from L at the time of the overpayment and did 
not receive the overpayment. K requests waiver of recovery of the $3,200 
overpayment from benefits due her as a surviving divorced wife of M. In 
this situation, it would be against equity and good conscience to 
recover the overpayment from K.
    Example 4. G filed for and was awarded benefits. His daughter, T, 
also filed for student benefits on G's earnings record. Since T was an 
independent, full-time student living in another State, she filed for 
benefits on her own behalf. Later, after T received 12 monthly benefits, 
the school reported that T had been a full-time student only 2 months 
and had withdrawn from school. Since T was overpaid 10 monthly benefits, 
she was requested to return the overpayment to SSA. T did not return the 
overpayment and further attempts to collect the overpayment were 
unsuccessful. G was asked to repay the overpayment because he was 
receiving benefits on the same earnings record. G requested waiver. To 
support his waiver request G established that he was not at fault in 
causing the overpayment because he did not know that T was receiving 
benefits. Since G is without fault and, in addition, meets the 
requirements of not living in the same household at the time of the 
overpayment and did not receive the overpayment, it would be against 
equity and good conscience to recover the overpayment from G.

[53 FR 25483, July 7, 1988]



Sec. 404.510  When an individual is ``without fault'' in a deduction 
overpayment.

    In determining whether an individual is ``without fault'' with 
respect to a deduction overpayment, the Social Security Administration 
will consider all pertinent circumstances, including the individual's 
age and intelligence, and any physical, mental, educational, or 
linguistic limitations (including any lack of facility with the English 
language) the individual has. Except as provided in Sec. 404.511 or 
elsewhere in this subpart F, situations in which an individual will be 
considered to be ``without fault'' with respect to a deduction 
overpayment include, but are not limited to, those that are described in 
this section. An individual will be considered ``without fault'' in 
accepting a payment which is incorrect because he/she failed to report 
an event specified in sections 203 (b) and (c) of the Act, or an event 
specified in section 203(d) of the Act as in effect for monthly benefits 
for months after December 1960, or because a deduction is required under 
section 203 (b), (c), (d), or section 222(b) of the Act, or payments 
were not withheld as required by section 202(t) or section 228 of the 
Act, if it is shown that such failure to report or acceptance of the 
overpayment was due to one of the following circumstances:
    (a) Reasonable belief that only his net cash earnings (take-home 
pay) are included in determining the annual earnings limitation or the 
monthly earnings limitation under section 203(f) of the Act.
    (b) Reliance upon erroneous information from an official source 
within the Social Security Administration (or other governmental agency 
which the individual had reasonable cause to believe was connected with 
the administration of benefits under title II of the Act) with respect 
to the interpretation of a pertinent provision of the Social Security 
Act or regulations pertaining thereto. For example, this circumstance 
could occur where the individual is misinformed by such source as to the 
interpretation of a provision in the Act or regulations relating to 
deductions, or relating to the effect of residence of an alien outside 
the United States for more than 6 months.
    (c) The beneficiary's death caused the earnings limit applicable to 
his earnings for purposes of deduction and the

[[Page 199]]

charging of excess earnings to be reduced below $1,680 for a taxable 
year ending after 1967.
    (d) [Reserved]
    (e) Reasonable belief that in determining, for deduction purposes, 
his earnings from employment and/or net earnings from self-employment in 
the taxable year in which he became entitled to benefits, earnings in 
such year prior to such entitlement would be excluded. However, this 
provision does not apply if his earnings in the taxable year, beginning 
with the first month of entitlement, exceeded the earnings limitation 
amount for such year.
    (f) Unawareness that his earnings were in excess of the earnings 
limitation applicable to the imposition of deductions and the charging 
of excess earnings or that he should have reported such excess where 
these earnings were greater than anticipated because of:
    (1) Retroactive increases in pay, including back-pay awards;
    (2) Work at a higher pay rate than realized;
    (3) Failure of the employer of an individual unable to keep accurate 
records to restrict the amount of earnings or the number of hours worked 
in accordance with a previous agreement with such individual;
    (4) The occurrence of five Saturdays (or other work days, e.g., five 
Mondays) in a month and the earnings for the services on the fifth 
Saturday or other work day caused the deductions.
    (g) The continued issuance of benefit checks to him after he sent 
notice to the Administration of the event which caused or should have 
caused the deductions provided that such continued issuance of checks 
led him to believe in good faith that he was entitled to checks 
subsequently received.
    (h) Lack of knowledge that bonuses, vacation pay, or similar 
payments, constitute earnings for purposes of the annual earnings 
limitation.
    (i) [Reserved]
    (j) Reasonable belief that earnings in excess of the earnings 
limitation amount for the taxable year would subject him to deductions 
only for months beginning with the first month in which his earnings 
exceeded the earnings limitation amount. However, this provision is 
applicable only if he reported timely to the Administration during the 
taxable year when his earnings reached the applicable limitation amount 
for such year.
    (k) Lack of knowledge by a wife, husband, or child entitled to 
wife's, husband's, or child's insurance benefits, as the case may be, 
that the individual entitled to old-age insurance benefits on the same 
earnings record has incurred or would incur deductions because of a 
violation of the annual earnings or 7-day foreign work test, whichever 
is applicable, provided the wife, husband, or child is not living with 
such old-age insurance beneficiary and did not know and had no reason to 
know that such beneficiary's earnings activity or the income derived 
therefrom has caused or would cause such deductions.
    (l) Reasonable belief, with respect to earnings activity for months 
after December 1982, that net earnings from self-employment after 
attainment of age 70 (age 72 for months after December 1972 and before 
January 1983) in the taxable year in which such age was attained would 
not cause deductions (see Sec. 404.430(a)) with respect to benefits 
payable for months in that taxable year prior to the attainment of such 
age.
    (m) Reasonable belief by an individual entitled to child's, wife's, 
husband's, widow's, widower's, mother's, or parent's insurance benefits 
that earnings from employment and/or net earnings from self-employment 
after the termination of entitlement (other than termination by reason 
of entitlement to an old-age insurance benefit) in the taxable year in 
which the termination event occurred would not cause deductions with 
respect to benefits payable for months in that taxable year prior to the 
month in which the termination event occurred.
    (n) Failure to understand the deduction provisions of the Act or the 
occurrence of unusual or unavoidable circumstances the nature of which 
clearly shows that the individual was unaware

[[Page 200]]

of a violation of such deduction provisions.

[27 FR 1162, Feb. 8, 1962, as amended at 28 FR 14492, Dec. 31, 1963; 34 
FR 14888, Sept. 27, 1969; 36 FR 23361, Dec. 9, 1971; 43 FR 31318, July 
21, 1978; 44 FR 20653, Apr. 6, 1979; 59 FR 1634, Jan. 12, 1994; 60 FR 
17445, Apr. 6, 1995]



Sec. 404.510a  When an individual is ``without fault'' in an entitlement 
overpayment.

    A benefit payment under title II or title XVIII of the Act to or on 
behalf of an individual who fails to meet one or more requirements for 
entitlement to such payment or a benefit payment exceeding the amount to 
which he is entitled, constitutes an entitlement overpayment. Where an 
individual or other person on behalf of an individual accepts such 
overpayment because of reliance on erroneous information from an 
official source within the Social Security Administration (or other 
governmental agency which the individual had reasonable cause to believe 
was connected with the administration of benefits under title II or 
title XVIII of the Act) with respect to the interpretation of a 
pertinent provision of the Social Security Act or regulations pertaining 
thereto, or where an individual or other person on behalf of an 
individual is overpaid as a result of the adjustment upward (under the 
family maximum provision in section 203 of the Act) of the benefits of 
such individual at the time of the proper termination of one or more 
beneficiaries on the same social security record and the subsequent 
reduction of the benefits of such individual caused by the reentitlement 
of the terminated beneficiary(ies) pursuant to a change in a provision 
of the law, such individual, in accepting such overpayment, will be 
deemed to be without fault. For purposes of this section governmental 
agency includes intermediaries and carriers under contract pursuant to 
sections 1816 and 1842 of the Act.

[39 FR 43716, Dec. 18, 1974]



Sec. 404.511  When an individual is at ``fault'' in a deduction overpayment.

    (a) Degree of care. An individual will not be without fault if the 
Administration has evidence in its possession which shows either a lack 
of good faith or failure to exercise a high degree of care in 
determining whether circumstances which may cause deductions from his 
benefits should be brought to the attention of the Administration by an 
immediate report or by return of a benefit check. The high degree of 
care expected of an individual may vary with the complexity of the 
circumstances giving rise to the overpayment and the capacity of the 
particular payee to realize that he is being overpaid. Accordingly, 
variances in the personal circumstances and situations of individual 
payees are to be considered in determining whether the necessary degree 
of care has been exercised by an individual to warrant a finding that he 
was without fault in accepting a deduction overpayment.
    (b) Subsequent deduction overpayments. The Social Security 
Administration generally will not find an individual to be without fault 
where, after having been exonerated for a ``deduction overpayment'' and 
after having been advised of the correct interpretation of the deduction 
provision, the individual incurs another ``deduction overpayment'' under 
the same circumstances as the first overpayment. However, in determining 
whether the individual is without fault, the Social Security 
Administration will consider all of the pertinent circumstances 
surrounding the prior and subsequent ``deduction overpayments,'' 
including any physical, mental, educational, or linguistic limitations 
(including any lack of facility with the English language) which the 
individual may have.

[16 FR 13054, Dec. 28, 1951, as amended at 59 FR 1634, Jan. 12, 1994]



Sec. 404.512  When adjustment or recovery of an overpayment will be waived.

    (a) Adjustment or recovery deemed ``against equity and good 
conscience.'' In the situations described in Sec. Sec. 404.510(a), (b), 
and (c), and 404.510a, adjustment or recovery will be waived since it 
will be deemed such adjustment or recovery is against equity and good 
conscience. Adjustment or recovery will also be deemed against equity 
and good conscience in the situation described in Sec. 404.510(e), but 
only as to a month in which the individual's earnings from

[[Page 201]]

wages do not exceed the total monthly benefits affected for that month.
    (b) Adjustment or recovery considered to defeat the purpose of title 
II or be against equity and good conscience under certain circumstances. 
In the situation described in Sec. 404.510(e) (except in the case of an 
individual whose monthly earnings from wages in employment do not exceed 
the total monthly benefits affected for a particular month), and in the 
situations described in Sec. 404.510 (f) through (n), adjustment or 
recovery shall be waived only where the evidence establishes that 
adjustment or recovery would work a financial hardship (see Sec. 
404.508) or would otherwise be inequitable (see Sec. 404.509).

[27 FR 1163, Feb. 8, 1962, as amended at 35 FR 6321, Apr. 18, 1970; 36 
FR 23361, Dec. 9, 1971]



Sec. 404.513  Liability of a certifying officer.

    No certifying or disbursing officer shall be held liable for any 
amount certified or paid by him to any individual.
    (a) Where adjustment or recovery of such amount is waived under 
section 204(b) of the Act; or
    (b) Where adjustment under section 204(a) of the Act is not 
completed prior to the death of all individuals against whose benefits 
or lump sums deductions are authorized; or
    (c) Where a claim for recovery of an overpayment is compromised or 
collection or adjustment action is suspended or terminated pursuant to 
the Federal Claims Collection Act of 1966 (31 U.S.C. 951-953) (see Sec. 
404.515).

[34 FR 14889, Sept. 27, 1969]



Sec. 404.515  Collection and compromise of claims for overpayment.

    (a) General effect of the Federal Claims Collection Act of 1966. 
Claims by the Administration against an individual for recovery of 
overpayments under title II or title XVIII (not including title XVIII 
overpayments for which refund is requested from providers, physicians, 
or other suppliers of services) of the Act, not exceeding the sum of 
$20,000, exclusive of interest, may be compromised, or collection 
suspended or terminated where such individual or his estate does not 
have the present or prospective ability to pay the full amount of the 
claim within a reasonable time (see paragraph (c) of this section) or 
the cost of collection is likely to exceed the amount of recovery (see 
paragraph (d) of this section) except as provided under paragraph (b) of 
this section.
    (b) When there will be no compromise, suspension or termination of 
collection of a claim for overpayment--(1) Overpaid individual alive. In 
any case where the overpaid individual is alive, a claim for overpayment 
will not be compromised, nor will there be suspension or termination of 
collection of the claim by the Administration if there is an indication 
of fraud, the filing of a false claim, or misrepresentation on the part 
of such individual or on the part of any other party having an interest 
in the claim.
    (2) Overpaid individual deceased. In any case where the overpaid 
individual is deceased (i) a claim for overpayment in excess of $5,000 
will not be compromised, nor will there be suspension or termination of 
collection of the claim by the Administration if there is an indication 
of fraud; the filing of a false claim, or misrepresentation on the part 
of such deceased individual, and (ii) a claim for overpayment regardless 
of the amount will not be compromised, nor will there be suspension or 
termination of collection of the claim by the Administration if there is 
an indication that any person other than the deceased overpaid 
individual had a part in the fraudulent action which resulted in the 
overpayment.
    (c) Inability to pay claim for recovery of overpayment. In 
determining whether the overpaid individual is unable to pay a claim for 
recovery of an overpayment under title II or title XVIII of the Act, the 
Administration will consider such individual's age, health, present and 
potential income (including inheritance prospects), assets (e.g., real 
property, savings account), possible concealment or improper transfer of 
assets, and assets or income of such individual which may be available 
in enforced collection proceedings. The Administration will also 
consider exemptions available to such individual under the pertinent 
State or Federal law in such proceedings. In the event the overpaid 
individual is deceased, the

[[Page 202]]

Administration will consider the available assets of the estate, taking 
into account any liens or superior claims against the estate.
    (d) Cost of collection or litigative probabilities. Where the 
probable costs of recovering an overpayment under title II or title 
XVIII of the Act would not justify enforced collection proceedings for 
the full amount of the claim or there is doubt concerning the 
Administration's ability to establish its claim as well as the time 
which it will take to effect such collection, a compromise or settlement 
for less than the full amount will be considered.
    (e) Amount of compromise. The amount to be accepted in compromise of 
a claim for overpayment under title II or title XVIII of the Act shall 
bear a reasonable relationship to the amount which can be recovered by 
enforced collection proceedings giving due consideration to the 
exemptions available to the overpaid individual under State or Federal 
law and the time which such collection will take.
    (f) Payment. Payment of the amount which the Administration has 
agreed to accept as a compromise in full settlement of a claim for 
recovery of an overpayment under title II or title XVIII of the Act must 
be made within the time and in the manner set by the Administration. A 
claim for such recovery of the overpayment shall not be considered 
compromised or settled until the full payment of the compromised amount 
has been made within the time and manner set by the Administration. 
Failure of the overpaid individual or his estate to make such payment as 
provided shall result in reinstatement of the full amount of the 
overpayment less any amounts paid prior to such default.

[34 FR 14889, Sept. 27, 1969; 34 FR 15413, Oct. 3, 1969]



Sec. 404.520  Referral of overpayments to the Department of the Treasury 
for tax refund offset--General.

    (a) The standards we will apply and the procedures we will follow 
before requesting the Department of the Treasury to offset income tax 
refunds due taxpayers who have an outstanding overpayment are set forth 
in Sec. Sec. 404.520 through 404.526. These standards and procedures 
are authorized by 31 U.S.C. 3720A and are implemented through Department 
of the Treasury regulations at 31 CFR 285.2.
    (b) We will use the Department of the Treasury tax refund offset 
procedure to collect overpayments that are certain in amount, past due 
and legally enforceable, and eligible for tax refund offset under 
regulations issued by the Department of the Treasury. We will use these 
procedures to collect overpayments only from individuals who are not 
currently entitled to monthly Social Security benefits under title II of 
the Act. We will refer an overpayment to the Department of the Treasury 
for offset against tax refunds no later than 10 years after our right to 
collect the overpayment first accrued.

[62 FR 64277, Dec. 5, 1997]



Sec. 404.521  Notice to overpaid individual.

    A request for reduction of a Federal income tax refund will be made 
only after we determine that an amount is owed and past due and send the 
overpaid individual written notice. Our notice of intent to collect an 
overpayment through tax refund offset will state:
    (a) The amount of the overpayment;
    (b) That unless, within 60 calendar days from the date of our 
notice, the overpaid individual repays the overpayment, sends evidence 
to us at the address given in our notice that the overpayment is not 
past due or not legally enforceable, or asks us to waive collection of 
the overpayment under section 204(b) of the Act, we intend to seek 
collection of the overpayment by requesting that the Department of the 
Treasury reduce any amounts payable to the overpaid individual as 
refunds of Federal income taxes by an amount equal to the amount of the 
overpayment;
    (c) The conditions under which we will waive recovery of an 
overpayment under section 204(b) of the Act;
    (d) That we will review any evidence presented that the overpayment 
is not past due or not legally enforceable;
    (e) That the overpaid individual has the right to inspect and copy 
our records related to the overpayment as determined by us and will be 
informed

[[Page 203]]

as to where and when the inspection and copying can be done after we 
receive notice from the overpaid individual that inspection and copying 
are requested.

[56 FR 52468, Oct. 21, 1991, as amended at 62 FR 64278, Dec. 5, 1997]



Sec. 404.522  Review within SSA that an overpayment is past due and legally 
enforceable.

    (a) Notification by overpaid individual. An overpaid individual who 
receives a notice as described in Sec. 404.521 has the right to present 
evidence that all or part of the overpayment is not past due or not 
legally enforceable. To exercise this right, the individual must notify 
us and present evidence regarding the overpayment within 60 calendar 
days from the date of our notice.
    (b) Submission of evidence. The overpaid individual may submit 
evidence showing that all or part of the debt is not past due or not 
legally enforceable as provided in paragraph (a) of this section. 
Failure to submit the notification and evidence within 60 calendar days 
will result in referral of the overpayment to the Department of the 
Treasury, unless the overpaid individual, within this 60-day time 
period, has asked us to waive collection of the overpayment under 
section 204(b) of the Act and we have not yet determined whether we can 
grant the waiver request. If the overpaid individual asks us to waive 
collection of the overpayment, we may ask that evidence to support the 
request be submitted to us.
    (c) Review of the evidence. After a timely submission of evidence by 
the overpaid individual, we will consider all available evidence related 
to the overpayment. If the overpaid individual has not requested a 
waiver we will make findings based on a review of the written record, 
unless we determine that the question of indebtedness cannot be resolved 
by a review of the documentary evidence. If the overpaid individual has 
asked us to make a waiver determination and our records do not show that 
after an oral hearing we had previously determined that he was at 
``fault'' in accepting the overpayment, we will not deny the waiver 
request without first scheduling an oral hearing.

[56 FR 52469, Oct. 21, 1991, as amended at 62 FR 64278, Dec. 5, 1997]



Sec. 404.523  Findings by SSA.

    (a) Following the hearing or a review of the record, we will issue 
written findings which include supporting rationale for the findings. 
Issuance of these findings concerning whether the overpayment or part of 
the overpayment is past due and legally enforceable is the final Agency 
action with respect to the past-due status and enforceability of the 
overpayment. If we make a determination that a waiver request cannot be 
granted, we will issue a written notice of this determination in 
accordance with the regulations in subpart J of this part. Our referral 
of the overpayment to the Department of the Treasury will not be 
suspended under Sec. 404.525 pending any further administrative review 
of the waiver request that the individual may seek.
    (b) Copies of the findings described in paragraph (a) of this 
section will be distributed to the overpaid individual and the overpaid 
individual's attorney or other representative, if any.
    (c) If the findings referred to in paragraph (a) of this section 
affirm that all or part of the overpayment is past due and legally 
enforceable and, if waiver is requested, we determine that the request 
cannot be granted, we will refer the overpayment to the Department of 
the Treasury. No referral will be made to the Department of the Treasury 
if, based on our review of the overpayment, we reverse our prior finding 
that the overpayment is past due and legally enforceable or, upon 
consideration of a waiver request, we determine that waiver of our 
collection of the overpayment is appropriate.

[56 FR 52469, Oct. 21, 1991, as amended at 62 FR 64278, Dec. 5, 1997]



Sec. 404.524  Review of our records related to the overpayment.

    (a) Notification by the overpaid individual. An overpaid individual 
who intends to inspect or copy our records related to the overpayment as 
determined by us must notify us stating his or her intention to inspect 
or copy.

[[Page 204]]

    (b) Our response. In response to a notification by the overpaid 
individual as described in paragraph (a) of this section, we will notify 
the overpaid individual of the location and time when the overpaid 
individual may inspect or copy our records related to the overpayment. 
We may also, at our discretion, mail copies of the overpayment-related 
records to the overpaid individual.

[56 FR 52469, Oct. 21, 1991]



Sec. 404.525  Suspension of offset.

    If, within 60 days of the date of the notice described in Sec. 
404.521, the overpaid individual notifies us that he or she is 
exercising a right described in Sec. 404.522(a) and submits evidence 
pursuant to Sec. 404.522(b) or requests a waiver under Sec. 404.506, 
we will suspend any notice to the Department of the Treasury until we 
have issued written findings that affirm that an overpayment is past due 
and legally enforceable and, if applicable, make a determination that a 
waiver request cannot be granted.

[56 FR 52469, Oct. 21, 1991, as amended at 62 FR 64278, Dec. 5, 1997]



Sec. 404.526  Tax refund insufficient to cover amount of overpayment.

    If a tax refund for a given taxable year is insufficient to recover 
an overpayment completely, the case will remain with the Department of 
the Treasury for offset, assuming that all criteria for offset continue 
to be met.

[62 FR 64278, Dec. 5, 1997]



Sec. 404.527  Additional methods for recovery of title II benefit overpayments.

    (a) General. In addition to the methods specified in Sec. Sec. 
404.502 and 404.520, an overpayment under title II of the Act is also 
subject to recovery under the rules in subparts D and E of part 422 of 
this chapter. Subpart D of part 422 of this chapter applies only under 
the following conditions:
    (1) The overpayment occurred after the individual has attained age 
18;
    (2) The overpaid individual is no longer entitled to benefits under 
title II of the Act; and
    (3) Pursuant to paragraph (b) of this section, we have determined 
that the overpayment is otherwise unrecoverable under section 204 of the 
Act.
    (b) When an overpayment is considered to be otherwise unrecoverable. 
An overpayment under title II of the Act is considered to be otherwise 
unrecoverable under section 204 of the Act if all of the following 
conditions are met:
    (1) Our billing system sequence has been completed (i.e., we have 
sent the individual an initial notice of the overpayment, a reminder 
notice, and a past-due notice) or collection activity has been suspended 
or terminated in accordance with the Federal Claims Collection Standards 
in 31 CFR 903.2 or 903.3.
    (2) We have not entered into an installment payment arrangement with 
the overpaid individual or, if we have entered into such an arrangement, 
the overpaid individual has failed to make any payment for two 
consecutive months.
    (3) The overpaid individual has not requested waiver pursuant to 
Sec. 404.506 or Sec. 404.522 or, after a review conducted pursuant to 
those sections, we have determined that we will not waive collection of 
the overpayment.
    (4) The overpaid individual has not requested reconsideration of the 
initial overpayment determination pursuant to Sec. Sec. 404.907 and 
404.909 or, after a review conducted pursuant to Sec. 404.913, we have 
affirmed, in whole or in part, the initial overpayment determination.
    (5) The overpayment cannot be recovered pursuant to Sec. 404.502 by 
adjustment of benefits payable to any individual other than the overpaid 
individual. For purposes of this paragraph, an overpayment will be 
deemed to be unrecoverable from any individual who was living in a 
separate household from the overpaid person at the time of the 
overpayment and did not receive the overpayment.

[62 FR 64278, Dec. 5, 1997, as amended at 68 FR 74183, Dec. 23, 2003]



            Subpart G_Filing of Applications and Other Forms

    Authority: Secs. 202 (i), (j), (o), (p), and (r), 205(a), 216(i)(2), 
223(b), 228(a), and 702(a)(5) of the Social Security Act (42 U.S.C. 402 
(i), (j), (o), (p), and (r), 405(a), 416(i)(2), 423(b), 428(a), and 
902(a)(5)).

[[Page 205]]


    Source: 44 FR 37209, June 26, 1979, unless otherwise noted.

                           General Provisions



Sec. 404.601  Introduction.

    This subpart contains the Social Security Administration's rules for 
filing a claim for old-age, disability, dependents', and survivors' 
insurance benefits as described in subpart D of part 404. It tells what 
an application is, who may sign it, where and when it must be signed and 
filed, the period of time it is in effect and how it may be withdrawn. 
This subpart also explains when a written statement, request, or notice 
will be considered filed. Since the application form and procedures for 
filing a claim under this subpart are the same as those used to 
establish entitlement to Medicare benefits under 42 CFR part 405, 
persons who wish to become entitled to Medicare benefits should refer to 
the provisions of this subpart. Requirements concerning applications for 
the black lung benefits program are contained in part 410. Requirements 
concerning applications for the supplemental security income program are 
contained in part 416. Part 422 contains the requirements for applying 
for a social security number.



Sec. 404.602  Definitions.

    For the purpose of this subpart--
    Applicant means the person who files an application for benefits for 
himself or herself or for someone else. A person who files for himself 
or herself is both the applicant and the claimant.
    Application refers only to an application on a form described in 
Sec. 404.611.
    Benefits means any old-age, disability, dependents', and survivors' 
insurance benefits described in subpart D, including a period of 
disability.
    Claimant means the person who files an application for benefits for 
himself or herself or the person for whom an application is filed.
    We, us, or our means the Social Security Administration (SSA).
    You or your means, as appropriate, the person who applies for 
benefits, the person for whom an application is filed, or the person who 
may consider applying for benefits.



Sec. 404.603  You must file an application to receive benefits.

    In addition to meeting other requirements, you must file an 
application to become entitled to benefits. If you believe you may be 
entitled to benefits, you should file an application. Filing an 
application will--
    (a) Permit a formal decision to be made on your entitlement to 
benefits;
    (b) Protect your entitlement to any benefits that may be payable for 
as many as 6 months or 12 months (depending on the type of benefit, as 
explained in Sec. 404.621) before the application was filed; and
    (c) Give you the right to appeal if you are dissatisfied with the 
decision.

[44 FR 37209, June 26, 1979, as amended at 46 FR 47444, Sept. 28, 1981]

                              Applications



Sec. 404.610  What makes an application a claim for benefits?

    We will consider your application a claim for benefits if it 
generally meets all of the following conditions:
    (a) You must file on a prescribed form, as stated in Sec. 404.611. 
See Sec. 422.505(a) of this chapter for the types of prescribed 
applications you can file.
    (b) You must complete and file the application with us as stated in 
Sec. 404.611 and Sec. 404.614.
    (c) You, or someone described in Sec. 404.612 who may sign an 
application for you, must sign the application.
    (d) You must be alive at the time you file (unless one of the 
limited exceptions in Sec. 404.615 applies).

[69 FR 498, Jan. 6, 2004]



Sec. 404.611  How do I file an application for Social Security benefits?

    (a) General rule. You must apply for benefits on an application that 
we prescribe. See Sec. 422.505(a) of this chapter for the types of 
applications we will accept. See Sec. 404.614 for places where you can 
file your application for benefits.
    (b) What if I file a claim with the Railroad Retirement Board (RRB)? 
If you file an application with the RRB on one of its forms for an 
annuity under section 2 of the Railroad Retirement Act, as amended, we 
will consider this an application for title II Social Security

[[Page 206]]

benefits, which you may be entitled to, unless you tell us otherwise.
    (c) What if I file a claim with the Department of Veterans Affairs 
(DVA)? If you file an application with the DVA on one of its forms for 
survivors' dependency and indemnity compensation (see section 3005 of 
title 38 U.S.C.), we will consider this an application for Social 
Security survivors' benefits, except for the lump sum death payment.

[69 FR 498, Jan. 6, 2004]



Sec. 404.612  Who may sign an application.

    We will determine who may sign an application according to the 
following rules:
    (a) A claimant who is 18 years old or over, mentally competent, and 
physically able to do so, must sign his or her own application. If the 
claim is for child's benefits for a person who is not yet 22 years old, 
the application may be signed by a parent or a person standing in place 
of the parent.
    (b) A claimant who is between 16 and 18 years old may sign his or 
her own application if he or she is mentally competent, has no court 
appointed representative, and is not in the care of any person.
    (c) If the claimant is under age 18, or mentally incompetent, or 
physically unable to sign, the application may be signed by a court 
appointed representative or a person who is responsible for the care of 
the claimant, including a relative. If the claimant is in the care of an 
institution, the manager or principal officer of the institution may 
sign the application.
    (d) If a person who could receive disability benefits or who could 
have a period of disability established dies before filing, an 
application for disability benefits or for a period of disability may be 
signed by a person who would be qualified to receive any benefits due 
the deceased.
    (e) If a written statement showing an intent to claim benefits is 
filed with us, but the person for whom the benefits are claimed dies 
before an application is filed, an application may be filed as explained 
in Sec. 404.630(d).
    (f) If a person who could receive benefits on the basis of a 
``deemed'' filing date of an application under Sec. 404.633 (b)(1)(i) 
or (b)(2)(i) dies before an application for the benefits is filed, the 
application may be signed by a person who would be qualified to receive 
any benefits due the deceased person as explained in Sec. 404.633 
(b)(1)(ii) and (b)(2)(ii).
    (g) If it is necessary to protect a claimant from losing benefits 
and there is good cause for the claimant not signing the application, we 
may accept an application signed by some one other than a person 
described in this section.

    Example: Mr. Smith comes to a social security office a few days 
before the end of a month to file an application for old-age benefits 
for his neighbor, Mr. Jones. Mr. Jones, a 63 year old widower, just 
suffered a heart attack and is in the hospital. He asked Mr. Smith to 
file the application for him. We will accept an application signed by 
Mr. Smith since it would not be possible to have Mr. Jones sign and file 
the application until the next calendar month and a loss of one month's 
benefits would result.

[44 FR 37209, June 26, 1979, as amended at 59 FR 44923, Aug. 31, 1994; 
61 FR 41330, Aug. 8, 1996]



Sec. 404.613  Evidence of authority to sign an application for another.

    (a) A person who signs an application for someone else will be 
required to provide evidence of his or her authority to sign the 
application for the person claiming benefits under the following rules:
    (1) If the person who signs is a court appointed representative, he 
or she must submit a certificate issued by the court showing authority 
to act for the claimant.
    (2) If the person who signs is not a court appointed representative, 
he or she must submit a statement describing his or her relationship to 
the claimant. The statement must also describe the extent to which the 
person is responsible for the care of the claimant. This latter 
information will not be requested if the application is signed by a 
parent for a child with whom he or she is living.
    (3) If the person who signs is the manager or principal officer of 
an institution which is responsible for the care of the claimant, he or 
she must submit a statement indicating the person's position of 
responsibility at the institution.

[[Page 207]]

    (b) We may, at any time, require additional evidence to establish 
the authority of a person to sign an application for someone else.



Sec. 404.614  When an application or other form is considered filed.

    (a) General rule. Except as otherwise provided in paragraph (b) of 
this section and in Sec. Sec. 404.630 through 404.633 which relate to 
the filing date of an application, an application for benefits, or a 
written statement, request, or notice is filed on the day it is received 
by an SSA employee at one of our offices or by an SSA employee who is 
authorized to receive it at a place other than one of our offices.
    (b) Other places and dates of filing. We will also accept as the 
date of filing--
    (1) The date an application for benefits, or a written statement, 
request or notice is received by any office of the U.S. Foreign Service 
or by the Veterans Administration Regional Office in the Philippines;
    (2) The date an application for benefits or a written statement, 
request or notice is mailed to us by the U.S. mail, if using the date we 
receive it would result in the loss or lessening of rights. The date 
shown by a U.S. postmark will be used as the date of mailing. If the 
postmark is unreadable, or there is no postmark, we will consider other 
evidence of when you mailed it to us; or
    (3) The date an application for benefits is filed with the Railroad 
Retirement Board or the Veterans Administration. See Sec. 404.611 (b) 
and (c) for an explanation of when an application for benefits filed 
with the Railroad Retirement Board or the Veterans Administration is 
considered an application for social security benefits.

[44 FR 37209, June 26, 1979, as amended at 59 FR 44923, Aug. 31, 1994]



Sec. 404.615  Claimant must be alive when an application is filed.

    A claimant must be alive at the time an application is filed. There 
are the following exceptions to this general rule:
    (a) If a disabled person dies before filing an application for 
disability benefits or a period of disability, a person who would be 
qualified to receive any benefits due the deceased may file an 
application. The application must be filed within 3 months after the 
month in which the disabled person died.
    (b) If a written statement showing an intent to claim benefits is 
filed with us, but the person for whom the benefits are claimed dies 
before an application is filed, an application may be filed as explained 
in Sec. 404.630(d).
    (c) If a person who could receive benefits on the basis of a 
``deemed'' filing date of an application under Sec. 404.633 (b)(1)(i) 
or (b)(2)(i) dies before an application for the benefits is filed, the 
application may be signed by a person who would be qualified to receive 
any benefits due the deceased person as explained in Sec. 404.633 
(b)(1)(ii) and (b)(2)(ii).

[44 FR 37209, June 26, 1979, as amended at 59 FR 44923, Aug. 31, 1994; 
61 FR 41330, Aug. 8, 1996]



Sec. 404.617  Pilot program for photographic identification of disability 
benefit applicants in designated geographic areas.

    (a) To be eligible for Social Security disability insurance benefits 
in the designated pilot geographic areas during the time period of the 
pilot, you or a person acting on your behalf must give SSA permission to 
take your photograph and make this photograph a part of the claims 
folder. You must give us this permission when you apply for benefits 
and/or when we ask for it at a later time. Failure to cooperate will 
result in denial of benefits. We will permit an exception to the 
photograph requirement when an individual has a sincere religious 
objection. This pilot will be in effect for a six-month period after 
these final rules become effective.
    (b) Designated pilot geographic areas means:
    (1) All SSA field offices in the State of South Carolina.
    (2) The Augusta, Georgia SSA field office.
    (3) All SSA field offices in the State of Kansas.
    (4) Selected SSA field offices located in New York City.

[68 FR 23194, May 1, 2003]

[[Page 208]]

                 Effective Filing Period of Application



Sec. 404.620  Filing before the first month you meet the requirements 
for benefits.

    (a) General rule. If you file an application for benefits (except 
special age 72 payments) before the first month you meet all the other 
requirements for entitlement, the application will remain in effect 
until we make a final determination on your application unless there is 
an administrative law judge hearing decision on your application. If 
there is an administrative law judge hearing decision, your application 
will remain in effect until the administrative law judge hearing 
decision is issued.
    (1) If you meet all the requirements for entitlement while your 
application is in effect, we may pay you benefits from the first month 
that you meet all the requirements.
    (2) If you first meet all the requirements for entitlement after the 
period for which your application was in effect, you must file a new 
application for benefits. In this case, we may pay you benefits only 
from the first month that you meet all the requirements based on the new 
application.
    (b) Filing for special age 72 payments. The requirements for 
entitlement to special age 72 payments must be met no later than 3 
months after the month an application is filed.

[44 FR 37209, June 26, 1979, as amended at 52 FR 4003, Feb. 9, 1987]



Sec. 404.621  What happens if I file after the first month I meet the 
requirements for benefits?

    (a) Filing for disability benefits and for old-age, survivors', or 
dependents' benefits. (1) If you file an application for disability 
benefits, widow's or widower's benefits based on disability, or wife's, 
husband's, or child's benefits based on the earnings record of a person 
entitled to disability benefits, after the first month you could have 
been entitled to them, you may receive benefits for up to 12 months 
immediately before the month in which your application is filed. Your 
benefits may begin with the first month in this 12-month period in which 
you meet all the requirements for entitlement. Your entitlement, 
however, to wife's or husband's benefits under this rule is limited by 
paragraph (a)(3) of this section.
    (2) If you file an application for old-age benefits, widow's or 
widower's benefits not based on disability, wife's, husband's, or 
child's benefits based on the earnings record of a person not entitled 
to disability benefits, or mother's, father's, or parent's benefits, 
after the first month you could have been entitled to them, you may 
receive benefits for up to 6 months immediately before the month in 
which your application is filed. Your benefits may begin with the first 
month in this 6-month period in which you meet all the requirements for 
entitlement. Your entitlement, however, to old-age, wife's, husband's, 
widow's, or widower's benefits under this rule is limited by paragraph 
(a)(3) of this section.
    (3) If the effect of the payment of benefits for a month before the 
month you file would be to reduce your benefits because of your age, you 
cannot be entitled to old-age, wife's, husband's, widow's, or widower's 
benefits for any month before the month in which your application is 
filed, unless you meet one of the conditions in paragraph (a)(4) of this 
section. (An explanation of the reduction that occurs because of age if 
you are entitled to these benefits for a month before you reach full 
retirement age, as defined in Sec. 404.409, is in Sec. 404.410.) An 
example follows that assumes you do not meet any of the conditions in 
paragraph (a)(4) of this section.

    Example: You will attain full retirement age in March 2003. If you 
apply for old-age benefits in March, you cannot be entitled to benefits 
in the 6-month period before March because the payment of benefits for 
any of these months would result in your benefits being reduced for age. 
If you do not file your application until June 2003, you may be entitled 
to benefits for the month of March, April and May because the payment of 
benefits for these months would not result in your benefits being 
reduced for age. You will not, however, receive benefits for the 3 
months before March.

    (4) The limitation in paragraph (a)(3) of this section on your 
entitlement to old-age, wife's, husband's, widow's, or widower's 
benefits for months before

[[Page 209]]

you file an application does not apply if:
    (i) You are a widow, widower, surviving divorced wife, or surviving 
divorced husband who is disabled and could be entitled to retroactive 
benefits for any month before age 60. If you could not be entitled 
before age 60, the limitation will prevent payment of benefits to you 
for past months, but it will not affect the month you become entitled to 
hospital insurance benefits.
    (ii) You are a widow, widower, or surviving divorced spouse of the 
insured person who died in the month before you applied and you were at 
least age 60 in the month of death of the insured person on whose 
earnings record you are claiming benefits. In this case, you can be 
entitled beginning with the month the insured person died if you choose 
and if you file your application on or after July 1, 1983.
    (b) Filing for lump-sum death payment. An application for a lump-sum 
death payment must be filed within 2 years after the death of the person 
on whose earnings record the claim is filed. There are two exceptions to 
the 2-year filing requirement:
    (1) If there is a good cause for failure to file within the 2-year 
period, we will consider your application as though it were filed within 
the 2-year period. Good cause does not exist if you were informed of the 
need to file an application within the 2-year period and you neglected 
to do so or did not desire to make a claim. Good cause will be found to 
exist if you did not file within the time limit due to--
    (i) Circumstances beyond your control, such as extended illness, 
mental or physical incapacity, or a language barrier;
    (ii) Incorrect or incomplete information we furnished you;
    (iii) Your efforts to get evidence to support your claim without 
realizing that you could submit the evidence after filing an 
application; or
    (iv) Unusual or unavoidable circumstances which show that you could 
not reasonably be expected to know of the time limit.
    (2) The Soldiers' and Sailors' Civil Relief Act of 1940 provides for 
extending the filing time.
    (c) Filing for special age 72 payments. An application for special 
age 72 payments is not effective as a claim for benefits for any month 
before you actually file.
    (d) Filing for a period of disability. You must file an application 
for a period of disability while you are disabled or no later than 12 
months after the month in which your period of disability ended. If you 
were unable to apply within the 12-month time period because of a 
physical or mental condition, you may apply not more than 36 months 
after your disability ended. The general rule we use to decide whether 
your failure to file was due to a physical or mental condition is stated 
in Sec. 404.322.
    (e) Filing after death of person eligible for disability benefits or 
period of disability. If you file for disability benefits or a period of 
disability for another person who died before filing an application and 
you would qualify under Sec. 404.503(b) to receive any benefits due the 
deceased, you must file an application no later than the end of the 
third month following the month in which the disabled person died.

[68 FR 4711, Jan. 30, 2003]



Sec. 404.622  Limiting an application.

    Your application may entitle you to benefits for up to 6 months or 
12 months (depending on the type of benefit, as explained in Sec. 
404.621) before the month in which it is filed. You may limit the number 
of months of your entitlement in the 6-month or 12-month period. You may 
state this choice any time before a decision is made on your claim by 
indicating, in writing, the month you want your benefits to begin. You 
may change the first month of entitlement in this 6-month or 12-month 
period after a decision has been made on your claim under the following 
conditions:
    (a) You file the request in writing.
    (b) If you are filing for the claimant, he or she is alive when the 
request is filed.
    (c) If any other person who is entitled to benefits would lose some 
or all of those benefits because of the change, that person, or the 
person who filed for him or her, consents in writing.

[[Page 210]]

    (d) Any benefit payments that would become improper as a result of 
the change in entitlement month are repaid, or we are satisfied that 
they will be repaid.

[44 FR 37209, June 26, 1979, as amended at 46 FR 47445, Sept. 28, 1981]



Sec. 404.623  Am I required to file for all benefits if I am eligible 
for old-age and husband's or wife's benefits?

    (a) Presumed filing for husband's or wife's benefits. If you file an 
application for old-age benefits, you are presumed to have filed an 
application for husband's or wife's benefits in the first month of your 
entitlement to old-age benefits, if--
    (1) Your old-age benefits are reduced for age because you choose to 
receive them before you reach full retirement age (as defined in Sec. 
404.409); and
    (2) You are eligible for either a husband's or a wife's benefit for 
the first month of your entitlement to old-age benefits.
    (b) Presumed filing for old-age benefits. If you file an application 
for a husband's or a wife's benefit, you are presumed to have filed an 
application for old-age benefits in the first month of your entitlement 
to husband's or wife's benefits if--
    (1) Your husband's or wife's benefits are reduced for age because 
you choose to receive them before you reach full retirement age (as 
defined in Sec. 404.409); and
    (2) You are eligible for old-age benefits for the first month of 
your entitlement to husband's or wife's benefits.
    (c) Exception. Paragraph (b) of this section does not apply if you 
are also entitled to disability benefits in the first month of your 
entitlement to husband's or wife's benefits. In this event, you are 
presumed to have filed for old-age benefits only if your disability 
benefits end before you reach full retirement age (as defined in Sec. 
404.409).

[68 FR 4712, Jan. 30, 2003]

                 Filing Date Based on Written Statement



Sec. 404.630  Use of date of written statement as filing date.

    If a written statement, such as a letter, indicating your intent to 
claim benefits either for yourself or for another person is filed with 
us under the rules stated in Sec. 404.614, we will use the filing date 
of the written statement as the filing date of the application, if all 
of the following requirements are met:
    (a) The statement indicates an intent to claim benefits.
    (b) The statement is signed by the claimant, the claimant's spouse, 
or a person described in Sec. 404.612. If you telephone us and advise 
us that you intend to file a claim but cannot file an application before 
the end of the month, we will prepare and sign a written statement if it 
is necessary to prevent the loss of benefits.
    (c) The claimant files an application with us on an application form 
as described in Sec. 404.611, or one is filed for the claimant by a 
person described in Sec. 404.612, within 6 months after the date of a 
notice we will send advising of the need to file an application. We will 
send the notice to the claimant. However, if it is clear from the 
information we receive that the claimant is a minor or is mentally 
incompetent, we will send the notice to the person who submitted the 
written statement.
    (d) The claimant is alive when the application is filed; or if the 
claimant has died after the written statement was filed, an application 
is filed--
    (1) By or for a person who would be eligible to receive benefits on 
the deceased's earnings record;
    (2) By a person acting for the deceased's estate; or
    (3) If the statement was filed with a hospital under Sec. 404.632, 
by the hospital if--
    (i) No person described in paragraph (d) (1) or (2) of this section 
can be located; or
    (ii) A person described in paragraphs (d) (1) or (2) of this section 
is located but refuses or fails to file the application unless the 
refusal or failure to file is because it would be harmful to the 
deceased person or the deceased's estate.



Sec. 404.631  Statements filed with the Railroad Retirement Board.

    A written statement filed with the Railroad Retirement Board will be 
considered a written statement filed with us under the rules in Sec. 
404.630 if--

[[Page 211]]

    (a) The statement indicates an intent to claim any payments under 
the Railroad Retirement Act;
    (b) It bears the signature of the person filing the statement;
    (c) No application is filed with the Railroad Retirement Board on 
one of its forms. If an application has been filed, we will use the date 
of filing of that application as determined by the Railroad Retirement 
Board (see Sec. 404.614(b)(3)); and
    (d) The statement is sent to us by the Railroad Retirement Board.



Sec. 404.632  Statements filed with a hospital.

    A statement (generally a hospital admission form) filed with a 
hospital may serve as a written statement under Sec. 404.630 if the 
requirements of this section are met. The statement will be considered 
filed with us as of the date it was filed with the hospital and will 
serve to protect entitlement to benefits. A statement filed with a 
hospital by you or some other person for you requesting or indicating an 
intent to claim benefits will be considered a written statement filed 
with us and Sec. 404.630 will apply to it if--
    (a) You are a patient in the hospital;
    (b) The hospital provides services covered by hospital insurance 
under the Medicare program;
    (c) An application has not already been filed; and
    (d) The statement is sent to us.

               Deemed Filing Date Based on Misinformation



Sec. 404.633  Deemed filing date in a case of misinformation.

    (a) General. You may have considered applying for monthly benefits 
for yourself or for another person, and you may have contacted us in 
writing, by telephone or in person to inquire about filing an 
application for these benefits. It is possible that in responding to 
your inquiry, we may have given you misinformation about your 
eligibility for such benefits, or the eligibility of the person on whose 
behalf you were considering applying for benefits, which caused you not 
to file an application at that time. If this happened, and later an 
application for such benefits is filed with us, we may establish an 
earlier filing date under this section.

    Example 1: Mrs. Smith, a widow of an insured individual, contacts a 
Social Security office when she reaches age 60 to inquire about applying 
for widow's insurance benefits. She is told by an SSA employee that she 
must be age 62 to be eligible for these benefits. This information, 
which was incorrect, causes Mrs. Smith not to file an application for 
benefits. When Mrs. Smith reaches age 62, she again contacts a Social 
Security office to ask about filing for widow's insurance benefits and 
learns that she could have received the benefits at age 60. She files an 
application for these benefits, provides the information required under 
paragraph (f) of this section to show that an SSA employee provided 
misinformation, and requests a deemed filing date based on the 
misinformation which she received from an SSA employee when she was age 
60.
    Example 2: Ms. Hill, a 22-year-old, is forced to stop work because 
of illness. When she contacts a Social Security office to inquire about 
applying for disability insurance benefits, she is told by an SSA 
employee that she must have 20 quarters of coverage out of the last 40 
calendar quarters to be insured for disability insurance benefits. The 
employee fails to consider the special rules for insured status for 
persons who become disabled before age 31 and, consequently, tells Ms. 
Hill that she is not insured because she only has 16 quarters of 
coverage. The misinformation causes Ms. Hill not to file an application 
for disability insurance benefits. Because of her illness, she is unable 
to return to work. A year later, Ms. Hill reads an article that 
indicates that there are special rules for insured status for young 
workers who become disabled. She again contacts a Social Security office 
to inquire about benefits based on disability and learns that she was 
misinformed earlier about her insured status. She files an application 
for disability insurance benefits, provides the information required 
under paragraph (f) of this section to show that an SSA employee 
provided misinformation, and requests a deemed filing date based on the 
misinformation provided to her earlier.

    (b) Deemed filing date of an application based on misinformation. 
Subject to the requirements and conditions in paragraphs (c) through (g) 
of this section, we may establish a deemed filing date of an application 
for monthly benefits under the following provisions.
    (1)(i) If we determine that you failed to apply for monthly benefits 
for yourself because we gave you misinformation about your eligibility 
for such benefits, we will deem an application

[[Page 212]]

for such benefits to have been filed with us on the later of--
    (A) The date on which the misinformation was provided to you; or
    (B) The date on which you met all of the requirements for 
entitlement to such benefits, other than the requirement of filing an 
application.
    (ii) Before we may establish a deemed filing date of an application 
for benefits for you under paragraph (b)(1)(i) of this section, you or a 
person described in Sec. 404.612 must file an application for such 
benefits. If you die before an application for the benefits is filed 
with us, we will consider establishing a deemed filing date of an 
application for such benefits only if an application for the benefits is 
filed with us by a person who would be qualified to receive any benefits 
due you.
    (2)(i) If you had authority under Sec. 404.612 to sign an 
application for benefits for another person, and we determine that you 
failed to apply for monthly benefits for that person because we gave you 
misinformation about that person's eligibility for such benefits, we 
will deem an application for such benefits to have been filed with us on 
the later of--
    (A) The date on which the misinformation was provided to you; or
    (B) The date on which the person met all of the requirements for 
entitlement to such benefits, other than the requirement of filing an 
application.
    (ii) Before we may establish a deemed filing date of an application 
for benefits for the person under paragraph (b)(2)(i) of this section, 
you, such person, or another person described in Sec. 404.612 must file 
an application for such benefits. If the person referred to in paragraph 
(b)(2)(i) of this section dies before an application for the benefits is 
filed with us, we will consider establishing a deemed filing date of an 
application for such benefits only if an application for the benefits is 
filed with us by a person who would be qualified to receive any benefits 
due the deceased person.
    (c) Requirements concerning the misinformation. We apply the 
following requirements for purposes of paragraph (b) of this section.
    (1) The misinformation must have been provided to you by one of our 
employees while he or she was acting in his or her official capacity as 
our employee. For purposes of this section, an employee includes an 
officer of SSA.
    (2) Misinformation is information which we consider to be incorrect, 
misleading, or incomplete in view of the facts which you gave to the 
employee, or of which the employee was aware or should have been aware, 
regarding your particular circumstances, or the particular circumstances 
of the person referred to in paragraph (b)(2)(i) of this section. In 
addition, for us to find that the information you received was 
incomplete, the employee must have failed to provide you with the 
appropriate, additional information which he or she would be required to 
provide in carrying out his or her official duties.
    (3) The misinformation may have been provided to you orally or in 
writing.
    (4) The misinformation must have been provided to you in response to 
a specific request by you to us for information about your eligibility 
for benefits or the eligibility for benefits of the person referred to 
in paragraph (b)(2)(i) of this section for which you were considering 
filing an application.
    (d) Evidence that misinformation was provided. We will consider the 
following evidence in making a determination under paragraph (b) of this 
section.
    (1) Preferred evidence. Preferred evidence is written evidence which 
relates directly to your inquiry about your eligibility for benefits or 
the eligibility of another person and which shows that we gave you 
misinformation which caused you not to file an application. Preferred 
evidence includes, but is not limited to, the following--
    (i) A notice, letter or other document which was issued by us and 
addressed to you; or
    (ii) Our record of your telephone call, letter or in-person contact.
    (2) Other evidence. In the absence of preferred evidence, we will 
consider other evidence, including your statements about the alleged 
misinformation, to determine whether we gave you misinformation which 
caused you not to file an application. We will not find that we gave you 
misinformation,

[[Page 213]]

however, based solely on your statements. Other evidence which you 
provide or which we obtain must support your statements. Evidence which 
we will consider includes, but is not limited to, the following--
    (i) Your statements about the alleged misinformation, including 
statements about--
    (A) The date and time of the alleged contact(s);
    (B) How the contact was made, e.g., by telephone or in person;
    (C) The reason(s) the contact was made;
    (D) Who gave the misinformation; and
    (E) The questions you asked and the facts you gave us, and the 
questions we asked and the information we gave you, at the time of the 
contact;
    (ii) Statements from others who were present when you were given the 
alleged misinformation, e.g., a neighbor who accompanied you to our 
office;
    (iii) If you can identify the employee or the employee can recall 
your inquiry about benefits--
    (A) Statements from the employee concerning the alleged contact, 
including statements about the questions you asked, the facts you gave, 
the questions the employee asked, and the information provided to you at 
the time of the alleged contact; and
    (B) Our assessment of the likelihood that the employee provided the 
alleged misinformation;
    (iv) An evaluation of the credibility and the validity of your 
allegations in conjunction with other relevant information; and
    (v) Any other information regarding your alleged contact.
    (e) Information which does not constitute satisfactory proof that 
misinformation was given. Certain kinds of information will not be 
considered satisfactory proof that we gave you misinformation which 
caused you not to file an application. Examples of such information 
include--
    (1) General informational pamphlets that we issue to provide basic 
program information;
    (2) The Personal Earnings and Benefit Estimate Statement that is 
based on an individual's reported and projected earnings and is an 
estimate which can be requested at any time;
    (3) General information which we review or prepare but which is 
disseminated by the media, e.g., radio, television, magazines, and 
newspapers; and
    (4) Information provided by other governmental agencies, e.g., the 
Department of Veterans Affairs, the Department of Defense, State 
unemployment agencies, and State and local governments.
    (f) Claim for benefits based on misinformation. You may make a claim 
for benefits based on misinformation at any time. Your claim must 
contain information that will enable us to determine if we did provide 
misinformation to you about your eligibility for benefits, or the 
eligibility of a person on whose behalf you were considering applying 
for benefits, which caused you not to file an application for the 
benefits. Specifically, your claim must be in writing and it must 
explain what information was provided; how, when and where it was 
provided and by whom; and why the information caused you not to file an 
application. If you give us this information, we will make a 
determination on such a claim for benefits if all of the following 
conditions are also met.
    (1) An application for the benefits described in paragraph (b)(1)(i) 
or (b)(2)(i) of this section is filed with us by someone described in 
paragraph (b)(1)(ii) or (b)(2)(ii) of this section, as appropriate. The 
application must be filed after the alleged misinformation was provided. 
This application may be--
    (i) An application on which we have made a previous final 
determination or decision awarding the benefits, but only if the 
claimant continues to be entitled to benefits based on that application;
    (ii) An application on which we have made a previous final 
determination or decision denying the benefits, but only if such 
determination or decision is reopened under Sec. 404.988; or
    (iii) A new application on which we have not made a final 
determination or decision.
    (2) The establishment of a deemed filing date of an application for 
benefits based on misinformation could result

[[Page 214]]

in the claimant becoming entitled to benefits or to additional benefits.
    (3) We have not made a previous final determination or decision to 
which you were a party on a claim for benefits based on alleged 
misinformation involving the same facts and issues. This provision does 
not apply, however, if the final determination or decision may be 
reopened under Sec. 404.988.
    (g) Effective date. This section applies only to misinformation 
which we provided after December 1982. In addition, this section is 
effective only for benefits payable for months after December 1982.

[59 FR 44924, Aug. 31, 1994]

                        Withdrawal of Application



Sec. 404.640  Withdrawal of an application.

    (a) Request for withdrawal filed before a determination is made. An 
application may be withdrawn before we make a determination on it if--
    (1) A written request for withdrawal is filed at a place described 
in Sec. 404.614 by the claimant or a person who may sign an application 
for the claimant under Sec. 404.612; and
    (2) The claimant is alive at the time the request is filed.
    (b) Request for withdrawal filed after a determination is made. An 
application may be withdrawn after we make a determination on it if--
    (1) The conditions in paragraph (a) of this section are met;
    (2) Any other person whose entitlement would be rendered erroneous 
because of the withdrawal consents in writing to it. Written consent for 
the person may be given by someone who could sign an application for him 
or her under Sec. 404.612; and
    (3) All benefits already paid based on the application being 
withdrawn are repaid or we are satisfied that they will be repaid.
    (c) Request for withdrawal filed after the claimant's death. An 
application may be withdrawn after the claimant's death, regardless of 
whether we have made a determination on it, if--
    (1) The claimant's application was for old-age benefits that would 
be reduced because of his or her age;
    (2) The claimant died before we certified his or her benefit 
entitlement to the Treasury Department for payment;
    (3) A written request for withdrawal is filed at a place described 
in Sec. 404.614 by or for the person eligible for widow's or widower's 
benefits based on the claimant's earnings; and
    (4) The conditions in paragraphs (b) (2) and (3) of this section are 
met.
    (d) Effect of withdrawal. If we approve a request to withdraw an 
application, the application will be considered as though it was never 
filed. If we disapprove a request for withdrawal, the application is 
treated as though the request was never filed.

[44 FR 37209, June 26, 1979, as amended at 48 FR 21931, May 16, 1983; 51 
FR 37720, Oct. 24, 1986]



Sec. 404.641  Cancellation of a request to withdraw.

    A request to withdraw an application may be cancelled and the 
application reinstated if--
    (a) A written request for cancellation is filed at a place described 
in Sec. 404.614 by the claimant or someone who may sign an application 
for the claimant under Sec. 404.612;
    (b) The claimant is alive at the time the request for cancellation 
is filed; and
    (c) For a cancellation request received after we have approved the 
withdrawal, the request is filed no later than 60 days after the date of 
the notice of approval.



                           Subpart H_Evidence

    Authority: Secs. 205(a) and 702(a)(5) of the Social Security Act (42 
U.S.C. 405(a) and 902(a)(5)).

    Source: 43 FR 24795, June 7, 1978, unless otherwise noted.

                                 General



Sec. 404.701  Introduction.

    This subpart contains the Social Security Administration's basic 
rules about what evidence is needed when a person claims old-age, 
disability, dependents' and survivors' insurance benefits as described 
in subpart D. In addition, there are special evidence requirements for 
disability benefits.

[[Page 215]]

These are contained in subpart P. Evidence of a person's earnings under 
social security is described in subpart I. Evidence needed to obtain a 
social security number card is described in part 422. Evidence 
requirements for the supplemental security income program are contained 
in part 416.



Sec. 404.702  Definitions.

    As used in this subpart:
    Apply means to sign a form or statement that the Social Security 
Administration accepts as an application for benefits under the rules 
set out in subpart G.
    Benefits means any old-age, disability, dependents' and survivors' 
insurance benefits described in subpart D, including a period of 
disability.
    Convincing evidence means one or more pieces of evidence that prove 
you meet a requirement for eligibility. See Sec. 404.708 for the guides 
we use in deciding whether evidence is convincing.
    Eligible means that a person would meet all the requirements for 
entitlement to benefits for a period of time but has not yet applied.
    Entitled means that a person has applied and has proven his or her 
right to benefits for a period of time.
    Evidence means any record, document, or signed statement that helps 
to show whether you are eligible for benefits or whether you are still 
entitled to benefits.
    Insured person means someone who has enough earnings under social 
security to permit the payment of benefits on his or her earnings 
record. He or she is fully insured, transitionally insured, currently 
insured, or insured for disability as defined in subpart B.
    We or Us refers to the Social Security Administration.
    You refers to the person who has applied for benefits, or the person 
for whom someone else has applied.



Sec. 404.703  When evidence is needed.

    When you apply for benefits, we will ask for evidence that you are 
eligible for them. After you become entitled to benefits, we may ask for 
evidence showing whether you continue to be entitled to benefits; or 
evidence showing whether your benefit payments should be reduced or 
stopped. See Sec. 404.401 for a list showing when benefit payments must 
be reduced or stopped.



Sec. 404.704  Your responsibility for giving evidence.

    When evidence is needed to prove your eligibility or your right to 
continue to receive benefit payments, you will be responsible for 
obtaining and giving the evidence to us. We will be glad to advise you 
what is needed and how to get it and we will consider any evidence you 
give us. If your evidence is a foreign-language record or document, we 
can have it translated for you. Evidence given to us will be kept 
confidential and not disclosed to anyone but you except under the rules 
set out in part 401. You should also be aware that Section 208 of the 
Social Security Act provides criminal penalties for misrepresenting the 
facts or for making false statements to obtain social security benefits 
for yourself or someone else.



Sec. 404.705  Failure to give requested evidence.

    Generally, you will be asked to give us by a certain date specific 
kinds of evidence or information to prove you are eligible for benefits. 
If we do not receive the evidence or information by that date, we may 
decide you are not eligible for benefits. If you are already receiving 
benefits, you may be asked to give us by a certain date information 
needed to decide whether you continue to be entitled to benefits or 
whether your benefits should be stopped or reduced. If you do not give 
us the requested information by the date given, we may decide that you 
are no longer entitled to benefits or that your benefits should be 
stopped or reduced. You should let us know if you are unable to give us 
the requested evidence within the specified time and explain why there 
will be a delay. If this delay is due to illness, failure to receive 
timely evidence you have asked for from another source, or a similar 
circumstance, you will be given additional time to give us the evidence.



Sec. 404.706  Where to give evidence.

    Evidence should be given to the people at a Social Security 
Administration office. In the Philippines evidence

[[Page 216]]

should be given to the people at the Veterans Administration Regional 
Office. Elsewhere outside the United States, evidence should be given to 
the people at a United States Foreign Service Office.



Sec. 404.707  Original records or copies as evidence.

    (a) General. To prove your eligibility or continuing entitlement to 
benefits, you may be asked to show us an original document or record. 
These original records or documents will be returned to you after we 
have photocopied them. We will also accept copies of original records 
that are properly certified and some uncertified birth notifications. 
These types of records are described below in this section.
    (b) Certified copies of original records. You may give us copies of 
original records or extracts from records if they are certified as true 
and exact copies by--
    (1) The official custodian of the record;
    (2) A Social Security Administration employee authorized to certify 
copies;
    (3) A Veterans Administration employee if the evidence was given to 
that agency to obtain veteran's benefits;
    (4) A U.S. Consular Officer or employee of the Department of State 
authorized to certify evidence received outside the United States; or
    (5) An employee of a State Agency or State Welfare Office authorized 
to certify copies of original records in the agency's or office's files.
    (c) Uncertified copies of original records. You may give us an 
uncertified photocopy of a birth registration notification as evidence 
where it is the practice of the local birth registrar to issue them in 
this way.



Sec. 404.708  How we decide what is enough evidence.

    When you give us evidence, we examine it to see if it is convincing 
evidence. If it is, no other evidence is needed. In deciding if evidence 
is convincing, we consider whether--
    (a) Information contained in the evidence was given by a person in a 
position to know the facts;
    (b) There was any reason to give false information when the evidence 
was created;
    (c) Information contained in the evidence was given under oath, or 
with witnesses present, or with the knowledge there was a penalty for 
giving false information;
    (d) The evidence was created at the time the event took place or 
shortly thereafter;
    (e) The evidence has been altered or has any erasures on it; and
    (f) Information contained in the evidence agrees with other 
available evidence, including our records.



Sec. 404.709  Preferred evidence and other evidence.

    If you give us the type of evidence we have shown as preferred in 
the following sections of this subpart, we will generally find it is 
convincing evidence. This means that unless we have information in our 
records that raises a doubt about the evidence, other evidence of the 
same fact will not be needed. If preferred evidence is not available, we 
will consider any other evidence you give us. If this other evidence is 
several different records or documents which all show the same 
information, we may decide it is convincing evidence even though it is 
not preferred evidence. If the other evidence is not convincing by 
itself, we will ask for additional evidence. If this additional evidence 
shows the same information, all the evidence considered together may be 
convincing. When we have convincing evidence of the facts that must be 
proven or it is clear that the evidence provided does not prove the 
necessary facts, we will make a formal decision about your benefit 
rights.

                  Evidence of Age, Marriage, and Death



Sec. 404.715  When evidence of age is needed.

    (a) If you apply for benefits, we will ask for evidence of age which 
shows your date of birth unless you are applying for--
    (1) A lump-sum death payment;
    (2) A wife's benefit and you have the insured person's child in your 
care;
    (3) A mother's or father's benefit; or

[[Page 217]]

    (4) A disability benefit (or for a period of disability) and neither 
your eligibility nor benefit amount depends upon your age.
    (b) If you apply for wife's benefits while under age 62 or if you 
apply for a mother's or father's benefit, you will be asked for evidence 
of the date of birth of the insured person's children in your care.
    (c) If you apply for benefits on the earnings record of a deceased 
person, you may be asked for evidence of his or her age if this is 
needed to decide whether he or she was insured at the time of death or 
what benefit amount is payable to you.



Sec. 404.716  Type of evidence of age to be given.

    (a) Preferred evidence. The best evidence of your age, if you can 
obtain it, is either: a birth certificate or hospital birth record 
recorded before age 5; or a religious record which shows your date of 
birth and was recorded before age 5.
    (b) Other evidence of age. If you cannot obtain the preferred 
evidence of your age, you will be asked for other convincing evidence 
that shows your date of birth or age at a certain time such as: an 
original family bible or family record; school records; census records; 
a statement signed by the physician or midwife who was present at your 
birth; insurance policies; a marriage record; a passport; an employment 
record; a delayed birth certificate, your child's birth certificate; or 
an immigration or naturalization record.



Sec. 404.720  Evidence of a person's death.

    (a) When evidence of death is required. If you apply for benefits on 
the record of a deceased person, we will ask for evidence of the date 
and place of his or her death. We may also ask for evidence of another 
person's death if this is needed to prove you are eligible for benefits.
    (b) Preferred evidence of death. The best evidence of a person's 
death is--
    (1) A certified copy or extract from the public record of death, 
coroner's report of death, or verdict of a coroner's jury; or a 
certificate by the custodian of the public record of death;
    (2) A statement of the funeral director, attending physician, intern 
of the institution where death occurred;
    (3) A certified copy of, or extract from an official report or 
finding of death made by an agency or department of the United States; 
or
    (4) If death occurred outside the United States, an official report 
of death by a United States Consul or other employee of the State 
Department; or a copy of the public record of death in the foreign 
country.
    (c) Other evidence of death. If you cannot obtain the preferred 
evidence of a person's death, you will be asked to explain why and to 
give us other convincing evidence such as: the signed statements of two 
or more people with personal knowledge of the death, giving the place, 
date, and cause of death.



Sec. 404.721  Evidence to presume a person is dead.

    If you cannot prove the person is dead but evidence of death is 
needed, we will presume he or she died at a certain time if you give us 
the following evidence:
    (a) A certified copy of, or extract from, an official report or 
finding by an agency or department of the United States that a missing 
person is presumed to be dead as set out in Federal law (5 U.S.C. 5565). 
Unless we have other evidence showing an actual date of death, we will 
use the date he or she was reported missing as the date of death.
    (b) Signed statements by those in a position to know and other 
records which show that the person has been absent from his or her 
residence and has not been heard from for at least 7 years. If the 
presumption of death is not rebutted pursuant to Sec. 404.722, we will 
use as the person's date of death either the date he or she left home, 
the date ending the 7 year period, or some other date depending upon 
what the evidence shows is the most likely date of death.
    (c) If you are applying for benefits as the insured person's 
grandchild or stepgrandchild but the evidence does not identify a 
parent, we will presume the parent died in the first month in

[[Page 218]]

which the insured person became entitled to to benefits.

[43 FR 24795, June 7, 1978, as amended at 60 FR 19164, Apr. 17, 1995]



Sec. 404.722  Rebuttal of a presumption of death.

    A presumption of death made based on Sec. 404.721(b) can be 
rebutted by evidence that establishes that the person is still alive or 
explains the individual's absence in a manner consistent with continued 
life rather than death.

    Example 1: Evidence in a claim for surviving child's benefits showed 
that the worker had wages posted to his earnings record in the year 
following the disappearance. It was established that the wages belonged 
to the worker and were for work done after his ``disappearance.'' In 
this situation, the presumption of death is rebutted by evidence (wages 
belonging to the worker) that the person is still alive after the 
disappearance.
    Example 2: Evidence shows that the worker left the family home 
shortly after a woman, whom he had been seeing, also disappeared, and 
that the worker phoned his wife several days after the disappearance to 
state he intended to begin a new life in California. In this situation 
the presumption of death is rebutted because the evidence explains the 
worker's absence in a manner consistent with continued life.

[60 FR 19165, Apr. 17, 1995]



Sec. 404.723  When evidence of marriage is required.

    If you apply for benefits as the insured person's husband or wife, 
widow or widower, divorced wife or divorced husband, we will ask for 
evidence of the marriage and where and when it took place. We may also 
ask for this evidence if you apply for child's benefits or for the lump-
sum death payment as the widow or widower. If you are a widow, widower, 
or divorced wife who remarried after your marriage to the insured person 
ended, we may also ask for evidence of the remarriage. You may be asked 
for evidence of someone else's marriage if this is necessary to prove 
your marriage to the insured person was valid. In deciding whether the 
marriage to the insured person is valid or not, we will follow the law 
of the State where the insured person had his or her permanent home when 
you applied or, if earlier, when he or she died--see Sec. 404.770. What 
evidence we will ask for depends upon whether the insured person's 
marriage was a ceremonial marriage, a common-law marriage, or a marriage 
we will deem to be valid.

[43 FR 24795, June 7, 1978, as amended at 44 FR 34493, June 15, 1979]



Sec. 404.725  Evidence of a valid ceremonial marriage.

    (a) General. A valid ceremonial marriage is one that follows 
procedures set by law in the State or foreign country where it takes 
place. These procedures cover who may perform the marriage ceremony, 
what licenses or witnesses are needed, and similar rules. A ceremonial 
marriage can be one that follows certain tribal Indian custom, Chinese 
custom, or similar traditional procedures. We will ask for the evidence 
described in this section.
    (b) Preferred evidence. Preferred evidence of a ceremonial marriage 
is--
    (1) If you are applying for wife's or husband's benefits, signed 
statements from you and the insured about when and where the marriage 
took place. If you are applying for the lump-sum death payment as the 
widow or widower, your signed statement about when and where the 
marriage took place; or
    (2) If you are applying for any other benefits or there is evidence 
causing some doubt about whether there was a ceremonial marriage: a copy 
of the public record of marriage or a certified statement as to the 
marriage; a copy of the religious record of marriage or a certified 
statement as to what the record shows; or the original marriage 
certificate.
    (c) Other evidence of a ceremonial marriage. If preferred evidence 
of a ceremonial marriage cannot be obtained, we will ask you to explain 
why and to give us a signed statement of the clergyman or official who 
held the marriage ceremony, or other convincing evidence of the 
marriage.



Sec. 404.726  Evidence of common-law marriage.

    (a) General. A common-law marriage is one considered valid under 
certain State laws even though there was no formal ceremony. It is a 
marriage between two persons free to marry, who

[[Page 219]]

consider themselves married, live together as man and wife, and, in some 
States, meet certain other requirements. We will ask for the evidence 
described in this section.
    (b) Preferred evidence. Preferred evidence of a common-law marriage 
is--
    (1) If both the husband and wife are alive, their signed statements 
and those of two blood relatives;
    (2) If either the husband or wife is dead, the signed statements of 
the one who is alive and those of two blood relatives of the deceased 
person; or
    (3) If both the husband and wife are dead, the signed statements of 
one blood relative of each;
    Note: All signed statements should show why the signer believes 
there was a marriage between the two persons. If a written statement 
cannot be gotten from a blood relative, one from another person can be 
used instead.
    (c) Other evidence of common-law marriage. If you cannot get 
preferred evidence of a common-law marriage, we will ask you to explain 
why and to give us other convincing evidence of the marriage. We may not 
ask you for statements from a blood relative or other person if we 
believe other evidence presented to us proves the common-law marriage.



Sec. 404.727  Evidence of a deemed valid marriage.

    (a) General. A deemed valid marriage is a ceremonial marriage we 
consider valid even though the correct procedures set by State law were 
not strictly followed or a former marriage had not yet ended. We will 
ask for the evidence described in this section.
    (b) Preferred evidence. Preferred evidence of a deemed valid 
marriage is--
    (1) Evidence of the ceremonial marriage as described in Sec. 
404.725(b)(2);
    (2) If the insured person is alive, his or her signed statement that 
the other party to the marriage went through the ceremony in good faith 
and his or her reasons for believing the marriage was valid or believing 
the other party thought it was valid;
    (3) The other party's signed statement that he or she went through 
the marriage ceremony in good faith and his or her reasons for believing 
it was valid;
    (4) If needed to remove a reasonable doubt, the signed statements of 
others who might have information about what the other party knew about 
any previous marriage or other facts showing whether he or she went 
through the marriage in good faith; and
    (5) Evidence the parties to the marriage were living in the same 
household when you applied for benefits or, if earlier, when the insured 
person died (see Sec. 404.760).
    (c) Other evidence of a deemed valid marriage. If you cannot obtain 
preferred evidence of a deemed valid marriage, we will ask you to 
explain why and to give us other convincing evidence of the marriage.



Sec. 404.728  Evidence a marriage has ended.

    (a) When evidence is needed that a marriage has ended. If you apply 
for benefits as the insured person's divorced wife or divorced husband, 
you will be asked for evidence of your divorce. If you are the insured 
person's widow or divorced wife who had remarried but that husband died, 
we will ask you for evidence of his death. We may ask for evidence that 
a previous marriage you or the insured person had was ended before you 
married each other if this is needed to show the latter marriage was 
valid. If you apply for benefits as an unmarried person and you had a 
marriage which was annulled, we will ask for evidence of the annulment. 
We will ask for the evidence described in this section.
    (b) Preferred evidence. Preferred evidence a marriage has ended is--
    (1) A certified copy of the decree of divorce or annulment; or
    (2) Evidence the person you married has died (see Sec. 404.720).
    (c) Other evidence a marriage has ended. If you cannot obtain 
preferred evidence the marriage has ended, we will ask you to explain 
why and to give us other convincing evidence the marriage has ended.

[43 FR 24795, June 7, 1978, as amended at 44 FR 34493, June 15, 1979]

[[Page 220]]

               Evidence for Child's and Parent's Benefits



Sec. 404.730  When evidence of a parent or child relationship is needed.

    If you apply for parent's or child's benefits, we will ask for 
evidence showing your relationship to the insured person. What evidence 
we will ask for depends on whether you are the insured person's natural 
parent or child; or whether you are the stepparent, stepchild, 
grandchild, stepgrandchild, adopting parent or adopted child.



Sec. 404.731  Evidence you are a natural parent or child.

    If you are the natural parent of the insured person, we will ask for 
a copy of his or her public or religious birth record made before age 5. 
If you are the natural child of the insured person, we will ask for a 
copy of your public or religious birth record made before age 5. In 
either case, if this record shows the same last name for the insured and 
the parent or child, we will accept it as convincing evidence of the 
relationship. However, if other evidence raises some doubt about this 
record or if the record cannot be gotten, we will ask for other evidence 
of the relationship. We may also ask for evidence of marriage of the 
insured person or of his or her parent if this is needed to remove any 
reasonable doubt about the relationship. To show you are the child of 
the insured person, you may be asked for evidence you would be able to 
inherit his or her personal property under State law where he or she had 
a permanent home (see Sec. 404.770). In addition, we may ask for the 
insured persons signed statement that you are his or her natural child, 
or for a copy of any court order showing the insured has been declared 
to be your natural parent or any court order requiring the insured to 
contribute to you support because you are his or her son or daughter.



Sec. 404.732  Evidence you are a stepparent or stepchild.

    If you are the stepparent or stepchild of the insured person, we 
will ask for the evidence described in Sec. 404.731 or Sec. 404.733 
that which shows your natural or adoptive relationship to the insured 
person's husband, wife, widow, or widower. We will also ask for evidence 
of the husband's, wife's, widow's, or widower's marriage to the insured 
person--see Sec. 404.725.



Sec. 404.733  Evidence you are the legally adopting parent or legally 
adopted child.

    If you are the adopting parent or adopted child, we will ask for the 
following evidence:
    (a) A copy of the birth certificate made following the adoption; or 
if this cannot be gotten, other evidence of the adoption; and, if 
needed, evidence of the date of adoption;
    (b) If the widow or widower adopted the child after the insured 
person died, the evidence described in paragraph (a) of this section; 
your written statement whether the insured person was living in the same 
household with the child when he or she died (see Sec. 404.760); what 
support the child was getting from any other person or organization; and 
if the widow or widower had a deemed valid marriage with the insured 
person, evidence of that marriage--see Sec. 404.727;
    (c) If you are the insured's stepchild, grandchild, or 
stepgrandchild as well as his or her adopted child, we may also ask you 
for evidence to show how you were related to the insured before the 
adoption.



Sec. 404.734  Evidence you are an equitably adopted child.

    In many States, the law will treat someone as a child of another if 
he or she agreed to adopt the child, the natural parents or the person 
caring for the child were parties to the agreement, he or she and the 
child then lived together as parent and child, and certain other 
requirements are met. If you are a child who had this kind or 
relationship to the insured person (or to the insured persons's wife, 
widow, or husband), we will ask for evidence of the agreement if it is 
in writing. If it is not in writing or cannot be gotten, other evidence 
may be accepted. Also, the following evidence will be asked for: Written 
statements of your natural parents and the adopting parents and other 
evidence of the child's relationship to the adopting parents.

[[Page 221]]



Sec. 404.735  Evidence you are the grandchild or stepgrandchild.

    If you are the grandchild or stepgrandchild of the insured person, 
we will ask you for the kind of evidence described in Sec. Sec. 404.731 
through 404.733 that shows your relationship to your parent and your 
parent's relationship to the insured.



Sec. 404.736  Evidence of a child's dependency.

    (a) When evidence of a child's dependency is needed. If you apply 
for child's benefit's we may ask for evidence you were the insured 
person's dependent at a specific time--usually the time you applied or 
the time the insured died or became disabled. What evidence we ask for 
depends upon how you are related to the insured person.
    (b) Natural or adopted child. If you are the insured person's 
natural or adopted child, we may ask for the following evidence:
    (1) A signed statement by someone who knows the facts that confirms 
this relationship and which shows whether you were legally adopted by 
someone other than the insured. If you were adopted by someone else 
while the insured person was alive, but the adoption was annulled, we 
may ask for a certified copy of the annulment decree or other convincing 
evidence of the annulment.
    (2) A signed statement by someone in a position to know showing when 
and where you lived with the insured and when and why you may have lived 
apart; and showing what contributions the insured made to your support 
and when and how they were made.
    (c) Stepchild. If you are the insured person's stepchild, we will 
ask for the following evidence:
    (1) A signed statement by someone in a position to know--showing 
when and where you lived with the insured and when and why you may have 
lived apart.
    (2) A signed statement by someone in a position to know showing you 
received at least one-half of your support from the insured for the one-
year period ending at one of the times mentioned in paragraph (a) of 
this section; and the income end support you had in this period from any 
other source.
    (d) Grandchild or Stepgrandchild. If you are the insured person's 
grandchild or stepgrandchild, we will ask for evidence described in 
paragraph (c) of this section showing that you were living together with 
the insured and receiving one-half of your support from him or her for 
the year before the insured became entitled to benefits or to a period 
of disability, or died. We will also ask for evidence of your parent's 
death or disability.



Sec. 404.745  Evidence of school attendance for child age 18 or older.

    If you apply for child's benefits as a student age 18 or over, we 
may ask for evidence you are attending school. We may also ask for 
evidence from the school you attend showing your status at the school. 
We will ask for the following evidence:
    (a) Your signed statement that you are attending school full-time 
and are not being paid by an employer to attend school.
    (b) If you apply before the school year has started and the school 
is not a high school, a letter of acceptance from the school, receipted 
bill, or other evidence showing you have enrolled or been accepted at 
that school.



Sec. 404.750  Evidence of a parent's support.

    If you apply for parent's benefits, we will ask you for evidence to 
show that you received at least one-half of your support from the 
insured person in the one-year period before he or she died or became 
disabled. We may also ask others who know the facts for a signed 
statement about your sources of support. We will ask you for the 
following evidence:
    (a) The parent's signed statement showing his or her income, any 
other sources of support, and the amount from each source over the one-
year period.
    (b) If the statement described in paragraph (a) of this section 
cannot be obtained, other convincing evidence that the parent received 
one-half of his or her support from the insured person.

[[Page 222]]

                       Other Evidence Requirements



Sec. 404.760  Evidence of living in the same household with insured person.

    If you apply for the lump-sum death payment as the insured person's 
widow or widower, or for wife's, husband's, widow's, or widower's 
benefits based upon a deemed valid marriage as described in Sec. 
404.727, we will ask for evidence you and the insured were living 
together in the same household when he or she died; or if the insured is 
alive, when you applied for benefits. We will ask for the following as 
evidence of this:
    (a) If the insured person is living, his or her signed statement and 
yours showing whether you were living together when you applied for 
benefits.
    (b) If the insured person is dead, your signed statement showing 
whether you were living together when he or she died.
    (c) If you and the insured person were temporarily living apart, a 
signed statement explaining where each was living, how long the 
separation lasted, and why you were separated. If needed to remove any 
reasonable doubts about this, we may ask for the signed statements of 
others in a position to know, or for other convincing evidence you and 
the insured were living together in the same household.



Sec. 404.762  Evidence of having a child in your care.

    If you are under age 65 and apply for wife's benefits based upon 
caring for a child, or for mother's benefits as a widow or divorced 
wife, or for father's benefits as a widower, we will ask for evidence 
that you have the insured person's child in your care. What evidence we 
will ask for depends upon whether the child is living with you or with 
someone else. You will be asked to give the following evidence:
    (a) If the child is living with you, your signed statement showing 
that the child is living with you.
    (b) If the child is living with someone else--
    (1) Your signed statement showing with whom he or she is living and 
why he or she is living with someone else. We will also ask when he or 
she last lived with you and how long this separation will last, and what 
care and contributions you provide for the child;
    (2) The signed statement of the one with whom the child is living 
showing what care you provide and the sources and amounts of support 
received for the child. If the child is in an institution, an official 
there should sign the statement. These statements are preferred 
evidence. If there is a court order or written agreement showing who has 
custody of the child, you may be asked to give us a copy; and
    (3) If you cannot get the preferred evidence described in paragraph 
(b)(2) of this section, we will ask for other convincing evidence that 
the child is in your care.



Sec. 404.770  Evidence of where the insured person had a permanent home.

    (a) When evidence of the insured's permanent home is needed. We may 
ask for evidence of where the insured person's permanent home was at the 
time you applied or, if earlier, the time he or she died if--
    (1) You apply for benefits as the insured's wife, husband, widow, 
widower, parent or child; and
    (2) Your relationship to the insured depends upon the State law that 
would be followed in the place where the insured had his or her 
permanent home when you applied for benefits or when he or she died.
    (b) What evidence is needed. We will ask for the following evidence 
of the insured person's permanent home:
    (1) Your signed statement showing where the insured considered his 
permanent home to be.
    (2) If the statement in paragraph (b)(1) of this section or other 
evidence we have raises a reasonable doubt about where the insured's 
permanent home was, evidence of where he or she paid personal, property, 
or income taxes, or voted; or other convincing evidence of where his or 
her permanent home was.



Sec. 404.780  Evidence of ``good cause'' for exceeding time limits on 
accepting proof of support or application for a lump-sum death payment.

    (a) When evidence of good cause is needed. We may ask for evidence 
that

[[Page 223]]

you had good cause (as defined in Sec. 404.370(f)) for not giving us 
sooner proof of the support you received from the insured as his or her 
parent. We may also ask for evidence that you had good cause (as defined 
in Sec. 404.621(b)) for not applying sooner for the lump-sum death 
payment. You may be asked for evidence of good cause for these delays 
if--
    (1) You are the insured person's parent giving us proof of support 
more than 2 years after he or she died, or became disabled; or
    (2) You are applying for the lump-sum death payment more than 2 
years after the insured died.
    (b) What evidence of good cause is needed. We will ask for the 
following evidence of good cause:
    (1) Your signed statement explaining why you did not give us the 
proof of support or the application for lump-sum death payment within 
the specified 2 year period.
    (2) If the statement in paragraph (b)(1) of the section or other 
evidence raises a reasonable doubt whether there was good cause, other 
convincing evidence of this.

[43 FR 24795, June 7, 1978, as amended at 44 FR 34493, June 15, 1979]



                      Subpart I_Records of Earnings

    Authority: Secs. 205(a), (c)(1), (c)(2)(A), (c)(4), (c)(5), (c)(6), 
and (p), 702(a)(5), and 1143 of the Social Security Act (42 U.S.C. 
405(a), (c)(1), (c)(2)(A), (c)(4), (c)(5), (c)(6), and (p), 902(a)(5), 
and 1320b-13).

    Source: 44 FR 38454, July 2, 1979, unless otherwise noted.

                           General Provisions



Sec. 404.801  Introduction.

    The Social Security Administration (SSA) keeps a record of the 
earnings of all persons who work in employment or self-employment 
covered under social security. We use these earnings records to 
determine entitlement to and the amount of benefits that may be payable 
based on a person's earnings under the retirement, survivors', 
disability and health insurance program. This subpart tells what is 
evidence of earnings, how you can find out what the record of your 
earnings shows, and how and under what circumstances the record of your 
earnings may be changed to correct errors.



Sec. 404.802  Definitions.

    For the purpose of this subpart--
    Earnings means wages and self-employment income earned by a person 
based on work covered by social security. (See subpart K for the rules 
about what constitutes wages and self-employment income for benefit 
purposes.)
    Period means a taxable year when referring to self-employment 
income. When referring to wages it means a calendar quarter if the wages 
were reported or should have been reported quarterly by your employer or 
a calendar year if the wages were reported or should have been reported 
annually by your employer.
    Record of earnings, earnings record, or record means SSA's records 
of the amounts of wages paid to you and the amounts of self-employment 
income you received, the periods in which the wages were paid and the 
self-employment income was received, and the quarters of coverage which 
you earned based on these earnings.
    Survivor means your spouse, divorced wife, child, or parent, who 
survives you. Survivor also includes your surviving divorced wife who 
may be entitled to benefits as a surviving divorced mother.
    Tax return means, as appropriate, a tax return of wages or a tax 
return of self-employment income (including information returns and 
other written statements filed with the Commissioner of Internal Revenue 
under chapter 2 or 21 of the Internal Revenue Code of 1954, as amended).
    Time limit means a period of time 3 years, 3 months, and 15 days 
after any year in which you received earnings. The period may be 
extended by the Soldiers and Sailors Relief Act of 1940 because of your 
military service or the military service of certain relatives who 
survive you (50 U.S.C. App. 501 and following sections). Where the time 
limit ends on a Federal nonwork day, we will extend it to the next 
Federal work day.

[[Page 224]]

    Wage report means a statement filed by a State under section 218 of 
the Social Security Act or related regulations. This statement includes 
wage amounts for which a State is billed and wage amounts for which 
credits or refunds are made to a State according to an agreement under 
section 218 of the Act.
    We, us, or our means the Social Security Administration (SSA).
    Year means a calendar year when referring to wages and a taxable 
year when referring to self-employment income.
    You or your means any person for whom we maintain a record of 
earnings.



Sec. 404.803  Conclusiveness of the record of your earnings.

    (a) Generally. For social security purposes, SSA records are 
evidence of the amounts of your earnings and the periods in which they 
were received.
    (b) Before time limit ends. Before the time limit ends for a year, 
SSA records are evidence, but not conclusive evidence, of the amounts 
and periods of your earnings in that year.
    (c) After time limit ends. After the time limit ends for a year--
    (1) If SSA records show an entry of self-employment income or wages 
for an employer for a period in that year, our records are conclusive 
evidence of your self-employment income in that year or the wages paid 
to you by that employer and the periods in which they were received 
unless one of the exceptions in Sec. 404.822 applies;
    (2) If SSA records show no entry of wages for an employer for a 
period in that year, our records are conclusive evidence that no wages 
were paid to you by that employer in that period unless one of the 
exceptions in Sec. 404.822 applies; and
    (3) If SSA records show no entry of self-employment income for that 
year, our records are conclusive evidence that you did not receive self-
employement income in that year unless the exception in Sec. 
404.822(b)(2) (i) or (iii) applies.

                     Obtaining Earnings Information



Sec. 404.810  How to obtain a statement of earnings and a benefit estimate 
statement.

    (a) Right to a statement of earnings and a benefit estimate. You or 
your legal representative or, after your death, your survivor or the 
legal representative of your estate may obtain a statement of your 
earnings as shown on our records at the time of the request. If you have 
a social security number and have wages or net earnings from self-
employment, you may also request and receive an earnings statement that 
will include an estimate of the monthly old-age, disability, 
dependents', and survivors' insurance benefits potentially payable on 
your earnings record, together with a description of the benefits 
payable under the medicare program. You may request these statements by 
writing, calling, or visiting a social security office.
    (b) Contents of request. When you request a statement of your 
earnings, we will ask you to complete a prescribed form, giving us your 
name, social security number, date of birth, and sex. You, your 
authorized representative or, after your death, your survivor or the 
legal representative of your estate will be asked to sign and date the 
form. If you are requesting an estimate of the monthly benefits 
potentially payable on your earnings record, we will also ask you to 
give us the amount of your earnings for the last year, an estimate of 
your earnings for the current year, an estimate of your earnings for 
future years before your planned retirement, and the age at which you 
plan to retire, so that we can give you a more realistic estimate of the 
benefits that may be payable on your record. A request for a statement 
of earnings and a benefit estimate not made on the prescribed form will 
be accepted if the request is in writing, is signed and dated by the 
appropriate individual noted above, and contains all the information 
that is requested on the prescribed form.

[57 FR 54918, Nov. 23, 1992]

[[Page 225]]



Sec. 404.811  The statement of earnings and benefit estimates you requested.

    (a) General. After receiving a request for a statement of earnings 
and the information we need to comply with the request, we will provide 
you or your authorized representative a statement of the earnings we 
have credited to your record at the time of your request. With the 
statement of earnings, we will include estimates of the benefits 
potentially payable on your record, unless you do not have the required 
credits (quarters of coverage) for any kind of benefit(s). (However, see 
paragraph (b)(3) of this section regarding the possibility of our 
estimating up to eight additional credits on your record.) If we do not 
provide a statement of earnings and an estimate of all the benefits 
potentially payable, or any other information you requested, we will 
explain why.
    (b) Contents of statement of earnings and benefit estimates. The 
statement of your earnings and benefit estimates will contain the 
following information:
    (1) Your social security taxed earnings as shown by our records as 
of the date of your request;
    (2) An estimate of the social security and medicare hospital 
insurance taxes paid on your earnings (although we do not maintain such 
tax information);
    (3) The number of credits, i.e., quarters of coverage, not exceeding 
40, you have for both social security and medicare hospital insurance 
purposes, and the number you need to be eligible for social security and 
also for medicare hospital insurance coverage. If you do not already 
have the required credits (quarters of coverage) to be eligible to 
receive social security benefits and medicare hospital insurance 
coverage, we may include up to eight additional estimated credits (four 
per year) based on the earnings you told us you had for last year and 
this year that we have not yet entered on your record;
    (4) A statement as to whether you meet the credits (quarters of 
coverage) requirements, as described in subpart B of this part, for each 
type of social security benefit when we prepare the benefit estimates, 
and also whether you are eligible for medicare hospital insurance 
coverage;
    (5) Estimates of the monthly retirement (old-age), disability, 
dependents' and survivors' insurance benefits potentially payable on 
your record if you meet the credits (quarters of coverage) requirements. 
The benefit estimates we send you will be based partly on your stated 
earnings for last year (if not yet on your record), your estimate of 
your earnings for the current year and for future years before you plan 
to retire, and on the age at which you plan to retire. The estimate will 
include the retirement (old-age) insurance benefits you could receive at 
age 62 (or your current age if you are already over age 62), at full 
retirement age (currently age 65 to 67, depending on your year of birth) 
or at your current age if you are already over full retirement age, and 
at age 70;
    (6) A description of the coverage under the medicare program;
    (7) A reminder of your right to request a correction of your 
earnings record; and
    (8) A remark that an annually updated statement is available on 
request.

[61 FR 18076, Apr. 24, 1996]



Sec. 404.812  Statement of earnings and benefit estimates sent without request.

    (a) Who will be sent a statement. Unless one of the conditions in 
paragraph (b) of this section applies to you, we will send you, without 
request, a statement of earnings and benefit estimates if:
    (1) You have a social security account number;
    (2) You have wages or net earnings from self-employment on your 
social security record;
    (3) You have attained age 25 or older, as explained in paragraph 
(c)(3) of this section; and
    (4) We can determine your current mailing address.
    (b) Who will not be sent a statement. We will not send you an 
unrequested statement if any of the following conditions apply:
    (1) You do not meet one or more of the conditions of paragraph (a) 
of this section;
    (2) Our records contain a notation of your death;

[[Page 226]]

    (3) You are entitled to benefits under title II of the Act;
    (4) We have already sent you a statement, based on your request, in 
the fiscal year we selected you to receive an unrequested statement;
    (5) We cannot obtain your address (see paragraph (c)(2) of this 
section); or
    (6) We are correcting your social security earnings record when we 
select you to receive a statement of earnings and benefit estimates.
    (c) The selection and mailing process. Subject to the provisions of 
paragraphs (a) and (b) of this section, we will use the following 
process for sending statements without requests:
    (1) Selection. We will use our records of assigned social security 
account numbers to identify individuals to whom we will send statements.
    (2) Addresses. If you are living in one of the 50 States or the 
District of Columbia, our current procedure is to get your address from 
individual taxpayer files of the Internal Revenue Service, as authorized 
by section 6103(m)(7) of the Internal Revenue Code (26 U.S.C. 
6103(m)(7)). If you live in Puerto Rico, the Virgin Islands, or Guam, we 
will get your address from the taxpayer records of the place in which 
you live.
    (3) Age. If you have attained age 60 on or before September 30, 
1995, we will send you a statement by that date. If you attain age 60 on 
or after October 1, 1995 but no later than September 30, 1999, we will 
send you a statement in the fiscal year in which you attain age 60, or 
in an earlier year as resources allow. Also, we will inform you that an 
annually updated statement is available on request. Beginning October 1, 
1999, we will send you a statement each year in which you are age 25 or 
older.
    (4) Ineligible. If we do not send you a statement because one or 
more conditions in paragraph (b) of this section apply when you are 
selected, we will send a statement in the first appropriate fiscal year 
thereafter in which you do qualify.
    (5) Undeliverable. If the statement we send you is returned by the 
Post Office as undeliverable, we will not remail it.
    (d) Contents of statement of earnings and benefit estimates. To 
prepare your statement and estimate your benefits, we will use the 
earnings in our records. If there are earnings recorded for you in 
either of the two years before the year in which you are selected to get 
a statement, we will use the later of these earnings as your earnings 
for the current year and future years when we estimate your benefits. In 
addition, if you do not already have the required credits (quarters of 
coverage) to be eligible to receive benefits, we will use that last 
recorded earnings amount to estimate up to eight additional credits 
(four per year) for last year and the current year if they are not yet 
entered on your record. If there are no earnings entered on your record 
in either of the two years preceding the year of selection, we will not 
estimate current and future earnings or additional credits for you. Your 
earnings and benefit estimates statement will contain the following 
information:
    (1) Your social security taxed earnings as shown by our records as 
of the date we select you to receive a statement;
    (2) An estimate of the social security and medicare hospital 
insurance taxes paid on your earnings (although we do not maintain such 
tax information);
    (3) The number of credits, i.e., quarters of coverage, not exceeding 
40 (as described in paragraph (d) of this section), that you have for 
both social security and medicare hospital insurance purposes, and the 
number you need to be eligible for social security benefits and also for 
medicare hospital insurance coverage;
    (4) A statement as to whether you meet the credit (quarters of 
coverage) requirements, as described in subpart B of this part, for each 
type of social security benefit when we prepare the benefit estimates, 
and also whether you are eligible for medicare hospital insurance 
coverage;
    (5) Estimates of the monthly retirement (old-age), disability, 
dependents' and survivors' insurance benefits potentially payable on 
your record if you meet the credits (quarters of coverage) requirements. 
If you are age 50 or older, the estimates will include the retirement 
(old-age) insurance benefits you could receive at age 62 (or your 
current age if you are already over age 62), at full retirement age 
(currently age 65 to 67, depending on your year of

[[Page 227]]

birth) or at your current age if you are already over full retirement 
age, and at age 70. If you are under age 50, instead of estimates, we 
may provide a general description of the benefits (including auxiliary 
benefits) that are available upon retirement;
    (6) A description of the coverage provided under the medicare 
program;
    (7) A reminder of your right to request a correction of your 
earnings record; and
    (8) A remark that an annually updated statement is available on 
request.

[61 FR 18077, Apr. 24, 1996]

                     Correcting the Earnings Record



Sec. 404.820  Filing a request for correction of the record of your earnings.

    (a) When to file a request for correction. You or your survivor must 
file a request for correction of the record of your earnings within the 
time limit for the year being questioned unless one of the exceptions in 
Sec. 404.822 applies.
    (b) Contents of a request. (1) A request for correction of an 
earnings record must be in writing and must state that the record is 
incorrect.
    (2) A request must be signed by you or your survivor or by a person 
who may sign an application for benefits for you or for your survivor as 
described in Sec. 404.612.
    (3) A request should state the period being questioned.
    (4) A request should describe, or have attached to it, any available 
evidence which shows that the record of earnings is incorrect.
    (c) Where to file a request. A request may be filed with an SSA 
employee at one of our offices or with an SSA employee who is authorized 
to receive a request at a place other than one of our offices. A request 
may be filed with the Veterans Administration Regional Office in the 
Philippines or with any U.S. Foreign Service Office.
    (d) When a request is considered filed. A request is considered 
filed on the day it is received by any of our offices, by an authorized 
SSA employee, by the Veterans Administration Regional Office in the 
Philippines, or by any U.S. Foreign Service Office. If using the date we 
receive a mailed request disadvantages the requester, we will use the 
date the request was mailed to us as shown by a U.S. postmark. If the 
postmark is unreadable or there is no postmark, we will consider other 
evidence of the date when the request was mailed.
    (e) Withdrawal of a request for correction. A request for correction 
of SSA records of your earnings may be withdrawn as described in Sec. 
404.640.
    (f) Cancellation of a request to withdraw. A request to withdraw a 
request for correction of SSA records of your earnings may be cancelled 
as described in Sec. 404.641.
    (g) Determinations on requests. When we receive a request described 
in this section, we will make a determination to grant or deny the 
request. If we deny the request, this determination may be appealed 
under the provisions of subpart J of this part.



Sec. 404.821  Correction of the record of your earnings before the time 
limit ends.

    Before the time limit ends for any year, we will correct the record 
of your earnings for that year for any reason if satisfactory evidence 
shows SSA records are incorrect. We may correct the record as the result 
of a request filed under Sec. 404.820 or we may correct it on our own.



Sec. 404.822  Correction of the record of your earnings after the time 
limit ends.

    (a) Generally. After the time limit for any year ends, we may 
correct the record of your earnings for that year if satisfactory 
evidence shows SSA records are incorrect and any of the circumstances in 
paragraphs (b) through (e) of this section applies.
    (b) Correcting SSA records to agree with tax returns. We will 
correct SSA records to agree with a tax return of wages or self-
employment income to the extent that the amount of earnings shown in the 
return is correct.
    (1) Tax returns of wages. We may correct the earnings record to 
agree with a tax return of wages or with a wage report of a State.
    (2) Tax returns of self-employment income--(i) Return filed before 
the time

[[Page 228]]

limit ended. We may correct the earnings record to agree with a tax 
return of self-employment income filed before the end of the time limit.
    (ii) Return filed after time limit ended. We may remove or reduce, 
but not increase, the amount of self-employment income entered on the 
earnings record to agree with a tax return of self-employment income 
filed after the time limit ends.
    (iii) Self-employment income entered in place of erroneously entered 
wages. We may enter self-employment income for any year up to an amount 
erroneously entered in SSA records as wages but which was later removed 
from the records. However, we may enter self-employment income under 
this paragraph only if--
    (A) An amended tax return is filed before the time limit ends for 
the year in which the erroneously entered wages were removed; or
    (B) Net earnings from self-employment, which are not already entered 
in the record of your earnings, were included in a tax return filed 
before the end of the time limit for the year in which the erroneously 
entered wages were removed.
    (c) Written request for correction or application for benefits filed 
before the time limit ends--(1) Written request for correction. We may 
correct an earnings record if you or your survivor files a request for 
correction before the time limit for that year ends. The request must 
state that the earnings record for that year is incorrect. However, we 
may not correct the record under this paragraph after our determination 
on the request becomes final.
    (2) Application for benefits. We may correct an earnings record if 
an application is filed for monthly benefits or for a lump-sum death 
payment before the time limit for that year ends. However, we may not 
correct the record under this paragraph after our determination on the 
application becomes final.
    (3) See subpart J for the rules on the finality of determinations.
    (d) Transfer of wages to or from the Railroad Retirement Board--(1) 
Wages erroneously reported. We may transfer to or from the records of 
the Railroad Retirement Board earnings which were erroneously reported 
to us or to the Railroad Retirement Board.
    (2) Earnings certified by Railroad Retirement Board. We may enter 
earnings for railroad work under subpart O if the earnings are certified 
by the Railroad Retirement Board.
    (e) Other circumstances permitting correction--(1) Investigation 
started before time limit ends. We may correct an earnings record if the 
correction is made as the result of an investigation started before, but 
completed after the time limit ends. An investigation is started when we 
take an affirmative step leading to a decision on a question about the 
earnings record, for example, an investigation is started when one SSA 
unit asks another unit to obtain additional information or evidence. We 
will remove or reduce earnings on the record under this paragraph only 
if we carried out the investigation as promptly as circumstances 
permitted.
    (2) Error apparent on face of records. We may correct an earnings 
record to correct errors, such as mechanical or clerical errors, which 
can be identified and corrected without going beyond any of the 
pertinent SSA records.
    (3) Fraud. We may change any entry which was entered on the earnings 
record as the result of fraud.
    (4) Entries for wrong person or period. We may correct errors in SSA 
records resulting from earnings being entered for the wrong person or 
period.
    (5) Less than correct wages on SSA records. We may enter wages paid 
to you by an employer for a period if no part of those wages or less 
than the correct amount of those wages is entered on SSA records.
    (6) Wage payments under a statute. We may enter and allocate wages 
awarded to you for a period as the result of a determination or 
agreement approved by a court or administrative agency that enforces 
Federal or State statutes protecting your right to employment or wages.

[44 FR 38454, July 2, 1979, as amended at 57 FR 21600, May 21, 1992]



Sec. 404.823  Correction of the record of your earnings for work in 
the employ of the United States.

    We may correct the record of your earnings to remove, reduce, or 
enter

[[Page 229]]

earnings for work in the employ of the United States only if--
    (a) Correction is permitted under Sec. 404.821 or Sec. 404.822; 
and
    (b) Any necessary determinations concerning the amount of 
remuneration paid for your work and the periods for which such 
remuneration was paid have been made as shown by--
    (1) A tax return filed under section 3122 of the Internal Revenue 
Code (26 U.S.C. 3122); or
    (2) A certification by the head of the Federal agency or 
instrumentality of which you have been an employee or his or her agent. 
A Federal instrumentality for these purposes includes a nonappropriated 
fund activity of the armed forces or Coast Guard.

[44 FR 38454, July 2, 1979, as amended at 55 FR 24891, June 19, 1990]

         Notice of Removal or Reduction of an Entry of Earnings



Sec. 404.830  Notice of removal or reduction of your wages.

    If we remove or reduce an amount of wages entered on the record of 
your earnings, we will notify you of this correction if we previously 
notified you of the amount of your wages for the period involved. We 
will notify your survivor if we previously notified you or your survivor 
of the amount of your earnings for the period involved.



Sec. 404.831  Notice of removal or reduction of your self-employment income.

    If we remove or reduce an amount of self-employment income entered 
on the record of your earnings, we will notify you of this correction. 
We will notify your survivor if we previously notified you or your 
survivor of the amount of your earnings for the period involved.



 Subpart J_Determinations, Administrative Review Process, and Reopening 
                     of Determinations and Decisions

    Authority: Secs. 201(j), 204(f), 205(a), (b), (d)-(h), and (j), 221, 
225, and 702(a)(5) of the Social Security Act (42 U.S.C. 401(j), 404(f), 
405(a), (b), (d)-(h), and (j), 421, 425, and 902(a)(5)); sec. 5, Pub. L. 
97-455, 96 Stat. 2500 (42 U.S.C. 405 note); secs. 5, 6(c)-(e), and 15, 
Pub. L. 98-460, 98 Stat. 1802 (42 U.S.C. 421 note).

    Source: 45 FR 52081, Aug. 5, 1980, unless otherwise noted.

          Introduction, Definitions, and Initial Determinations



Sec. 404.900  Introduction.

    (a) Explanation of the administrative review process. This subpart 
explains the procedures we follow in determining your rights under title 
II of the Social Security Act. The regulations describe the process of 
administrative review and explain your right to judicial review after 
you have taken all the necessary administrative steps. These procedures 
apply also to persons claiming certain benefits under title XVIII of the 
Act (Medicare); see 42 CFR 405.701(c). The administrative review process 
consists of several steps, which usually must be requested within 
certain time periods and in the following order:
    (1) Initial determination. This is a determination we make about 
your entitlement or your continuing entitlement to benefits or about any 
other matter, as discussed in Sec. 404.902, that gives you a right to 
further review.
    (2) Reconsideration. If you are dissatisfied with an initial 
determination, you may ask us to reconsider it.
    (3) Hearing before an administrative law judge. If you are 
dissatisfied with the reconsideration determination, you may request a 
hearing before an administrative law judge.
    (4) Appeals Council review. If you are dissatisfied with the 
decision of the administrative law judge, you may request that the 
Appeals Council review the decision.
    (5) Federal court review. When you have completed the steps of the 
administrative review process listed in paragraphs (a)(1) through (a)(4) 
of this section, we will have made our final decision. If you are 
dissatisfied with our final decision, you may request judicial review by 
filing an action in a Federal district court.
    (6) Expedited appeals process. At some time after your initial 
determination has been reviewed, if you have no dispute with our 
findings of fact and our application and interpretation of the

[[Page 230]]

controlling laws, but you believe that a part of the law is 
unconstitutional, you may use the expedited appeals process. This 
process permits you to go directly to a Federal district court so that 
the constitutional issue may be resolved.
    (b) Nature of the administrative review process. In making a 
determination or decision in your case, we conduct the administrative 
review process in an informal, nonadversary manner. In each step of the 
review process, you may present any information you feel is helpful to 
your case. Subject to the limitations on Appeals Council consideration 
of additional evidence (see Sec. Sec. 404.970(b) and 404.976(b)), we 
will consider at each step of the review process any information you 
present as well as all the information in our records. You may present 
the information yourself or have someone represent you, including an 
attorney. If you are dissatisfied with our decision in the review 
process, but do not take the next step within the stated time period, 
you will lose your right to further administrative review and your right 
to judicial review, unless you can show us that there was good cause for 
your failure to make a timely request for review.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 300, Jan 3, 1986; 51 FR 
8808, Mar. 14, 1986; 52 FR 4004, Feb. 9, 1987]



Sec. 404.901  Definitions.

    As used in this subpart:
    Date you receive notice means 5 days after the date on the notice, 
unless you show us that you did not receive it within the 5-day period.
    Decision means the decision made by an administrative law judge or 
the Appeals Council.
    Determination means the initial determination or the reconsidered 
determination.
    Remand means to return a case for further review.
    Vacate means to set aside a previous action.
    Waive means to give up a right knowingly and voluntarily.
    We, us, or our refers to the Social Security Administration.
    You or your refers to any person claiming a right under the old age, 
disability, dependents' or survivors' benefits program.



Sec. 404.902  Administrative actions that are initial determinations.

    Initial determinations are the determinations we make that are 
subject to administrative and judicial review. The initial determination 
will state the important facts and give the reasons for our conclusions. 
In the old age, survivors' and disability insurance programs, initial 
determinations include, but are not limited to, determinations about--
    (a) Your entitlement or your continuing entitlement to benefits;
    (b) Your reentitlement to benefits;
    (c) The amount of your benefit;
    (d) A recomputation of your benefit;
    (e) A reduction in your disability benefits because you also receive 
benefits under a workmen's compensation law;
    (f) A deduction from your benefits on account of work;
    (g) [Reserved]
    (h) Termination of your benefits;
    (i) Penalty deductions imposed because you failed to report certain 
events;
    (j) Any overpayment or underpayment of your benefits;
    (k) Whether an overpayment of benefits must be repaid to us;
    (l) How an underpayment of benefits due a deceased person will be 
paid;
    (m) The establishment or termination of a period of disability;
    (n) A revision of your earnings record;
    (o) Whether the payment of your benefits will be made, on your 
behalf, to a representative payee, unless you are under age 18, legally 
incompetent, or you are disabled and drug addiction or alcoholism is a 
contributing factor material to the determination of disability (as 
described in Sec. 404.1535);
    (p) Your drug addiction or alcoholism;
    (q) Who will act as your payee if we determine that representative 
payment will be made;
    (r) An offset of your benefits under Sec. 404.408b because you 
previously received supplemental security income payments for the same 
period;
    (s) Whether your completion of or continuation for a specified 
period of time in an appropriate vocational rehabilitation program will 
significantly

[[Page 231]]

increase the likelihood that you will not have to return to the 
disability benefit rolls and thus, whether your benefits may be 
continued even though you are not disabled;
    (t) Nonpayment of your benefits under Sec. 404.468 because of your 
confinement in a jail, prison, or other penal institution or 
correctional facility for conviction of a felony;
    (u) Whether or not you have a disabling impairment(s) as defined in 
Sec. 404.1511;
    (v) Nonpayment of your benefits under Sec. 404.469 because you have 
not furnished us satisfactory proof of your Social Security number, or, 
if a Social Security number has not been assigned to you, you have not 
filed a proper application for one; and
    (w) A claim for benefits under Sec. 404.633 based on alleged 
misinformation.

[45 FR 52081, Aug. 5, 1980, as amended at 47 FR 4988, Feb. 3, 1982; 47 
FR 31543, July 21, 1982; 49 FR 22272, May 29, 1984; 50 FR 20902, May 21, 
1985; 56 FR 41790, Aug. 23, 1991; 59 FR 44925, Aug. 31, 1994; 60 FR 
8147, Feb. 10, 1995; 68 FR 40123, July 7, 2003]



Sec. 404.903  Administrative actions that are not initial determinations.

    Administrative actions that are not initial determinations may be 
reviewed by us, but they are not subject to the administrative review 
process provided by this subpart, and they are not subject to judicial 
review. These actions include, but are not limited to, an action--
    (a) Suspending benefits pending an investigation and determination 
of any factual issue relating to a deduction on account of work;
    (b) Suspending benefits pending an investigation to determine if 
your disability has ceased;
    (c) Denying a request to be made a representative payee;
    (d) Certifying two or more family members for joint payment of 
benefits;
    (e) Withholding less than the full amount of your monthly benefit to 
recover an overpayment;
    (f) Determining the fee that may be charged or received by a person 
who has represented you in connection with a proceeding before us;
    (g) Disqualifying or suspending a person from acting as your 
representative in a proceeding before us (See Sec. 404.1745);
    (h) Compromising, suspending or terminating collection of an 
overpayment under the Federal Claims Collection Act;
    (i) Extending or not extending the time to file a report of 
earnings;
    (j) Denying your request to extend the time period for requesting 
review of a determination or a decision;
    (k) Denying your request to use the expedited appeals process;
    (l) Denying your request to reopen a determination or a decision;
    (m) Withholding temporarily benefits based on a wage earner's 
estimate of earnings to avoid creating an overpayment;
    (n) Determining whether (and the amount of) travel expenses incurred 
are reimbursable in connection with proceedings before us;
    (o) Denying your request to readjudicate your claim and apply an 
Acquiescence Ruling;
    (p) Findings on whether we can collect an overpayment by using the 
Federal income tax refund offset procedure (see Sec. 404.523);
    (q) Determining whether an organization may collect a fee from you 
for expenses it incurred in serving as your representative payee (see 
Sec. 404.2040a);
    (r) Declining under Sec. 404.633(f) to make a determination on a 
claim for benefits based on alleged misinformation because one or more 
of the conditions specified in Sec. 404.633(f) are not met;
    (s) The assignment of a monthly payment day (see Sec. 404.1807);
    (t) Determining whether we will refer information about your 
overpayment to a consumer reporting agency (see Sec. Sec. 404.527 and 
422.305 of this chapter);
    (u) Determining whether we will refer your overpayment to the 
Department of the Treasury for collection by offset against Federal 
payments due you (see Sec. Sec. 404.527 and 422.310 of this chapter); 
and
    (v) Determining whether we will order your employer to withhold from 
your disposable pay to collect an overpayment you received under title 
II of

[[Page 232]]

the Social Security Act (see part 422, subpart E, of this chapter).

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 8808, Mar. 14, 1986; 55 
FR 1018, Jan. 11, 1990; 56 FR 52469, Oct. 21, 1991; 57 FR 23057, June 1, 
1992; 59 FR 44925, Aug. 31, 1994; 62 FR 6120, Feb. 11, 1997; 62 FR 
64278, Dec. 5, 1997; 68 FR 74183, Dec. 23, 2003]



Sec. 404.904  Notice of the initial determination.

    We shall mail a written notice of the initial determination to you 
at your last known address. The reasons for the initial determination 
and the effect of the initial determination will be stated in the 
notice. The notice also informs you of the right to a reconsideration. 
We will not mail a notice if the beneficiary's entitlement to benefits 
has ended because of his or her death.

[51 FR 300, Jan. 3, 1986]



Sec. 404.905  Effect of an initial determination.

    An initial determination is binding unless you request a 
reconsideration within the stated time period, or we revise the initial 
determination.

[51 FR 300, Jan. 3, 1986]



Sec. 404.906  Testing modifications to the disability determination procedures.

    (a) Applicability and scope. Notwithstanding any other provision in 
this part or part 422 of this chapter, we are establishing the 
procedures set out in this section to test modifications to our 
disability determination process. These modifications will enable us to 
test, either individually or in one or more combinations, the effect of: 
having disability claim managers assume primary responsibility for 
processing an application for disability benefits; providing persons who 
have applied for benefits based on disability with the opportunity for 
an interview with a decision maker when the decision maker finds that 
the evidence in the file is insufficient to make a fully favorable 
determination or requires an initial determination denying the claim; 
having a single decision maker make the initial determination with 
assistance from medical consultants, where appropriate; and eliminating 
the reconsideration step in the administrative review process and having 
a claimant who is dissatisfied with the initial determination request a 
hearing before an administrative law judge. The model procedures we test 
will be designed to provide us with information regarding the effect of 
these procedural modifications and enable us to decide whether and to 
what degree the disability determination process would be improved if 
they were implemented on a national level.
    (b) Procedures for cases included in the tests. Prior to commencing 
each test or group of tests in selected site(s), we will publish a 
notice in the Federal Register. The notice will describe which model or 
combinations of models we intend to test, where the specific test 
site(s) will be, and the duration of the test(s). The individuals who 
participate in the test(s) will be randomly assigned to a test group in 
each site where the tests are conducted. Paragraphs (b) (1) through (4) 
of this section lists descriptions of each model.
    (1) In the disability claim manager model, when you file an 
application for benefits based on disability, a disability claim manager 
will assume primary responsibility for the processing of your claim. The 
disability claim manager will be the focal point for your contacts with 
us during the claims intake process and until an initial determination 
on your claim is made. The disability claim manager will explain the 
disability programs to you, including the definition of disability and 
how we determine whether you meet all the requirements for benefits 
based on disability. The disability claim manager will explain what you 
will be asked to do throughout the claims process and how you can obtain 
information or assistance through him or her. The disability claim 
manager will also provide you with information regarding your right to 
representation, and he or she will provide you with appropriate referral 
sources for representation. The disability claim manager may be either a 
State agency employee or a Federal employee. In some instances, the 
disability claim manager may be assisted by other individuals.
    (2) In the single decision maker model, the decision maker will make 
the disability determination and may

[[Page 233]]

also determine whether the other conditions for entitlement to benefits 
based on disability are met. The decision maker will make the disability 
determination after any appropriate consultation with a medical or 
psychological consultant. The medical or psychological consultant will 
not be required to sign the disability determination forms we use to 
have the State agency certify the determination of disability to us (see 
Sec. 404.1615). However, before an initial determination is made that a 
claimant is not disabled in any case where there is evidence which 
indicates the existence of a mental impairment, the decision maker will 
make every reasonable effort to ensure that a qualified psychiatrist or 
psychologist has completed the medical portion of the case review and 
any applicable residual functional capacity assessment pursuant to our 
existing procedures (see Sec. 404.1617). In some instances the decision 
maker may be the disability claim manager described in paragraph (b)(1) 
of this section. When the decision maker is a State agency employee, a 
team of individuals that includes a Federal employee will determine 
whether the other conditions for entitlement to benefits are met.
    (3) In the predecision interview model, if the decision maker(s) 
finds that the evidence in your file is insufficient to make a fully 
favorable determination or requires an initial determination denying 
your claim, a predecision notice will be mailed to you. The notice will 
tell you that, before the decision maker(s) makes an initial 
determination about whether you are disabled, you may request a 
predecision interview with the decision maker(s). The notice will also 
tell you that you may submit additional evidence. You must request a 
predecision interview within 10 days after the date you receive the 
predecision notice. You must also submit any additional evidence within 
10 days after you receive the predecision notice. If you request a 
predecision interview, the decision maker(s) will conduct the 
predecision interview in person, by videoconference, or by telephone as 
the decision maker(s) determines is appropriate under the circumstances. 
If you make a late request for a predecision interview, or submit 
additional evidence late, but show in writing that you had good cause 
under the standards in Sec. 404.911 for missing the deadline, the 
decision maker(s) will extend the deadline. If you do not request the 
predecision interview, or if you do not appear for a scheduled 
predecision interview and do not submit additional evidence, or if you 
do not respond to our attempts to communicate with you, the decision 
maker(s) will make an initial determination based upon the evidence in 
your file. If you identify additional evidence during the predecision 
interview, which was previously not available, the decision maker(s) 
will advise you to submit the evidence. If you are unable to do so, the 
decision maker(s) may assist you in obtaining it. The decision maker(s) 
also will advise you of the specific timeframes you have for submitting 
any additional evidence identified during the predecision interview. If 
you have no treating source(s) (see Sec. 404.1502), or your treating 
source(s) is unable or unwilling to provide the necessary evidence, or 
there is a conflict in the evidence that cannot be resolved through 
evidence from your treating source(s), the decision maker(s) may arrange 
a consultative examination or resolve conflicts according to existing 
procedures (see Sec. 404.1519a). If you attend the predecision 
interview, or do not attend the predecision interview but you submit 
additional evidence, the decision maker(s) will make an initial 
determination based on the evidence in your file, including the 
additional evidence you submit or the evidence obtained as a result of 
the predecision notice or interview, or both.
    (4) In the reconsideration elimination model, we will modify the 
disability determination process by eliminating the reconsideration step 
of the administrative review process. If you receive an initial 
determination on your claim for benefits based on disability, and you 
are dissatisfied with the determination, we will notify you that you may 
request a hearing before an administrative law judge. If you request a 
hearing before an administrative law

[[Page 234]]

judge, we will apply our usual procedures contained in subpart J of this 
part.

[60 FR 20026, Apr. 24, 1995]

                             Reconsideration



Sec. 404.907  Reconsideration--general.

    If you are dissatisfied with the initial determination, 
reconsideration is the first step in the administrative review process 
that we provide, except that we provide the opportunity for a hearing 
before an administrative law judge as the first step for those 
situations described in Sec. Sec. 404.930 (a)(6) and (a)(7), where you 
appeal an initial determination denying your request for waiver of 
adjustment or recovery of an overpayment (see Sec. 404.506). If you are 
dissatisfied with our reconsidered determination, you may request a 
hearing before an administrative law judge.

[61 FR 56132, Oct. 31, 1996]



Sec. 404.908  Parties to a reconsideration.

    (a) Who may request a reconsideration. If you are dissatisfied with 
the initial determination, you may request that we reconsider it. In 
addition, a person who shows in writing that his or her rights may be 
adversely affected by the initial determination may request a 
reconsideration.
    (b) Who are parties to a reconsideration. After a request for the 
reconsideration, you and any person who shows in writing that his or her 
rights are adversely affected by the initial determination will be 
parties to the reconsideration.



Sec. 404.909  How to request reconsideration.

    (a) We shall reconsider an initial determination if you or any other 
party to the reconsideration files a written request--
    (1) Within 60 days after the date you receive notice of the initial 
determination (or within the extended time period if we extend the time 
as provided in paragraph (b) of this section);
    (2) At one of our offices, the Veterans Administration Regional 
Office in the Philippines, or an office of the Railroad Retirement Board 
if you have 10 or more years of service in the railroad industry.
    (b) Extension of time to request a reconsideration. If you want a 
reconsideration of the initial determination but do not request one in 
time, you may ask us for more time to request a reconsideration. Your 
request for an extension of time must be in writing and must give the 
reasons why the request for reconsideration was not filed within the 
stated time period. If you show us that you had good cause for missing 
the deadline, we will extend the time period. To determine whether good 
cause exists, we use the standards explained in Sec. 404.911.



Sec. 404.911  Good cause for missing the deadline to request review.

    (a) In determining whether you have shown that you had good cause 
for missing a deadline to request review we consider--
    (1) What circumstances kept you from making the request on time;
    (2) Whether our action misled you;
    (3) Whether you did not understand the requirements of the Act 
resulting from amendments to the Act, other legislation, or court 
decisions; and
    (4) Whether you had any physical, mental, educational, or linguistic 
limitations (including any lack of facility with the English language) 
which prevented you from filing a timely request or from understanding 
or knowing about the need to file a timely request for review.
    (b) Examples of circumstances where good cause may exist include, 
but are not limited to, the following situations:
    (1) You were seriously ill and were prevented from contacting us in 
person, in writing, or through a friend, relative, or other person.
    (2) There was a death or serious illness in your immediate family.
    (3) Important records were destroyed or damaged by fire or other 
accidental cause.
    (4) You were trying very hard to find necessary information to 
support your claim but did not find the information within the stated 
time periods.
    (5) You asked us for additional information explaining our action 
within the time limit, and within 60 days of

[[Page 235]]

receiving the explanation you requested reconsideration or a hearing, or 
within 30 days of receiving the explanation you requested Appeal Council 
review or filed a civil suit.
    (6) We gave you incorrect or incomplete information about when and 
how to request administrative review or to file a civil suit.
    (7) You did not receive notice of the determination or decision.
    (8) You sent the request to another Government agency in good faith 
within the time limit and the request did not reach us until after the 
time period had expired.
    (9) Unusual or unavoidable circumstances exist, including the 
circumstances described in paragraph (a)(4) of this section, which show 
that you could not have known of the need to file timely, or which 
prevented you from filing timely.

[45 FR 52081, Aug. 5, 1980, as amended at 59 FR 1634, Jan. 12, 1994]



Sec. 404.913  Reconsideration procedures.

    (a) Case review. With the exception of the type of case described in 
paragraph (b) of this section, the reconsideration process consists of a 
case review. Under a case review procedure, we will give you and the 
other parties to the reconsideration an opportunity to present 
additional evidence to us. The official who reviews your case will then 
make a reconsidered determination based on all of this evidence.
    (b) Disability hearing. If you have been receiving benefits based on 
disability and you request reconsideration of an initial or revised 
determination that, based on medical factors, you are not now disabled, 
we will give you and the other parties to the reconsideration an 
opportunity for a disability hearing. (See Sec. Sec. 404.914 through 
404.918.)

[51 FR 300, Jan. 3, 1986]



Sec. 404.914  Disability hearing--general.

    (a) Availability. We will provide you with an opportunity for a 
disability hearing if:
    (1) You have been receiving benefits based on a medical impairment 
that renders you disabled;
    (2) We have made an initial or revised determination based on 
medical factors that you are not now disabled because your impairment:
    (i) Has ceased;
    (ii) Did not exist; or
    (iii) Is no longer disabling; and
    (3) You make a timely request for reconsideration of the initial or 
revised determination.
    (b) Scope. The disability hearing will address only the initial or 
revised determination, based on medical factors, that you are not now 
disabled. Any other issues which arise in connection with your request 
for reconsideration will be reviewed in accordance with the 
reconsideration procedures described in Sec. 404.913(a).
    (c) Time and place--(1) General. Either the State agency or the 
Director of the Office of Disability Hearings or his or her delegate, as 
appropriate, will set the time and place of your disability hearing. We 
will send you a notice of the time and place of your disability hearing 
at least 20 days before the date of the hearing. You may be expected to 
travel to your disability hearing. (See Sec. Sec. 404.999a-404.999d 
regarding reimbursement for travel expenses.)
    (2) Change of time or place. If you are unable to travel or have 
some other reason why you cannot attend your disability hearing at the 
scheduled time or place, you should request at the earliest possible 
date that the time or place of your hearing be changed. We will change 
the time or place if there is good cause for doing so under the 
standards in Sec. 404.936 (c) and (d).
    (d) Combined issues. If a disability hearing is available to you 
under paragraph (a) of this section, and you file a new application for 
benefits while your request for reconsideration is still pending, we may 
combine the issues on both claims for the purpose of the disability 
hearing and issue a combined initial/reconsidered determination which is 
binding with respect to the common issues on both claims.
    (e) Definition. For purposes of the provisions regarding disability 
hearings (Sec. Sec. 404.914 through 404.918) we, us or our means the 
Social Security Administration or the State agency.

[51 FR 300, Jan. 3, 1986, as amended at 51 FR 8808, Mar. 14, 1986]

[[Page 236]]



Sec. 404.915  Disability hearing--disability hearing officers.

    (a) General. Your disability hearing will be conducted by a 
disability hearing officer who was not involved in making the 
determination you are appealing. The disability hearing officer will be 
an experienced disability examiner, regardless of whether he or she is 
appointed by a State agency or by the Director of the Office of 
Disability Hearings or his or her delegate, as described in paragraphs 
(b) and (c) below.
    (b) State agency hearing officers--(1) Appointment of State agency 
hearing officers. If a State agency made the initial or revised 
determination that you are appealing, the disability hearing officer who 
conducts your disability hearing may be appointed by a State agency. If 
the disability hearing officer is appointed by a State agency, that 
individual will be employed by an adjudicatory unit of the State agency 
other than the adjudicatory unit which made the determination you are 
appealing.
    (2) State agency defined. For purposes of this subpart, State agency 
means the adjudicatory component in the State which issues disability 
determinations.
    (c) Federal hearing officers. The disability hearing officer who 
conducts your disability hearing will be appointed by the Director of 
the Office of Disability Hearings or his or her delegate if:
    (1) A component of our office other than a State agency made the 
determination you are appealing; or
    (2) The State agency does not appoint a disability hearing officer 
to conduct your disability hearing under paragraph (b) of this section.

[51 FR 301, Jan. 3, 1986]



Sec. 404.916  Disability hearing--procedures.

    (a) General. The disability hearing will enable you to introduce 
evidence and present your views to a disability hearing officer if you 
are dissatisfied with an initial or revised initial determination, based 
on medical factors, that you are not now disabled as described in Sec. 
404.914(a)(2).
    (b) Your procedural rights. We will advise you that you have the 
following procedural rights in connection with the disability hearing 
process:
    (1) You may request that we assist you in obtaining pertinent 
evidence for your disability hearing and, if necessary, that we issue a 
subpoena to compel the production of certain evidence or testimony. We 
will follow subpoena procedures similar to those described in Sec. 
404.950(d) for the administrative law judge hearing process;
    (2) You may have a representative at the hearing appointed under 
subpart R of this part, or you may represent yourself;
    (3) You or your representative may review the evidence in your case 
file, either on the date of your hearing or at an earlier time at your 
request, and present additional evidence;
    (4) You may present witnesses and question any witnesses at the 
hearing;
    (5) You may waive your right to appear at the hearing. If you do not 
appear at the hearing, the disability hearing officer will prepare and 
issue a written reconsidered determination based on the information in 
your case file.
    (c) Case preparation. After you request reconsideration, your case 
file will be reviewed and prepared for the hearing. This review will be 
conducted in the component of our office (including a State agency) that 
made the initial or revised determination, by personnel who were not 
involved in making the initial or revised determination. Any new 
evidence you submit in connection with your request for reconsideration 
will be included in this review. If necessary, further development of 
the evidence, including arrrangements for medical examinations, will be 
undertaken by this component. After the case file is prepared for the 
hearing, it will be forwarded by this component to the disability 
hearing officer for a hearing. If necessary, the case file may be sent 
back to this component at any time prior to the issuance of the 
reconsidered determination for additional development. Under paragraph 
(d) of this section, this component has the authority to issue a 
favorable reconsidered determination at any time in its development 
process.

[[Page 237]]

    (d) Favorable reconsideration determination without a hearing. If 
all the evidence in your case file supports a finding that you are now 
disabled, either the component that prepares your case for hearing under 
paragraph (c) or the disability hearing officer will issue a written 
favorable reconsideration determination, even if a disability hearing 
has not yet been held.
    (e) Opportunity to submit additional evidence after the hearing. At 
your request, the disability hearing officer may allow up to 15 days 
after your disability hearing for receipt of evidence which is not 
available at the hearing, if:
    (1) The disability hearing officer determines that the evidence has 
a direct bearing on the outcome of the hearing; and
    (2) The evidence could not have been obtained before the hearing.
    (f) Opportunity to review and comment on evidence obtained or 
developed by us after the hearing. If, for any reason, additional 
evidence is obtained or developed by us after your disability hearing, 
and all evidence taken together can be used to support a reconsidered 
determination that is unfavorable to you with regard to the medical 
factors of eligibility, we will notify you, in writing, and give you an 
opportunity to review and comment on the additional evidence. You will 
be given 10 days from the date you receive our notice to submit your 
comments (in writing or, in appropriate cases, by telephone), unless 
there is good cause for granting you additional time, as illustrated by 
the examples in Sec. 404.911(b). Your comments will be considered 
before a reconsidered determination is issued. If you believe that it is 
necessary to have further opportunity for a hearing with respect to the 
additional evidence, a supplementary hearing may be scheduled at your 
request. Otherwise, we will ask for your written comments on the 
additional evidence, or, in appropriate cases, for your telephone 
comments.

[51 FR 301, Jan. 3, 1986]



Sec. 404.917  Disability hearing--disability hearing officer's 
reconsidered determination.

    (a) General. The disability hearing officer who conducts your 
disability hearing will prepare and will also issue a written 
reconsidered determination, unless:
    (1) The disability hearing officer sends the case back for 
additional development by the component that prepared the case for the 
hearing, and that component issues a favorable determination, as 
permitted by Sec. 404.916(c);
    (2) It is determined that you are engaging in substantial gainful 
activity and that you are therefore not disabled; or
    (3) The reconsidered determination prepared by the disability 
hearing officer is reviewed under Sec. 404.918.
    (b) Content. The disability hearing officer's reconsidered 
determination will give the findings of fact and the reasons for the 
reconsidered determination. The reconsidered determination must be based 
on evidence offered at the disability hearing or otherwise included in 
the case file.
    (c) Notice. We will mail you and the other parties a notice of 
reconsidered determination in accordance with Sec. 404.922.
    (d) Effect. The disability hearing officer's reconsidered 
determination, or, if it is changed under Sec. 404.918, the 
reconsidered determination that is issued by the Director of the Office 
of Disability Hearings or his or her delegate, is binding in accordance 
with Sec. 404.921, subject to the exceptions specified in that section.

[51 FR 302, Jan. 3, 1986]



Sec. 404.918  Disability hearing--review of the disability hearing 
officer's reconsidered determination before it is issued.

    (a) General. The Director of the Office of Disability Hearings or 
his or her delegate may select a sample of disability hearing officers' 
reconsidered determinations, before they are issued, and review any such 
case to determine its correctness on any grounds he or she deems 
appropriate. The Director or his

[[Page 238]]

or her delegate shall review any case within the sample if:
    (1) There appears to be an abuse of discretion by the hearing 
officer;
    (2) There is an error of law; or
    (3) The action, findings or conclusions of the disability hearing 
officer are not supported by substantial evidence.

If the review indicates that the reconsidered determination prepared by 
the disability hearing officer is correct, it will be dated and issued 
immediately upon completion of the review. If the reconsidered 
determination prepared by the disability hearing officer is found by the 
Director or his or her delegate to be deficient, it will be changed as 
described in paragraph (b) of this section.
    (b) Methods of correcting deficiencies in the disability hearing 
officer's reconsidered determination. If the reconsidered determination 
prepared by the disability hearing officer is found by the Director or 
his or her delegate to be deficient, the Director of the Office of 
Disability Hearings or his or her delegate will take appropriate action 
to assure that the deficiency is corrected before a reconsidered 
determination is issued. The action taken by the Director or his or her 
delegate will take one of two forms:
    (1) The Director or his or her delegate may return the case file 
either to the component responsible for preparing the case for hearing 
or to the disability hearing officer, for appropriate further action; or
    (2) The Director or his or her delegate may issue a written 
reconsidered determination which corrects the deficiency.
    (c) Further action on your case if it is sent back by the Director 
or his or her delegate either to the component that prepared your case 
for hearing or to the disability hearing officer. If the Director of the 
Office of Disability Hearings or his or her delegate sends your case 
back either to the component responsible for preparing the case for 
hearing or to the disability hearing officer for appropriate further 
action, as provided in paragraph (b)(1) of this section, any additional 
proceedings in your case will be governed by the disability hearing 
procedures described in Sec. 404.916(f) or if your case is returned to 
the disability hearing officer and an unfavorable determination is 
indicated, a supplementary hearing may be scheduled for you before a 
reconsidered determination is reached in your case.
    (d) Opportunity to comment before the Director or his or her 
delegate issues a reconsidered determination that is unfavorable to you. 
If the Director of the Office of Disability Hearings or his or her 
delegate proposes to issue a reconsidered determination as described in 
paragraph (b)(2) of this section, and that reconsidered determination is 
unfavorable to you, he or she will send you a copy of the proposed 
reconsidered determination with an explanation of the reasons for it, 
and will give you an opportunity to submit written comments before it is 
issued. At your request, you will also be given an opportunity to 
inspect the pertinent materials in your case file, including the 
reconsidered determination prepared by the disability hearing officer, 
before submitting your comments. You will be given 10 days from the date 
you receive the Director's notice of proposed action to submit your 
written comments, unless additional time is necessary to provide access 
to the pertinent file materials or there is good cause for providing 
more time, as illustrated by the examples in Sec. 404.911(b). The 
Director or his or her delegate will consider your comments before 
taking any further action on your case.

[51 FR 302, Jan. 3, 1986]



Sec. 404.919  Notice of another person's request for reconsideration.

    If any other person files a request for reconsideration of the 
initial determination in your case, we shall notify you at your last 
known address before we reconsider the initial determination. We shall 
also give you an opportunity to present any evidence you think helpful 
to the reconsidered determination.

[45 FR 52081, Aug. 5, 1980. Redesignated at 51 FR 302, Jan. 3, 1986]



Sec. 404.920  Reconsidered determination.

    After you or another person requests a reconsideration, we shall 
review the

[[Page 239]]

evidence considered in making the initial determination and any other 
evidence we receive. We shall make our determination based on this 
evidence.

[45 FR 52081, Aug. 5, 1980. Redesignated at 51 FR 302, Jan. 3, 1986]



Sec. 404.921  Effect of a reconsidered determination.

    The reconsidered determination is binding unless--
    (a) You or any other party to the reconsideration requests a hearing 
before an administrative law judge within the stated time period and a 
decision is made;
    (b) The expedited appeals process is used; or
    (c) The reconsidered determination is revised.

[51 FR 302, Jan. 3, 1986]



Sec. 404.922  Notice of a reconsidered determination.

    We shall mail a written notice of the reconsidered determination to 
the parties at their last known address. We shall state the specific 
reasons for the determination and tell you and any other parties of the 
right to a hearing. If it is appropriate, we will also tell you and any 
other parties how to use the expedited appeals process.

[45 FR 52081, Aug. 5, 1980. Redesignated at 51 FR 302, Jan. 3, 1986]

                        Expedited Appeals Process



Sec. 404.923  Expedited appeals process--general.

    By using the expedited appeals process you may go directly to a 
Federal district court without first completing the administrative 
review process that is generally required before the court will hear 
your case.



Sec. 404.924  When the expedited appeals process may be used.

    You may use the expedited appeals process if all of the following 
requirements are met:
    (a) We have made an initial and a reconsidered determination; an 
administrative law judge has made a hearing decision; or Appeals Council 
review has been requested, but a final decision has not been issued.
    (b) You are a party to the reconsidered determination or the hearing 
decision.
    (c) You have submitted a written request for the expedited appeals 
process.
    (d) You have claimed, and we agree, that the only factor preventing 
a favorable determination or decision is a provision in the law that you 
believe is unconstitutional.
    (e) If you are not the only party, all parties to the determination 
or decision agree to request the expedited appeals process.



Sec. 404.925  How to request expedited appeals process.

    (a) Time of filing request. You may request the expedited appeals 
process--
    (1) Within 60 days after the date you receive notice of the 
reconsidered determination (or within the extended time period if we 
extend the time as provided in paragraph (c) of this section);
    (2) At any time after you have filed a timely request for a hearing 
but before you receive notice of the administrative law judge's 
decision;
    (3) Within 60 days after the date you receive a notice of the 
administrative law judge's decision or dismissal (or within the extended 
time period if we extend the time as provided in paragraph (c) of this 
section); or
    (4) At any time after you have filed a timely request for Appeals 
Council review, but before you receive notice of the Appeals Council's 
action.
    (b) Place of filing request. You may file a written request for the 
expedited appeals process at one of our offices, the Veterans 
Administration Regional Office in the Philippines, or an office of the 
Railroad Retirement Board if you have 10 or more years of service in the 
railroad industry.
    (c) Extension of time to request expedited appeals process. If you 
want to use the expedited appeals process but do not request it within 
the stated time period, you may ask for more time to submit your 
request. Your request for an extension of time must be in writing and 
must give the reasons why the request for the expedited appeals process 
was not filed within the stated time period. If you show that you had 
good cause for missing the deadline, the

[[Page 240]]

time period will be extended. To determine whether good cause exists, we 
use the standards explained in Sec. 404.911.



Sec. 404.926  Agreement in expedited appeals process.

    If you meet all the requirements necessary for the use of the 
expedited appeals process, our authorized representative shall prepare 
an agreement. The agreement must be signed by you, by every other party 
to the determination or decision and by our authorized representative. 
The agreement must provide that--
    (a) The facts in your claim are not in dispute;
    (b) The sole issue in dispute is whether a provision of the Act that 
applies to your case is unconstitutional;
    (c) Except for your belief that a provision of the Act is 
unconstitutional, you agree with our interpretation of the law;
    (d) If the provision of the Act that you believe is unconstitutional 
were not applied to your case, your claim would be allowed; and
    (e) Our determination or the decision is final for the purpose of 
seeking judicial review.



Sec. 404.927  Effect of expedited appeals process agreement.

    After an expedited appeals process agreement is signed, you will not 
need to complete the remaining steps of the administrative review 
process. Instead, you may file an action in a Federal district court 
within 60 days after the date you receive notice (a signed copy of the 
agreement will be mailed to you and will constitute notice) that the 
agreement has been signed by our authorized representative.

[45 FR 52081, Aug. 5, 1980, as amended at 49 FR 46369, Nov. 26, 1984]



Sec. 404.928  Expedited appeals process request that does not result 
in agreement.

    If you do not meet all of the requirements necessary to use the 
expedited appeals process, we shall tell you that your request to use 
this process is denied and that your request will be considered as a 
request for a hearing or Appeals Council review, whichever is 
appropriate.

               Hearing Before an Administrative Law Judge



Sec. 404.929  Hearing before an administrative law judge--general.

    If you are dissatisfied with one of the determinations or decisions 
listed in Sec. 404.930 you may request a hearing. The Associate 
Commissioner for Hearings and Appeals, or his or her delegate, shall 
appoint an administrative law judge to conduct the hearing. If 
circumstances warrant, the Associate Commissioner, or his or her 
delegate, may assign your case to another administrative law judge. At 
the hearing you may appear in person or by video teleconferencing, 
submit new evidence, examine the evidence used in making the 
determination or decision under review, and present and question 
witnesses. The administrative law judge who conducts the hearing may ask 
you questions. He or she shall issue a decision based on the hearing 
record. If you waive your right to appear at the hearing, either in 
person or by video teleconferencing, the administrative law judge will 
make a decision based on the evidence that is in the file and any new 
evidence that may have been submitted for consideration.

[68 FR 5218, Feb. 3, 2003]



Sec. 404.930  Availability of a hearing before an administrative law judge.

    (a) You or another party may request a hearing before an 
administrative law judge if we have made--
    (1) A reconsidered determination;
    (2) A revised determination of an initial determination, unless the 
revised determination concerns the issue of whether, based on medical 
factors, you are disabled;
    (3) A reconsideration of a revised initial determination concerning 
the issue of whether, based on medical factors, you are disabled;
    (4) A revised reconsidered determination;
    (5) A revised decision based on evidence not included in the record 
on which the prior decision was based;
    (6) An initial determination denying waiver of adjustment or 
recovery of an overpayment based on a personal conference (see Sec. 
404.506); or

[[Page 241]]

    (7) An initial determination denying waiver of adjustment or 
recovery of an overpayment based on a review of the written evidence of 
record (see Sec. 404.506), and the determination was made concurrent 
with, or subsequent to, our reconsideration determination regarding the 
underlying overpayment but before an administrative law judge holds a 
hearing.
    (b) We will hold a hearing only if you or another party to the 
hearing file a written request for a hearing.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986; 61 FR 
56132, Oct. 31, 1996]



Sec. 404.932  Parties to a hearing before an administrative law judge.

    (a) Who may request a hearing. You may request a hearing if a 
hearing is available under Sec. 404.930. In addition, a person who 
shows in writing that his or her rights may be adversely affected by the 
decision may request a hearing.
    (b) Who are parties to a hearing. After a request for a hearing is 
made, you, the other parties to the initial, reconsidered, or revised 
determination, and any other person who shows in writing that his or her 
rights may be adversely affected by the hearing, are parties to the 
hearing. In addition, any other person may be made a party to the 
hearing if his or her rights may be adversely affected by the decision, 
and the administrative law judge notifies the person to appear at the 
hearing or to present evidence supporting his or her interest.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.933  How to request a hearing before an administrative law judge.

    (a) Written request. You may request a hearing by filing a written 
request. You should include in your request--
    (1) The name and social security number of the wage earner;
    (2) The reasons you disagree with the previous determination or 
decision;
    (3) A statement of additional evidence to be submitted and the date 
you will submit it; and
    (4) The name and address of any designated representative.
    (b) When and where to file. The request must be filed--
    (1) Within 60 days after the date you receive notice of the previous 
determination or decision (or within the extended time period if we 
extend the time as provided in paragraph (c) of this section);
    (2) At one of our offices, the Veterans Administration Regional 
Office in the Philippines, or an office of the Railroad Retirement Board 
for persons having 10 or more years of service in the railroad industry.
    (c) Extension of time to request a hearing. If you have a right to a 
hearing but do not request one in time, you may ask for more time to 
make your request. The request for an extension of time must be in 
writing and it must give the reasons why the request for a hearing was 
not filed within the stated time period. You may file your request for 
an extension of time at one of our offices. If you show that you had 
good cause for missing the deadline, the time period will be extended. 
To determine whether good cause exists, we use the standards explained 
in Sec. 404.911.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.935  Submitting evidence prior to a hearing before an administrative 
law judge.

    If possible, the evidence or a summary of evidence you wish to have 
considered at the hearing should be submitted to the administrative law 
judge with the request for hearing or within 10 days after filing the 
request. Each party shall make every effort to be sure that all material 
evidence is received by the administrative law judge or is available at 
the time and place set for the hearing.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.936  Time and place for a hearing before an administrative law 
judge.

    (a) General. The administrative law judge sets the time and place 
for the hearing. He or she may change the time and place, if it is 
necessary. After sending you reasonable notice of the proposed action, 
the administrative law judge may adjourn or postpone the hearing or 
reopen it to receive additional evidence any time before he or she 
notifies you of a hearing decision.

[[Page 242]]

    (b) Where we hold hearings. We hold hearings in the 50 States, the 
District of Columbia, American Samoa, Guam, the Northern Mariana 
Islands, the Commonwealth of Puerto Rico and the Virgin Islands. The 
``place'' of the hearing is the hearing office or other site(s) at which 
you and any other parties to the hearing are located when you make your 
appearance(s) before the administrative law judge, whether in person or 
by video teleconferencing.
    (c) Determining how appearances will be made. In setting the time 
and place of the hearing, the administrative law judge determines 
whether your appearance or that of any other individual who is to appear 
at the hearing will be made in person or by video teleconferencing. The 
administrative law judge will direct that the appearance of an 
individual be conducted by video teleconferencing if video 
teleconferencing technology is available to conduct the appearance, use 
of video teleconferencing to conduct the appearance would be more 
efficient than conducting the appearance in person, and the 
administrative law judge does not determine that there is a circumstance 
in the particular case preventing use of video teleconferencing to 
conduct the appearance. Section 404.950 sets forth procedures under 
which parties to the hearing and witnesses appear and present evidence 
at hearings.
    (d) Objecting to the time or place of the hearing. If you object to 
the time or place of your hearing, you must notify the administrative 
law judge at the earliest possible opportunity before the time set for 
the hearing. You must state the reason for your objection and state the 
time and place you want the hearing to be held. If at all possible, the 
request should be in writing. The administrative law judge will change 
the time or place of the hearing if you have good cause, as determined 
under paragraph (e) and (f) of this section. Section 404.938 provides 
procedures we will follow when you do not respond to a notice of 
hearing.
    (e) Good cause for changing the time or place. If you have been 
scheduled to appear by video teleconferencing at the place of your 
hearing and you notify the ALJ as provided in paragraph (d) of this 
section that you object to appearing in that way, the administrative law 
judge will find your wish not to appear by video teleconferencing to be 
a good reason for changing the time or place of your scheduled hearing 
and will reschedule your hearing for a time and place at which you may 
make your appearance before the administrative law judge in person. The 
administrative law judge will also find good cause for changing the time 
or place of your scheduled hearing, and will reschedule your hearing, if 
your reason is one of the following circumstances and is supported by 
the evidence:
    (1) You or your representative are unable to attend or to travel to 
the scheduled hearing because of a serious physical or mental condition, 
incapacitating injury, or death in the family; or
    (2) Severe weather conditions make it impossible to travel to the 
hearing.
    (f) Good cause in other circumstances. In determining whether good 
cause exists in circumstances other than those set out in paragraph (e) 
of this section, the administrative law judge will consider your reason 
for requesting the change, the facts supporting it, and the impact of 
the proposed change on the efficient administration of the hearing 
process. Factors affecting the impact of the change include, but are not 
limited to, the effect on the processing of other scheduled hearings, 
delays which might occur in rescheduling your hearing, and whether any 
prior changes were granted to you. Examples of such other circumstances, 
which you might give for requesting a change in the time or place of the 
hearing, include, but are not limited to, the following:
    (1) You have attempted to obtain a representative but need 
additional time;
    (2) Your representative was appointed within 30 days of the 
scheduled hearing and needs additional time to prepare for the hearing;
    (3) Your representative has a prior commitment to be in court or at 
another administrative hearing on the date scheduled for the hearing;
    (4) A witness who will testify to facts material to your case would 
be unavailable to attend the scheduled hearing and the evidence cannot 
be otherwise obtained;

[[Page 243]]

    (5) Transportation is not readily available for you to travel to the 
hearing;
    (6) You live closer to another hearing site; or
    (7) You are unrepresented, and you are unable to respond to the 
notice of hearing because of any physical, mental, educational, or 
linguistic limitations (including any lack of facility with the English 
language) which you may have.

[68 FR 5218, Feb. 3, 2003]



Sec. 404.938  Notice of a hearing before an administrative law judge.

    (a) Issuing the notice. After the administrative law judge sets the 
time and place of the hearing, we will mail notice of the hearing to you 
at your last known address, or give the notice to you by personal 
service, unless you have indicated in writing that you do not wish to 
receive this notice. The notice will be mailed or served at least 20 
days before the hearing.
    (b) Notice information. The notice of hearing will contain a 
statement of the specific issues to be decided and tell you that you may 
designate a person to represent you during the proceedings. The notice 
will also contain an explanation of the procedures for requesting a 
change in the time or place of your hearing, a reminder that if you fail 
to appear at your scheduled hearing without good cause the ALJ may 
dismiss your hearing request, and other information about the scheduling 
and conduct of your hearing. You will also be told if your appearance or 
that of any other party or witness is scheduled to be made by video 
teleconferencing rather than in person. If we have scheduled you to 
appear at the hearing by video teleconferencing, the notice of hearing 
will tell you that the scheduled place for the hearing is a 
teleconferencing site and explain what it means to appear at your 
hearing by video teleconferencing. The notice will also tell you how you 
may let us know if you do not want to appear in this way and want, 
instead, to have your hearing at a time and place where you may appear 
in person before the ALJ.
    (c) Acknowledging the notice of hearing. The notice of hearing will 
ask you to return a form to let us know that you received the notice. If 
you or your representative do not acknowledge receipt of the notice of 
hearing, we will attempt to contact you for an explanation. If you tell 
us that you did not receive the notice of hearing, an amended notice 
will be sent to you by certified mail. See Sec. 404.936 for the 
procedures we will follow in deciding whether the time or place of your 
scheduled hearing will be changed if you do not respond to the notice of 
hearing.

[68 FR 5219, Feb. 3, 2003]



Sec. 404.939  Objections to the issues.

    If you object to the issues to be decided upon at the hearing, you 
must notify the administrative law judge in writing at the earliest 
possible opportunity before the time set for the hearing. You must state 
the reasons for your objections. The administrative law judge shall make 
a decision on your objections either in writing or at the hearing.



Sec. 404.940  Disqualification of the administrative law judge.

    An administrative law judge shall not conduct a hearing if he or she 
is prejudiced or partial with respect to any party or has any interest 
in the matter pending for decision. If you object to the administrative 
law judge who will conduct the hearing, you must notify the 
administrative law judge at your earliest opportunity. The 
administrative law judge shall consider your objections and shall decide 
whether to proceed with the hearing or withdraw. If he or she withdraws, 
the Associate Commissioner for Hearings and Appeals, or his or her 
delegate, will appoint another administrative law judge to conduct the 
hearing. If the administrative law judge does not withdraw, you may, 
after the hearing, present your objections to the Appeals Council as 
reasons why the hearing decision should be revised or a new hearing held 
before another administrative law judge.



Sec. 404.941  Prehearing case review.

    (a) General. After a hearing is requested but before it is held, we 
may, for the purposes of a prehearing case

[[Page 244]]

review, forward the case to the component of our office (including a 
State agency) that issued the determination being reviewed. That 
component will decide whether the determination may be revised. A 
revised determination may be wholly or partially favorable to you. A 
prehearing case review will not delay the scheduling of a hearing unless 
you agree to continue the review and delay the hearing. If the 
prehearing case review is not completed before the date of the hearing, 
the case will be sent to the administrative law judge unless a favorable 
revised determination is in process or you and the other parties to the 
hearing agree in writing to delay the hearing until the review is 
completed.
    (b) When a prehearing case review may be conducted. We may conduct a 
prehearing case review if--
    (1) Additional evidence is submitted;
    (2) There is an indication that additional evidence is available;
    (3) There is a change in the law or regulation; or
    (4) There is an error in the file or some other indication that the 
prior determination may be revised.
    (c) Notice of a prehearing revised determination. If we revise the 
determination in a prehearing case review, we shall mail written notice 
of the revised determination to all parties at their last known address. 
We shall state the basis for the revised determination and advise all 
parties of their right to request a hearing on the revised determination 
within 60 days after the date or receiving this notice.
    (d) Revised determination wholly favorable. If the revised 
determination is wholly favorable to you, we shall tell you in the 
notice that the administrative law judge will dismiss the hearing 
request unless a party requests that the hearing proceed. A request to 
continue must be made in writing within 30 days after the date the 
notice of the revised determination is mailed.
    (e) Revised determination partially favorable. If the revised 
determination is partially favorable to you, we shall tell you in the 
notice what was not favorable. We shall also tell you that the hearing 
you requested will be held unless you, the parties to the revised 
determination and the parties to the hearing tell us that all parties 
agree to dismiss the hearing request.



Sec. 404.942  Prehearing proceedings and decisions by attorney advisors.

    (a) General. After a hearing is requested but before it is held, an 
attorney advisor in our Office of Hearings and Appeals may conduct 
prehearing proceedings as set out in paragraph (c) of this section. If 
upon the completion of these proceedings, a decision that is wholly 
favorable to you and all other parties may be made, an attorney advisor, 
instead of an administrative law judge, may issue such a decision. The 
conduct of the prehearing proceedings by the attorney advisor will not 
delay the scheduling of a hearing. If the prehearing proceedings are not 
completed before the date of the hearing, the case will be sent to the 
administrative law judge unless a wholly favorable decision is in 
process or you and all other parties to the hearing agree in writing to 
delay the hearing until the proceedings are completed.
    (b) When prehearing proceedings may be conducted by an attorney 
advisor. An attorney advisor may conduct prehearing proceedings if you 
have filed a claim for benefits based on disability and--
    (1) New and material evidence is submitted;
    (2) There is an indication that additional evidence is available;
    (3) There is a change in the law or regulations; or
    (4) There is an error in the file or some other indication that a 
wholly favorable decision may be issued.
    (c) Nature of the prehearing proceedings that may be conducted by an 
attorney advisor. As part of the prehearing proceedings, the attorney 
advisor, in addition to reviewing the existing record, may--
    (1) Request additional evidence that may be relevant to the claim, 
including medical evidence; and
    (2) If necessary to clarify the record for the purpose of 
determining if a wholly favorable decision is warranted, schedule a 
conference with the parties.
    (d) Notice of a decision by an attorney advisor. If the attorney 
advisor issues a wholly favorable decision under this section, we shall 
mail a written notice

[[Page 245]]

of the decision to all parties at their last known address. We shall 
state the basis for the decision and advise all parties that an 
administrative law judge will dismiss the hearing request unless a party 
requests that the hearing proceed. A request to proceed with the hearing 
must be made in writing within 30 days after the date the notice of the 
decision of the attorney advisor is mailed.
    (e) Effect of actions under this section. If under this section, an 
administrative law judge dismisses a request for a hearing, the 
dismissal is binding in accordance with Sec. 404.959 unless it is 
vacated by an administrative law judge or the Appeals Council pursuant 
to Sec. 404.960. A decision made by an attorney advisor under this 
section is binding unless--
    (1) A party files a request to proceed with the hearing pursuant to 
paragraph (d) of this section and an administrative law judge makes a 
decision;
    (2) The Appeals Council reviews the decision on its own motion 
pursuant to Sec. 404.969 as explained in paragraph (f)(3) of this 
section; or
    (3) The decision of the attorney advisor is revised under the 
procedures explained in Sec. 404.987.
    (f) Ancillary provisions. For the purposes of the procedures 
authorized by this section, the regulations of part 404 shall apply to--
    (1) Authorize an attorney advisor to exercise the functions 
performed by an administrative law judge under Sec. Sec. 404.1520a and 
404.1546;
    (2) Define the term ``decision'' to include a decision made by an 
attorney advisor, as well as the decisions identified in Sec. 404.901; 
and
    (3) Make the decision of an attorney advisor subject to review by 
the Appeals Council under Sec. 404.969 if an administrative law judge 
dismisses the request for a hearing following issuance of the decision, 
and the Appeals Council decides to review the decision of the attorney 
advisor anytime within 60 days after the date of the dismissal.
    (g) Sunset provision. The provisions of this section will no longer 
be effective on April 2, 2001.

[60 FR 34131, June 30, 1995, as amended at 63 FR 35516, June 30, 1998; 
64 FR 13678, Mar. 22, 1999; 64 FR 51893, Sept. 27, 1999]



Sec. 404.943  Responsibilities of the adjudication officer.

    (a)(1) General. Under the procedures set out in this section we will 
test modifications to the procedures we follow when you file a request 
for a hearing before an administrative law judge in connection with a 
claim for benefits based on disability where the question of whether you 
are under a disability as defined in Sec. 404.1505 is at issue. These 
modifications will enable us to test the effect of having an 
adjudication officer be your primary point of contact after you file a 
hearing request and before you have a hearing with an administrative law 
judge. The tests may be conducted alone, or in combination with the 
tests of the modifications to the disability determination procedures 
which we conduct under Sec. 404.906. The adjudication officer, working 
with you and your representative, if any, will identify issues in 
dispute, develop evidence, conduct informal conferences, and conduct any 
other prehearing proceeding as may be necessary. The adjudication 
officer has the authority to make a decision wholly favorable to you if 
the evidence so warrants. If the adjudication officer does not make a 
decision on your claim, your hearing request will be assigned to an 
administrative law judge for further proceedings.
    (2) Procedures for cases included in the tests. Prior to commencing 
tests of the adjudication officer position in selected site(s), we will 
publish a notice in the Federal Register. The notice will describe where 
the specific test site(s) will be and the duration of the test(s). We 
will also state whether the tests of the adjudication officer position 
in each site will be conducted alone, or in combination with the tests 
of the modifications to the disability determination procedures which we 
conduct under Sec. 404.906. The individuals who participate in the 
test(s) will be

[[Page 246]]

assigned randomly to a test group in each site where the tests are 
conducted.
    (b)(1) Prehearing procedures conducted by an Adjudication Officer. 
When you file a request for a hearing before an administrative law judge 
in connection with a claim for benefits based on disability where the 
question of whether you are under a disability as defined in Sec. 
404.1505 is at issue, the adjudication officer will conduct an interview 
with you. The interview may take place in person, by telephone, or by 
videoconference, as the adjudication officer determines is appropriate 
under the circumstances of your case. If you file a request for an 
extension of time to request a hearing in accordance with Sec. 
404.933(c), the adjudication officer may develop information on, and may 
decide where the adjudication officer issues a wholly favorable decision 
to you that you had good cause for missing the deadline for requesting a 
hearing. To determine whether you had good cause for missing the 
deadline, the adjudication officer will use the standards contained in 
Sec. 404.911.
    (2) Representation. The adjudication officer will provide you with 
information regarding the hearing process, including your right to 
representation. As may be appropriate, the adjudication officer will 
provide you with referral sources for representation, and give you 
copies of necessary documents to facilitate the appointment of a 
representative. If you have a representative, the adjudication officer 
will conduct an informal conference with the representative, in person 
or by telephone, to identify the issues in dispute and prepare proposed 
written agreements for the approval of the administrative law judge 
regarding those issues which are not in dispute and those issues 
proposed for the hearing. If you decide to proceed without 
representation, the adjudication officer may hold an informal conference 
with you. If you obtain representation after the adjudication officer 
has concluded that your case is ready for a hearing, the administrative 
law judge will return your case to the adjudication officer who will 
conduct an informal conference with you and your representative.
    (3) Evidence. You, or your representative, may submit, or may be 
asked to obtain and submit, additional evidence to the adjudication 
officer. As the adjudication officer determines is appropriate under the 
circumstances of your case, the adjudication officer may refer the claim 
for further medical or vocational evidence.
    (4) Referral for a hearing. The adjudication officer will refer the 
claim to the administrative law judge for further proceedings when the 
development of evidence is complete, and you or your representative 
agree that a hearing is ready to be held. If you or your representative 
are unable to agree with the adjudication officer that the development 
of evidence is complete, the adjudication officer will note your 
disagreement and refer the claim to the administrative law judge for 
further proceedings. At this point, the administrative law judge 
conducts all further hearing proceedings, including scheduling and 
holding a hearing (Sec. 404.936), considering any additional evidence 
or arguments submitted (Sec. Sec. 404.935, 404.944, 404.949, 404.950), 
and issuing a decision or dismissal of your request for a hearing, as 
may be appropriate (Sec. Sec. 404.948, 404.953, 404.957). In addition, 
if the administrative law judge determines on or before the date of your 
hearing that the development of evidence is not complete, the 
administrative law judge may return the claim to the adjudication 
officer to complete the development of the evidence and for such other 
action as necessary.
    (c)(1) Wholly favorable decisions issued by an adjudication officer. 
If, after a hearing is requested but before it is held, the adjudication 
officer decides that the evidence in your case warrants a decision which 
is wholly favorable to you, the adjudication officer may issue such a 
decision. For purposes of the tests authorized under this section, the 
adjudication officer's decision shall be considered to be a decision as 
defined in Sec. 404.901. If the adjudication officer issues a decision 
under this section, it will be in writing and will give the findings of 
fact and the reasons for the decision. The adjudication officer will 
evaluate the issues relevant to determining whether or not you are 
disabled in accordance with the

[[Page 247]]

provisions of the Social Security Act, the rules in this part and part 
422 of this chapter and applicable Social Security Rulings. For cases in 
which the adjudication officer issues a decision, he or she may 
determine your residual functional capacity in the same manner that an 
administrative law judge is authorized to do so in Sec. 404.1546. The 
adjudication officer may also evaluate the severity of your mental 
impairments in the same manner that an administrative law judge is 
authorized to do so under Sec. 404.1520a. The adjudication officer's 
decision will be based on the evidence which is included in the record 
and, subject to paragraph (c)(2) of this section, will complete the 
actions that will be taken on your request for hearing. A copy of the 
decision will be mailed to all parties at their last known address. We 
will tell you in the notice that the administrative law judge will not 
hold a hearing unless a party to the hearing requests that the hearing 
proceed. A request to proceed with the hearing must be made in writing 
within 30 days after the date the notice of the decision of the 
adjudication officer is mailed.
    (2) Effect of a decision by an adjudication officer. A decision by 
an adjudication officer which is wholly favorable to you under this 
section, and notification thereof, completes the administrative action 
on your request for hearing and is binding on all parties to the hearing 
and not subject to further review, unless--
    (i) You or another party requests that the hearing continue, as 
provided in paragraph (c)(1) of this section;
    (ii) The Appeals Council decides to review the decision on its own 
motion under the authority provided in Sec. 404.969;
    (iii) The decision is revised under the procedures explained in 
Sec. Sec. 404.987 through 404.989; or
    (iv) In a case remanded by a Federal court, the Appeals Council 
assumes jurisdiction under the procedures in Sec. 404.984.
    (3) Fee for a representative's services. The adjudication officer 
may authorize a fee for your representative's services if the 
adjudication officer makes a decision on your claim that is wholly 
favorable to you, and you are represented. The actions of, and any fee 
authorization made by, the adjudication officer with respect to 
representation will be made in accordance with the provisions of subpart 
R of this part.
    (d) Who may be an adjudication officer. The adjudication officer 
described in this section may be an employee of the Social Security 
Administration or a State agency that makes disability determinations 
for us.

[60 FR 47475, Sept. 13, 1995]

               Administrative Law Judge Hearing Procedures



Sec. 404.944  Administrative law judge hearing procedures--general.

    A hearing is open to the parties and to other persons the 
administrative law judge considers necessary and proper. At the hearing, 
the administrative law judge looks fully into the issues, questions you 
and the other witnesses, and accepts as evidence any documents that are 
material to the issues. The administrative law judge may stop the 
hearing temporarily and continue it at a later date if he or she 
believes that there is material evidence missing at the hearing. The 
administrative law judge may also reopen the hearing at any time before 
he or she mails a notice of the decision in order to receive new and 
material evidence. The administrative law judge may decide when the 
evidence will be presented and when the issues will be discussed.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.946  Issues before an administrative law judge.

    (a) General. The issues before the administrative law judge include 
all the issues brought out in the initial, reconsidered or revised 
determination that were not decided entirely in your favor. However, if 
evidence presented before or during the hearing causes the 
administrative law judge to question a fully favorable determination, he 
or she will notify you and will consider it an issue at the hearing.
    (b) New issues--(1) General. The administrative law judge may 
consider a new issue at the hearing if he or she notifies you and all 
the parties about

[[Page 248]]

the new issue any time after receiving the hearing request and before 
mailing notice of the hearing decision. The administrative law judge or 
any party may raise a new issue; an issue may be raised even though it 
arose after the request for a hearing and even though it has not been 
considered in an initial or reconsidered determination. However, it may 
not be raised if it involves a claim that is within the jurisdiction of 
a State agency under a Federal-State agreement concerning the 
determination of disability.
    (2) Notice of a new issue. The administrative law judge shall notify 
you and any other party if he or she will consider any new issue. Notice 
of the time and place of the hearing on any new issues will be given in 
the manner described in Sec. 404.938, unless you have indicated in 
writing that you do not wish to receive the notice.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.948  Deciding a case without an oral hearing before an administrative 
law judge.

    (a) Decision wholly favorable. If the evidence in the hearing record 
supports a finding in favor of you and all the parties on every issue, 
the administrative law judge may issue a hearing decision without 
holding an oral hearing. However, the notice of the decision will inform 
you that you have the right to an oral hearing and that you have a right 
to examine the evidence on which the decision is based.
    (b) Parties do not wish to appear. (1) The administrative law judge 
may decide a case on the record and not conduct an oral hearing if--
    (i) You and all the parties indicate in writing that you do not wish 
to appear before the administrative law judge at an oral hearing; or
    (ii) You live outside the United States and you do not inform us 
that you want to appear and there are no other parties who wish to 
appear.
    (2) When an oral hearing is not held, the administrative law judge 
shall make a record of the material evidence. The record will include 
the applications, written statements, certificates, reports, affidavits, 
and other documents that were used in making the determination under 
review and any additional evidence you or any other party to the hearing 
present in writing. The decision of the administrative law judge must be 
based on this record.
    (c) Case remanded for a revised determination. (1) The 
administrative law judge may remand a case to the appropriate component 
of our office for a revised determination if there is reason to believe 
that the revised determination would be fully favorable to you. This 
could happen if the administrative law judge receives new and material 
evidence or if there is a change in the law that permits the favorable 
determination.
    (2) Unless you request the remand, the administrative law judge 
shall notify you that your case has been remanded and tell you that if 
you object, you must notify him or her of your objections within 10 days 
of the date the case is remanded or we will assume that you agree to the 
remand. If you object to the remand, the administrative law judge will 
consider the objection and rule on it in writing.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.949  Presenting written statements and oral arguments.

    You or a person you designate to act as your representative may 
appear before the administrative law judge to state your case, to 
present a written summary of your case, or to enter written statements 
about the facts and law material to your case in the record. A copy of 
your written statements should be filed for each party.



Sec. 404.950  Presenting evidence at a hearing before an administrative 
law judge.

    (a) The right to appear and present evidence. Any party to a hearing 
has a right to appear before the administrative law judge, either in 
person or, when the conditions in Sec. 404.936(c) exist, by video 
teleconferencing, to present evidence and to state his or her position. 
A party may also make his or her appearance by means of a designated 
representative, who may make the appearance in person or by video 
teleconferencing.

[[Page 249]]

    (b) Waiver of the right to appear. You may send the administrative 
law judge a waiver or a written statement indicating that you do not 
wish to appear at the hearing. You may withdraw this waiver any time 
before a notice of the hearing decision is mailed to you. Even if all of 
the parties waive their right to appear at a hearing, the administrative 
law judge may notify them of a time and a place for an oral hearing, if 
he or she believes that a personal appearance and testimony by you or 
any other party is necessary to decide the case.
    (c) What evidence is admissible at a hearing. The administrative law 
judge may receive evidence at the hearing even though the evidence would 
not be admissible in court under the rules of evidence used by the 
court.
    (d) Subpoenas. (1) When it is reasonably necessary for the full 
presentation of a case, an administrative law judge or a member of the 
Appeals Council may, on his or her own initiative or at the request of a 
party, issue subpoenas for the appearance and testimony of witnesses and 
for the production of books, records, correspondence, papers, or other 
documents that are material to an issue at the hearing.
    (2) Parties to a hearing who wish to subpoena documents or witnesses 
must file a written request for the issuance of a subpoena with the 
administrative law judge or at one of our offices at least 5 days before 
the hearing date. The written request must give the names of the 
witnesses or documents to be produced; describe the address or location 
of the witnesses or documents with sufficient detail to find them; state 
the important facts that the witness or document is expected to prove; 
and indicate why these facts could not be proven without issuing a 
subpoena.
    (3) We will pay the cost of issuing the subpoena.
    (4) We will pay subpoenaed witnesses the same fees and mileage they 
would receive if they had been subpoenaed by a Federal district court.
    (e) Witnesses at a hearing. Witnesses may appear at a hearing in 
person or, when the conditions in Sec. 404.936(c) exist, by video 
teleconferencing. They shall testify under oath or affirmation, unless 
the administrative law judge finds an important reason to excuse them 
from taking an oath or affirmation. The administrative law judge may ask 
the witnesses any questions material to the issues and shall allow the 
parties or their designated representatives to do so.
    (f) Collateral estoppel--issues previously decided. An issue at your 
hearing may be a fact that has already been decided in one of our 
previous determinations or decisions in a claim involving the same 
parties, but arising under a different title of the Act or under the 
Federal Coal Mine Health and Safety Act. If this happens, the 
administrative law judge will not consider the issue again, but will 
accept the factual finding made in the previous determination or 
decision unless there are reasons to believe that it was wrong.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986; 68 FR 
5219, Feb. 3, 2003]



Sec. 404.951  When a record of a hearing before an administrative law 
judge is made.

    The administrative law judge shall make a complete record of the 
hearing proceedings. The record will be prepared as a typed copy of the 
proceedings if--
    (a) The case is sent to the Appeals Council without a decision or 
with a recommended decision by the administrative law judge;
    (b) You seek judicial review of your case by filing an action in a 
Federal district court within the stated time period, unless we request 
the court to remand the case; or
    (c) An administrative law judge or the Appeals Council asks for a 
written record of the proceedings.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.952  Consolidated hearing before an administrative law judge.

    (a) General. (1) A consolidated hearing may be held if--
    (i) You have requested a hearing to decide your benefit rights under 
title II of the Act and you have also requested a hearing to decide your 
rights under another law we administer; and

[[Page 250]]

    (ii) One or more of the issues to be considered at the hearing you 
requested are the same issues that are involved in another claim you 
have pending before us.
    (2) If the administrative law judge decides to hold the hearing on 
both claims, he or she decides both claims, even if we have not yet made 
an initial or reconsidered determination on the other claim.
    (b) Record, evidence, and decision. There will be a single record at 
a consolidated hearing. This means that the evidence introduced in one 
case becomes evidence in the other(s). The administrative law judge may 
make either a separate or consolidated decision.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.953  The decision of an administrative law judge.

    (a) General. The administrative law judge shall issue a written 
decision that gives the findings of fact and the reasons for the 
decision. The decision must be based on evidence offered at the hearing 
or otherwise included in the record. The administrative law judge shall 
mail a copy of the decision to all the parties at their last known 
address. The Appeals Council may also receive a copy of the decision.
    (b) Recommended decision. Although an administrative law judge will 
usually make a decision, he or she may send the case to the Appeals 
Council with a recommended decision where appropriate. The 
administrative law judge will mail a copy of the recommended decision to 
the parties at their last known addresses and send the recommended 
decision to the Appeals Council.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986; 54 FR 
37792, Sept. 13, 1989]



Sec. 404.955  The effect of an administrative law judge's decision.

    The decision of the administrative law judge is binding on all 
parties to the hearing unless--
    (a) You or another party request a review of the decision by the 
Appeals Council within the stated time period, and the Appeals Council 
reviews your case;
    (b) You or another party requests a review of the decision by the 
Appeals Council within the stated time period, the Appeals Council 
denies your request for review, and you seek judicial review of your 
case by filing an action in a Federal district court;
    (c) The decision is revised by an administrative law judge or the 
Appeals Council under the procedures explained in Sec. 404.987;
    (d) The expedited appeals process is used;
    (e) The decision is a recommended decision directed to the Appeals 
Council; or
    (f) In a case remanded by a Federal court, the Appeals Council 
assumes jurisdiction under the procedures in Sec. 404.984.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986; 54 FR 
37792, Sept. 13, 1989]



Sec. 404.956  Removal of a hearing request from an administrative law 
judge to the Appeals Council.

    If you have requested a hearing and the request is pending before an 
administrative law judge, the Appeals Council may assume responsibility 
for holding a hearing by requesting that the administrative law judge 
send the hearing request to it. If the Appeals Council holds a hearing, 
it shall conduct the hearing according to the rules for hearings before 
an administrative law judge. Notice shall be mailed to all parties at 
their last known address telling them that the Appeals Council has 
assumed responsibility for the case.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.957  Dismissal of a request for a hearing before an administrative 
law judge.

    An administrative law judge may dismiss a request for a hearing 
under any of the following conditions:
    (a) At any time before notice of the hearing decision is mailed, you 
or the party or parties that requested the hearing ask to withdraw the 
request.

[[Page 251]]

This request may be submitted in writing to the administrative law judge 
or made orally at the hearing.
    (b)(1)(i) Neither you nor the person you designate to act as your 
representative appears at the time and place set for the hearing and you 
have been notified before the time set for the hearing that your request 
for hearing may be dismissed without further notice if you did not 
appear at the time and place of hearing, and good cause has not been 
found by the administrative law judge for your failure to appear; or
    (ii) Neither you nor the person you designate to act as your 
representative appears at the time and place set for the hearing and 
within 10 days after the administrative law judge mails you a notice 
asking why you did not appear, you do not give a good reason for the 
failure to appear.
    (2) In determining good cause or good reason under this paragraph, 
we will consider any physical, mental, educational, or linguistic 
limitations (including any lack of facility with the English language) 
which you may have.
    (c) The administrative law judge decides that there is cause to 
dismiss a hearing request entirely or to refuse to consider any one or 
more of the issues because--
    (1) The doctrine of res judicata applies in that we have made a 
previous determination or decision under this subpart about your rights 
on the same facts and on the same issue or issues, and this previous 
determination or decision has become final by either administrative or 
judicial action;
    (2) The person requesting a hearing has no right to it under Sec. 
404.930;
    (3) You did not request a hearing within the stated time period and 
we have not extended the time for requesting a hearing under Sec. 
404.933(c); or
    (4) You die, there are no other parties, and we have no information 
to show that another person may be adversely affected by the 
determination that was to be reviewed at the hearing. However, dismissal 
of the hearing request will be vacated if, within 60 days after the date 
of the dismissal, another person submits a written request for a hearing 
on the claim and shows that he or she may be adversely affected by the 
determination that was to be reviewed at the hearing.

[45 FR 52081, Aug. 5, 1980, as amended at 50 FR 21438, May 24, 1985; 51 
FR 303, Jan. 3, 1986; 59 FR 1634, Jan. 12, 1994]



Sec. 404.958  Notice of dismissal of a request for a hearing before an 
administrative law judge.

    We shall mail a written notice of the dismissal of the hearing 
request to all parties at their last known address. The notice will 
state that there is a right to request that the Appeals Council vacate 
the dismissal action.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.959  Effect of dismissal of a request for a hearing before an 
administrative law judge.

    The dismissal of a request for a hearing is binding, unless it is 
vacated by an administrative law judge or the Appeals Council.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.960  Vacating a dismissal of a request for a hearing before an 
administrative law judge.

    An administrative law judge or the Appeals Council may vacate any 
dismissal of a hearing request if, within 60 days after the date you 
receive the dismissal notice, you request that the dismissal be vacated 
and show good cause why the hearing request should not have been 
dismissed. The Appeals Council itself may decide within 60 days after 
the notice of dismissal is mailed to vacate the dismissal. The Appeals 
Council shall advise you in writing of any action it takes.

[45 FR 52081, Aug. 5, 1980, as amended at 51 FR 303, Jan. 3, 1986]



Sec. 404.961  Prehearing and posthearing conferences.

    The administrative law judge may decide on his or her own, or at the 
request of any party to the hearing, to hold a prehearing or posthearing 
conference to facilitate the hearing or the hearing decision. The 
administrative law judge shall tell the parties of the time, place and 
purpose of the conference at least seven days before the

[[Page 252]]

conference date, unless the parties have indicated in writing that they 
do not wish to receive a written notice of the conference. At the 
conference, the administrative law judge may consider matters in 
addition to those stated in the notice, if the parties consent in 
writing. A record of the conference will be made. The administrative law 
judge shall issue an order stating all agreements and actions resulting 
from the conference. If the parties do not object, the agreements and 
actions become part of the hearing record and are binding on all 
parties.



Sec. 404.965  [Reserved]

                         Appeals Council Review



Sec. 404.966  Testing elimination of the request for Appeals Council review.

    (a) Applicability and scope. Notwithstanding any other provision in 
this part or part 422 of this chapter, we are establishing the 
procedures set out in this section to test elimination of the request 
for review by the Appeals Council. These procedures will apply in 
randomly selected cases in which we have tested a combination of model 
procedures for modifying the disability claim process as authorized 
under Sec. Sec. 404.906 and 404.943, and in which an administrative law 
judge has issued a decision (not including a recommended decision) that 
is less than wholly favorable to you.
    (b) Effect of an administrative law judge's decision. In a case to 
which the procedures of this section apply, the decision of an 
administrative law judge will be binding on all the parties to the 
hearing unless --
    (1) You or another party file an action concerning the decision in 
Federal district court;
    (2) The Appeals Council decides to review the decision on its own 
motion under the authority provided in Sec. 404.969, and it issues a 
notice announcing its decision to review the case on its own motion no 
later than the day before the filing date of a civil action establishing 
the jurisdiction of a Federal district court; or
    (3) The decision is revised by the administrative law judge or the 
Appeals Council under the procedures explained in Sec. 404.987.
    (c) Notice of the decision of an administrative law judge. The 
notice of decision the administrative law judge issues in a case 
processed under this section will advise you and any other parties to 
the decision that you may file an action in a Federal district court 
within 60 days after the date you receive notice of the decision.
    (d) Extension of time to file action in Federal district court. Any 
party having a right to file a civil action under this section may 
request that the time for filing an action in Federal district court be 
extended. The request must be in writing and it must give the reasons 
why the action was not filed within the stated time period. The request 
must be filed with the Appeals Council. If you show that you had good 
cause for missing the deadline, the time period will be extended. To 
determine whether good cause exists, we will use the standards in Sec. 
404.911.

[62 FR 49602, Sept. 23, 1997]



Sec. 404.967  Appeals Council review--general.

    If you or any other party is dissatisfied with the hearing decision 
or with the dismissal of a hearing request, you may request that the 
Appeals Council review that action. The Appeals Council may deny or 
dismiss the request for review, or it may grant the request and either 
issue a decision or remand the case to an administrative law judge. The 
Appeals Council shall notify the parties at their last known address of 
the action it takes.



Sec. 404.968  How to request Appeals Council review.

    (a) Time and place to request Appeals Council review. You may 
request Appeals Council review by filing a written request. Any 
documents or other evidence you wish to have considered by the Appeals 
Council should be submitted with your request for review. You may file 
your request--
    (1) Within 60 days after the date you receive notice of the hearing 
decision or dismissal (or within the extended time period if we extend 
the time as provided in paragraph (b) of this section);
    (2) At one of our offices, the Veterans Administration Regional 
Office in the

[[Page 253]]

Philippines, or an office of the Railroad Retirement Board if you have 
10 or more years of service in the railroad industry.
    (b) Extension of time to request review. You or any party to a 
hearing decision may ask that the time for filing a request for the 
review be extended. The request for an extension of time must be in 
writing. It must be filed with the Appeals Council, and it must give the 
reasons why the request for review was not filed within the stated time 
period. If you show that you had good cause for missing the deadline, 
the time period will be extended. To determine whether good cause 
exists, we use the standards explained in Sec. 404.911.



Sec. 404.969  Appeals Council initiates review.

    (a) General. Anytime within 60 days after the date of a decision or 
dismissal that is subject to review under this section, the Appeals 
Council may decide on its own motion to review the action that was taken 
in your case. We may refer your case to the Appeals Council for it to 
consider reviewing under this authority.
    (b) Identification of cases. We will identify a case for referral to 
the Appeals Council for possible review under its own-motion authority 
before we effectuate a decision in the case. We will identify cases for 
referral to the Appeals Council through random and selective sampling 
techniques, which we may use in association with examination of the 
cases identified by sampling. We will also identify cases for referral 
to the Appeals Council through the evaluation of cases we conduct in 
order to effectuate decisions.
    (1) Random and selective sampling and case examinations. We may use 
random and selective sampling to identify cases involving any type of 
action (i.e., wholly or partially favorable decisions, unfavorable 
decisions, or dismissals) and any type of benefits (i.e., benefits based 
on disability and benefits not based on disability). We will use 
selective sampling to identify cases that exhibit problematic issues or 
fact patterns that increase the likelihood of error. Neither our random 
sampling procedures nor our selective sampling procedures will identify 
cases based on the identity of the decisionmaker or the identity of the 
office issuing the decision. We may examine cases that have been 
identified through random or selective sampling to refine the 
identification of cases that may meet the criteria for review by the 
Appeals Council.
    (2) Identification as a result of the effectuation process. We may 
refer a case requiring effectuation to the Appeals Council if, in the 
view of the effectuating component, the decision cannot be effectuated 
because it contains a clerical error affecting the outcome of the claim; 
the decision is clearly inconsistent with the Social Security Act, the 
regulations, or a published ruling; or the decision is unclear regarding 
a matter that affects the claim's outcome.
    (c) Referral of cases. We will make referrals that occur as the 
result of a case examination or the effectuation process in writing. The 
written referral based on the results of such a case examination or the 
effectuation process will state the referring component's reasons for 
believing that the Appeals Council should review the case on its own 
motion. Referrals that result from selective sampling without a case 
examination may be accompanied by a written statement identifying the 
issue(s) or fact pattern that caused the referral. Referrals that result 
from random sampling without a case examination will only identify the 
case as a random sample case.
    (d) Appeals Council's action. If the Appeals Council decides to 
review a decision or dismissal on its own motion, it will mail a notice 
of review to all the parties as provided in Sec. 404.973. The Appeals 
Council will include with that notice a copy of any written referral it 
has received under paragraph (c) of this section. The Appeals Council's 
decision to review a case is established by its issuance of the notice 
of review. If it is unable to decide within the applicable 60-day period 
whether to review a decision or dismissal, the Appeals Council may 
consider the case to determine if the decision or dismissal should be 
reopened pursuant to Sec. Sec. 404.987 and 404.988. If the Appeals 
Council decides to review a decision on its own motion or to reopen a 
decision as provided in

[[Page 254]]

Sec. Sec. 404.987 and 404.988, the notice of review or the notice of 
reopening issued by the Appeals Council will advise, where appropriate, 
that interim benefits will be payable if a final decision has not been 
issued within 110 days after the date of the decision that is reviewed 
or reopened, and that any interim benefits paid will not be considered 
overpayments unless the benefits are fraudulently obtained.

[63 FR 36570, July 7, 1998]



Sec. 404.970  Cases the Appeals Council will review.

    (a) The Appeals Council will review a case if--
    (1) There appears to be an abuse of discretion by the administrative 
law judge;
    (2) There is an error of law;
    (3) The action, findings or conclusions of the administrative law 
judge are not supported by substantial evidence; or
    (4) There is a broad policy or procedural issue that may affect the 
general public interest.
    (b) If new and material evidence is submitted, the Appeals Council 
shall consider the additional evidence only where it relates to the 
period on or before the date of the administrative law judge hearing 
decision. The Appeals Council shall evaluate the entire record including 
the new and material evidence submitted if it relates to the period on 
or before the date of the administrative law judge hearing decision. It 
will then review the case if it finds that the administrative law 
judge's action, findings, or conclusion is contrary to the weight of the 
evidence currently of record.

[45 FR 52081, Aug. 5, 1980, as amended at 52 FR 4004, Feb. 9, 1987]



Sec. 404.971  Dismissal by Appeals Council.

    The Appeals Council will dismiss your request for review if you did 
not file your request within the stated period of time and the time for 
filing has not been extended. The Appeals Council may also dismiss any 
proceedings before it if--
    (a) You and any other party to the proceedings files a written 
request for dismissal; or
    (b) You or any other party to the proceedings dies and the record 
clearly shows that dismissal will not adversely affect any other person 
who wishes to continue the action.



Sec. 404.972  Effect of dismissal of request for Appeals Council review.

    The dismissal of a request for Appeals Council review is binding and 
not subject to further review.



Sec. 404.973  Notice of Appeals Council review.

    When the Appeals Council decides to review a case, it shall mail a 
notice to all parties at their last known address stating the reasons 
for the review and the issues to be considered.



Sec. 404.974  Obtaining evidence from Appeals Council.

    You may request and receive copies or a statement of the documents 
or other written evidence upon which the hearing decision or dismissal 
was based and a copy or summary of the transcript of oral evidence. 
However, you will be asked to pay the costs of providing these copies 
unless there is a good reason why you should not pay.



Sec. 404.975  Filing briefs with the Appeals Council.

    Upon request, the Appeals Council shall give you and all other 
parties a reasonable opportunity to file briefs or other written 
statements about the facts and law relevant to the case. A copy of each 
brief or statement should be filed for each party.



Sec. 404.976  Procedures before Appeals Council on review.

    (a) Limitation of issues. The Appeals Council may limit the issues 
it considers if it notifies you and the other parties of the issues it 
will review.
    (b) Evidence. (1) The Appeals Council will consider all the evidence 
in the administrative law judge hearing record as well as any new and 
material evidence submitted to it which relates to the period on or 
before the date of the administrative law judge hearing decision. If you 
submit evidence which does

[[Page 255]]

not relate to the period on or before the date of the administrative law 
judge hearing decision, the Appeals Council will return the additional 
evidence to you with an explanation as to why it did not accept the 
additional evidence and will advise you of your right to file a new 
application. The notice returning the evidence to you will also advise 
you that if you file a new application within 6 months after the date of 
the Appeals Council's notice, your request for review will constitute a 
written statement indicating an intent to claim benefits in accordance 
with Sec. 404.630. If a new application is filed within 6 months of 
this notice, the date of the request for review will be used as the 
filing date for your application.
    (2) If additional evidence is needed, the Appeals Council may remand 
the case to an administrative law judge to receive evidence and issue a 
new decision. However, if the Appeals Council decides that it can obtain 
the evidence more quickly, it may do so, unless it will adversely affect 
your rights.
    (c) Oral argument. You may request to appear before the Appeals 
Council to present oral argument. The Appeals Council will grant your 
request if it decides that your case raises an important question of law 
or policy or that oral argument would help to reach a proper decision. 
If your request to appear is granted, the Appeals Council will tell you 
the time and place of the oral argument at least 10 days before the 
scheduled date.

[45 FR 52081, Aug. 5, 1980, as amended at 52 FR 4004, Feb. 9, 1987]



Sec. 404.977  Case remanded by Appeals Council.

    (a) When the Appeals Council may remand a case. The Appeals Council 
may remand a case to an administrative law judge so that he or she may 
hold a hearing and issue a decision or a recommended decision. The 
Appeals Council may also remand a case in which additional evidence is 
needed or additional action by the administrative law judge is required.
    (b) Action by administrative law judge on remand. The administrative 
law judge shall take any action that is ordered by the Appeals Council 
and may take any additional action that is not inconsistent with the 
Appeals Council's remand order.
    (c) Notice when case is returned with a recommended decision. When 
the administrative law judge sends a case to the Appeals Council with a 
recommended decision, a notice is mailed to the parties at their last 
known address. The notice tells them that the case has been sent to the 
Appeals Council, explains the rules for filing briefs or other written 
statements with the Appeals Council, and includes a copy of the 
recommended decision.
    (d) Filing briefs with and obtaining evidence from the Appeals 
Council. (1) You may file briefs or other written statements about the 
facts and law relevant to your case with the Appeals Council within 20 
days of the date that the recommended decision is mailed to you. Any 
party may ask the Appeals Council for additional time to file briefs or 
statements. The Appeals Council will extend this period, as appropriate, 
if you show that you had good cause for missing the deadline.
    (2) All other rules for filing briefs with and obtaining evidence 
from the Appeals Council follow the procedures explained in this 
subpart.
    (e) Procedures before the Appeals Council. (1) The Appeals Council, 
after receiving a recommended decision, will conduct its proceedings and 
issue its decision according to the procedures explain in this subpart.
    (2) If the Appeals Council believes that more evidence is required, 
it may again remand the case to an administrative law judge for further 
inquiry into the issues, rehearing, receipt of evidence, and another 
decision or recommended decision. However, if the Appeals Council 
decides that it can get the additional evidence more quickly, it will 
take appropriate action.



Sec. 404.979  Decision of Appeals Council.

    After it has reviewed all the evidence in the administrative law 
judge hearing record and any additional evidence received, subject to 
the limitations on Appeals Council consideration of additional evidence 
in Sec. Sec. 404.970(b) and 404.976(b), the Appeals Council will make a 
decision or remand the case to

[[Page 256]]

an administrative law judge. The Appeals Council may affirm, modify or 
reverse the administrative law judge hearing decision or it may adopt, 
modify or reject a recommended decision. A copy of the Appeals Council's 
decision will be mailed to the parties at their last known address.

[52 FR 4004, Feb. 9, 1987]



Sec. 404.981  Effect of Appeals Council's decision or denial of review.

    The Appeals Council may deny a party's request for review or it may 
decide to review a case and make a decision. The Appeals Council's 
decision, or the decision of the administrative law judge if the request 
for review is denied, is binding unless you or another party file an 
action in Federal district court, or the decision is revised. You may 
file an action in a Federal district court within 60 days after the date 
you receive notice of the Appeals Council's action.



Sec. 404.982  Extension of time to file action in Federal district court.

    Any party to the Appeals Council's decision or denial of review, or 
to an expedited appeals process agreement, may request that the time for 
filing an action in a Federal district court be extended. The request 
must be in writing and it must give the reasons why the action was not 
filed within the stated time period. The request must be filed with the 
Appeals Council, or if it concerns an expedited appeals process 
agreement, with one of our offices. If you show that you had good cause 
for missing the deadline, the time period will be extended. To determine 
whether good cause exists, we use the standards explained in Sec. 
404.911.

                           Court Remand Cases



Sec. 404.983  Case remanded by a Federal court.

    When a Federal court remands a case to the Commissioner for further 
consideration, the Appeals Council, acting on behalf of the 
Commissioner, may make a decision, or it may remand the case to an 
administrative law judge with instructions to take action and issue a 
decision or return the case to the Appeals Council with a recommended 
decision. If the case is remanded by the Appeals Council, the procedures 
explained in Sec. 404.977 will be followed. Any issues relating to your 
claim may be considered by the administrative law judge whether or not 
they were raised in the administrative proceedings leading to the final 
decision in your case.

[54 FR 37792, Sept. 13, 1989, as amended at 62 FR 38450, July 18, 1997]



Sec. 404.984  Appeals Council review of administrative law judge decision 
in a case remanded by a Federal court.

    (a) General. In accordance with Sec. 404.983, when a case is 
remanded by a Federal court for further consideration, the decision of 
the administrative law judge will become the final decision of the 
Commissioner after remand on your case unless the Appeals Council 
assumes jurisdiction of the case. The Appeals Council may assume 
jurisdiction based on written exceptions to the decision of the 
administrative law judge which you file with the Appeals Council or 
based on its authority pursuant to paragraph (c) of this section. If the 
Appeals Council assumes jurisdiction of your case, any issues relating 
to your claim may be considered by the Appeals Council whether or not 
they were raised in the administrative proceedings leading to the final 
decision in your case or subsequently considered by the administrative 
law judge in the administrative proceedings following the court's remand 
order. The Appeals Council will either make a new, independent decision 
based on the entire record that will be the final decision of the 
Commissioner after remand or remand the case to an administrative law 
judge for further proceedings.
    (b) You file exceptions disagreeing with the decision of the 
administrative law judge. (1) If you disagree with the decision of the 
administrative law judge, in whole or in part, you may file exceptions 
to the decision with the Appeals Council. Exceptions may be filed by 
submitting a written statement to the Appeals Council setting forth your 
reasons for disagreeing with the decision of the administrative law 
judge. The exceptions must be filed within 30 days

[[Page 257]]

of the date you receive the decision of the administrative law judge or 
an extension of time in which to submit exceptions must be requested in 
writing within the 30-day period. A timely request for a 30-day 
extension will be granted by the Appeals Council. A request for an 
extension of more than 30 days should include a statement of reasons as 
to why you need the additional time.
    (2) If written exceptions are timely filed, the Appeals Council will 
consider your reasons for disagreeing with the decision of the 
administrative law judge and all the issues presented by your case. If 
the Appeals Council concludes that there is no reason to change the 
decision of the administrative law judge, it will issue a notice to you 
addressing your exceptions and explaining why no change in the decision 
of the administrative law judge is warranted. In this instance, the 
decision of the administrative law judge is the final decision of the 
Commissioner after remand.
    (3) When you file written exceptions to the decision of the 
administrative law judge, the Appeals Council may assume jurisdiction at 
any time, even after the 60-day time period which applies when you do 
not file exceptions. If the Appeals Council assumes jurisdiction, it 
will make a new, independent decision based on its consideration of the 
entire record affirming, modifying, or reversing the decision of the 
administrative law judge or remand the case to an administrative law 
judge for further proceedings, including a new decision. The new 
decision of the Appeals Council is the final decision of the 
Commissioner after remand.
    (c) Appeals Council assumes jurisdiction without exceptions being 
filed. Any time within 60 days after the date of the decision of the 
administrative law judge, the Appeals Council may decide to assume 
jurisdiction of your case even though no written exceptions have been 
filed. Notice of this action will be mailed to all parties at their last 
known address. You will be provided with the opportunity to file briefs 
or other written statements with the Appeals Council about the facts and 
law relevant to your case. After the briefs or other written statements 
have been received or the time allowed (usually 30 days) for submitting 
them has expired, the Appeals Council will either issue a final decision 
of the Commissioner affirming, modifying, or reversing the decision of 
the administrative law judge, or remand the case to an administrative 
law judge for further proceedings, including a new decision.
    (d) Exceptions are not filed and the Appeals Council does not 
otherwise assume jurisdiction. If no exceptions are filed and the 
Appeals Council does not assume jurisdiction of your case, the decision 
of the administrative law judge becomes the final decision of the 
Commissioner after remand.

[54 FR 37792, Sept. 13, 1989; 54 FR 40779, Oct. 3, 1989; 62 FR 38450, 
July 18, 1997]



Sec. 404.985  Application of circuit court law.

    The procedures which follow apply to administrative determinations 
or decisions on claims involving the application of circuit court law.
    (a) General. We will apply a holding in a United States Court of 
Appeals decision that we determine conflicts with our interpretation of 
a provision of the Social Security Act or regulations unless the 
Government seeks further judicial review of that decision or we 
relitigate the issue presented in the decision in accordance with 
paragraphs (c) and (d) of this section. We will apply the holding to 
claims at all levels of the administrative review process within the 
applicable circuit unless the holding, by its nature, applies only at 
certain levels of adjudication.
    (b) Issuance of an Acquiescence Ruling. When we determine that a 
United States Court of Appeals holding conflicts with our interpretation 
of a provision of the Social Security Act or regulations and the 
Government does not seek further judicial review or is unsuccessful on 
further review, we will issue a Social Security Acquiescence Ruling. The 
Acquiescence Ruling will describe the administrative case and the court 
decision, identify the issue(s) involved, and explain how we will apply 
the holding, including, as necessary, how the holding relates to other 
decisions within the applicable circuit. These Acquiescence Rulings will 
generally be effective on the date of their

[[Page 258]]

publication in the Federal Register and will apply to all determinations 
and decisions made on or after that date unless an Acquiescence Ruling 
is rescinded as stated in paragraph (e) of this section. The process we 
will use when issuing an Acquiescence Ruling follows:
    (1) We will release an Acquiescence Ruling for publication in the 
Federal Register for any precedential circuit court decision that we 
determine contains a holding that conflicts with our interpretation of a 
provision of the Social Security Act or regulations no later than 120 
days from the receipt of the court's decision. This timeframe will not 
apply when we decide to seek further judicial review of the circuit 
court decision or when coordination with the Department of Justice and/
or other Federal agencies makes this timeframe no longer feasible.
    (2) If we make a determination or decision on your claim between the 
date of a circuit court decision and the date we publish an Acquiescence 
Ruling, you may request application of the published Acquiescence Ruling 
to the prior determination or decision. You must demonstrate that 
application of the Acquiescence Ruling could change the prior 
determination or decision in your case. You may demonstrate this by 
submitting a statement that cites the Acquiescence Ruling or the holding 
or portion of a circuit court decision which could change the prior 
determination or decision in your case. If you can so demonstrate, we 
will readjudicate the claim in accordance with the Acquiescence Ruling 
at the level at which it was last adjudicated. Any readjudication will 
be limited to consideration of the issue(s) covered by the Acquiescence 
Ruling and any new determination or decision on readjudication will be 
subject to administrative and judicial review in accordance with this 
subpart. Our denial of a request for readjudication will not be subject 
to further administrative or judicial review. If you file a request for 
readjudication within the 60-day appeal period and we deny that request, 
we shall extend the time to file an appeal on the merits of the claim to 
60 days after the date that we deny the request for readjudication.
    (3) After we receive a precedential circuit court decision and 
determine that an Acquiescence Ruling may be required, we will begin to 
identify those claims that are pending before us within the circuit and 
that might be subject to readjudication if an Acquiescence Ruling is 
subsequently issued. When an Acquiescence Ruling is published, we will 
send a notice to those individuals whose cases we have identified which 
may be affected by the Acquiescence Ruling. The notice will provide 
information about the Acquiescence Ruling and the right to request 
readjudication under that Acquiescence Ruling, as described in paragraph 
(b)(2) of this section. It is not necessary for an individual to receive 
a notice in order to request application of an Acquiescence Ruling to 
his or her claim, as described in paragraph (b)(2) of this section.
    (c) Relitigation of court's holding after publication of an 
Acquiescence Ruling. After we have published an Acquiescence Ruling to 
reflect a holding of a United States Court of Appeals on an issue, we 
may decide under certain conditions to relitigate that issue within the 
same circuit. We may relitigate only when the conditions specified in 
paragraphs (c)(2) and (3) of this section are met, and, in general, one 
of the events specified in paragraph (c)(1) of this section occurs.
    (1) Activating events:
    (i) An action by both Houses of Congress indicates that a circuit 
court decision on which an Acquiescence Ruling was based was decided 
inconsistently with congressional intent, such as may be expressed in a 
joint resolution, an appropriations restriction, or enactment of 
legislation which affects a closely analogous body of law;
    (ii) A statement in a majority opinion of the same circuit indicates 
that the court might no longer follow its previous decision if a 
particular issue were presented again;
    (iii) Subsequent circuit court precedent in other circuits supports 
our interpretation of the Social Security Act or regulations on the 
issue(s) in question; or
    (iv) A subsequent Supreme Court decision presents a reasonable legal 
basis for questioning a circuit court holding

[[Page 259]]

upon which we base an Acquiescence Ruling.
    (2) The General Counsel of the Social Security Administration, after 
consulting with the Department of Justice, concurs that relitigation of 
an issue and application of our interpretation of the Social Security 
Act or regulations to selected claims in the administrative review 
process within the circuit would be appropriate.
    (3) We publish a notice in the Federal Register that we intend to 
relitigate an Acquiescence Ruling issue and that we will apply our 
interpretation of the Social Security Act or regulations within the 
circuit to claims in the administrative review process selected for 
relitigation. The notice will explain why we made this decision.
    (d) Notice of relitigation. When we decide to relitigate an issue, 
we will provide a notice explaining our action to all affected 
claimants. In adjudicating claims subject to relitigation, 
decisionmakers throughout the SSA administrative review process will 
apply our interpretation of the Social Security Act and regulations, but 
will also state in written determinations or decisions how the claims 
would have been decided under the circuit standard. Claims not subject 
to relitigation will continue to be decided under the Acquiescence 
Ruling in accordance with the circuit standard. So that affected 
claimants can be readily identified and any subsequent decision of the 
circuit court or the Supreme Court can be implemented quickly and 
efficiently, we will maintain a listing of all claimants who receive 
this notice and will provide them with the relief ordered by the court.
    (e) Rescission of an Acquiescence Ruling. We will rescind as 
obsolete an Acquiescence Ruling and apply our interpretation of the 
Social Security Act or regulations by publishing a notice in the Federal 
Register when any of the following events occurs:
    (1) The Supreme Court overrules or limits a circuit court holding 
that was the basis of an Acquiescence Ruling;
    (2) A circuit court overrules or limits itself on an issue that was 
the basis of an Acquiescence Ruling;
    (3) A Federal law is enacted that removes the basis for the holding 
in a decision of a circuit court that was the subject of an Acquiescence 
Ruling; or
    (4) We subsequently clarify, modify or revoke the regulation or 
ruling that was the subject of a circuit court holding that we 
determined conflicts with our interpretation of the Social Security Act 
or regulations, or we subsequently publish a new regulation(s) 
addressing an issue(s) not previously included in our regulations when 
that issue(s) was the subject of a circuit court holding that conflicted 
with our interpretation of the Social Security Act or regulations and 
that holding was not compelled by the statute or Constitution.

[63 FR 24932, May 6, 1998]

           Reopening and Revising Determinations and Decisions



Sec. 404.987  Reopening and revising determinations and decisions.

    (a) General. Generally, if you are dissatisfied with a 
determinationor decision made in the administrative review process, but 
do not request further review within the stated time period, you lose 
your right to further review and that determination or decision becomes 
final. However, a determination or a decision made in your case which is 
otherwise final and binding may be reopened and revised by us.
    (b) Procedure for reopening and revision. We may reopen a final 
determination or decision on our own initiative, or you may ask that a 
final determination or a decision to which you were a party be reopened. 
In either instance, if we reopen the determination or decision, we may 
revise that determination or decision. The conditions under which we may 
reopen a previous determination or decision, either on our own 
initiative or at your request, are explained in Sec. 404.988.

[59 FR 8535, Feb. 23, 1994]



Sec. 404.988  Conditions for reopening.

    A determination, revised determination, decision, or revised 
decision may be reopened--
    (a) Within 12 months of the date of the notice of the initial 
determination, for any reason;

[[Page 260]]

    (b) Within four years of the date of the notice of the initial 
determination if we find good cause, as defined in Sec. 404.989, to 
reopen the case; or
    (c) At any time if--
    (1) It was obtained by fraud or similar fault (see Sec. 416.1488(c) 
of this chapter for factors which we take into account in determining 
fraud or similar fault);
    (2) Another person files a claim on the same earnings record and 
allowance of the claim adversely affects your claim;
    (3) A person previously determined to be dead, and on whose earnings 
record your entitlement is based, is later found to be alive;
    (4) Your claim was denied because you did not prove that a person 
died, and the death is later established--
    (i) By a presumption of death under Sec. 404.721(b); or
    (ii) By location or identification of his or her body;
    (5) The Railroad Retirement Board has awarded duplicate benefits on 
the same earnings record;
    (6) It either--
    (i) Denies the person on whose earnings record your claim is based 
gratuitous wage credits for military or naval service because another 
Federal agency (other than the Veterans Administration) has erroneously 
certified that it has awarded benefits based on the service; or
    (ii) Credits the earnings record of the person on which your claim 
is based with gratuitous wage credits and another Federal agency (other 
than the Veterans Administration) certifies that it has awarded a 
benefit based on the period of service for which the wage credits were 
granted;
    (7) It finds that the claimant did not have insured status, but 
earnings were later credited to his or her earnings record to correct 
errors apparent on the face of the earnings record (section 205(c)(5)(C) 
of the Act), to enter items transferred by the Railroad Retirement 
Board, which were credited under the Railroad Retirement Act when they 
should have been credited to the claimant's Social Security earnings 
record (section 205(c)(5)(D) of the Act), or to correct errors made in 
the allocation of wages or self-employment income to individuals or 
periods (section 205(c)(5)(G) of the Act), which would have given him or 
her insured status at the time of the determination or decision if the 
earnings had been credited to his or her earnings record at that time, 
and the evidence of these earnings was in our possession or the 
possession of the Railroad Retirement Board at the time of the 
determination or decision;
    (8) It is wholly or partially unfavorable to a party, but only to 
correct clerical error or an error that appears on the face of the 
evidence that was considered when the determination or decision was 
made;
    (9) It finds that you are entitled to monthly benefits or to a lump 
sum death payment based on the earnings of a deceased person, and it is 
later established that:
    (i) You were convicted of a felony or an act in the nature of a 
felony for intentionally causing that person's death; or
    (ii) If you were subject to the juvenile justice system, you were 
found by a court of competent jurisdiction to have intentionally caused 
that person's death by committing an act which, if committed by an 
adult, would have been considered a felony or an act in the nature of a 
felony;
    (10) It either--
    (i) Denies the person on whose earnings record your claim is based 
deemed wages for internment during World War II because of an erroneous 
finding that a benefit based upon the internment has been determined by 
an agency of the United States to be payable under another Federal law 
or under a system established by that agency; or
    (ii) Awards the person on whose earnings record your claim is based 
deemed wages for internment during World War II and a benefit based upon 
the internment is determined by an agency of the United States to be 
payable under another Federal law or under a system established by that 
agency; or
    (11) It is incorrect because--
    (i) You were convicted of a crime that affected your right to 
receive benefits or your entitlement to a period of disability; or
    (ii) Your conviction of a crime that affected your right to receive 
benefits

[[Page 261]]

or your entitlement to a period of disability is overturned.

[45 FR 52081, Aug. 5, 1980, as amended at 49 FR 46369, Nov. 26, 1984; 51 
FR 18313, May 19, 1986; 59 FR 1635, Jan. 12, 1994; 60 FR 19165, Apr. 17, 
1995]



Sec. 404.989  Good cause for reopening.

    (a) We will find that there is good cause to reopen a determination 
or decision if--
    (1) New and material evidence is furnished;
    (2) A clerical error in the computation or recomputation of benefits 
was made; or
    (3) The evidence that was considered in making the determination or 
decision clearly shows on its face that an error was made.
    (b) We will not find good cause to reopen your case if the only 
reason for reopening is a change of legal interpretation or 
adminstrative ruling upon which the determination or decision was made.



Sec. 404.990  Finality of determinations and decisions on revision of 
an earnings record.

    A determination or a decision on a revision of an earnings record 
may be reopened only within the time period and under the conditions 
provided in section 205(c) (4) or (5) of the Act, or within 60 days 
after the date you receive notice of the determination or decision, 
whichever is later.



Sec. 404.991  Finality of determinations and decisions to suspend benefit 
payments for entire taxable year because of earnings.

    A determination or decision to suspend benefit payments for an 
entire taxable year because of earnings may be reopened only within the 
time period and under the conditions provided in section 203(h)(1)(B) of 
the Act.



Sec. 404.991a  Late completion of timely investigation.

    We may revise a determination or decision after the applicable time 
period in Sec. 404.988(a) or Sec. 404.988(b) expires if we begin an 
investigation into whether to revise the determination or decision 
before the applicable time period expires. We may begin the 
investigation either based on a request by you or by an action on our 
part. The investigation is a process of gathering facts after a 
determination or decision has been reopened to determine if a revision 
of the determination or decision is applicable.
    (a) If we have diligently pursued the investigation to its 
conclusion, we may revise the determination or decision. The revision 
may be favorable or unfavorable to you. ``Diligently pursued'' means 
that in light of the facts and circumstances of a particular case, the 
necessary action was undertaken and carried out as promptly as the 
circumstances permitted. Diligent pursuit will be presumed to have been 
met if we conclude the investigation and if necessary, revise the 
determination or decision within 6 months from the date we began the 
investigation.
    (b) If we have not diligently pursued the investigation to its 
conclusion, we will revise the determination or decision if a revision 
is applicable and if it will be favorable to you. We will not revise the 
determination or decision if it will be unfavorable to you.

[49 FR 46369, Nov. 26, 1984; 49 FR 48036, Dec. 10, 1984]



Sec. 404.992  Notice of revised determination or decision.

    (a) When a determination or decision is revised, notice of the 
revision will be mailed to the parties at their last known address. The 
notice will state the basis for the revised determination or decision 
and the effect of the revision. The notice will also inform the parties 
of the right to further review.
    (b) If a reconsidered determination that you are disabled, based on 
medical factors, is reopened for the purpose of being revised, you will 
be notified, in writing, of the proposed revision and of your right to 
request that a disability hearing be held before a revised reconsidered 
determination is issued. If a revised reconsidered determination is 
issued, you may request a hearing before an administrative law judge.
    (c) If an administrative law judge or the Appeals Council proposes 
to revise a decision, and the revision would be based on evidence not 
included in the record on which the prior decision was based, you and 
any other parties to the

[[Page 262]]

decision will be notified, in writing, of the proposed action and of 
your right to request that a hearing be held before any further action 
is taken. If a revised decision is issued by an administrative law 
judge, you and any other party may request that it be reviewed by the 
Appeals Council, or the Appeals Council may review the decision on its 
own initiative.
    (d) If an administrative law judge or the Appeals Council proposes 
to revise a decision, and the revision would be based only on evidence 
included in the record on which the prior decision was based, you and 
any other parties to the decision will be notified, in writing, of the 
proposed action. If a revised decision is issued by an administrative 
law judge, you and any other party may request that it be reviewed by 
the Appeals Council, or the Appeals Council may review the decision on 
its own initiative.

[51 FR 303, Jan. 3, 1986]



Sec. 404.993  Effect of revised determination or decision.

    A revised determination or decision is binding unless--
    (a) You or another party to the revised determination file a written 
request for reconsideration or a hearing before an administrative law 
judge, as appropriate;
    (b) You or another party to the revised decision file, as 
appropriate, a request for review by the Appeals Council or a hearing 
before an administrative law judge;
    (c) The Appeals Council reviews the revised decision; or
    (d) The revised determination or decision is further revised.

[51 FR 303, Jan. 3, 1986]



Sec. 404.994  Time and place to request a hearing on revised determination 
or decision.

    You or another party to a revised determination or decision may 
request, as approporiate, further review or a hearing on the revision by 
filing a request in writing at one of our offices within 60 days after 
the date you receive notice of the revision. Further review or a hearing 
will be held on the revision according to the rules of this subpart.



Sec. 404.995  Finality of findings when later claim is filed on same 
earnings record.

    If two claims for benefits are filed on the same earnings records, 
findings of fact made in a determination on the first claim may be 
revised in determining or deciding the second claim, even though the 
time limit for revising the findings made in the first claim has passed. 
However, a finding in connection with a claim that a person was fully or 
currently insured at the time of filing an application, at the time of 
death, or any other pertinent time, may be revised only under the 
conditions stated in Sec. 404.988.



Sec. 404.996  Increase in future benefits where time period for reopening 
expires.

    If, after the time period for reopening under Sec. 404.988(b) has 
ended, new evidence is furnished showing a different date of birth or 
additional earnings for you (or for the person on whose earnings record 
your claim was based) which would otherwise increase the amount of your 
benefits, we will make the increase (subject to the limitations provided 
in section 205(c) (4) and (5) of the Act) but only for benefits payable 
after the time we received the new evidence. (If the new evidence we 
receive would lead to a decrease in your benefits, we will take no 
action if we cannot reopen under Sec. 404.988.)

[49 FR 46369, Nov. 26, 1984]

                   Payment of Certain Travel Expenses



Sec. 404.999a  Payment of certain travel expenses--general.

    When you file a claim for Social Security benefits, you may incur 
certain travel expenses in pursuing your claim. Sections 404.999b-
404.999d explain who may be reimbursed for travel expenses, the types of 
travel expenses that are reimbursable, and when and how to claim 
reimbursement. Generally, the agency that requests you to travel will be 
the agency that reimburses you. No later than when it notifies you of 
the examination or hearing described in Sec. 404.999b(a), that agency 
will give you

[[Page 263]]

information about the right to travel reimbursement, the right to 
advance payment and how to request it, the rules on means of travel and 
unusual travel costs, and the need to submit receipts.

[51 FR 8808, Mar. 14, 1986]



Sec. 404.999b  Who may be reimbursed.

    (a) The following individuals may be reimbursed for certain travel 
expenses--
    (1) You, when you attend medical examinations upon request in 
connection with disability determinations; these are medical 
examinations requested by the State agency or by us when additional 
medical evidence is necessary to make a disability determination (also 
referred to as consultative examinations, see Sec. 404.1517);
    (2) You, your representative (see Sec. 404.1705 (a) and (b)), and 
all unsubpoenaed witnesses we or the State agency determines to be 
reasonably necessary who attend disability hearings; and
    (3) You, your representative, and all unsubpoenaed witnesses we 
determine to be reasonably necessary who attend hearings on any claim 
for benefits before an administrative law judge.
    (b) Sections 404.999a through 404.999d do not apply to subpoenaed 
witnesses. They are reimbursed under Sec. Sec. 404.950(d) and 
404.916(b)(1).

[51 FR 8808, Mar. 14, 1986]



Sec. 404.999c  What travel expenses are reimbursable.

    Reimbursable travel expenses include the ordinary expenses of public 
or private transportation as well as unusual costs due to special 
circumstances.
    (a) Reimbursement for ordinary travel expenses is limited--
    (1) To the cost of travel by the most economical and expeditious 
means of transportation available and appropriate to the individual's 
condition of health as determined by the State agency or by us, 
considering the available means in the following order--
    (i) Common carrier (air, rail, or bus);
    (ii) Privately owned vehicles;
    (iii) Commercially rented vehicles and other special conveyances;
    (2) If air travel is necessary, to the coach fare for air travel 
between the specified travel points involved unless first-class air 
travel is authorized in advance by the State agency or by the Secretary 
in instances when--
    (i) Space is not available in less-than-first-class accommodations 
on any scheduled flights in time to accomplish the purpose of the 
travel;
    (ii) First-class accommodations are necessary because you, your 
representative, or reasonably necessary witness is so handicapped or 
otherwise impaired that other accommodations are not practical and the 
impairment is substantiated by competent medical authority;
    (iii) Less-than-first-class accommodations on foreign carriers do 
not provide adequate sanitation or health standards; or
    (iv) The use of first-class accommodations would result in an 
overall savings to the government based on economic considerations, such 
as the avoidance of additional subsistence costs that would be incurred 
while awaiting availability of less-than-first-class accommodations.
    (b) Unusual travel costs may be reimbursed but must be authorized in 
advance and in writing by us or the appropriate State official, as 
applicable, unless they are unexpected or unavoidable; we or the State 
agency must determine their reasonableness and necessity and must 
approve them before payment can be made. Unusual expenses that may be 
covered in connection with travel include, but are not limited to--
    (1) Ambulance services;
    (2) Attendant services;
    (3) Meals;
    (4) Lodging; and
    (5) Taxicabs.
    (c) If we reimburse you for travel, we apply the rules in Sec. Sec. 
404.999b through 404.999d and the same rates and conditions of payment 
that govern travel expenses for Federal employees as authorized under 41 
CFR chapter 301. If a State agency reimburses you, the reimbursement 
rates shall be determined by the rules in Sec. Sec. 404.999b through 
404.999d and that agency's rules and regulations and may differ from one 
agency to another and also may differ from the Federal reimbursement 
rates.

[[Page 264]]

    (1) When public transportation is used, reimbursement will be made 
for the actual costs incurred, subject to the restrictions in paragraph 
(a)(2) of this section on reimbursement for first-class air travel.
    (2) When travel is by a privately owned vehicle, reimbursement will 
be made at the current Federal or State mileage rate specified for that 
geographic location plus the actual costs of tolls and parking, if 
travel by a privately owned vehicle is determined appropriate under 
paragraph (a)(1) of this section. Otherwise, the amount of reimbursement 
for travel by privately owned vehicle cannot exceed the total cost of 
the most economical public transportation available for travel between 
the same two points. Total cost includes the cost for all the authorized 
travelers who travel in the same privately owned vehicle. Advance 
approval of travel by privately owned vehicle is not required (but could 
give you assurance of its approval).
    (3) Sometimes your health condition dictates a mode of 
transportation different from the most economical and expeditious. In 
order for your health to require a mode of transportation other than 
common carrier or passenger car, you must be so handicapped or otherwise 
impaired as to require special transportation arrangements and the 
conditions must be substantiated by competent medical authority.
    (d) For travel to a hearing--
    (1) Reimbursement is limited to travel within the U.S. For this 
purpose, the U.S. includes the U.S. as defined in Sec. 404.2(c)(6) and 
the Northern Mariana Islands.
    (2) We or the State agency will reimburse you, your representative, 
or an unsubpoenaed witness only if the distance from the person's 
residence or office (whichever he or she travels from) to the hearing 
site exceeds 75 miles.
    (3) For travel expenses incurred on or after April 1, 1991, the 
amount of reimbursement under this section for travel by your 
representative to attend a disability hearing or a hearing before an 
administrative law judge shall not exceed the maximum amount allowable 
under this section for travel to the hearing site from any point within 
the geographic area of the office having jurisdiction over the hearing.
    (i) The geographic area of the office having jurisdiction over the 
hearing means, as appropriate--
    (A) The designated geographic service area of the State agency 
adjudicatory unit having responsibility for providing the disability 
hearing;
    (B) If a Federal disability hearing officer holds the disability 
hearing, the geographic area of the State (which includes a State as 
defined in Sec. 404.2(c)(5) and also includes the Northern Mariana 
Islands) in which the claimant resides or, if the claimant is not a 
resident of a State, in which the hearing officer holds the disability 
hearing; or
    (C) The designated geographic service area of the Office of Hearings 
and Appeals hearing office having responsibility for providing the 
hearing before an administrative law judge.
    (ii) We or the State agency determine the maximum amount allowable 
for travel by a representative based on the distance to the hearing site 
from the farthest point within the appropriate geographic area. In 
determining the maximum amount allowable for travel between these two 
points, we or the State agency apply the rules in paragraphs (a) through 
(c) of this section and the limitations in paragraph (d) (1) and (4) of 
this section. If the distance between these two points does not exceed 
75 miles, we or the State agency will not reimburse any of your 
representative's travel expenses.
    (4) If a change in the location of the hearing is made at your 
request from the location we or the State agency selected to one farther 
from your residence or office, neither your additional travel expenses 
nor the additional travel expenses of your representative and witnesses 
will be reimbursed.

[51 FR 8808, Mar. 14, 1986, as amended at 59 FR 8532, Feb. 23, 1994]



Sec. 404.999d  When and how to claim reimbursement.

    (a)(1) Generally, you will be reimbursed for your expenses after 
your trip. However, travel advances may be authorized if you request 
prepayment and show that the requested advance is reasonable and 
necessary.

[[Page 265]]

    (2) You must submit to us or the State agency, as appropriate, an 
itemized list of what you spent and supporting receipts to be 
reimbursed.
    (3) Arrangements for special means of transportation and related 
unusual costs may be made only if we or the State agency authorizes the 
costs in writing in advance of travel, unless the costs are unexpected 
or unavoidable. If they are unexpected or unavoidable we or the State 
agency must determine their reasonableness and necessity and must 
approve them before payment may be made.
    (4) If you receive prepayment, you must, within 20 days after your 
trip, provide to us or the State agency, as appropriate, an itemized 
list of your actual travel costs and submit supporting receipts. We or 
the State agency will require you to pay back any balance of the 
advanced amount that exceeds any approved travel expenses within 20 days 
after you are notified of the amount of that balance. (State agencies 
may have their own time limits in place of the 20-day periods in the 
preceding two sentences.)
    (b) You may claim reimbursable travel expenses incurred by your 
representative for which you have been billed by your representative, 
except that if your representative makes a claim for them to us or the 
State, he or she will be reimbursed directly.

(Approved by the Office of Management and Budget under control number 
0960-0434)

[51 FR 8809, Mar. 14, 1986, as amended at 51 FR 44983, Dec. 16, 1986]



Subpart K_Employment, Wages, Self-Employment, and Self-Employment Income

    Authority: Secs. 202(v), 205(a), 209, 210, 211, 229(a), 230, 231, 
and 702(a)(5) of the Social Security Act (42 U.S.C. 402(v), 405(a), 409, 
410, 411, 429(a), 430, 431, and 902(a)(5)).

    Source: 45 FR 20075, Mar. 27, 1980, unless otherwise noted.



Sec. 404.1001  Introduction.

    (a)(1) In general, your social security benefits are based on your 
earnings that are on our records. (Subpart I of this part explains how 
we keep earnings records.) Basically, you receive credit only for 
earnings that are covered for social security purposes. The earnings are 
covered only if your work is covered. If you are an employee, your 
employer files a report of your covered earnings. If you are self-
employed, you file a report of your covered earnings. Some work is 
covered by social security and some work is not. Also, some earnings are 
covered by social security and some are not. It is important that you 
are aware of what kinds of work and earnings are covered so that you 
will know whether your earnings should be on our records.
    (2) If you are an employee, your covered work is called employment. 
This subpart explains our rules on the kinds of work that are covered as 
employment and the kinds that are not. We also explain who is an 
employee.
    (3) If your work is employment, your covered earnings are called 
wages. This subpart explains our rules on the kinds of earnings that are 
covered as wages and the kinds that are not.
    (4) If you work for yourself, you are self-employed. The subpart 
explains our rules on the kinds of self-employment that are covered and 
the kinds that are not.
    (5) If you are self-employed, your covered earnings are called self-
employment income which is based on your net earnings from self-
employment during a taxable year. This subpart explains our rules on the 
kinds of earnings that are covered as net earnings from self-employment 
and the kinds that are not. We also explain how to figure your net 
earnings from self-employment and determine your self-employment income 
which is the amount that goes on our records.
    (b) We include basically only the rules that apply to current work 
or that the law requires us to publish as regulations. We generally do 
not include rules that are seldom used or do not apply to current work 
because of changes in the law.
    (c) The Social Security Act and the Internal Revenue Code (Code) 
have similar provisions on coverage of your earnings because the one law 
specifies the earnings for which you will receive credit for benefit 
purposes and the other the earnings on which you must pay social 
security taxes. Because the

[[Page 266]]

Code (title 26 U.S.C.) has some provisions that are not in the Act but 
which may affect you, you may need to refer to the Code or the Internal 
Revenue Service regulations (title 26 of the Code of Federal 
Regulations) to get complete information about your social security 
coverage.
    (d) The rules are organized in the following manner:
    (1) Sections 404.1003 through 404.1010 include the rules on 
employment. We discuss what we mean by employment, what work is covered 
as employment for social security purposes, and describe the kinds of 
workers who are considered employees.
    (2) In Sec. Sec. 404.1012 through 404.1038 we discuss various types 
of work that are not covered as employment for social security purposes.
    (3) The rules on wages are found in Sec. Sec. 404.1041 through 
404.1059. We describe what is meant by the term wages, discuss the 
various types of pay that count as wages, and state when the pay counts 
for Social Security purposes. We include explanations of agriculture 
labor, domestic services, service not in the course of the employer's 
business, and home worker services under wages because special standards 
apply to these services.
    (4) Our rules on self-employment and self-employment income are 
found in Sec. Sec. 404.1065 through 404.1096. We discuss what we mean 
by self-employment, what we mean by a trade or business, what types of 
activities are considered self-employment, how to determine self-
employment income, and how net earnings from self-employment are 
figured.

[45 FR 20075, Mar. 27, 1980, as amended at 55 FR 7309, Mar. 1, 1990; 61 
FR 38365, July 24, 1996]



Sec. 404.1002  Definitions.

    (a) General definitions. As used in this subpart--
    The Act means the Social Security Act, as amended.
    The Code means the Internal Revenue Code of 1954, as amended.
    We, our, or us means the Social Security Administration.
    You or your means any person whose earnings from employment or self-
employment are included or excluded under social security.
    (b) Other definitions. For ease of reference, we have placed other 
definitions in the sections of this subpart in which they are used.

                               Employment



Sec. 404.1003  Employment.

    Employment means, generally, any service covered by social security 
performed by an employee for his or her employer. The rules on who is an 
employee and who is an employer are contained in Sec. Sec. 404.1005 
through 404.1010. Section 404.1004 states the general rule on the kinds 
of work covered as employment. Exceptions to the general rule are 
contained in Sec. Sec. 404.1012 through 404.1038 which explain the 
kinds of work excluded from employment. All of these rules apply to 
current work unless otherwise indicated.

[45 FR 20075, Mar. 27, 1980, as amended at 61 FR 38365, July 24, 1996]



Sec. 404.1004  What work is covered as employment.

    (a) General requirements of employment. Unless otherwise excluded 
from coverage under Sec. Sec. 404.1012 through 404.1038, the work you 
perform as an employee for your employer is covered as employment under 
social security if one of the following situations applies:
    (1) You perform the work within the United States (whether or not 
you or your employer are a citizen or resident of the United States).
    (2) You perform the work outside the United States and you are a 
citizen or resident of the United States working for--
    (i) An American employer; or
    (ii) A foreign affiliate of an American employer that has in effect 
an agreement covering your work under section 3121(l) of the Code.
    (3) You perform the work on or in connection with an American vessel 
or American aircraft and the conditions in paragraphs (a)(3) (i) and 
(ii) are met. Your citizenship or residence does not matter. The 
citizenship or residence of your employer matters only if it affects 
whether the vessel is an American vessel.

[[Page 267]]

    (i) You enter into the contract of employment within the United 
States or the vessel or aircraft touches at a port or airport within the 
United States during the performance of your contract of employment on 
the vessel or aircraft.
    (ii) You are employed on and in connection with the vessel or 
aircraft when outside the United States.
    (4) Your work is designated as employment or recognized as 
equivalent to employment under a totalization agreement. (See Sec. 
404.1913. An agreement may exempt work from coverage as well as extend 
coverage to work.)
    (5) Your work performed after December 31, 1994, is in the employ of 
an international organization pursuant to a transfer from a Federal 
agency under section 3582 of title 5 of the United States Code and both 
the following are met:
    (i) Immediately before the transfer, your work for the Federal 
agency was covered employment; and
    (ii) You would be entitled, upon separation from the international 
organization and proper application, to reemployment with the Federal 
agency under section 3582.
    (b) Explanation of terms used in this section--(1) American employer 
means--
    (i) The United States or any of its instrumentalities;
    (ii) A State, a political subdivision of a State, or an 
instrumentality of any one or more States or political subdivisions of a 
State;
    (iii) An individual who is a resident of the United States;
    (iv) A partnership, if at least two-thirds of the partners are 
residents of the United States;
    (v) A trust, if all of the trustees are residents of the United 
States; or
    (vi) A corporation organized under the laws of the United States or 
of any State.
    (2) American aircraft means an aircraft registered under the laws of 
the United States.
    (3) American vessel means a vessel documented or numbered under the 
laws of the United States. It also includes a vessel neither documented 
nor numbered under the laws of the United States, nor documented under 
the laws of any foreign country, if its crew is employed solely by one 
or more citizens or residents of the United States, or corporations 
organized under the laws of the United States or of any State.
    (4) Citizen of the United States includes a citizen of the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam or American Samoa.
    (5) Foreign affiliate refers to a foreign affiliate as defined in 
section 3121(l)(6) of the Code.
    (6) On and in connection with refers to the performance of work on a 
vessel or aircraft which concerns the vessel or aircraft. Examples of 
this kind of work are the services performed on a vessel by employees as 
officers or crew members, or as employees of concessionaires, of the 
vessel.
    (7) On or in connection with refers to work performed on the vessel 
or aircraft and to work which concerns the vessel or aircraft but not 
actually performed on it. For example, shore services in connection with 
repairing, loading, unloading, or provisioning a vessel performed by 
employees as officers or crew members, or as employees of 
concessionaires, of the vessel are included, since this work concerns 
the vessel though not performed on it.
    (8) State refers to the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam and American 
Samoa.
    (9) United States when used in a geographical sense means the 50 
States, the District of Columbia, the Commonwealth of Puerto Rico, the 
Virgin Islands, Guam and American Samoa.

[45 FR 20075, Mar. 27, 1980, as amended at 50 FR 36573, Sept. 9, 1985; 
55 FR 51687, Dec. 17, 1990; 61 FR 38365, July 24, 1996]



Sec. 404.1005  Who is an employee.

    You must be an employee for your work to be covered as employment 
for social security purposes. You are an employee if you are--
    (a) A corporation officer as described in Sec. 404.1006;
    (b) A common-law employee as described in Sec. 404.1007 (unless you 
are, after December 31, 1982, a qualified real estate agent or direct 
seller as described in Sec. 404.1069); or

[[Page 268]]

    (c) An agent-driver or commission-driver, a full-time life insurance 
salesman, a home worker, or a traveling or city salesman as described in 
Sec. 404.1008.

[45 FR 20075, Mar. 27, 1980, as amended at 48 FR 40515, Sept. 8, 1983]



Sec. 404.1006  Corporation officer.

    If you are an officer of a corporation, you are an employee of the 
corporation if you are paid or you are entitled to be paid for holding 
office or performing services. However, if you are a director of a 
corporation, we consider you to be self-employed when you work as a 
director.



Sec. 404.1007  Common-law employee.

    (a) General. The common-law rules on employer-employee status are 
the basic test for determining whether you and the person or firm you 
work for have the relationship of employee and employer. Even though you 
are considered self-employed under the common-law rules, you may still 
be an employee for social security purposes under Sec. 404.1006 
(relating to corporation officers) or Sec. 404.1008 (relating to 
workers in four specific jobs). In general, you are a common-law 
employee if the person you work for may tell you what to do and how, 
when, and where to do it. The person or firm you work for does not have 
to give these orders, but needs only the right to do so. Whether or not 
you are a common-law employee is not always clear. Several aspects of 
your job arrangement are considered in determining whether you are an 
employee or are self-employed under the common-law rules.
    (b) Factors that show employee status. Some aspects of a job 
arrangement that may show you are an employee are as follows:
    (1) The person you work for may fire you.
    (2) The person you work for furnishes you with tools or equipment 
and a place to work.
    (3) You receive training from the person you work for or are 
required to follow that person's instructions.
    (4) You must do the work yourself.
    (5) You do not hire, supervise, or pay assistants (unless you are 
employed as a foreman, manager, or supervisor).
    (6) The person you work for sets your hours of work, requires you to 
work full-time, or restricts you from doing work for others.
    (7) The person you work for pays your business or traveling 
expenses.
    (8) You are paid by the hour, week or month.
    (c) Factors that show self-employed status. Some aspects of a job 
arrangement or business venture that may show you are self-employed are 
as follows:
    (1) You make a profit or suffer a loss.
    (2) You are hired to complete a certain job and if you quit before 
the job is completed you may be liable for damages.
    (3) You work for a number of persons or firms at the same time.
    (4) You advertise to the general public that you are available to 
perform services.
    (5) You pay your own expenses and have your own equipment and work 
place.
    (d) Questions about your status. If there is a question about 
whether you are working as an employee or are self-employed, we or the 
Internal Revenue Service will make a determination after examining all 
of the facts of your case.



Sec. 404.1008  Agent-driver or commission-driver, full-time life insurance 
salesman, home worker, or traveling or city salesman.

    (a) General. In addition to common-law employees and corporation 
officers, we consider workers in the four types of jobs described in 
paragraphs (b) through (e) of this section to be employees if their 
services are performed under the following conditions:
    (1) Under the work arrangement the worker is expected to do 
substantially all of the work personally.
    (2) The worker must not have a substantial investment in the 
facilities used to do the work. Facilities include such things as a 
place to work, storage space, equipment, machinery and office furniture. 
However, facilities do not include tools, equipment or clothing of the 
kind usually provided by employees nor transportation such as a car or 
truck.
    (3) The work must be performed as part of a continuing work 
relationship between the worker and the person for

[[Page 269]]

whom the work is done. The work performed must not be a single 
transaction. Part-time and regular seasonal work may be performed as 
part of a continuing work relationship.
    (b) Agent-driver or commission-driver. This is a driver hired by 
another person to distribute meat products, vegetable products, fruit 
products, bakery products, beverages (other than milk), or laundry or 
dry-cleaning services. We consider you an agent-driver or commission-
driver if you are paid a commission based on your sales or the 
difference between the price you charge your customers and the amount 
you pay for the goods or services. It makes no difference whether you 
drive your own truck or the company's truck or whether you solicit the 
customers you serve.
    (c) Full-time life insurance salesman. A full-time life insurance 
salesman's main activity is selling life insurance or annuity contracts, 
or both, mostly for one life insurance company. If you are a full-time 
life insurance salesman, you are probably provided office space, 
stenographic help, telephone, forms, rate books and advertising 
materials by the company or general agent, without cost to you.
    (d) Home worker. A home worker is a person who works away from the 
place of business of the person he or she works for, usually at home. If 
you are a home worker and you work according to the instructions of the 
person you work for, on material or goods furnished by that person, and 
are required to return the finished product to that person (or another 
person whom he or she designates), you are an employee.
    (e) Traveling or city salesman. The main activity of a traveling or 
city salesman is taking orders for merchandise for another person or 
firm. The salesman gets orders from wholesalers, retailers, contractors, 
or operators of hotels, restaurants or other firms whose main business 
is furnishing food or lodging or both. The salesman sells merchandise to 
others for resale or for use in their own business. We consider you a 
traveling or city salesman if most of your work is done for a single 
person or firm even though you have incidental sideline sales 
activities. However, you are not an employee under this paragraph as to 
those sideline sales. If you take orders for a number of persons or 
firms as a multiple line salesman, you are not a traveling or city 
salesman.



Sec. 404.1009  Who is an employer.

    A person is an employer if he or she employs at least one employee. 
Sometimes it is not clear who a worker's employer is, since the employer 
does not always pay the worker's wages. When there is a question about 
who the employer is, we use the common-law rules to identify the 
employer (see Sec. 404.1007).



Sec. 404.1010  Farm crew leader as employer.

    A farm crew leader furnishes workers to do agricultural labor for 
another person, usually a farm operator. If the crew leader pays the 
workers (the money can be the crew leader's or the farm operator's), the 
crew leader is deemed to be the employer of the workers and is self-
employed. However, the crew leader is not deemed the employer of the 
workers if there is a written agreement between the crew leader and the 
farm operator naming the crew leader as an employee. If the crew leader 
does not have this agreement and does not pay the workers, we use the 
common-law rules to determine the crew leader's status.

                      Work Excluded From Employment



Sec. 404.1012  Work excluded from employment.

    Certain kinds of work performed by an employee are excluded from 
employment. They are described in Sec. Sec. 404.1014 through 404.1038 
and are exceptions to the general rule in Sec. 404.1004 on the kinds of 
work that are covered as employment. In general, if the work performed 
by an employee is excluded from employment, the work is not covered 
under social security. However, certain kinds of work performed by an 
employee, even though excluded from employment, are covered as self-
employment for social security purposes. In addition, if part of the 
work performed by an employee for the same employer is included as 
employment and part is excluded from employment,

[[Page 270]]

all the work may be included or all may be excluded as described in 
Sec. 404.1013.

[45 FR 20075, Mar. 27, 1980, as amended at 61 FR 38365, July 24, 1996]



Sec. 404.1013  Included-excluded rule.

    (a) If part of your work for an employer during a pay period is 
covered as employment and part excluded, all of your work during that 
period is considered covered if at least one-half of your time in the 
pay period is in covered work. If you spend most of your time in a pay 
period doing work that is excluded, all of your work in that period is 
excluded.
    (b) A pay period is the period for which your employer ordinarily 
pays you. It cannot be more than 31 consecutive days. If the actual 
period is not always the same, your usual pay period will be used for 
applying the included-excluded rule.
    (c) The included-excluded rule does not apply and your covered work 
will be counted if--
    (1) Part of your work is covered by the Railroad Retirement Tax Act 
and part by the Social Security Act; or
    (2) You have no usual pay period of 31 consecutive days or less, or 
you have separate pay periods for covered and excluded work.



Sec. 404.1014  Domestic service by a student for a local college club, 
fraternity or sorority.

    (a) General. If you are a student and do work of a household nature 
in or about the club rooms or house of a local college club or local 
chapter of a college fraternity or sorority, and are enrolled and 
regularly attending classes at a school, college, or university, your 
work is not covered as employment.
    (b) Explanation of terms. (1) Work of a household nature means the 
type of work done by cooks, waiters, butlers, maids, janitors, 
laundresses, furnacemen, handymen, gardeners, housekeepers and 
housemothers.
    (2) A local college club or local chapter of a college fraternity or 
sorority does not include an alumni club or chapter. Also, if the club 
rooms or house are used mostly for supplying board or lodging to 
students or nonstudents as a business, the work done is not excluded by 
this section.



Sec. 404.1015  Family services.

    (a) General. If you work as an employee of a relative, the work is 
excluded from employment if--
    (1) You work while under age 18 in the employ of your parent;
    (2) You do nonbusiness work (see Sec. 404.1058(a)(3) for an 
explanation of nonbusiness work) or perform domestic service (as 
described in Sec. 404.1057(b)) as an employee of your parent while 
under age 21;
    (3) You do nonbusiness work as an employee of your son, daughter, or 
spouse; or
    (4) You perform domestic service in the private home of your son, 
daughter or spouse as an employee of that son, daughter or spouse 
unless--
    (i) The son or daughter has a child (either natural, adopted or 
stepchild) living in the home who is under age 18 or, if older, has a 
mental or physical condition that requires the personal care and 
supervision of an adult for at least four continuous weeks in the 
calendar quarter in which the work is done; and
    (ii) The son or daughter is a widower or widow, or is divorced and 
has not remarried, or has a spouse living in the home who, because of a 
physical or mental condition, is incapable of taking care of the child 
and the condition is present for at least four continuous weeks in the 
calendar quarter in which the work is done.
    (b) Family work for other than sole proprietor. Work for a 
corporation is not excluded under this section, and work for a 
partnership is not excluded unless the required family relationship 
exists between the employee and each of the partners.

[45 FR 20075, Mar. 27, 1980, as amended at 57 FR 59913, Dec. 17, 1992]



Sec. 404.1016  Foreign agricultural workers.

    Farm work done by foreign workers lawfully admitted to the United 
States on a temporary basis to do farm work is not covered as 
employment. The excluded work includes any services connected with farm 
operations.

[[Page 271]]



Sec. 404.1017  Sharefarmers.

    (a) If you are a sharefarmer, your services are not covered as 
employment, but as self-employment.
    (b) You are a sharefarmer if you have an arrangement with the owner 
or tenant of the land and the arrangement provides for all of the 
following:
    (1) You will produce agricultural or horticultural commodities on 
the land.
    (2) The commodities you produce or the income from their sale will 
be divided between you and the person with whom you have the agreement.
    (3) The amount of your share depends on the amount of commodities 
you produce.
    (c) If under your agreement you are to receive a specific rate of 
pay, a fixed sum of money or a specific amount of the commodities not 
based on your production, you are not a sharefarmer for social security 
purposes.



Sec. 404.1018  Work by civilians for the United States Government or its 
instrumentalities--wages paid after 1983.

    (a) General. If you are a civilian employee of the United States 
Government or an instrumentality of the United States, your employer 
will determine the amount of remuneration paid for your work and the 
periods in or for which such remuneration was paid. We will determine 
whether your employment is covered under Social Security, the periods of 
such covered employment, and whether remuneration paid for your work 
constitutes wages for purposes of Social Security. To make these 
determinations we will consider the date of your appointment to Federal 
service, your previous Federal employing agencies and positions (if 
any), whether you were covered under Social Security or a Federal 
civilian retirement system, and whether you made a timely election to 
join a retirement system established by the Federal Employees' 
Retirement System Act of 1986 or the Foreign Service Pension System Act 
of 1986. Using this information and the following rules, we will 
determine that your service is covered unless--
    (1) The service would have been excluded if the rules in effect in 
January 1983 had remained in effect; and
    (i) You have been continuously performing such service since 
December 31, 1983; or
    (ii) You are receiving an annuity from the Civil Service Retirement 
and Disability Fund or benefits for service as an employee under another 
retirement system established by a law of the United States and in 
effect on December 31, 1983, for employees of the Federal Government 
other than a system for members of the uniformed services.
    (2) The service is under the provisions of 28 U.S.C. 294, relating 
to the assignment of retired Federal justices and judges to active duty.
    (b) Covered services--(1) Federal officials. Any service for which 
you received remuneration after 1983 is covered if performed--
    (i) As the President or the Vice President of the United States;
    (ii) In a position placed in the Executive Schedule under 5 U.S.C. 
5312 through 5317;
    (iii) As a noncareer appointee in the Senior Executive Service or a 
noncareer member of the Senior Foreign Service;
    (iv) In a position to which you are appointed by the President, or 
his designee, or the Vice President under 3 U.S.C. 105(a)(1), 106(a)(1), 
or 197 (a)(1) or (b)(1) if the maximum rate of basic pay for such 
position is at or above the rate for level V of the Executive Schedule;
    (v) As the Chief Justice of the United States, an Associate Justice 
of the Supreme Court, a judge of a United States court of appeals, a 
judge of a United States district court, including the district court of 
a territory, a judge of the United States Claims Court, a judge of the 
United States Court of International Trade, a judge of the United States 
Tax Court, a United States magistrate, or a referee in bankruptcy or 
United States bankruptcy judge; or
    (vi) As a Member, Delegate, or Resident Commissioner of or to the 
Congress.
    (2) Legislative Branch Employees. Service you perform for the 
legislative branch of the Federal Government for which you are paid 
remuneration after 1983 is generally covered by Social Security if such 
service is not covered by the Civil Service Retirement System

[[Page 272]]

or by another retirement system established by a law of the United 
States and in effect on December 31, 1983, for employees of the Federal 
Government other than a system for members of the uniformed services.
    (3) Election to become subject to the Federal Employees' Retirement 
System or the Foreign Service Pension System. Your service is covered 
if:
    (i) You timely elect after June 30, 1987, under either the Federal 
Employees' Retirement System Act or the Central Intelligence Agency 
Retirement Act, to become subject to the Federal Employees Retirement 
System provided in 5 U.S.C. 8401 through 8479; or
    (ii) You timely elect after June 30, 1987, to become subject to the 
Foreign Service Pension System provided in 22 U.S.C. 4071 through 
4071(k).
    (4) Subsequent Federal civilian service. If you perform Federal 
civilian service on or after November 10, 1988, which is described in 
paragraph (b)(1), (b)(2), or (b)(3) of this section you will continue to 
be covered for any subsequent Federal Civilian Service not excluded 
under paragraph (c) of this section.
    (c) Excluded Service. Notwithstanding Sec. 404.1018a and this 
section, your service is not covered if performed--
    (1) In a penal institution of the United States as an inmate 
thereof;
    (2) As an employee included under 5 U.S.C. 5351(2) relating to 
certain interns, student nurses, and other student employees of 
hospitals of the Federal Government, other than as a medical or dental 
intern or a medical or dental resident in training;
    (3) As an employee serving on a temporary basis in case of fire, 
storm, earthquake, flood, or other similar emergency; or
    (4) Under any other statutory provisions that would require 
exclusion for reasons other than being in the employ of the Federal 
Government or an instrumentality of such.
    (d) Work as a Peace Corps Volunteer. Work performed as a volunteer 
or volunteer leader within the meaning of the Peace Corps Act, 22 U.S.C. 
2501 through 2523, is covered as employment.
    (e) Work as Job Corps Enrollee. Work performed as an enrollee in the 
Job Corps is considered to be performed in the employ of the United 
States.
    (f) Work by Volunteer in Service to America. Work performed and 
training received as a Volunteer in Service to America is considered to 
be performed in the employ of the United States if the volunteer is 
enrolled for a period of service of at least 1 year. If the enrollment 
is for less than 1 year, we use the common-law rules in Sec. 404.1007 
to determine the volunteer's status.
    (g) Work for international organizations. Work performed for an 
international organization by an employee who was transferred from a 
Federal agency is generally covered as employment if, immediately before 
the transfer, the employee's services for the Federal agency were 
covered. (See Sec. 404.1004(a)(5) and Sec. 404.1034(c).)
    (h) Meaning of ``continuously performing''--(1) Absence of less than 
366 days. You are considered to be continuously performing service 
described in paragraph (a)(1)(i) of this section if you return to the 
performance of such service after being separated from such service for 
a period of less than 366 consecutive days, regardless of whether the 
period began before, on, or after December 31, 1983.
    (2) Other absences. You are considered to be continuously performing 
service described in paragraph (a)(1)(i) of this section regardless of 
the length of separation or whether the period of separation began 
before, on, or after December 31, 1983, if you--
    (i) Return to the performance of such service after being detailed 
or transferred from such service to an international organization as 
described under 5 U.S.C. 3343 or under 5 U.S.C. 3581;
    (ii) Are reemployed or reinstated after being separated from such 
service for the purpose of accepting employment with the American 
Institute of Taiwan as provided under 22 U.S.C. 3310;
    (iii) Return to the performance of such service after performing 
service as a member of a uniformed service including service in the 
National Guard and temporary service in the Coast Guard Reserve and 
after exercising restoration or reemployment rights as provided under 38 
U.S.C. chapter 43; or

[[Page 273]]

    (iv) Return to the performance of such service after employment by a 
tribal organization to which section 105(e)(2) of the Indian Self-
Determination Act applies.

[53 FR 38944, Oct. 4, 1988; 53 FR 44551, Nov. 3, 1988, as amended at 55 
FR 24891, June 19, 1990; 61 FR 38365, July 24, 1996]



Sec. 404.1018a  Work by civilians for the United States Government or 
its instrumentalities--remuneration paid prior to 1984.

    (a) General--remuneration paid prior to 1984. If you worked as a 
civilian employee of the United States Government or an instrumentality 
of the United States, your work was excluded from employment if that 
work was covered by a retirement system established by law. Your work 
for an instrumentality that was exempt from Social Security tax was also 
excluded. Certain other work for the United States or an instrumentality 
of the United States was specifically excluded and is described in this 
section.
    (b) Work covered by a retirement system--remuneration paid prior to 
1984. Work you did as an employee of the United States or an 
instrumentality of the United States was excluded from employment if the 
work was covered by a retirement system established by a law of the 
United States. If you had a choice as to whether your work was covered 
by the retirement system, the work was not covered by that system until 
you chose that coverage. In order for the exclusion to apply, the work 
you did, rather than the position you held, must have been covered by 
the retirement system.
    (c) Work that was specifically excluded--remuneration paid prior to 
1984. Work performed by an employee of the United States or an 
instrumentality of the United States was excluded if it was done--
    (1) As the President or Vice President of the United States;
    (2) As a Member of the United States Congress, a Delegate to 
Congress, or a Resident Commissioner;
    (3) In the legislative branch of the United States Government;
    (4) By a student nurse, student dietitian, student physical 
therapist or student occupational therapist who was assigned or attached 
to a Federal hospital, clinic, or medical or dental laboratory;
    (5) By a person designated as a student employee with the approval 
of the Office of Personnel Management who was assigned or attached 
primarily for training purposes to a Federal hospital, clinic, or 
medical or dental laboratory, other than a medical or dental intern or 
resident in training;
    (6) By an employee who served on a temporary basis in case of fire, 
storm, earthquake, flood, or other similar emergency;
    (7) By a person to whom the Civil Service Retirement Act did not 
apply because the person's services were subject to another retirement 
system established by a law of the United States or by the 
instrumentality of the United States for which the work was done, other 
than the retirement system established by the Tennessee Valley Authority 
under the plan approved by the Secretary of Health, Education, and 
Welfare on December 28, 1956; or
    (8) By an inmate of a penal institution of the United States, if the 
work was done in the penal institution.
    (d) Work for instrumentalities of the United States exempt from 
employer tax--remuneration paid prior to 1984. (1) Work performed by an 
employee of an instrumentality of the United States was excluded if--
    (i) The instrumentality was exempt from the employer tax imposed by 
section 3111 of the Code or by section 1410 of the Internal Revenue Code 
of 1939; and
    (ii) The exemption was authorized by another law specifically 
referring to these sections.
    (2) Work performed by an employee of an instrumentality of the 
United States was excluded if the instrumentality was not on December 
31, 1950, subject to the employer tax imposed by section 1410 of the 
Internal Revenue Code of 1939 and the work was covered by a retirement 
system established by the instrumentality, unless--
    (i) The work was for a corporation wholly owned by the United 
States;
    (ii) The work was for a Federal land bank association, a production 
credit association, a Federal Reserve Bank, a Federal Credit Union, a 
Federal land

[[Page 274]]

bank, a Federal intermediate credit bank, a bank for cooperatives, or a 
Federal Home Loan Bank;
    (iii) The work was for a State, county, or community committee under 
the Agriculture Marketing Service and the Commodity Stabilization 
Service, formerly the Production and Marketing Administration; or
    (iv) The work was by a civilian, who was not paid from funds 
appropriated by the Congress, in activities conducted by an 
instrumentality of the United States subject to the jurisdiction of the 
Secretary of Defense or Secretary of Transportation at installations 
intended for the comfort, pleasure, contentment, and mental and physical 
improvement of personnel of the Defense Department or the Coast Guard, 
such as--
    (A) Army and Air Force Exchange Service;
    (B) Army and Air Force Motion Picture Service;
    (C) Coast Guard Exchanges;
    (D) Navy Ship's Service Stores; and
    (E) Marine Corps Post Exchanges.
    (3) For purposes of paragraph (d)(2) of this section, if an employee 
has a choice as to whether his or her work was covered by a retirement 
system, the work was not covered by that system until he or she chose 
that coverage. The work done, rather than the position held, must have 
been covered by the retirement system.
    (e) Work as a Peace Corps Volunteer--remuneration paid prior to 
1984. Work performed as a volunteer or volunteer leader within the 
meaning of the Peace Corps Act, 22 U.S.C. 2501 through 2523, was covered 
as employment.
    (f) Work as Job Corps Enrollee--remuneration paid prior to 1984. 
Work performed as an enrollee in the Job Corps was considered to be 
performed in the employ of the United States.
    (g) Work by Volunteer in Service to America--remuneration paid prior 
to 1984. Work performed and training received as a Volunteer in Service 
to America was considered to be performed in the employ of the United 
States if the volunteer was enrolled for a period of service of at least 
one year. If the enrollment was for less than one year, we used the 
common-law rules in Sec. 404.1007 to determine the volunteer's status.

[53 FR 38945, Oct. 4, 1988]



Sec. 404.1018b  Medicare qualified government employment.

    (a) General. The work of a Federal, State, or local government 
employee not otherwise subject to Social Security coverage may 
constitute Medicare qualified government employment. Medicare qualified 
government employment means any service which in all ways meets the 
definition of ``employment'' for title II purposes of the Social 
Security Act, except for the fact that the service was performed by a 
Federal, State or local government employee. This employment is used 
solely in determining eligibility for protection under part A of title 
XVIII of the Social Security Act (Hospital Insurance) and for coverage 
under the Medicare program for end-stage renal disease.
    (b) Federal employment. If, beginning with remuneration paid after 
1982, your service as a Federal employee is not otherwise covered 
employment under the Social Security Act, it is Medicare qualified 
government employment unless excluded under Sec. 404.1018(c).
    (c) State and local government employment. If, beginning with 
service performed after March 31, 1986, your service as an employee of a 
State or political subdivision (as defined in Sec. 404.1202(b)), Guam, 
American Samoa, the District of Columbia, or the Northern Mariana 
Islands is excluded from covered employment solely because of section 
210(a)(7) of the Social Security Act which pertains to employees of 
State and local governments (note Sec. Sec. 404.1020 through 404.1022), 
it is Medicare qualified government employment except as provided in 
paragraphs (c) (1) and (2) of this section.
    (1) An individual's service shall not be treated as employment if 
performed--
    (i) By an individual employed by a State or political subdivision 
for the purpose of relieving that individual from unemployment;
    (ii) In a hospital, home, or other institution by a patient or 
inmate thereof as an employee of a State, political

[[Page 275]]

subdivision, or of the District of Columbia;
    (iii) By an individual, as an employee of a State, political 
subdivision or the District of Columbia serving on a temporary basis in 
case of fire, storm, snow, earthquake, flood, or other similar 
emergency;
    (iv) By an individual as an employee included under 5 U.S.C. 5351(2) 
(relating to certain interns, student nurses, and other student 
employees of hospitals of the District of Columbia government), other 
than as a medical or dental intern or a medical or dental resident in 
training; or
    (v) By an election official or election worker paid less than $100 
in a calendar year for such service prior to 1995, or less than $1,000 
for service performed in any calendar year after 1994 and before 2000, 
or, for service performed in any calendar year after 1999, less than the 
$1,000 base amount, as adjusted pursuant to section 218(c)(8)(B) of the 
Social Security Act to reflect changes in wages in the economy. We will 
publish this adjustment of the $1,000 base amount in the Federal 
Register on or before November 1 preceding the year for which the 
adjustment is made.
    (2) An individual's service performed for an employer shall not be 
treated as employment if--
    (i) The service would be excluded from coverage under section 
210(a)(7) of the Social Security Act which pertains to employees of 
State and local governments;
    (ii) The service is performed by an individual who--
    (A) Was performing substantial and regular service for remuneration 
for that employer before April 1, 1986;
    (B) Was a bona fide employee of that employer on March 31, 1986; and
    (C) Did not enter into the employment relationship with that 
employer for purposes of meeting the requirements of paragraphs 
(c)(2)(ii) (A) and (B) of this section; and
    (iii) After March 31, 1986, but prior to the service being 
performed, the employment relationship with that employer had not been 
terminated.

[57 FR 59913, Dec. 17, 1992, as amended at 61 FR 38366, July 24, 1996]



Sec. 404.1019  Work as a member of a uniformed service of the United States.

    (a) Your work as a member of a uniformed service of the United 
States is covered under Social Security (unless creditable under the 
Railroad Retirement Act), if--
    (1) On or after January 1, 1957, the work is service on active duty 
or active duty for training but not including service performed while on 
leave without pay; or
    (2) On or after January 1, 1988, the work is service on inactive 
duty training.
    (b) You are a member of a uniformed service if--
    (1) You are appointed, enlisted, or inducted into (or a retired 
member of)--
    (i) One of the armed services (Army, Navy, Air Force, Marine Corps, 
or Coast Guard); or
    (ii) A component of one of the armed services, including any reserve 
component as defined in Veterans' Benefits, 38 U.S.C. 101 (except the 
Coast Guard Reserve as a temporary member);
    (2) You are a commissioned officer (including a retired commissioned 
officer) of the National Oceanic and Atmospheric Administration or the 
Regular or Reserve Corps of the Public Health Service;
    (3) You are a member of the Fleet Reserve or Fleet Marine Corps 
Reserve;
    (4) You are a cadet at the United States Military, Coast Guard, or 
Air Force Academy, or a midshipman at the United States Naval Academy;
    (5) You are a member of the Reserve Officers Training Corps, the 
Naval Reserve Officers Training Corps, or the Air Force Reserve Officers 
Training Corps, when ordered to annual training duty for 14 days or more 
including periods of authorized travel to and from that duty; or
    (6) You are selected for active military or naval training under the 
Military Selective Service Act or are provisionally accepted for active 
duty in the military or naval service and you are ordered or directed to 
a place for final acceptance or entry upon active duty and are on the 
way to or from, or at, that place.

[45 FR 20075, Mar. 27, 1980, as amended at 57 FR 59913, Dec. 17, 1992]

[[Page 276]]



Sec. 404.1020  Work for States and their political subdivisions and 
instrumentalities.

    (a) General. If you work as an employee of a State, a political 
subdivision of a State, or any wholly owned instrumentality of one or 
more of these, your work is excluded from employment unless--
    (1) The work is covered under an agreement under section 218 of the 
Act (see subpart M of this part); or
    (2) The work is covered transportation service as defined in section 
210(k) of the Act (see paragraph (c) of this section).
    (3) You perform services after July 1, 1991, as an employee of a 
State (other than the District of Columbia, Guam, or American Samoa), a 
political subdivision of a State, or any wholly owned instrumentality of 
one or more of the foregoing and you are not a member of a retirement 
system of such State, political subdivision, or instrumentality. 
Retirement system has the meaning given that term in section 218(b)(4) 
of the Act, except as provided in regulations prescribed by the 
Secretary of the Treasury. This paragraph does not apply to services 
performed--
    (i) As an employee employed to relieve you from unemployment;
    (ii) In a hospital, home, or other institution where you are a 
patient or inmate thereof;
    (iii) As an employee serving on a temporary basis in case of fire, 
storm, snow, earthquake, flood, or other similar emergency;
    (iv) As an election official or election worker if the remuneration 
paid in a calendar year for such service prior to 1995 is less than 
$100, or less than $1000 for service performed in any calendar year 
after 1994 and before 2000, or, for service performed in any calendar 
year after 1999, less than the $1000 base amount, as adjusted pursuant 
to section 218(c)(8)(B) of the Social Security Act to reflect changes in 
wages in the economy. We will publish this adjustment of the $1000 base 
amount in the Federal Register on or before November 1 preceding the 
year for which the adjustment is made.
    (v) As an employee in a position compensated solely on a fee basis 
which is treated, pursuant to section 211(c)(2)(E) of the Act, as a 
trade or business for purposes of inclusion of the fees in net earnings 
from self-employment; or
    (4) The work is covered under Sec. 404.1021 or Sec. 404.1022.
    (b) Medicare qualified government employment. Notwithstanding the 
provisions of paragraph (a) of this section, your work may be covered as 
Medicare qualified government employment (see Sec. 404.1018b(c) of this 
subpart).
    (c) Covered transportation service--(1) Work for a public 
transportation system. If you work for a public transportation system of 
a State or political subdivision of a State, your work may be covered 
transportation service if all or part of the system was acquired from 
private ownership. You must work as an employee of the State or 
political subdivision in connection with its operation of a public 
transportation system for your work to be covered transportation 
service. This paragraph sets out additional conditions that must be met 
for your work to be covered transportation service. If you work for a 
public transportation system but your work is not covered transportation 
service, your work may be covered for social security purposes under an 
agreement under section 218 of the Act (see subpart M of this part).
    (2) Transportation system acquired in whole or in part after 1936 
and before 1951. All work after 1950 for a public transportation system 
is covered transportation service if--
    (i) Any part of the transportation system was acquired from private 
ownership after 1936 and before 1951; and
    (ii) No general retirement system covering substantially all work in 
connection with the operation of the transportation system and 
guaranteed by the State constitution was in effect on December 31, 1950.
    (3) Transportation system operated on December 31, 1950, no part of 
which was acquired after 1936 and before 1951. If no part of a 
transportation system operated by a State or political subdivision on 
December 31, 1950, was acquired from private ownership after 1936 and 
before 1951, work for that public transportation system is not covered 
transportation service unless performed under conditions described in 
paragraph (b)(4) of this section.

[[Page 277]]

    (4) Addition after 1950 to existing transportation system. Work for 
a public transportation system part of which was acquired from private 
ownership after 1950 as an addition to an existing transportation system 
is covered transportation service beginning with the first day of the 
third calendar quarter following the calendar quarter in which the 
addition was acquired if--
    (i) The work is performed by an employee who--
    (A) Worked in employment in connection with the operation of the 
addition before the addition was acquired by the State or political 
subdivision; and
    (B) Became an employee of the State or political subdivision in 
connection with and at the time of its acquisition of the addition;
    (ii) On that first day, work performed by that employee is--
    (A) Not covered by a general retirement system; or
    (B) Covered by a general retirement system which contains special 
provisions that apply only to employees described in paragraph 
(c)(4)(i)(B) of this section;
    (iii) The existing transportation system was operated by the State 
or political subdivision on December 31, 1950; and
    (iv) Work for the existing transportation system was not covered 
transportation service because--
    (A) No part of the system was acquired from private ownership after 
1936 and before 1951; or
    (B) The general retirement system described in paragraph (c)(2)(ii) 
of this section was in effect on December 31, 1950.
    (5) Transportation system acquired after 1950. All work for a public 
transportation system is covered transportation service if--
    (i) The transportation system was not operated by the State or 
political subdivision before 1951;
    (ii) All or part of the transportation system was first acquired 
from private ownership after 1950; and
    (iii) At the time the State or political subdivision first acquired 
any part of its transportation system from private ownership, it did not 
have a general retirement system covering substantially all work 
performed in connection with the operation of the transportation system.
    (6) Definitions. (i) The term general retirement system means any 
pension, annuity, retirement, or similar fund or system established by a 
State or by a political subdivision of a State for employees of the 
State, the political subdivision, or both. The term does not include a 
fund or system which covers only work performed in positions connected 
with the operation of the public transportation system.
    (ii) A transportation system (or part of a system) is considered to 
have been acquired from private ownership by a State or political 
subdivision if--
    (A) Before the acquisition, work performed by employees in 
connection with the operation of the system (or an acquired part) 
constituted employment under the Act; and
    (B) Some of these employees became employees of the State or 
political subdivision in connection with and at the time of the 
acquisition.
    (iii) The term political subdivision includes an instrumentality of 
a State, of one or more political subdivisions of a State, or of a State 
and one or more of its political subdivisions.

[45 FR 20075, Mar. 27, 1980, as amended at 57 FR 59910, 59914, Dec. 17, 
1992; 61 FR 38366, July 24, 1996]



Sec. 404.1021  Work for the District of Columbia.

    If you work as an employee of the District of Columbia or a wholly 
owned instrumentality of the District of Columbia, your work is covered 
as employment unless--
    (a) Your work is covered by a retirement system established by a law 
of the United States; or
    (b) You are--
    (1) A patient or inmate of a hospital or penal institution and your 
work is for that hospital or institution;
    (2) A student employee (a student nurse, dietitian, or physical or 
occupational therapist, but not a medical or dental intern or resident 
in training) of a District of Columbia hospital, clinic, or medical or 
dental laboratory;

[[Page 278]]

    (3) An employee serving temporarily in case of fire, storm, snow, 
earthquake, flood, or other similar emergency; or
    (4) A member of a board, committee, or council of the District of 
Columbia paid on a per diem, meeting, or other fee basis.
    (c) Medicare qualified government employment. If your work is not 
covered under Social Security, it may be covered as Medicare qualified 
government employment (see Sec. 404.1018b(c) of this subpart).

[45 FR 20075, Mar. 27, 1980, as amended at 57 FR 59914, Dec. 17, 1992]



Sec. 404.1022  American Samoa or Guam.

    (a) Work in American Samoa or Guam. Work in American Samoa or Guam 
for a private employer is covered as employment the same as in the 50 
States. Work done by a resident of the Republic of the Philippines 
working in Guam on a temporary basis as a nonimmigrant alien admitted to 
Guam under section 101(a)(15)(H)(ii) of the Immigration and Nationality 
Act is excluded from coverage regardless of the employer.
    (b) Work for American Samoa or a political subdivision or wholly 
owned instrumentality of American Samoa. Work as an officer or employee 
(including a member of the legislature) of the government of American 
Samoa, its political subdivisions, or any wholly owned instrumentality 
of any one or more of these, is covered as employment (unless the work 
is covered by a retirement system established by a law of the United 
States). The officer or employee is not considered as an employee of the 
United States, an agency of the United States, or an instrumentality of 
the United States, for purposes of title II of the Act. We consider any 
pay for this work to have been paid by the government of American Samoa, 
or the political subdivision or the wholly owned instrumentality of 
American Samoa.
    (c) Work for Guam or a political subdivision or wholly owned 
instrumentality of Guam. Work as an officer or employee (including a 
member of the legislature) of the government of Guam, its political 
subdivisions, or any wholly owned instrumentality of any one or more of 
these, is excluded from coverage as employment. However, the exclusion 
does not apply to employees classified as temporary or intermittent 
unless the work is--
    (1) Covered by a retirement system established by a law of Guam;
    (2) Done by an elected official;
    (3) Done by a member of the legislature; or
    (4) Done in a hospital or penal institution by a patient or inmate 
of the hospital or penal institution.
    (d) Medicare qualified government employment. If your work is not 
covered under Social Security, it may be covered as Medicare qualified 
government employment (see Sec. 404.1018b(c) of this subpart).

[45 FR 20075, Mar. 27, 1980, as amended at 57 FR 59914, Dec. 17, 1992]



Sec. 404.1023  Ministers of churches and members of religious orders.

    (a) General. If you are a duly ordained, commissioned, or licensed 
minister of a church, the work you do in the exercise of your ministry 
is excluded from employment. However, it is treated as self-employment 
for social security purposes. If you are a member of a religious order 
who has not taken a vow of poverty, the same rule applies to the work 
you do in the exercise of your duties required by that order. If you are 
a member of a religious order who has taken a vow of poverty, the work 
you do in the exercise of duties required by the order (the work may be 
done for the order or for another employer) is covered as employment 
only if the order or autonomous subdivision of the order to which you 
belong has filed an effective election of coverage. The election is made 
under section 3121(r) of the Code. For the rules on self-employment 
coverage of ministers and members of religious orders who have not taken 
vows of poverty, see Sec. 404.1071.
    (b) What is an ordained, commissioned, or licensed minister. The 
terms ordained, commissioned, or licensed describe the procedures 
followed by recognized churches or church denominations to vest 
ministerial status upon qualified individuals. If a church or church 
denomination has an ordination procedure, the commissioning or licensing 
of

[[Page 279]]

a person as a minister may not make him or her a commissioned or 
licensed minister for purposes of this subpart. Where there is an 
ordination procedure, the commissioning or licensing must be recognized 
as having the same effect as ordination and the person must be fully 
qualified to exercise all of the ecclesiastical duties of the church or 
church denomination.
    (c) When is work by a minister in the exercise of the ministry. (1) 
A minister is working in the exercise of the ministry when he or she 
is--
    (i) Ministering sacerdotal functions or conducting religious worship 
(other than as described in paragraph (d)(2) of this section); or
    (ii) Working in the control, conduct, and maintenance of a religious 
organization (including an integral agency of a religious organization) 
under the authority of a religious body constituting a church or church 
denomination.
    (2) The following rules are used to decide whether a minister's work 
is in the exercise of the ministry:
    (i) Whether the work is the conduct of religious worship or the 
ministration of sacerdotal functions depends on the tenets and practices 
of the religious body which is his or her church or church denomination.
    (ii) Work in the control, conduct, and maintenance relates to 
directing, managing, or promoting the activities of the religious 
organization. Any religious organization is considered to be under the 
authority of a religious body constituting a church or church 
denomination if it is organized and dedicated to carrying out the tenets 
and principles of a faith according to either the requirements or 
sanctions governing the creation of institutions of the faith.

The term religious organization has the same meaning and application as 
is given to the term for income tax purposes under the Code.
    (iii) If a minister is working in the conduct of religious worship 
or the ministration of sacerdotal functions, the work is in the exercise 
of the ministry whether or not it is performed for a religious 
organization. (See paragraph (d)(2) of this section for an exception to 
this rule.)

    Example: M, a duly ordained minister, is engaged to work as chaplain 
at a privately owned university. M spends his entire time working as 
chaplain. This includes the conduct of religious worship, offering 
spiritual counsel to the university students, and teaching a class in 
religion. M is working in the exercise of the ministry.

    (iv) If a minister is working for an organization which is operated 
as an integral agency of a religious organization under the authority of 
a religious body constituting a church or church denomination, all work 
by the minister in the conduct of religious worship, in the ministration 
of sacerdotal functions, or in the control, conduct, and maintenance of 
the organization is in the exercise of the ministry.

    Example: M, a duly ordained minister, is engaged by the N Religious 
Board as director of one of its departments. M performs no other 
service. The N Religious Board is an integral agency of O, a religious 
organization operating under the authority of a religious body 
constituting a church denomination. M is working in the exercise of the 
ministry.

    (v) If a minister, under an assignment or designation by a religious 
body constituting a church, works for an organization which is neither a 
religious organization nor operated as an integral agency of a religious 
organization, all service performed by him or her, even though the 
service may not involve the conduct of religious worship or the 
ministration of sacerdotal functions, is in the exercise of the 
ministry.

    Example: M, a duly ordained minister, is assigned by X, the 
religious body constituting M's church, to perform advisory service to Y 
company in connection with the publication of a book dealing with the 
history of M's church denomination. Y is neither a religious 
organization nor operated as an integral agency of a religious 
organization. M performs no other service for X or Y. M is working in 
the exercise of the ministry.

    (vi) If a minister is working for an organization which is neither a 
religious organization nor operated as an integral agency of a religious 
organization and the work is not performed under an assignment or 
designation by ecclesiastical superiors, then only the work done by the 
minister in the conduct of religious worship or the ministration of 
sacerdotal functions is in the exercise of the ministry. (See paragraph

[[Page 280]]

(d)(2) of this section for an exception to this rule.)

    Example: M, a duly ordained minister, is engaged by N University to 
teach history and mathematics. M does no other work for N although from 
time to time M performs marriages and conducts funerals for relatives 
and friends. N University is neither a religious organization nor 
operated as an integral agency of a religious organization. M is not 
working for N under an assignment by his ecclesiastical superiors. The 
work performed by M for N University is not in the exercise of the 
ministry. However, service performed by M in performing marriages and 
conducting funerals is in the exercise of the ministry.

    (d) When is work by a minister not in the exercise of the ministry. 
(1) Work performed by a duly ordained, commissioned, or licensed 
minister of a church which is not in the exercise of the ministry is not 
excluded from employment.
    (2) Work performed by a duly ordained, commissioned, or licensed 
minister of a church as an employee of the United States, or a State, 
territory, or possession of the United States, or the District of 
Columbia, or a foreign government, or a political subdivision of any of 
these, is not in the exercise of the ministry, even though the work may 
involve the ministration of sacerdotal functions or the conduct of 
religious worship. For example, we consider service performed as a 
chaplain in the Armed Forces of the United States to be work performed 
by a commissioned officer and not by a minister in the exercise of the 
ministry. Also, service performed by an employee of a State as a 
chaplain in a State prison is considered to be performed by a civil 
servant of the State and not by a minister in the exercise of the 
ministry.
    (e) Work in the exercise of duties required by a religious order. 
Work performed by a member of a religious order in the exercise of 
duties required by the order includes all duties required of the member 
of the order. The nature or extent of the work is immaterial so long as 
it is service which the member is directed or required to perform by the 
member's ecclesiastical superiors.



Sec. 404.1024  Election of coverage by religious orders.

    A religious order whose members are required to take a vow of 
poverty, or any autonomous subdivision of that religious order, may 
elect to have social security coverage extended to the work performed by 
its members in the exercise of duties required by that order or 
subdivision. The rules on the election of coverage by these religious 
orders are described in 26 CFR 31.3121(r). The rules on determining the 
wages of members of religious orders for which an election of coverage 
has been made are described in Sec. 404.1046.



Sec. 404.1025  Work for religious, charitable, educational, or certain 
other organizations exempt from income tax.

    (a) After 1983. Work done after 1983 by an employee in the employ of 
a religious, charitable, educational, or other organization described in 
section 501(c)(3) of the Code which is exempt from income tax under 
section 501(a) of the Code is covered as employment unless the work is 
for a church or church-controlled organization that has elected to have 
services performed by its employees excluded (see Sec. 404.1026). (See 
Sec. 404.1059(b) for special wage rule.)
    (b) Before 1984. Work described in paragraph (a) of this section 
which was done before 1984 is excluded from employment. However, the 
exclusion does not apply to work done during the period for which a form 
SS-15, Certificate Waiving Exemption From Taxes Under the Federal 
Insurance Contributions Act, was filed (or was deemed to have been 
filed) with the Internal Revenue Service.

[50 FR 36573, Sept. 9, 1985]



Sec. 404.1026  Work for a church or qualified church-controlled organization.

    (a) General. If you work for a church or qualified church-controlled 
organization, as described in this section, your employer may elect to 
have your services excluded from employment. You would then be 
considered to be self-employed and special conditions would apply to 
you. See Sec. 404.1068(f) for those special conditions. The employer's 
election of the exclusion must be

[[Page 281]]

made with the Internal Revenue Service in accordance with Internal 
Revenue Service procedures and must state that the church or church-
controlled organization is opposed for religious reasons to the payment 
of Social Security employment taxes. The exclusion applies to current 
and future employees. If you work in an unrelated trade or business 
(within the meaning of section 513(a) of the Code) of the church or 
church-controlled organization, the exclusion does not apply to your 
services.
    (b) What is a church. For purposes of this section the term church 
means a church, a convention or association of churches, or an 
elementary or secondary school which is controlled, operated, or 
principally supported by a church or by a convention or association of 
churches.
    (c) What is a qualified church-controlled organization. For purposes 
of this section the term qualified church-controlled organization means 
any church-controlled organization exempt from income tax under section 
501(c)(3) of the Code but does not include an organization which:
    (1) Offers goods, services, or facilities for sale to the general 
public, other than on an incidental basis, or for other than a nominal 
charge which is substantially less than the cost of providing such 
goods, services, or facilities; and
    (2) Normally receives more than 25 percent of its support from 
either governmental sources or receipts from admissions, sales of 
merchandise, performance of services or furnishing of facilities other 
than in an unrelated trade or business, or both.

[50 FR 36573, Sept. 9, 1985, as amended at 55 FR 7309, Mar. 1, 1990]



Sec. 404.1027  Railroad work.

    We exclude from employment any work you do as an employee or 
employee representative as described in the Railroad Retirement Tax Act. 
However, railroad compensation can be counted for social security 
purposes under the conditions described in subpart O of this part.



Sec. 404.1028  Student working for a school, college, or university.

    (a) For purposes of this section, a school, college, or university 
has its usual accepted meaning. It does not, however, include any 
school, college, or university that is an instrumentality or integral 
part of a State or a political subdivision of a State for which work can 
only be covered by an agreement under section 218 of the Act. (See 
subpart M of this part.)
    (b) If you are a student, any work you do as an employee of a 
school, college or university is excluded from employment, if you are 
enrolled in and regularly attending classes at that school, college, or 
university. The exclusion also applies to work you do for a private 
nonprofit auxiliary organization of the school, college, or university 
if it is organized and operated exclusively for the benefit of, to 
perform functions of, or to carry out the purposes of the school, 
college, or university. The organization must be operated, supervised, 
or controlled by, or in connection with, the school, college, or 
university.
    (c) Whether you are a student for purposes of this section depends 
on your relationship with your employer. If your main purpose is 
pursuing a course of study rather than earning a livelihood, we consider 
you to be a student and your work is not considered employment.



Sec. 404.1029  Student nurses.

    If you are a student nurse, your work for a hospital or nurses 
training school is excluded from employment if you are enrolled and 
regularly attending classes in a nurses training school which is 
chartered or approved under State law.



Sec. 404.1030  Delivery and distribution or sale of newspapers, shopping 
news, and magazines.

    (a) If you are under age 18. Work you do before you reach age 18 
delivering or distributing newspapers or shopping news is excluded from 
employment. This does not include delivery or distribution to some point 
for further delivery or distribution by someone else. If you make house-
to-house delivery or sale of newspapers or shopping news

[[Page 282]]

(including handbills and similar kinds of advertising material), your 
work is not covered while you are under age 18. Related work such as 
assembling newspapers is also excluded.
    (b) If you are any age. No matter how old you are, work you do in 
connection with and at the time of the sale of newspapers or magazines 
to consumers is excluded from employment if there is an arrangement 
under which--
    (1) You are to sell the newspapers or magazines at a fixed price; 
and
    (2) Your pay is the difference between the fixed selling price and 
the amount you are charged for the newspapers or magazines (whether or 
not you are guaranteed a minimum amount of compensation or receive 
credit for unsold newspapers or magazines).
    (c) If you are age 18 or older. If you have attained age 18, you are 
self-employed if you work under the arrangement described in paragraph 
(b) of this section. See Sec. 404.1068(b).



Sec. 404.1031  Fishing.

    (a) If you work on a boat engaged in catching fish or other forms of 
aquatic animal life, your work is not employment if you have an 
arrangement with the owner or operator of the boat which provides for 
all of the following:
    (1) You do not receive any cash pay (other than as provided in 
paragraph (a)(2) of this section).
    (2) You receive a share of the catch or a share of the proceeds from 
the sale of the catch.
    (3) The amount of your share depends on the size of the catch.
    (4) The operating crew of the boat (or each boat from which you 
receive a share if the fishing operation involves more than one boat) is 
normally made up of fewer than 10 individuals.
    (b) Work excluded from employment under this section is considered 
to be self-employment (Sec. 404.1068(e)).



Sec. 404.1032  Work for a foreign government.

    If you work as an employee of a foreign government in any capacity, 
your work is excluded from employment. If you are a citizen of the 
United States and work in the United States as an employee of a foreign 
government, you are considered to be self-employed (Sec. 404.1068(d)).



Sec. 404.1033  Work for a wholly owned instrumentality of a foreign government.

    (a) If you work as an employee of an instrumentality of a foreign 
government, your work is excluded from employment if--
    (1) The instrumentality is wholly owned by the foreign government;
    (2) Your work is similar to work performed in foreign countries by 
employees of the United States Government or its instrumentalities; and
    (3) The Secretary of State certifies to the Secretary of the 
Treasury that the foreign government grants an equivalent exemption for 
services performed in the foreign country by employees of the United 
States Government or its instrumentalities.
    (b) Your work will not be excluded under this section if any of the 
conditions in paragraph (a) of this section are not met.
    (c) If you are a citizen of the United States and work in the United 
States as an employee of an instrumentality of a foreign government and 
the conditions in paragraph (a) of this section are met, you are 
considered to be self-employed (Sec. 404.1068(d)).



Sec. 404.1034  Work for an international organization.

    (a) If you work as an employee of an international organization 
entitled to enjoy privileges, exemptions, and immunities as an 
international organization under the International Organizations 
Immunities Act (59 Stat. 669), your work is excluded from employment 
except as described in paragraphs (b) and (c) of this section. The 
organization must meet the following conditions:
    (1) It must be a public international organization in which the 
United States participates under a treaty or authority of an act of 
Congress authorizing, or making an appropriation for, participation.
    (2) It must be designated by executive order to be entitled to enjoy 
the privileges, exemptions, and immunities provided in the International 
Organizations Immunities Act.

[[Page 283]]

    (3) The designation must be in effect, and all conditions and 
limitations in the designation must be met.
    (b) Your work will not be excluded under this section if any of the 
conditions in paragraph (a) of this section are not met.
    (c) Your work performed after December 31, 1994 will not be excluded 
under this section if you perform service in the employ of an 
international organization pursuant to a transfer from a Federal agency 
under section 3582 of title 5 of the United States Code and
    (1) Immediately before such transfer you performed service with a 
Federal agency which was covered as employment; and
    (2) You would be entitled, upon separation from the international 
organization and proper application, to reemployment with the Federal 
agency under section 3582.
    (d) If you are a citizen of the United States and work in the United 
States as an employee of an international organization that meets the 
conditions in paragraph (a) of this section and you are not subject to 
coverage based on paragraph (c) of this section, you are considered to 
be self-employed (Sec. 404.1068(d)).

[45 FR 20075, Mar. 27, 1980, as amended at 61 FR 38366, July 24, 1996]



Sec. 404.1035  Work for a communist organization.

    If you work as an employee of an organization which is registered, 
or which is required by a final order of the Subversive Activities 
Control Board to register under the Internal Security Act of 1950 as a 
communist action, communist-front, or communist-infiltrated 
organization, your work is excluded from employment. The exclusion is 
effective with the calendar year in which the organization is registered 
or the final order is in effect.



Sec. 404.1036  Certain nonresident aliens.

    (a) Foreign students. (1) Foreign students (nonimmigrant aliens) may 
be temporarily in the United States under subparagraph (F) of section 
101(a)(15) of the Immigration and Nationality Act to attend a school or 
other recognized place of study approved by the Attorney General. On-
campus work or work under permission granted by the Immigration and 
Naturalization Service which is done by these students is excluded from 
employment. Other work done by these foreign students is not excluded 
from employment under this section.
    (2) Foreign students (nonimmigrant aliens) may be temporarily in the 
United States under subparagraph (M) of section 101(a)(15) of the 
Immigration and Nationality Act to pursue a vocational or nonacademic 
technical education approved by the Attorney General. Work done by these 
students to carry out the purpose for which they were admitted is 
excluded from employment. Other work done by these foreign students is 
not excluded from employment under this section.
    (b) Exchange visitors. (1) Exchange visitors (nonimmigrant aliens) 
may be temporarily in the United States under subparagraph (J) of 
section 101(a)(15) of the Immigration and Nationality Act to participate 
in exchange visitor programs designated by the Director of the United 
States Information Agency. Work done by these exchange visitors to carry 
out the purpose for which they were admitted and for which permission 
has been granted by the sponsor, is excluded from employment. Other work 
done by these exchange visitors is not excluded from employment under 
this section.
    (2) Exchange visitors (nonimmigrant aliens) may be temporarily in 
the United States under subparagraph (Q) of section 101(a)(15) of the 
Immigration and Nationality Act to participate in an international 
cultural exchange program approved by the Attorney General. Effective 
October 1, 1994, work done by these exchange visitors to carry out the 
purpose for which they were admitted is excluded from employment. Other 
work done by these exchange visitors is not excluded from employment 
under this section.
    (c) Spouse and children. Work done by a foreign student's or 
exchange visitor's alien spouse or minor child who is also temporarily 
in the United States under subparagraph (F), (J), (M), or (Q) of section 
101(a)(15) of the Immigration and Nationality Act is not excluded from 
employment under this section

[[Page 284]]

unless that spouse or child and the work that is done meets the 
conditions of paragraph (a) or (b) of this section.

[61 FR 38366, July 24, 1996]



Sec. 404.1037  Work on or in connection with a non-American vessel 
or aircraft.

    If you work as an employee within the United States on or in 
connection with (as explained in Sec. 404.1004(b)(8)) a vessel or 
aircraft that is not an American vessel (as defined in Sec. 
404.1004(b)(3)) or American aircraft (as defined in Sec. 
404.1004(b)(2)), your work is excluded from employment if--
    (a) You are not a citizen of the United States or your employer is 
not an American employer (as defined in Sec. 404.1004(b)(1)); and
    (b) You are employed on and in connection with (as explained in 
Sec. 404.1004(b)(7)) the vessel or aircraft when outside the United 
States.



Sec. 404.1038  Domestic employees under age 18.

    Domestic services you perform in a private home of your employer are 
excluded from employment, regardless of the amount earned, in any year 
in which you are under age 18 if domestic service is not your principal 
occupation. The exclusion applies to the entire year if you are under 
age 18 in any part of the year. See Sec. 404.1057.

[61 FR 38366, July 24, 1996]

      Exemption From Social Security by Reason of Religious Belief



Sec. 404.1039  Employers (including partnerships) and employees who 
are both members of certain religious groups opposed to insurance.

    (a) You and your employer (or, if the employer is a partnership, 
each of its partners) may file applications with the Internal Revenue 
Service for exemption from your respective shares of the Federal 
Insurance Contributions Act taxes on your wages paid by that employer if 
you and your employer (or, if the employer is a partnership, each of its 
partners)--
    (1) Are members of a recognized religious sect or division of the 
sect; and
    (2) Adhere to the tenets or teachings of the sect or division of the 
sect and for that reason are conscientiously opposed to receiving 
benefits from any private or public insurance that--
    (i) Makes payment in the event of death, disability, old-age, or 
retirement; or
    (ii) Makes payment for the cost of, or provides services for, 
medical care including the benefits of any insurance system established 
by the Act.
    (b) Both your application and your employer's application (or, if 
your employer is a partnership, each partner's application) must be 
filed with and approved by the Internal Revenue Service pursuant to 
section 3127 of the Internal Revenue Code. An application must contain 
or be accompanied by the applicant's waiver of all benefits and payments 
under title II and part A of title XVIII of the Act. See Sec. 404.305 
for the effect of the filing of the waiver and the granting of the 
exemption.
    (c) Regardless of whether the applicant meets all these conditions, 
the application will not be approved unless we find that--
    (1) The sect or division of the sect has established tenets or 
teachings which cause the applicant to be conscientiously opposed to the 
types of insurance benefits described in paragraph (a)(2) of this 
section; and
    (2) For a substantial period of time it has been the practice for 
members of the sect or division of the sect to make provision for their 
dependent members that is reasonable in view of their general level of 
living; and
    (3) The sect or division of the sect has been in existence 
continuously since December 31, 1950.
    (d) An application for exemption will be approved by the Internal 
Revenue Service only if no benefit or payment under title II or part A 
of title XVIII of the Act became payable (or, but for section 203 or 
section 222(b) of the Act, would have become payable) to the applicant 
at or before the time of the filing of the application for exemption.
    (e) The tax exemption ceases to be effective with respect to wages 
paid beginning with the calendar quarter in which either the employer 
(or if the employer is a partnership, any of its partners) or the 
employee involved does not meet the requirements of

[[Page 285]]

paragraph (a) of this section or the religious sect or division of the 
sect is found by us to no longer meet the requirements of paragraph (c) 
of this section. If the tax exemption ceases to be effective, the waiver 
of the right to receive Social Security and Medicare Part A benefits 
will also no longer be effective. Benefits may be payable based upon the 
wages of the individual, whose exempt status was terminated, for and 
after the calendar year following the calendar year in which the event 
occurred upon which the cessation of the exemption is based. Benefits 
may be payable based upon the self-employment income of the individual 
whose exempt status was terminated for and after the taxable year in 
which the event occurred upon which the cessation of the exemption is 
based.

[58 FR 64889, Dec. 10, 1993]

                                  Wages



Sec. 404.1041  Wages.

    (a) The term wages means remuneration paid to you as an employee for 
employment unless specifically excluded. Wages are counted in 
determining your entitlement to retirement, survivors', and disability 
insurance benefits.
    b) If you are paid wages, it is not important what they are called. 
Salaries, fees, bonuses and commissions on sales or on insurance 
premiums are wages if they are remuneration paid for employment.
    (c) The way in which you are paid is unimportant. Wages may be paid 
on the basis of piecework or a percentage of the profits. Wages may be 
paid on an hourly, daily, weekly, monthly, or yearly basis. (See Sec. 
404.1056 for special rules for agricultural labor.)
    (d) Your wages can be in any form. You can be paid in cash or 
something other than cash, for example, in goods or clothing. (See 
paragraphs (e) and (f) of this section for kinds of employment where 
cash payments alone are considered wages and Sec. 404.1043(b) 
concerning the value of meals and lodging as wages.) If your employer 
pays you cash for your meals and lodging on a regular basis as part of 
your employment, these payments may be considered wages. Payments other 
than cash may be counted as wages on the basis of the fair value of the 
items when paid.
    (e) In certain kinds of employment, cash payments alone count as 
wages. These types of employment are agricultural labor, domestic 
services, and services not in the course of the employer's trade or 
business.
    (f) To count as wages, payments for services performed by home 
workers who are employees as described in Sec. 404.1008(d) must be in 
cash and must amount to $100 or more in a calendar year. Once this cash 
pay test is met, all remuneration paid, whether in cash or kind, is also 
wages.

[45 FR 20075, Mar. 27, 1980, as amended at 55 FR 7309, Mar. 1, 1990]



Sec. 404.1042  Wages when paid and received.

    (a) In general. Wages are received by an employee at the time they 
are paid by the employer to the employee. Wages are paid by an employer 
at the time that they are actually or constructively paid unless they 
are deemed to be paid later (as described in paragraph (c)(3) of this 
section).
    (b) Constructive payment. Wages are constructively paid when they 
are credited to the account of, or set aside for, an employee so that 
they may be drawn upon by the employee at any time although not then 
actually received. To be a payment--
    (1) The wages must be credited to or set aside for the employee and 
must be made available without restriction so that they may be drawn 
upon at any time; or
    (2) The employer must intend to pay or to set aside or credit, and 
have the ability to pay wages when due to the employee, and failure of 
the employer to credit or set aside the wages is due to clerical error 
or mistake in the mechanics of payment, and because of the clerical 
error or mistake the wages are not actually available at that time.
    (c) Deemed payment. (1) The first $100 of cash paid, either actually 
or constructively, by an employer to an employee in a calendar year is 
considered paid at the time that the amount of the cash payment totals 
$100 for the year in the case of pay for--

[[Page 286]]

    (i) Work not in the course of the employer's trade or business (non-
business work);
    (ii) Work by certain home workers; and
    (iii) Work for an organization exempt from income tax under section 
501 of the Code.
    (2) We also apply this rule to domestic work in a private home of 
the employer, except see Sec. 404.1057(a)(1) for the applicable dollar 
amount.
    (3) Cash of less than $150 that an employer pays to an employee in a 
calendar year, either actually or constructively, for agricultural labor 
is considered paid at the earliest of--
    (i) The time in the calendar year that the employee's pay totals 
$150; or
    (ii) The 20th day of the calendar year on which the employee works 
for cash pay computed on a time basis.
    (4) If an employer pays cash to an employee for two or more of the 
kinds of work referred to in paragraph (c)(1) of this section, we apply 
the provisions of this paragraph to the pay for each kind of work.
    (d) Employee tax deductions. We consider employee tax deductions 
under section 3101 of the Code to be part of the employee's wages and 
consider them to be paid at the time of the deduction. We consider other 
deductions from wages to be wages paid at the time of the deduction. It 
is immaterial that the deductions are required or permitted by an act of 
Congress or the law of any State.
    (e) Tips. (1) Tips received by an employee in the course of 
employment, that are considered to be wages, are deemed to be paid at 
the time the employee reports the tips to the employer in a written 
statement as provided under section 6053(a) of the Code. Tips that are 
not reported are deemed to be paid to the employee at the time they are 
received by the employee.
    (2) We consider tips to be received in the course of employment 
whether they are received by the employee from the employer or from 
another person. Only tips employees receive and keep for themselves are 
considered to be the employees' pay. If employees split tips, each 
employee who receives part of the tip receives tips in the course of 
employment.
    (f) Payments under nonqualified deferred compensation plans. Amounts 
that an employee is entitled to receive under nonqualified deferred 
compensation plans (plans that do not qualify for special tax treatment 
under the Code) are creditable as wages for Social Security purposes at 
the later of the following times:
    (1) When the services are performed; or
    (2) When there is no longer a substantial risk of forfeiture (as 
defined in section 83 of the Code) of the employee's rights to the 
deferred compensation.

Any amounts taken into account as wages by this paragraph (and the 
income attributable thereto) will not thereafter be treated as wages for 
Social Security purposes.

[45 FR 20075, Mar. 27, 1980, as amended at 55 FR 7309, Mar. 1, 1990; 61 
FR 38366, July 24, 1996]



Sec. 404.1043  Facilities or privileges--meals and lodging.

    (a) Excluding the value of employer provided facilities or 
privileges from employee gross income prior to January 1, 1985. (1) 
Generally, the facilities or privileges that an employer furnished an 
employee prior to January 1, 1985 are not wages if the facilities or 
privileges--
    (i) Were of relatively small value; and
    (ii) Were offered or furnished by the employer merely as a means of 
promoting the health, good will, contentment, or efficiency of the 
employees.
    (2) The term facilities or privileges for the period prior to 
January 1, 1985 is intended to include such items as entertainment, 
medical services, and so-called courtesy discounts on purchases.
    (b) Meals and lodging. The value of the meals and lodging furnished 
to an employee by an employer for reasons of the employer's convenience 
is not wages if--
    (1) The meals are provided at the employer's place of business; and
    (2) The employee, in the case of lodging, is required to accept 
lodging on the employer's business premises as a condition of 
employment.

[52 FR 29662, Aug. 11, 1987]

[[Page 287]]



Sec. 404.1044  Vacation pay.

    We consider your salary while on vacation, or a vacation allowance 
paid by your employer, to be wages.



Sec. 404.1045  Employee expenses.

    Amounts that your employer pays you specifically--either as advances 
or reimbursements--for traveling or for other ordinary and necessary 
expenses incurred, or reasonably expected to be incurred, in your 
employer's business are not wages. The employer must identify these 
travel and other expenses either by making a separate payment or by 
specifically stating the separate amounts if both wages and expense 
allowances are combined in a single payment.



Sec. 404.1046  Pay for work by certain members of religious orders.

    (a) If you are a member of a religious order who has taken a vow of 
poverty (Sec. 404.1023), and the order has elected Social Security 
coverage under section 3121(r) of the Code, your wages are figured in a 
special way. Your wages, for Social Security purposes, are the fair 
market value of any board, lodging, clothing, and other items of value 
furnished to you by the order, or furnished to the order on your behalf 
by another organization or person under an agreement with the order. See 
paragraph (b) of this section if you perform services for a third party. 
The order must report at least $100 a month for each active member. If 
the fair market value of items furnished to all members of a religious 
order does not vary significantly, the order may consider all members to 
have a uniform wage.
    (b) If you perform services for a third party, the following rules 
apply:
    (1) If you perform services for another agency of the supervising 
church or an associated institution, any amounts paid based on such 
services, whether paid directly to you or to the order, do not count on 
wages. Only wages figured under (a) above, are counted.
    (2) If you perform services in a secular setting as an employee of a 
third party not affiliated or associated with the supervising church or 
an associated institution, any amounts paid based on such services, 
whether paid directly to you or to the order, count as wages paid to you 
by the third party. These wages are in addition to any wages counted 
under paragraph (a) of this section.

[55 FR 7309, Mar. 1, 1990; 55 FR 17530, Apr. 25, 1990]



Sec. 404.1047  Annual wage limitation.

    Payments made by an employer to you as an employee in a calendar 
year that are more than the annual wage limitation are not wages. The 
annual wage limitation is:

------------------------------------------------------------------------
                                                                 Wage
                       Calendar year                          limitation
------------------------------------------------------------------------
1951-54....................................................       $3,600
1955-58....................................................        4,200
1959-65....................................................        4,800
1966-67....................................................        6,600
1968-71....................................................        7,800
1972.......................................................        9,000
1973.......................................................       10,800
1974.......................................................       13,200
1975.......................................................       14,100
1976.......................................................       15,300
1977.......................................................       16,500
1978.......................................................       17,700
1979.......................................................       22,900
1980.......................................................       25,900
1981.......................................................       29,700
1982.......................................................       32,400
1983.......................................................       35,700
1984.......................................................       37,800
1985.......................................................       39,600
1986.......................................................       42,000
1987.......................................................       43,800
1988.......................................................       45,000
1989.......................................................       48,000
1990.......................................................       51,300
1991.......................................................       53,400
1992.......................................................       55,500
------------------------------------------------------------------------


[52 FR 8249, Mar. 17, 1987, as amended at 57 FR 44098, Sept 24, 1992]



Sec. 404.1048  Contribution and benefit base after 1992.

    (a) General. The contribution and benefit base after 1992 is figured 
under the formula described in paragraph (b) of this section in any 
calendar year in which there is an automatic cost-of-living increase in 
old-age, survivors, and disability insurance benefits. For purposes of 
this section, the calendar year in which the contribution and benefit 
base is figured is called the determination year. The base figured in 
the determination year applies to wages paid after (and taxable years 
beginning after) the determination year.
    (b) Formula for figuring the contribution and benefit base. For 
wages paid

[[Page 288]]

after (and taxable years beginning after) the determination year, the 
contribution and benefit base is the larger of--
    (1) The contribution and benefit base in effect for the 
determination year; or
    (2) The amount determined by--
    (i) Multiplying the contribution and benefit base in effect for the 
determination year by the ratio of--
    (A) The average of the total wages (as described in paragraph (c) of 
this section) reported to the Secretary of the Treasury for the calendar 
year before the determination year to
    (B) The average of the total wages reported to the Secretary of the 
Treasury for the calendar year before the most recent calendar year in 
which an increase in the contribution and benefit base was enacted or a 
determination under this section resulting in an increase of the base 
was made; and
    (ii) Rounding the result of the multiplication, if not a multiple of 
$300, to--
    (A) The nearest multiple of $300; or
    (B) The next higher multiple of $300 if the result is a multiple of 
$150.
    (c) Average of the total wages. The average of the total wages means 
the amount equal to all remuneration reported as wages on Form W-2 to 
the Internal Revenue Service for all employees for income tax purposes 
plus contributions to certain deferred compensation plans described in 
section 209(k) of the Social Security Act (also reported on Form W-2), 
divided by the number of wage earners. If both distributions from and 
contributions to any such deferred compensation plan are reported on 
Form W-2, we will include only the contributions in the calculation of 
the average of the total wages. The reported remuneration and deferred 
compensation contributions include earnings from work not covered under 
social security and earnings from work covered under social security 
that are more than the annual wage limitation described in Sec. 
404.1047.

[45 FR 20075, Mar. 27, 1980, as amended at 55 FR 7309, Mar. 1, 1990; 57 
FR 1382, Jan. 14, 1992]



Sec. 404.1049  Payments under an employer plan or system.

    (a) Payments to, or on behalf of, you or any of your dependents 
under your employer's plan or system are excluded from wages if made 
because of your or your dependents'--
    (1) Medical or hospitalization expenses connected with sickness or 
accident disability; or
    (2) Death, except that the exclusion does not apply to payments for 
group-term life insurance to the extent that the payments are includible 
in the gross income of the employee under the Internal Revenue Code of 
1986, effective with respect to group-term life insurance coverage in 
effect after 1987 for employees whose employment, for the employer (or 
successor of that employer) providing the insurance coverage, does not 
end prior to 1989. Such payments are wages, however, if they are for 
coverage for an employee who was separated from employment prior to 
January 1, 1989, if the payments are for any period for which the 
employee is reemployed by the employer (or successor of that employer) 
after the date of separation.
    (b) Payments to you or your dependents under your employer's plan at 
or after the termination of your employment relationship because of your 
death or retirement for disability are excluded from wages.
    (c) Payments made after 1983 to you or your dependents under your 
employer's plan at or after the termination of your employment 
relationship because of retirement after reaching an age specified in 
the plan or in a pension plan of the employer are not excluded from 
wages unless--
    (1) The payments are to or from a trust or annuity plan of your 
employer as described in Sec. 404.1052; or
    (2) An agreement to retire was in effect on March 24, 1983, between 
you and your employer and the payments made after 1983 under a 
nonqualified deferred compensation plan (see Sec. 404.1042(f)) are 
based on services performed for your employer before 1984.
    (d) The plan or system established by the employer must provide for 
the employees generally or for a class or classes of employees. The plan 
or system may also provide for these employees' dependents. Payments 
under a plan or system established only for your dependents are not 
excluded from wages. The plan or system established

[[Page 289]]

by the employer can provide for payments on account of one or more of 
the items in paragraphs (a) and (b) of this section.
    (e) For purposes of this section, your dependents include your 
husband or wife, children, and any other members of your immediate 
family.
    (f) It does not make any difference that the benefit payments are 
considered in arriving at the amount of your pay or are required by the 
employment agreement.

[45 FR 20075, Mar. 27, 1980, as amended at 50 FR 1832, Jan. 14, 1985; 55 
FR 7310, Mar. 1, 1990; 55 FR 17530, Apr. 25, 1990]



Sec. 404.1050  Retirement payments.

    Payments made after 1983 to you (including any amount paid by an 
employer for insurance or annuities) on account of your retirement for 
age are not excluded from wages unless--
    (a) The payments are to or from a trust or annuity plan of your 
employer as described in Sec. 404.1052; or
    (b) The payments satisfy the requirements described in Sec. 
404.1049(c)(2).

[55 FR 7310, Mar. 1, 1990]



Sec. 404.1051  Payments on account of sickness or accident disability, or 
related medical or hospitalization expenses.

    (a) We do not include as wages any payment that an employer makes to 
you, or on your behalf, on account of your sickness or accident 
disability, or related medical or hospitalization expenses, if the 
payment is made more than 6 consecutive calendar months following the 
last calendar month in which you worked for that employer. Payments made 
during the 6 consecutive months are included as wages.
    (b) The exclusion in paragraph (a) of this section also applies to 
any such payment made by a third party (such as an insurance company). 
However, if you contributed to your employer's sick pay plan, that 
portion of the third party payments attributable to your contribution is 
not wages.
    (c) Payments of medical or hospitalization expenses connected with 
sickness or accident disability are excluded from wages beginning with 
the first payment only if made under a plan or system of your employer 
as explained in Sec. 404.1049(a)(1).
    (d) Payments under a worker's compensation law are not wages.

[55 FR 7310, Mar. 1, 1990]



Sec. 404.1052  Payments from or to certain tax-exempt trusts or payments 
under or into certain annuity plans.

    (a) We do not include as wages any payment made--
    (1) Into a tax-exempt trust or annuity plan by your employer on 
behalf of you or your beneficiary; or
    (2) From a tax-exempt trust or under an annuity plan to, or on 
behalf of, you or your beneficiary.
    (b) The trust must be exempt from tax under sections 401 and 501(a) 
of the Code, and the annuity plan must be a plan described in section 
403(a) of the Code when payment is made.
    (c) The exclusion does not apply to payments to an employee of the 
trust for work done as an employee of the trust.

[55 FR 7310, Mar. 1, 1990]



Sec. 404.1053  ``Qualified benefits'' under a cafeteria plan.

    We do not include as wages any qualified benefits under a cafeteria 
plan as described in section 125 of the Code if such payment would not 
be treated as wages without regard to such plan and it is reasonable to 
believe that (if section 125 applied for purposes of this section) 
section 125 would not treat any wages as constructively received. This 
includes any qualified benefit made to you, or on your behalf, pursuant 
to a salary reduction agreement between you and your employer. The 
Internal Revenue Service decides whether any plan is a cafeteria plan 
under section 125 of the Code and whether any benefit under the plan is 
a qualified benefit.

[55 FR 7310, Mar. 1, 1990]



Sec. 404.1054  Payments by an employer of employee's tax or employee's 
contribution under State law.

    (a) We exclude as wages any payment by an employer (described in 
paragraph (b) of this section) that is not deducted from the employee's 
salary (or for which reimbursement is not made by the employee) of 
either--

[[Page 290]]

    (1) The tax imposed by section 3101 of the Code (employee's share of 
Social Security tax); or
    (2) Any payment required from an employee under a State unemployment 
compensation law.
    (b) The payments described in paragraph (a) of this section are not 
included as wages only if they are made by an employer on behalf of an 
employee employed in--
    (1) Domestic service in the private home of the employer; or
    (2) Agricultural labor.

[55 FR 7310, Mar. 1, 1990]



Sec. 404.1055  Payments for agricultural labor.

    (a) When cash payments are not wages. We do not include as wages 
your cash payments in a calendar year after 1987 from an employer for 
agricultural labor (see Sec. 404.1056) if your employer's total 
expenditures for agricultural labor are less than $2500 in that year and 
your employer paid you less than $150 cash remuneration in that year for 
your agricultural labor. If you perform domestic service in the private 
home of an employer on a farm operated for profit, we do not include as 
wages the cash payments for those services if they are less than the 
applicable dollar threshold described in Sec. 404.1057(a).
    (b) Exclusions for noncash payments and payments for seasonal 
agricultural labor. (1) Noncash payments for agricultural labor are not 
wages.
    (2) Your cash payments in a calendar year from an employer for 
agricultural labor are not wages, irrespective of your employer's total 
annual expenditures for agricultural labor, if you are a hand harvest 
laborer (i.e., seasonal agricultural labor), and--
    (i) Your employer paid you less than $150 in that year;
    (ii) You are paid on a piece rate basis in an operation which has 
been, and is customarily and generally recognized in the region of 
employment as paying on a piece rate basis;
    (iii) You commute daily from your permanent residence to the farm on 
which you are so employed; and,
    (iv) You were employed in agriculture less than 13 weeks during the 
previous calendar year.

    Example: In 1988, A (not a hand harvest laborer) performs 
agricultural labor for X for cash pay of $144 in the year. X's total 
agricultural labor expenditures for 1988 are $2,450. Neither the $150 
cash-pay test nor the $2,500 expenditures test is met. Therefore, X's 
payments to A are not wages.

    (c) When cash-pay is creditable as wages. (1) If you receive cash 
pay from an employer for services which are agricultural labor and for 
services which are not agricultural labor, we count only the amounts 
paid for agricultural labor in determining whether cash payments equal 
or exceed $150. If the amounts paid are less than $150, we count only 
those amounts paid for agricultural labor in determining if the $2500 
expenditure test is met.

    Example: Employer X operates a store and also operates a farm. 
Employee A, who regularly works in the store, works on X's farm when 
additional help is required for the farm activities. In calendar year 
1988, X pays A $140 cash for agricultural labor performed in that year, 
and $2,260 for work in connection with the operation of the store. 
Additionally, X's total expenditures for agricultural labor in 1988 were 
$2,010. Since the cash payments by X to A in the calendar year 1988 for 
agricultural labor are less than $150, and total agricultural labor 
expenditures were under $2,500, the $140 paid by X to A for agricultural 
labor is not wages. The $2,260 paid for work in the store is wages.

    (2) The amount of cash pay for agricultural labor that is creditable 
to an individual is based on cash paid in a calendar year rather than on 
amounts earned during a calendar year.
    (3) If you receive cash pay for agricultural labor in any one 
calendar year from more than one employer, we apply the $150 cash-pay 
test and $2,500 total expenditures test to each employer.
    (d) Application of the $150 cash-pay and 20-day tests prior to 1988. 
(1) For the time period prior to 1988, we apply either the $150 a year 
cash-pay test or the 20-day test. Cash payments are wages if you receive 
$150 or more from an employer for agricultural labor or under the 20-day 
test if you perform agricultural labor for which cash pay is computed on 
a time basis on 20 or more days during a calendar year. For purposes of 
the 20-day test, the amount of the cash pay is immaterial, and it is 
immaterial whether you also receive

[[Page 291]]

payments other than cash or payments that are not computed on a time 
basis. If cash paid to you for agricultural labor is computed on a time 
basis, the payments are not wages unless they are paid in a calendar 
year in which either the 20-day test or the $150 cash-pay test is met.
    (2) [Reserved]

[57 FR 59914, Dec. 17, 1992, as amended at 61 FR 38367, July 24, 1996]



Sec. 404.1056  Explanation of agricultural labor.

    (a) What is agricultural labor. (1) If you work on a farm as an 
employee of any person, you are doing agricultural labor if your work 
has to do with--
    (i) Cultivating the soil;
    (ii) Raising, shearing, feeding, caring for, training or managing 
livestock, bees, poultry, fur-bearing animals or wildlife; or
    (iii) Raising or harvesting any other agricultural or horticultural 
commodity.
    (2) If you work on a farm as an employee of any person in connection 
with the production or harvesting of maple sap, the raising or 
harvesting of mushrooms, or the hatching of poultry, you are doing 
agricultural labor. If you work in the processing of maple sap into 
maple syrup or maple sugar you are not doing agricultural labor even 
though you work on a farm. Work in a mushroom cave or poultry hatchery 
is agricultural labor only if the cave or hatchery is operated as part 
of a farm.
    (3) If you work as an employee of the owner, tenant, or other 
operator of a farm, you are doing agricultural labor if most of your 
work is done on a farm and is involved with--
    (i) The operation, management, conservation, improvement, or 
maintenance of the farm or its tools or equipment (this may include work 
by carpenters, painters, mechanics, farm supervisors, irrigation 
engineers, bookkeepers, and other skilled or semiskilled workers); or
    (ii) Salvaging timber or clearing the land of brush and other debris 
left by a hurricane.
    (4) You are doing agricultural labor no matter for whom or where you 
work, if your work involves--
    (i) Cotton ginning;
    (ii) Operating or maintaining ditches, canals, reservoirs, or 
waterways, if they are used only for supplying and storing water for 
farm purposes and are not owned or operated for profit; or
    (iii) Producing or harvesting crude gum (oleoresin) from living 
trees or processing the crude gum into gum spirits of turpentine and gum 
resin (if the processing is done by the original producer).
    (5) Your work as an employee in the handling, planting, drying, 
packing, packaging, processing, freezing, grading, storing, or 
delivering to storage, to a market or to a carrier for transportation to 
market, of any agricultural or horticultural commodity is agricultural 
labor if--
    (i) You work for a farm operator or a group of farm operators (other 
than a cooperative organization);
    (ii) Your work involves the commodity in its raw or unmanufactured 
state; and
    (iii) The operator produced most of the commodity you work with 
during the period for which you are paid, or if you work for a group of 
operators, all of the commodity you work with during the pay period is 
produced by that group.
    (6) If you do nonbusiness work or domestic work in the private home 
of your employer, it is agricultural labor if you do the work on a farm 
operated for profit. However, if you do domestic work in the private 
home of your employer on a farm operated for profit, coverage of your 
earnings for the domestic services is determined in the same manner as 
earnings for any other domestic employee. Whether those earnings are 
covered will be determined based on the threshold described in Sec. 
404.1057(a) and the other coverage rules applicable to domestic service 
instead of the threshold applicable to other agricultural employees. A 
farm is not operated for profit if the employer primarily uses it as a 
residence or for personal or family recreation or pleasure. (See Sec. 
404.1057 for an explanation of domestic work and Sec. 404.1058(a) for 
an explanation of nonbusiness work.)
    (7) The term farm operator means an owner, tenant, or other person, 
in possession of and operating a farm.

[[Page 292]]

    (8) Work is not agricultural labor if it is done in the employ of a 
cooperative organization, which includes corporations, joint-stock 
companies, and associations treated as corporations under the Code. Any 
unincorporated group of operators is considered to be a cooperative 
organization if more than 20 operators are in the group at any time 
during the calendar year in which the work is done.
    (9) Processing work which changes the commodity from its raw or 
natural state is not agricultural labor. An example of this is the 
extraction of juices from fruits or vegetables. However, work in the 
cutting and drying of fruits or vegetables does not change the commodity 
from its raw or natural state and can be agricultural labor.
    (10) The term commodity means a single agricultural or horticultural 
product. For example, all apples are a commodity, while apples and 
oranges are two commodities.
    (11) Work connected with the commerical canning or freezing of a 
commodity is not agricultural labor nor is work done after the delivery 
of the commodity to a terminal market for distribution for consumption.
    (b) What is a farm. For purposes of social security coverage, farm 
includes a stock, dairy, poultry, fruit, fur-bearing animal, or truck 
farm, plantation, ranch, nursery, range or orchard. A farm also includes 
a greenhouse or other similar structure used mostly for raising 
agricultural or horticultural products. A greenhouse or other similar 
structure used mostly for other purposes such as display, storage, 
making wreaths and bouquets is not a farm.

[45 FR 20075, Mar. 27, 1980. Redesignated at 55 FR 7310, Mar. 1, 1990, 
as amended at 61 FR 38367, July 24, 1996]



Sec. 404.1057  Domestic service in the employer's home.

    (a) Payments for domestic service--(1) The applicable dollar 
threshold. We do not include as wages cash payments that an employer 
makes to you in any calendar year for domestic service in the employer's 
private home if the cash pay in that calendar year is less than the 
applicable dollar threshold. The threshold per employer is $1000 in 
calendar year 1995. In calendar years after 1995, this amount will be 
subject to adjustment in $100 increments based on the formula in section 
215(a)(1)(B)(i) of the Act to reflect changes in wages in the economy. 
Non-cash payments for domestic service are not counted as wages.
    (2) How evaluation is made. We apply the applicable dollar threshold 
described in paragraph (a)(1) of this section based on when the payments 
are made to you rather than when the pay is earned. To count toward the 
applicable dollar threshold, payment must be made to you in cash 
(including checks or other forms of money). We apply the applicable 
dollar threshold only to services performed as a domestic employee. If 
an employer pays you for performing other work, the cash pay for the 
nondomestic work does not count toward the applicable dollar threshold 
domestic service pay required for the remuneration to count as wages.
    (3) More than one domestic employer. The applicable dollar threshold 
as explained in paragraph (a)(1) of this section applies to each 
employer when you perform domestic services for more than one employer 
in a calendar year. The wages paid by more than one employer for 
domestic services may not be combined to decide whether you have been 
paid the applicable dollar threshold or more in a calendar year. The 
standard applies to each employee when an employer has two or more 
domestic employees during a calendar year.
    (4) Rounding dollar amounts for reporting. For social security 
purposes, an employer has an option in the way he or she reports cash 
wages paid for domestic service in his or her private home. The employer 
may report the actual wages paid or may round the wages to the nearest 
dollar. For purposes of rounding to the nearest dollar the cents are 
disregarded unless it amounts to one-half dollar or more, in which case 
it will be raised to $1. If an employer uses this method to report a 
cash payment to you for domestic services in his or her private home in 
a calendar year, he or she must use the same method to report payments 
to other employees in that year for similar services.

[[Page 293]]

    (b) What is domestic service. Domestic service is work of a 
household nature done by you in or about a private home of the employer. 
A private home is a fixed place of residence of a person or family. A 
separate dwelling unit maintained by a person in an apartment house, 
hotel, or other similar establishment may be a private home. If a house 
is used primarily for supplying board or lodging to the public as a 
business enterprise, it is not a private home. In general, services of a 
household nature in or about a private home include services performed 
by cooks, waiters, butlers, housekeepers, governessess, maids, valets, 
baby sitters, janitors, laundresses, furnacemen, caretakers, handymen, 
gardeners, footmen, grooms, and chauffeurs of automobiles for family 
use. Pay for these services does not come under this provision unless 
the services are performed in or about a private home of the employer. 
Pay for services not of a household nature, such as services performed 
as a private secretary, tutor, or librarian, even though performed in 
the employer's home, does not come under this provision.

[45 FR 20075, Mar. 27, 1980; 45 FR 25060, Apr. 14, 1980. Redesignated at 
55 FR 7310, Mar. 1, 1990, as amended at 61 FR 38367, July 24, 1996]



Sec. 404.1058  Special situations.

    (a) Payments for service not in course of employer's trade or 
business (nonbusiness work) and payments to certain home workers--(1) 
The $100 standard. We do not include as wages cash pay of less than $100 
paid to you in a calendar year by an employer for services not in the 
course of the employer's trade or business (nonbusiness work) and for 
services as a home worker as described in Sec. 404.1008(d).
    (2) How evaluation is made. (i) We apply the $100 standard for a 
calendar year based on when the payments are made to you rather than 
when the pay is earned. To count toward the $100 amount, payment must be 
in cash (including checks or other forms of money). The $100 standard 
applies to each employer when you perform services not in the course of 
the employer's trade or business or as a homeworker for two or more 
employers.
    (ii) If the employer has two or more employees, the standard applies 
to each employee. In applying the $100 standard, we disregard cash 
payments for any other type of services you perform for the employer.
    (iii) The noncash payments an employer pays you for services not in 
the course of the employer's trade or business are not wages even if the 
employer has paid you cash wages of $100 or more in the calendar year 
for services of that type.
    (iv) Amounts paid to you as a home worker as described in Sec. 
404.1008(d) are not wages unless you are paid $100 or more in cash in a 
calendar year. If you meet this test, any noncash payments you receive 
for your services also count as wages.
    (v) Amounts paid to you as a home worker in a common-law employment 
relationship (see Sec. 404.1007) count as wages regardless of amount or 
whether paid in cash or kind.
    (3) Definitions. The term services not in the course of the 
employer's trade or business (also called nonbusiness work) means 
services that do not promote or advance the trade or business of the 
employer. Services performed for a corporation do not come within this 
definition. A homeworker is described in Sec. 404.1008(c).
    (b) Nonprofit, income-tax exempt organizations--(1) The $100 
standard. We do not include as wages payments of less than $100 in a 
calendar year made by an employer that is an organization exempt from 
income tax under section 501 of the Code.
    (2) How evaluation is made. We apply the $100 standard for a 
calendar year based on when the payments are made to you rather than 
when the pay is earned. To figure the $100 amount, both cash and noncash 
payments are counted. The $100 standard applies to each employer where 
you render services for two or more nonprofit, income-tax exempt 
organizations during a calendar year. The $100 standard also applies to 
each of you where a nonprofit, income-tax exempt organization has two or 
more employees. In applying the standard, the tax-exempt status of the 
employer and not the nature or place of your services is controlling.

[[Page 294]]

    (c) Payments to members of the uniformed services--(1) The standard. 
We include as the wages of a member of the uniformed services--
    (i) Basic pay, as explained in paragraph (c)(3) of this section, for 
performing the services described in paragraph (a)(1) of Sec. 404.1019 
of this subpart; or
    (ii) Compensation, as explained in paragraph (c)(4) of this section, 
for performing the services described in paragraph (a)(2) of Sec. 
404.1019 of this subpart.
    (2) Wages deemed paid. These following provisions apply to members 
of the uniformed services who perform services as described in paragraph 
(a)(1) of Sec. 404.1019 of this subpart.
    (i) After 1977, a member of the uniformed services is considered to 
have been paid additional wages of $100 for each $300 of basic pay paid 
to the individual in a calendar year. The amount of additional wages 
deemed paid cannot be more than $1,200 for any calendar year. No wages 
may be deemed paid for units of basic pay which are less than $300.
    (ii) Before 1978, a member of the uniformed services is considered 
to have been paid additional wages of $300 for each calendar quarter 
after 1956 in which the individual is paid any amount of basic pay.
    (3) Basic pay. Basic pay means the monthly pay prescribed by 37 
U.S.C. 203 (Pay and Allowances for the Uniformed Services) for a member 
of the uniformed services on active duty or on active duty for training.
    (4) Compensation. ``Compensation'' refers to the remuneration 
received for services as a member of a uniformed service, based on 
regulations issued by the Secretary concerned (as defined in 37 U.S.C. 
101(5) under 37 U.S.C. 206(a), where such member is not entitled to the 
basic pay (as defined by paragraph (3) of this section).
    (d) Payments to volunteers and volunteer leaders in the Peace Corps. 
If you are a volunteer or volunteer leader under the provisions of the 
Peace Corps Act (22 U.S.C. 2501ff), payments for your services are wages 
with the exception of amounts in excess of the amounts certified as 
payable under section 5(c) or 6(1) of the Peace Corps Act. Amounts 
certified under those sections are considered to have been paid to the 
individual at the time the service is performed. See Sec. 404.1018(e) 
on coverage of these services.
    (e) Moving expenses. We do not include as wages amounts paid to, or 
on behalf of, an employee for moving expenses if it is reasonable to 
believe that a similar deduction is allowable under section 217 of the 
Code.
    (f) Payments by employer to survivor or estate of former employee. 
We do not include as wages any payment by an employer to a survivor or 
the estate of a former employee after the calendar year in which the 
employee died.
    (g) Payments to an employee who is entitled to disability insurance 
benefits. We do not include as wages any payments made by an employer to 
an employee if at the time such payment is made--
    (1) The employee is entitled to disability insurance benefits under 
the Act;
    (2) The employee's entitlement to such benefits began before the 
calendar year in which the employer's payment is made; and
    (3) The employee performed no work for the employer in the period in 
which the payments were paid by such employer (regardless of whether the 
employee worked in the period the payments were earned).
    (h) Tips. (1) We include as wages tips received by an employee if--
    (i) The tips are paid in cash; and
    (ii) The tips amount to $20 or more and are received in the course 
of employment by an employee in a calendar month.
    (2) Cash tips include checks and other forms of money. Tips received 
in a form other than cash, such as passes, tickets, or other goods are 
not wages. If an employee works for more than one employer in a calendar 
month, we apply the $20 tip test to work done for each employer.
    (i) Payments by employer under group legal services plan. We do not 
include as wages any contribution, payment, or service, provided by an 
employer under a qualified group legal services plan

[[Page 295]]

which is excludable from the gross income of an employee, or the 
employee's spouse or dependents, under section 120 of the Code.

[45 FR 20075, Mar. 27, 1980, as amended at 52 FR 29662, Aug. 11, 1987. 
Redesignated and amended at 55 FR 7310, Mar. 1, 1990; 57 FR 59914, Dec. 
17, 1992]



Sec. 404.1059  Deemed wages for certain individuals interned during World 
War II.

    (a) In general. Persons who were interned during any period of time 
from December 7, 1941, through December 31, 1946, by the United States 
Government at a place operated by the Government within the United 
States for the internment of United States citizens of Japanese ancestry 
are deemed to have been paid wages (in addition to wages actually paid) 
as provided in paragraph (c) of this section during any period after 
attaining age 18 while interned. This provision is effective for 
determining entitlement to, and the amount of, any monthly benefit for 
months after December 1972, for determining entitlement to, and the 
amount of, any lump-sum death payment in the case of a death after 
December 1972, and for establishing a period of disability.
    (b) Information needed to process deemed wages. Unless we have 
already made a determination on deemed wages for a period of internment 
of an individual, any person applying for a monthly benefit, a 
recalculation of benefits by reason of this section, or a lump-sum death 
payment, must submit certain information before the benefit or payment 
may be computed on the basis of deemed wages. This information is--
    (1) The place where the individual worked before internment;
    (2) The highest hourly wage before internment;
    (3) The place and date of internment;
    (4) Date of birth (if not previously furnished);
    (5) Whether or not another Federal benefit is being received based 
wholly or in part upon the period of internment; and
    (6) In the case of a woman, her maiden name.
    (c) Amount of deemed wages. The amount of wages which may be deemed 
is determined as follows:
    (1) Employed prior to internment. If the individual was employed 
before being interned, the deemed wages are the greater of--
    (i) The highest actual hourly rate of pay received for any 
employment before internment, multiplied by 40 for each full week during 
the period of internment; or
    (ii) The Federal minimum hourly rate in effect for the period of 
internment, multiplied by 40 for each full week during that period.
    (2) Self-employed or not employed prior to internment. If the 
individual was self-employed or was not employed before the period of 
internment, the deemed wages are the Federal minimum hourly rate in 
effect for that period, multiplied by 40 for each full week during the 
period.
    (d) When wages are not deemed. Wages are not deemed under this 
section--
    (1) For any period before the quarter in which the individual 
attained age 18; or
    (2) If a larger benefit is payable without the deemed wages; or
    (3) If a benefit based in whole or in part upon internment is 
determined by any agency of the United States to be payable under any 
other law of the United States or under a system set up by that agency. 
However, this exception does not apply in cases where the failure to 
receive deemed wages reduces the primary insurance amount by 50 cents or 
less.
    (e) Certification of internment. The certification concerning the 
internment is made by the Archivist of the United States or his or her 
representative. After the internment has been verified, wages are deemed 
to have been paid to the internee.

[45 FR 20075, Mar. 27, 1980, as amended at 52 FR 29662, Aug. 11, 1987. 
Redesignated at 55 FR 7310, Mar. 1, 1990]

[[Page 296]]



Sec. 404.1060  [Reserved]

                             Self-Employment



Sec. 404.1065  Self-employment coverage.

    For an individual to have self-employment coverage under social 
security, the individual must be engaged in a trade or business and have 
net earnings from self-employment that can be counted as self-employment 
income for social security purposes. The rules explaining whether you 
are engaged in a trade or business are in Sec. Sec. 404.1066 through 
404.1077. What are net earnings from self-employment is discussed in 
Sec. Sec. 404.1080 through 404.1095. Section 404.1096 describes the net 
earnings from self-employment that are counted as self-employment income 
for social security purposes. See Sec. 404.1913 for the effect of a 
totalization agreement on self-employment coverage. An agreement may 
exempt an activity from coverage as well as extend coverage to an 
activity.

[50 FR 36574, Sept. 9, 1985]



Sec. 404.1066  Trade or business in general.

    For you to be covered as a self-employed person for social security 
purposes, you must be engaged in a trade or business. You can carry on a 
trade or business as an individual or as a member of a partnership. With 
some exceptions, the term trade or business has the same meaning as it 
does when used in section 162 of the Code.



Sec. 404.1068  Employees who are considered self-employed.

    (a) General. Although we generally exclude services performed by 
employees from the definition of trade or business, certain types of 
services are considered a trade or business even though performed by 
employees. If you perform any of the services described in paragraphs 
(b) through (f) of this section, you are self-employed for social 
security purposes. Certain other services described in Sec. 404.1071 
(relating to ministers and members of religious orders) and Sec. 
404.1073 (relating to certain public officers) may be considered a trade 
or business even though performed by employees.
    (b) Newspaper vendors. If you have attained age 18 and perform 
services as a newspaper vendor that are described in Sec. 404.1030(b), 
you are engaged in a trade or business.
    (c) Sharefarmers. If you perform services as a sharefarmer that are 
described in Sec. 404.1017, you are engaged in a trade or business.
    (d) Employees of a foreign government, an instrumentality wholly 
owned by a foreign government, or an international organization. If you 
are a United States citizen and perform the services that are described 
in Sec. 404.1032, Sec. 404.1033(a), or Sec. 404.1034(a), you are 
engaged in a trade or business if the services are performed in the 
United States and are not covered as employment based upon Sec. 
404.1034(c).
    (e) Certain fishermen. If you perform services as a fisherman that 
are described in Sec. 404.1031, you are engaged in a trade or business.
    (f) Employees of a church or church-controlled organization that has 
elected to exclude employees from coverage as employment. If you perform 
services that are excluded from employment as described in Sec. 
404.1026, you are engaged in a trade or business. Special rules apply to 
your earnings from those services which are known as church employee 
income. If you are paid $100 or more in a taxable year by an employer 
who has elected to have its employees excluded, those earnings are self-
employment income (see Sec. 404.1096(c)(1)). In figuring your church 
employee income you may not reduce that income by any deductions 
attributable to your work. Your church employee income and deductions 
may not be taken into account in determining the amount of other net 
earnings from self-employment. Effective for taxable years beginning on 
or after January 1, 1990, your church employee income is exempt from 
self-employment tax under the conditions set forth for members of 
certain religious groups (see Sec. 404.1075).

[45 FR 20075, Mar. 27, 1980, as amended at 50 FR 36574, Sept. 9, 1985; 
58 FR 64889, Dec. 10, 1993; 61 FR 38367, July 24, 1996]

[[Page 297]]



Sec. 404.1069  Real estate agents and direct sellers.

    (a) Trade or business. If you perform services after 1982 as a 
qualified real estate agent or as a direct seller, as defined in section 
3508 of the Code, you are considered to be engaging in a trade or 
business.
    (b) Who is a qualified real estate agent. You are a qualified real 
estate agent as defined in section 3508 of the Code if you are a 
salesperson and--
    (1) You are a licensed real estate agent;
    (2) Substantially all of the earnings (whether or not paid in cash) 
for the services you perform as a real estate agent are directly related 
to sales or other output (including the performance of services) rather 
than to the number of hours worked; and
    (3) Your services are performed under a written contract between 
yourself and the person for whom the services are performed which 
provides you will not be treated as an employee with respect to these 
services for Federal tax purposes.
    (c) Who is a direct seller. You are a direct seller as defined in 
section 3508 of the Code if--
    (1) You are engaged in the trade or business of selling (or 
soliciting the sale of) consumer products--
    (i) To any buyer on a buy-sell basis, a deposit-commission basis, or 
any similar basis which the Secretary of the Treasury prescribes by 
regulations, for resale (by the buyer or any other person) in the home 
or in other than a permanent retail establishment; or
    (ii) In the home or in other than a permanent retail establishment; 
and
    (2) Substantially all of your earnings (whether or not paid in cash) 
for the performance of these services are directly related to sales or 
other output (including the performance of services) rather than to the 
number of hours worked; and
    (3) Your services are performed under a written contract between 
yourself and the person for whom the services are performed which 
provides you will not be treated as an employee with respect to these 
services for Federal tax purposes.

[48 FR 40515, Sept. 8, 1983]



Sec. 404.1070  Christian Science practitioners.

    If you are a Christian Science practitioner, the services you 
perform in the exercise of your profession are a trade or business 
unless you were granted an exemption from coverage under section 1402(e) 
of the Code, and you did not revoke such exemption in accordance with 
section 1704(b) of the Tax Reform Act of 1986. An exemption cannot be 
granted if you filed a valid waiver certificate under the provisions 
that apply to taxable years ending before 1968.

[55 FR 7311, Mar. 1, 1990]



Sec. 404.1071  Ministers and members of religious orders.

    (a) If you are a duly ordained, commissioned, or licensed minister 
of a church, or a member of a religious order who has not taken a vow of 
poverty, the services you perform in the exercise of your ministry or in 
the exercise of duties required by the order (Sec. 404.1023 (c) and 
(e)) are a trade or business unless you filed for and were granted an 
exemption from coverage under section 1402(e) of the Code, and you did 
not revoke such exemption in accordance with section 1704(b) of the Tax 
Reform Act of 1986. An exemption cannot be granted if you filed a valid 
waiver certificate under the provisions that apply to taxable years 
ending before 1968.
    (b) If you are a member of a religious order and have taken a vow of 
poverty, the services you perform in the exercise of your duties 
required by the order may be covered as employment. (See Sec. 404.1023 
(a) and (e)).

[45 FR 20075, Mar. 27, 1980, as amended at 55 FR 7311, Mar. 1, 1990]



Sec. 404.1073  Public office.

    (a) General. The performance of the functions of a public office is 
not a trade or business except under the circumstances explained in 
paragraph (b) of this section. If you are an officer of a State or 
political subdivision, you are considered as employee of the State or 
political subdivision.
    (b) State and local governmental employees paid by fees--(1) 
Voluntary coverage under section 218 of the Act. The

[[Page 298]]

services of employees of States and political subdivisions, including 
those in positions paid solely on a fee-basis, may be covered as 
employment by a Federal-State agreement under section 218 of the Act 
(see subpart M of this part). States, when entering into these 
agreements, have the option of excluding under the agreement coverage of 
services in positions paid solely by fees. If you occupy a position paid 
solely on a fee-basis and the State has not covered your services under 
section 218 of the Act, you are considered to be engaged in a trade or 
business.
    (2) Mandatory old-age, survivors, disability, and hospital insurance 
coverage. Beginning with services performed after July 1, 1991, Social 
Security coverage (old-age, survivors, disability, and hospital 
insurance) is mandatory, with certain exceptions, for services performed 
by employees of a State, a political subdivision of a State, or of a 
wholly owned instrumentality of one or more of the foregoing, if the 
employees are not members of a retirement system of the State, political 
subdivision, or instrumentality. Among the exclusions from such 
mandatory coverage is service performed by an employee in a position 
compensated solely on a fee-basis which is treated pursuant to section 
211(c)(2)(E) of the Act as a trade or business for purposes of inclusion 
of such fees in the net earnings from self-employment.
    (3) If you are a notary public, you are not a public officer even 
though you perform a public function. Your services as a notary public 
are not covered for social security purposes.

[45 FR 20075, Mar. 27, 1980, as amended at 57 FR 59910, Dec. 17, 1992]



Sec. 404.1074  Farm crew leader who is self-employed.

    If you are a farm crew leader and are deemed the employer of the 
workers as described in Sec. 404.1010, we consider you to be engaged in 
a trade or business. This includes services performed in furnishing 
workers to perform agricultural labor for others, as well as services 
performed as a member of the crew.



Sec. 404.1075  Members of certain religious groups opposed to insurance.

    (a) You may file an application with the Internal Revenue Service 
for exemption from social security self-employment tax if--
    (1) You are a member of a recognized religious sect or division of 
the sect; and
    (2) You adhere to the tenets or teachings of the sect or division of 
the sect and for this reason are conscientiously opposed to receiving 
benefits from any private or public insurance that--
    (i) Makes payments in the event of death, disability, old age, or 
retirement; or
    (ii) Makes payments toward the cost of, or provides services for, 
medical care (including the benefits of any insurance system established 
by the Act).
    (b) Your application must be filed under the rules described in 26 
CFR 1.1402(h). An application must contain or be accompanied by the 
applicant's waiver of all benefits and payments under title II and part 
A of title XVIII of the Act. See Sec. 404.305 for the effect of the 
filing of the waiver and the granting of the exemption.
    (c) Regardless of whether you meet all these conditions, your 
application for exemption will not be approved unless we find that--
    (1) The sect or division of the sect has established tenets or 
teachings which cause you to be conscientiously opposed to the types of 
insurance benefits described in paragraph (a)(2) of this section;
    (2) For a substantial period of time it has been the practice for 
members of the sect or division of the sect to make provision for their 
dependent members which is reasonable in view of their general level of 
living; and
    (3) The sect or division of the sect has been in existence 
continuously since December 31, 1950.
    (d) Your application for exemption will be approved by the Internal 
Revenue Service only if no benefit or other payment under title II or 
part A of title XVIII of the Act became payable or, but for section 203 
or section 222(b) of the Act, would have become payable, to you or on 
your behalf at or before

[[Page 299]]

the time of the filing of your application for exemption.
    (e) The tax exemption ceases to be effective for any taxable year 
ending after the time you do not meet the requirements of paragraph (a) 
of this section or after the time we find the religious sect or division 
of the sect of which you are a member no longer meets the requirements 
of paragraph (c) of this section. If your tax exemption ceases to be 
effective, your waiver of the right to receive Social Security and 
Medicare part A benefits will also no longer be effective. Benefits may 
be payable based upon your wages for and after the calendar year 
following the calendar year in which the event occurred upon which the 
cessation of the exemption is based. Benefits may be payable based upon 
your self-employment income for and after the taxable year in which the 
event occurred upon which the cessation of the exemption is based.

[45 FR 20075, Mar. 27, 1980, as amended at 58 FR 64890, Dec. 10, 1993]



Sec. 404.1077  Individuals under railroad retirement system.

    If you are an employee or employee representative as defined in 
section 3231 (b) and (c) of the Code, your work is not a trade or 
business. Your services are covered under the railroad retirement 
system.

                         Self-Employment Income



Sec. 404.1080  Net earnings from self-employment.

    (a) Definition of net earnings from self-employment. If you are 
self-employed, you must first determine the amount of your net earnings 
from self-employment before figuring the amount of your earnings that 
count for social security purposes. Some of your earnings may not be 
included as net earnings from self-employment even though they are 
taxable for income tax purposes. If you are an employee but we consider 
you to be self-employed for social security purposes, you must figure 
your earnings as though you were actually self-employed unless you work 
for a church or church-controlled organization that has exempted its 
employees (see Sec. 404.1068(f)). Subject to the special rules in 
Sec. Sec. 404.1081 through 404.1095, the term net earnings from self-
employment means--
    (1) Your gross income, as figured under subtitle A of the Code, from 
any trade or business you carried on, less deductions attributed to your 
trade or business that are allowed by that subtitle; plus
    (2) Your distributive share of income (or loss) from a trade or 
business carried on by a partnership of which you are a member, as 
described in paragraph (b) of this section.
    (b) Income or loss from a partnership. (1) Your distributive share 
(whether or not actually distributed) of the income or loss from any 
trade or business carried on by a partnership of which you are a member, 
other than as a limited partner, is determined under section 704 of the 
Code.
    (2) If you are a limited partner, your distributive share is 
included in your net earnings from self-employment if--
    (i) The amount is payable to you for services you render to or on 
behalf of the partnerships; and
    (ii) It is a guaranteed payment described in section 707(c) of the 
Code.
    (3) You are a limited partner if your financial liability for the 
obligations of the partnership is limited to the amount of your 
financial investment in the partnership. Generally, you will not have to 
perform services in the operation of, or participate in the control of, 
the business carried on by the partnership for the taxable year 
involved.
    (c) Reporting methods. Your gross income from a trade or business 
includes the gross income you received (under the cash method) or that 
accrued to you (under the accrual method) from the trade or business in 
the taxable year. It is immaterial that the income may be attributable 
in whole or in part to services you rendered or other acts you performed 
in a prior taxable year.
    (d) What is a taxable year. (1) The term taxable year means--
    (i) Your annual accounting period on which you regularly figure your 
income in keeping your books; or
    (ii) A short period resulting from your death before the end of your 
annual accounting period or from a change of your annual accounting 
period.

[[Page 300]]

    (2) The term annual accounting period means--
    (i) A calendar year, consisting of 12 months ending on December 31; 
or
    (ii) A fiscal year, consisting of--
    (A) 12 months ending on the last day of any month other than 
December; or
    (B) A period, if elected under section 441 of the Code, that varies 
from 52 to 53 weeks and always ends on the same day of the week that 
occurs last in a calendar month or nearest to the last day of the 
calendar month.
    (3) Your taxable year for figuring self-employment income is the 
same as your taxable year for the purposes of subtitle A of the Code. 
Your taxable year is a calendar year if--
    (i) You keep no books;
    (ii) You have no annual accounting period; or
    (iii) You have an annual accounting period that differs from the 
definition of fiscal year as described in paragraph (d)(2)(ii) of this 
section.

[45 FR 20075, Mar. 27, 1980, as amended at 50 FR 36574, Sept. 9, 1985]



Sec. 404.1081  General rules for figuring net earnings from self-employment.

    (a) Determining net earnings. (1) In determining your gross income 
and the deductions attributable to your trade or business for the 
purpose of determining your net earnings from self-employment, the 
provisions that apply to the taxes imposed by sections 1 and 3 of the 
Code are used.
    (2) If you use the accrual method of accounting to figure your 
taxable income from a trade or business, you must use the same method in 
determining your net earnings from self-employment.
    (3) If you are engaged in a trade or business of selling property on 
the installment plan and elect, under the provisions of section 453 of 
the Code, to use the installment method of accounting in figuring your 
income, you must use the installment method in determining your net 
earnings from self-employment.
    (4) Any income which can be excluded from gross income under any 
provision of subtitle A of the Code cannot be counted in determining 
your net earnings from self-employment, unless--
    (i) You are a resident of Puerto Rico (see Sec. 404.1089);
    (ii) You are a minister or member of a religious order (see Sec. 
404.1091);
    (iii) You are a United States citizen or resident engaged in a trade 
or business outside the United States (see Sec. 404.1092); or
    (iv) You are a citizen of, or have income from sources within, 
certain possessions of the United States (see Sec. 404.1093).
    (b) Trade or business carried on. You must carry on the trade or 
business either personally or through agents or employees. Income from a 
trade or business carried on by an estate or trust is not included in 
determining the net earnings from self-employment of the individual 
beneficiaries of the estate or trust.
    (c) Aggregate net earnings. If you are engaged in more than one 
trade or business, your net earnings from self-employment consist of the 
total of the net income and losses of all the trades or businesses you 
carry on. A loss in one trade or business you carry on offsets the 
income from another trade or business.
    (d) Partnerships. When you have net earnings from self-employment 
from a partnership as described in Sec. 404.1080 (a) and (b), those net 
earnings are combined with your other net earnings from self-employment 
in determining your total net earnings from self-employment for the 
taxable year.
    (e) Different taxable years. If you are a partner and your taxable 
year is different from that of the partnership, you must include, in 
figuring your net earnings from self-employment, your distributive share 
of the income or loss of the partnership for its taxable year ending 
with or within your taxable year. For the special rule in case of the 
termination of a partner's taxable year as a result of death, see Sec. 
404.1087.
    (f) Meaning of partnerships. A partnership for social security 
purposes is one that is recognized as a partnership for income tax 
purposes. For income tax purposes, the term partnership includes not 
only a partnership as known under common law, but also a syndicate, 
group, pool, joint venture, or other unincorporated organization that 
carries

[[Page 301]]

on any trade or business, financial operation, or venture, and which is 
not a trust, estate, or a corporation.
    (g) Proprietorship taxed as domestic corporation. If you are a 
proprietor of an unincorporated business enterprise and have elected to 
be taxed as a domestic corporation, you must figure your net earnings 
from self-employment without regard to the election you have made.

[45 FR 20075, Mar. 27, 1980, as amended at 50 FR 36574, Sept. 9, 1985]



Sec. 404.1082  Rentals from real estate; material participation.

    (a) In general. Your rentals from real estate and from personal 
property leased with the real estate (including rentals paid in crop 
shares) and the deductions attributable to the rentals are excluded in 
figuring your net earnings from self-employment, unless you receive the 
rentals in the course of a trade or business as a real estate dealer. If 
you are an owner or lessee of land, rentals paid in crop shares include 
income you get under an agreement with another person if the arrangement 
provides for the following:
    (1) The other person will produce agricultural or horticultural 
commodities on the land.
    (2) The commodities produced, or the income from their sale, will be 
divided between you and the other person.
    (3) The amount of your share depends on the amount of the 
commodities produced.
    (b) Real estate dealers. (1) You are a real estate dealer if you are 
engaged in the business of selling real estate to customers for profit.
    (2) If you merely hold real estate for investment or speculation and 
receive rental income from it, you are not considered a real estate 
dealer.
    (3) If you are a real estate dealer, but also hold real estate for 
investment or speculation in addition to real estate you hold for sale 
to customers, only the rental income from the real estate held for sale 
to customers and the deductions attributable to it are included in 
determining your net earnings from self-employment. The rental income 
from real estate you hold for investment or speculation and the 
deductions attributable to it are not counted in figuring your net 
earnings from self-employment.
    (c) Special rule for farm rental income--(1) In general. If you own 
or lease land, any income you derive from it is included in figuring 
your net earnings from self-employment if--
    (i) The income results from an arrangement between you and another 
person which provides for the other person to produce agricultural or 
horticultural commodities on the land that you own or lease and for you 
to materially participate in the production or the management of the 
production of the agricultural or horticultural commodities; and
    (ii) You actually do materially participate.
    (2) Nature of arrangement. (i) The arrangement between you and the 
other person may be either oral or written. It must provide that the 
other person will produce one or more agricultural or horticultural 
commodities and that you will materially participate in the production 
or the management of the production of the commodities.
    (ii) The term production, refers to the physical work performed and 
the expenses incurred in producing a commodity. It includes activities 
like the actual work of planting, cultivating, and harvesting crops, and 
the furnishing of machinery, implements, seed, and livestock.
    (iii) The term management of the production, refers to services 
performed in making managerial decisions about the production of the 
crop, such as when to plant, cultivate, dust, spray, or harvest, and 
includes advising and consulting, making inspections, and making 
decisions on matters, such as rotation of crops, the type of crops to be 
grown, the type of livestock to be raised, and the type of machinery and 
implements to be furnished.
    (3) Material participation. (i) If you show that you periodically 
advise or consult with the other person, who under the rental 
arrangement produces the agricultural or horticultural commodities, and 
also show that you periodically inspect the production activities on the 
land, you will have presented strong evidence that you are materially 
participating.

[[Page 302]]

    (ii) If you also show that you furnish a large portion of the 
machinery, tools, and livestock used in the production of the 
commodities, or that you furnish or advance monies, or assume financial 
responsibility, for a substantial part of the expense involved in the 
production of the commodities, you will have established that you are 
materially participating.
    (4) Employees or agents. We consider any farm rental arrangement 
entered into by your employee or agent and another person to be an 
arrangement entered into by you. However, we do not consider the 
services of an employee or agent as your services in determining the 
extent to which you have participated in the production or management of 
production of a commodity.
    (5) Examples.

    Example 1. After the death of her husband, Ms. A rents her farm, 
together with its machinery and equipment, to B for one-half of the 
proceeds from the commodities produced on the farm by B. It is agreed 
that B will live in the tenant house on the farm and be responsible for 
the overall operation of the farm, such as planting, cultivating, and 
harvesting the field crops, caring for the orchard and harvesting the 
fruit and caring for the livestock and poultry. It also is agreed that 
Ms. A will continue to live in the farm residence and help B operate the 
farm. Under the agreement it is expected that Ms. A will regularly 
operate and clean the cream separator and feed the poultry flock and 
collect the eggs. When possible she will assist B in such work as 
spraying the fruit trees, penning livestock, culling the poultry, and 
controlling weeds. She will also assist in preparing the meals when B 
engages seasonal workers. The agreement between Ms. A and B clearly 
provides that she will materially participate in the overall production 
operations to be conducted on her farm by B. In actual practice, Ms. A 
regularly performs those services. The regularly performed services are 
material to the production of an agricultural commodity, and the 
services performed are material to the production operations to which 
they relate. The furnishing of a substantial portion of the farm 
machinery and equipment also supports the conclusion that Ms. A has 
materially participated. Accordingly, the rental income Ms. A receives 
from her farm should be included in her net earnings from self-
employment.
    Example 2. G owns a fully-equipped farm which he rents to H under an 
arrangement which provides that G will materially participate in the 
management of the production of crops raised on the farm under the 
arrangement. G lives in town about 5 miles from the farm. About twice a 
month he visits the farm and looks over the buildings and equipment. G 
may occasionally, in an emergency, discuss with H some phase of a crop 
production activity. In effect, H has complete charge of the management 
of farming operations regardless of the understanding between him and G. 
Although G pays one-half of the cost of the seed and fertilizer and is 
charged for the cost of materials purchased by H to make all necessary 
repairs, G's activities are not material in the crop production 
activities. Accordingly, G's income from the crops is not included in 
net earnings from self-employment.

    (d) Rental income from living quarters--(1) No services provided for 
occupants. Payments you receive for renting living quarters in a private 
residence, duplex, or multiple-housing unit are generally rental income 
from real estate. Except in the case of real estate dealers, these 
payments are excluded in determining net earnings from self-employment, 
even if the payments are in part attributable to personal property 
furnished under the lease.
    (2) Services provided for occupants. (i) Payments you receive for 
renting living quarters where services are also provided to the 
occupant, as in hotels, boarding houses, or apartment houses furnishing 
hotel services, or in tourist camps or tourist homes, are included in 
determining your net earnings from self-employment. Any payments you 
receive for the use of space in parking lots, warehouses, or storage 
garages are also included in determining your net earnings from self-
employment.
    (ii) Generally, we consider services to be provided to the occupant 
if they are primarily for the occupant's convenience and are other than 
those usually provided in connection with the rental of rooms or other 
space for occupancy only. We consider the supplying of maid service to 
be a service provided to the occupant. However, we do not consider the 
furnishing of heat and light, the cleaning of public entrances, exits, 
stairways, and lobbies and the collection of trash, as services provided 
to the occupant.

    Example: A owns a building containing four apartments. During the 
taxable year, A received $1,400 from apartments numbered 1 and 2, which 
are rented without services provided to the occupants, and $3,600 from 
apartments numbered 3 and 4, which are

[[Page 303]]

rented with services provided. A's fixed expenses for the four 
apartments are $1,200 during the taxable year. In addition, A has $500 
of expenses attributable to the services provided to the occupants of 
apartments 3 and 4. In determining his net earnings from self-
employment, A includes the $3,600 received from apartments 3 and 4, and 
the expenses of $1,100 ($500 plus one-half of $1,200) attributable to 
them. The rentals and expenses attributable to apartments 1 and 2 are 
excluded. Therefore, A has $2,500 of net earnings from self-employment 
from the building for the taxable year.

    (e) Treatment of business income which includes rentals from real 
estate. If an individual or a partnership is engaged in a trade or 
business other than real estate, and part of the income is rentals from 
real estate, only that part of the income which is not rentals and the 
expenses attributable to that portion are included in determining net 
earnings from self-employment.



Sec. 404.1083  Dividends and interest.

    (a) The dividends you receive on shares of stock are excluded in 
determining your net earnings from self-employment, unless you are a 
dealer in stocks and securities and receive the dividends in the course 
of your trade or business.
    (b) The interest you receive on a bond, debenture, note, 
certificate, or other evidence of indebtedness issued with interest 
coupons or in registered form by any corporation (including one issued 
by a government or political subdivision) is excluded in determining 
your net earnings from self-employment, unless you are a dealer in 
stocks and securities and receive the interest in the course of your 
trade or business.
    (c) If you hold stocks or securities for investment or speculation 
purposes, any dividends and interest you receive that are excludable 
under paragraphs (a) and (b) of this section are excluded in determining 
your net earnings from self-employment, whether or not you are a dealer 
in stocks and securities.
    (d) A dealer in stocks or securities is a merchant with an 
established place of business who is regularly engaged in the business 
of purchasing stocks or securities and reselling them to customers. The 
dealer, as a merchant, buys stocks or securities and sells them to 
customers with a view to making a profit. Persons who buy and sell or 
hold stocks or securities for investment or speculation, regardless of 
whether the buying or selling constitutes a trade or business, are not 
dealers in stocks or securities.

[45 FR 20075, Mar. 25, 1980; 45 FR 25060, Apr. 14, 1980]



Sec. 404.1084  Gain or loss from disposition of property; capital assets; 
timber, coal, and iron ore; involuntary conversion.

    (a) If you are engaged in a trade or business, you must, in 
determining your net earnings from self-employment, exclude any gain or 
loss--
    (1) That is considered a gain or loss from the sale or exchange of a 
capital asset;
    (2) From the cutting of timber or from the disposal of timber or 
coal, even if held primarily for sale to customers, if section 631 of 
the Code applies to the gain or loss;
    (3) From the disposal of iron ore mined in the United States, even 
if held primarily for sale to customers, if section 631 of the Code 
applies to the gain or loss; and
    (4) From the sale, exchange, involuntary conversion, or other 
disposition of property that is not--
    (i) Stock in trade or other property of a kind which would properly 
be included in inventory if on hand at the close of the taxable year; or
    (ii) Property held primarily for sale to customers in the ordinary 
course of a trade or business;
    (b) For purposes of paragraph (a)(4) of this section, it is 
immaterial whether a gain or loss is treated as a capital gain or as an 
ordinary gain or loss for purposes other than determining earnings from 
self-employment.
    (c) For purposes of paragraph (a)(4) of this section--
    (1) The term involuntary conversion means a compulsory or unintended 
change of property into other property or money as a result of such 
things as destruction, theft or seizure; and
    (2) The term other disposition includes destruction or loss by fire, 
theft, storm, shipwreck, or other casualty, even though there is no 
change of the property into other property or money.


[[Page 304]]


    Example: During the taxable year 1976, A, who owns a grocery store, 
had a net profit of $1,500 from the sale of groceries and a gain of $350 
from the sale of a refrigerator case. During the same year, he had a 
loss of $2,000 as a result of damage by fire to the store building. In 
figuring taxable income for income tax purposes, all of these items are 
considered. In determining net earnings from self-employment, however, 
only the $1,500 of profit derived from the sale of groceries is 
included. The $350 gain and the $2,000 loss are excluded.



Sec. 404.1085  Net operating loss deduction.

    When determining your net earnings from self-employment, you 
disregard the deduction provided by section 172 of the Code that relates 
to net operating losses sustained in years other than the taxable year.



Sec. 404.1086  Community income.

    (a) In case of an individual. (1) If community property laws apply 
to income that an individual derives from a trade or business (other 
than a trade or business carried on by a partnership), all of the gross 
income and the deductions attributable to the income are generally 
treated as the gross income and deductions of the husband. However, if 
the wife exercises substantially all of the management and control of 
that trade or business, all of the gross income and deductions are 
treated as the gross income and deductions of the wife.
    (2) The term management and control means management and control in 
fact, not the management and control given to the husband under the 
community property laws. For example, a wife who operates a beauty 
parlor without any significant help from her husband will be considered 
as having substantially all of the management and control of the 
business, despite the provision of any community property law giving the 
husband the right of management and control of community property. The 
income and deductions from the operations of the beauty parlor are 
considered the income and deductions of the wife.
    (b) In case of a partnership. Even though only a portion of a 
partner's distributive share of the income or loss from a trade or 
business carried on by a partnership is community income or loss under 
the community property laws applicable to the share, all of the 
distributive share is included in figuring the net earnings from self-
employment of that partner. No part of the share is taken into account 
in figuring the net earnings from self-employment of the spouse of the 
partner. In any case in which both spouses are members of the same 
partnership, the distributive share of the income or loss of each spouse 
is included in figuring the net earnings from self-employment of that 
spouse.



Sec. 404.1087  Figuring partner's net earnings from self-employment for 
taxable year which ends as a result of death.

    (a) General. In the case of a deceased partner whose taxable year 
ends because of death, the deceased partner's net earnings from self-
employment includes the amount of his or her distributive share of 
partnership ordinary income or loss for the partnership's taxable year 
that is attributable to an interest in the partnership through the month 
of death.
    (b) Computation. (1) The deceased partner's distributive share of 
partnership ordinary income or loss for the partnership taxable year in 
which death occurred is determined by applying the rules contained in 
paragraphs (d) and (f) of Sec. 404.1081.
    (2) The portion of the distributive share to be included in the 
deceased partner's net earnings from self-employment for his or her last 
taxable year is determined by treating the ordinary income or loss 
constituting the distributive share as having been realized or sustained 
ratably over the partnership taxable year during which the deceased 
partner had an interest in the partnership and during which the deceased 
partner's estate, or any other person succeeding by reason of the death 
to rights to his partnership interest, held an interest in the 
partnership.
    (c) Deceased partner's distributive share. A deceased partner's 
distributive share includes the distributive share of the estate or of 
any other person succeeding to the interest of a deceased partner. It 
does not include any share attributable to a partnership interest

[[Page 305]]

that was not held by the deceased partner at the time of death. If a 
deceased partner's estate should acquire an interest in a partnership in 
addition to the interest to which it succeeded upon the death of the 
deceased partner, the amount of the distributive share attributable to 
the additional interest acquired by the estate is not included in 
computing the deceased partner's distributive share of the partnership's 
ordinary income or loss for the partnership taxable year.
    (d) Options available to farmers. In determining the applicability 
of the optional method of figuring net earnings from self-employment to 
a member of a farm partnership it is necessary to determine the 
partner's distributive share of partnership gross income or distributive 
share of income described in section 702(a)(8) of the Code.



Sec. 404.1088  Retirement payment to retired partners.

    (a) In general. If you are a retired partner, in figuring your net 
earnings from self-employment you must exclude payments made to you on a 
periodic basis by a partnershp on account of your retirement and which 
are to continue until your death. This exclusion applies only if the 
payments are made under a written plan which meets the requirements set 
out in 26 CFR 1.1402(a)-(17) and the conditions in paragraph (b) of this 
section are met. The necessary requirements and conditions must be met 
throughout the entire partnership's taxable year for the payments to be 
excluded so that either all or none of the payments are excluded.
    (b) Other conditions. You must have been paid your full share of the 
partnership's capital before the close of the partnership's taxable year 
in which retirement payments are made. Also, no member of the 
partnership can have any financial obligations to you (in his or her 
capacity as a partner) except to make the retirement payments. Lastly, 
you cannot perform any services for the partnership in the partnership's 
taxable year which falls wholly or partially in your taxable year in 
which you receive the retirement payments.

    Example: D, a partner in the DEF partnership, retired from the 
partnership as of December 31, 1976. The taxable year of both D and the 
partnership is the calendar year. During the partnership's taxable year 
ending December 31, 1977, D rendered no service to any trade or business 
carried on by the partnership. On or before December 31, 1977, all 
obligations (other than retirement payments under the plan) from the 
other partners to D were liquidated, and D's share of the capital of the 
partnership was paid to him. Retirement payments received by D under the 
partnership's plan in his taxable year ending December 31, 1977, are 
excluded in determining net earnings from self-employment (if any) for 
that taxable year.



Sec. 404.1089  Figuring net earnings for residents and nonresidents of 
Puerto Rico.

    (a) Residents. If you are a resident of Puerto Rico, whether or not 
you are an alien, a citizen of the United States, or a citizen of Puerto 
Rico, you must figure your net earnings from self-employment in the same 
manner as would a citizen of the United States residing in the United 
States. In figuring your net earnings from self-employment you must 
include your income from sources in Puerto Rico even though you are a 
resident of Puerto Rico during the entire taxable year.
    (b) Nonresidents. A citizen of Puerto Rico, who is also a citizen of 
the United States and who is not a resident of Puerto Rico must figure 
net earnings from self-employment in the same manner as other citizens 
of the United States.



Sec. 404.1090  Personal exemption deduction.

    The deduction provided by section 151 of the Code, relating to 
personal exemptions, is excluded in determining net earnings from self-
employment.



Sec. 404.1091  Figuring net earnings for ministers and members of 
religious orders.

    (a) General. If you are a duly ordained, commissioned, or licensed 
minister of a church or a member of a religious order who has not taken 
a vow of poverty, we consider you to be engaged in a trade or business 
under the conditions described in Sec. 404.1071 with regard to services 
described in Sec. 404.1023 (c) and (e). In figuring your net earnings 
from self-employment from performing

[[Page 306]]

these services, you must include certain income (described in paragraphs 
(b) and (c) of this section) that may be excluded from your gross income 
for income tax purposes.
    (b) Housing and meals. You must include in figuring your net 
earnings from self-employment the rental value of a home furnished to 
you and any rental allowance paid to you as payment for services 
performed in the exercise of your ministry or in the exercise of duties 
required by your order even though the rental value or rental allowance 
may be excluded from gross income by section 107 of the Code. Also, the 
value of any meals or lodging furnished to you in connection with the 
performance of these services is included in figuring your net earnings 
from self-employment even though their value is excluded from gross 
income by section 119 of the Code.
    (c) Services outside the United States. If you one are a citizen or 
resident of the United States performing services outside the United 
States which are in the exercise of your ministry or in the exercise of 
duties required by your order, your net earnings from self-employment 
from the performance of these services are figured as described in 
paragraph (b) of this section. However, they are figured without regard 
to the exclusions from gross income provided in sections 911 and 931 of 
the Code relating to earned income from services performed outside the 
United States and from sources within possessions of the United States.

[45 FR 20075, Mar. 27, 1980, as amended at 50 FR 36574, Sept. 9, 1985]



Sec. 404.1092  Figuring net earnings for U.S. citizens or residents 
living outside the United States.

    (a) Taxable years beginning after December 31, 1983. If you are a 
citizen or resident of the United States and are engaged in a trade or 
business outside the United States, your net earnings from self-
employment are figured without regard to the exclusion from gross income 
provided by section 911 (a)(1) of the Code.
    (b) Taxable years beginning after December 31, 1981, and before 
January 1, 1984. If you are a citizen of the United States and were 
engaged in a trade or business outside the United States, your net 
earnings from self-employment are figured without regard to the 
exclusion from gross income provided by section 911(a)(1) of the Code 
unless you are a resident of a foreign country or countries for an 
uninterrupted period which includes an entire taxable year.

[50 FR 36574, Sept. 9, 1985]



Sec. 404.1093  Possession of the United States.

    In using the exclusions from gross income provided under section 931 
of the Code (relating to income from sources within possessions of the 
United States) and section 932 of the Code (relating to citizens of 
possessions of the United States) for purposes of figuring your net 
earnings from self-employment, the term possession of the United States 
shall be deemed not to include the Virgin Islands, Guam, or American 
Samoa.



Sec. 404.1094  Options available for figuring net earnings from self-employment.

    (a) General. If you have income from a trade or business in certain 
situations, you have options for figuring your net earnings from self-
employment. The options available to you depend on whether you have 
income from an agricultural trade or business or a non-agricultural 
trade or business. For a definition of agricultural trade or business 
see Sec. 404.1095.
    (b) Agricultural trade or business. The net earnings from self-
employment you derive from an agricultural trade or business may, at 
your option, be figured as follows:
    (1) Gross income of $2,400 or less. If your gross income is $2,400 
or less you may, at your option, report 66\2/3\ percent of the gross 
income as net earnings from self-employment instead of your actual net 
earnings from your business.
    (2) Gross income of more than $2,400. If your gross income is more 
than $2,400 and your actual net earnings from your business are less 
than $1,600 you may, at your option, report $1,600 as net earnings from 
self-employment instead

[[Page 307]]

of your actual net earnings. If your actual net earnings are $1,600 or 
more you cannot use the optional method.
    (3) Two or more agricultural trades or businesses. If you carry on 
more than one agricultural trade or business as a sole proprietor or as 
a partner, you must combine your gross income and net income from each 
trade or business to find out whether you may use the optional method of 
figuring net earnings.
    (c) Non-agricultural trade or business. (1) The net earnings from 
self-employment you derive from a non-agricultural trade or business may 
be reported under an optional method if you are self-employed on a 
regular basis (as defined in paragraph (c)(4) of this section). You 
cannot use the optional method of reporting for more than 5 taxable 
years, and you cannot report less than your actual net earnings from 
self-employment.
    (2) Computation. If your actual net earnings from self-employment 
are less than $1,600 and less than 66\2/3\ percent of your gross income, 
you may, at your option, report 66\2/3\ percent of your gross income 
(but not more than $1,600) as your net earnings from self-employment.

    Example: A operates a grocery store and files income tax returns on 
a calendar year basis. A meets the self-employed on a regular basis 
requirement because actual net earnings from self-employment were $400 
or more in 1976 and in 1977. Gross income and net profit from operating 
the grocery store in 1978 through 1980 are as follows:

------------------------------------------------------------------------
                                                 1978     1979     1980
------------------------------------------------------------------------
Gross income.................................   $2,800   $1,200   $1,000
Net profit...................................      300      400      800
------------------------------------------------------------------------

    For the year 1978, A may report as annual net earnings from self-
employment either--
    (i) None. (Actual net earnings from self-employment are less than 
$400); or
    (ii) $1,600. (Non-agricultural option, 66\2/3\ percent of $2,800, 
but not to exceed the $1,600 maximum.)
    For the year 1979, A may report as annual net earnings from self-
employment either--
    (i) $400. (Actual net earnings from self-employment); or
    (ii) $800. (Non-agricultural option, 66\2/3\ percent of $1,200.)
    For the year 1980, A must report $800, the actual net earnings from 
self-employment. The non-agricultural option is not available because 
A's actual net earnings are not less than 66\2/3\ percent of the gross 
income.

    (3) Figuring net earnings from both non-agricultural and 
agricultural self-employment. If you are self-employed on a regular 
basis, you may use the non-agricultural optional method of reporting 
when you have both non-agricultural and agricultural trades or 
businesses. However, in order to use this method, your actual net 
earnings from non-agricultural self-employment combined with your actual 
net earnings from agricultural self-employment, or your optional net 
earnings from agricultural self-employment, must be less than $1,600, 
and the net non-agricultural earnings must be less than 66\2/3\ percent 
of your gross non-agricultural income. If you qualify for using both the 
non-agricultural and agricultural option, you may report less than your 
actual total net earnings, but not less than your actual net earnings 
from non-agricultural self-employment alone. If you elect to use both 
options in a given taxable year, the combined maximum reportable net 
earnings from self-employment may not exceed $1,600.

    Example: C was regularly self-employed. She derived actual net 
earnings from self-employment of $400 or more in 1975 and in 1976. Her 
gross income and net profit from operating both a grocery store and a 
farm in 1978 are:

                              Grocery Store
Gross income...................................................   $1,000
Net profit.....................................................      800
                                  Farm
Gross income...................................................   $2,600
Net profit.....................................................      400
 

    For the year 1978, C may report $1,200 (actual net earnings from 
self-employment from both businesses), or $2,400 ($1,600 agricultural 
option (66\2/3\ percent of $2,600 farm gross income not to exceed 
$1,600) and $800 grocery store profit). C cannot use the non-
agricultural option for 1978 because her actual grocery store net 
exceeds 66\2/3\ percent of her grocery store gross income.

    (4) Self-employed on a regular basis. For any taxable year beginning 
after 1972, we consider you to be self-employed on a regular basis, or 
to be a member of a partnership on a regular basis, if, in at least 2 of 
the 3 taxable years immediately before that taxable year, you had actual 
net earnings from self-employment of not less than $400 from 
agricultural and non-agricultural

[[Page 308]]

trades or businesses (including your distributive share of the net 
income or loss from any partnership of which you are a member).
    (d) Members of partnerships. If you are a member of a partnership 
you may use the optional method of reporting. Your gross income is your 
distributive share of the partnership's gross income (after all 
guaranteed payments to which section 707(c) of the Code applies have 
been deducted), plus your own guaranteed payment.
    (e) Computing gross income. For purposes of this section gross 
income means--
    (1) Under the cash method of computing, the gross receipts from the 
trade or business reduced by the cost or other basis of property that 
was purchased and sold, minus any income that is excluded in computing 
net earnings from self-employment; or
    (2) Under the accrual method of computing, the gross income minus 
any income that is excluded in figuring net earnings from self-
employment.
    (f) Exercise of option. For each taxable year for which you are 
eligible to use the optional method and elect to use that method, you 
must figure your net earnings from self-employment in that manner on 
your tax return for that year. If you wish to change your method of 
reporting after your tax return is filed, you may change it by filing an 
amended tax return with the Internal Revenue Service or by filing with 
us Form 2190, Change in Method of Computing Net Earnings from Self-
Employment.



Sec. 404.1095  Agricultural trade or business.

    (a) An agricultural trade or business is one in which, if the trade 
or business were carried on entirely by employees, the major portion of 
the services would be agricultural labor (Sec. 404.1057).
    (b)(1) If the services are partly agricultural and partly non-
agricultural, the time devoted to the performance of each type of 
service is the test used to determine whether the major portion of the 
services is agricultural labor.
    (2) If more than half of the time spent in performing all the 
services is spent in performing services that are agricultural labor, 
the trade or business is agricultural.
    (3) If half or less of the time spent in performing all the services 
is spent in performing services that are agricultural labor, the trade 
or business is not agricultural. The time spent in performing the 
services is figured by adding the time spent in the trade or business 
during the taxable year by every individual (including the individual 
carrying on the trade or business and the members of that individual's 
family).
    (c) We do not apply the rules in this section if the non-
agricultural services are performed in connection with a trade or 
business separate and distinct from the agricultural trade or business. 
A roadside automobile service station on a farm is a trade or business 
separate and distinct from the agricultural trade or business, and the 
gross income from the service station, less the deductions attributable 
to it, is to be considered in determining net earnings from self-
employment.
    (d) We consider a sharefarmer (see Sec. 404.1068(c)) or a 
materially participating owner or tenant (see Sec. 404.1082(c)) to be 
engaged in an agricultural trade or business. We use the rules in this 
section to determine whether a farm crew leader who is self-employed 
(see Sec. 404.1074) is engaged in an agricultural trade or business.



Sec. 404.1096  Self-employment income.

    (a) General. Self-employment income is the amount of your net 
earnings from self-employment that is subject to social security tax and 
counted for social security benefit purposes. The term self-employment 
income means the net earnings from self-employment you derive in a 
taxable year, except as described in paragraphs (b), (c) and (d) of this 
section.
    (b) Maximum self-employment income. (1) The term self-employment 
income does not include that part of your net earnings from self-
employment that exceeds (or that part of your net earnings from self-
employment which, when added to the wages you received in that taxable 
year, exceeds)--

------------------------------------------------------------------------
                        Taxable year                            Amount
------------------------------------------------------------------------
Ending before 1955.........................................       $3,600

[[Page 309]]

 
Ending in 1955 through 1958................................        4,200
Ending in 1959 through 1965................................        4,800
Ending in 1966 and 1967....................................        6,600
Ending after 1967 and beginning before 1972................        7,800
Beginning in 1972..........................................        9,000
Beginning in 1973..........................................       10,800
Beginning in 1974..........................................       13,200
Beginning in 1975..........................................       14,100
Beginning in 1976..........................................       15,300
Beginning in 1977..........................................       16,500
Beginning in 1978..........................................       17,700
Beginning in 1979..........................................       22,900
Beginning in 1980..........................................       25,900
Beginning in 1981..........................................       29,700
Beginning in 1982..........................................       32,400
Beginning in 1983..........................................       35,700
Beginning in 1984..........................................       37,800
Beginning in 1985..........................................       39,600
Beginning in 1986..........................................       42,000
Beginning in 1987..........................................       43,800
Beginning in 1988..........................................       45,000
Beginning in 1989..........................................       48,000
Beginning in 1990..........................................       51,300
Beginning in 1991..........................................       53,400
Beginning in 1992..........................................       55,500
------------------------------------------------------------------------

    (2) For the purpose of this paragraph the term wages includes 
remuneration paid to an employee for services covered by an agreement 
entered into under section 218 of the Act, or an agreement entered into 
under section 3121(l) of the Code, which would be wages under section 
209 of Act if the services were considered employment under section 
210(a) of the Act.
    (c) Minimum net earnings from self employment. (1) Self-employment 
income does not include your net earnings from self-employment when the 
amount of those earnings for the taxable year is less than $400. If you 
have only $300 of net earnings from self-employment for the taxable year 
you would not have any self-employment income. (Special rules apply if 
you are paid $100 or more and work for a church or church-controlled 
organization that has exempted its employees (see Sec. 404.1068(f)).)
    (2) If you have net earnings from self-employment of $400 or more 
for the taxable year you may have less than $400 of creditable self-
employment income. This occurs where your net earnings from self-
employment is $400 or more for a taxable year and the amount of your net 
earnings from self-employment plus the amount of the wages paid to you 
during that taxable year exceed the maximum creditable earnings for a 
year. For example, if you had net earnings from self-employment of 
$1,000 for 1978, and were also paid wages of $17,500 during 1978, your 
creditable self-employment income for 1978 would be $200.
    (d) Nonresident aliens. A nonresident alien has self-employment 
income only if coverage is provided under a totalization agreement [see 
Sec. 404.1913]. We do not consider an individual who is a resident of 
the Commonwealth of Puerto Rico, the Virgin Islands, Guam or American 
Samoa to be a nonresident alien.

[45 FR 20075, Mar. 27, 1980, as amended at 50 FR 36575, Sept. 9, 1985; 
52 FR 8250, Mar. 17, 1987; 57 FR 44098, Sept. 24, 1992]

Subpart L [Reserved]



     Subpart M_Coverage of Employees of State and Local Governments

    Authority: Secs. 205, 210, 218, and 702(a)(5) of the Social Security 
Act (42 U.S.C. 405, 410, 418, and 902(a)(5)); sec. 12110, Pub. L. 99-
272, 100 Stat. 287 (42 U.S.C. 418 note); sec. 9002, Pub. L. 99-509, 100 
Stat. 1970.

    Source: 53 FR 32976, Aug. 29, 1988, unless otherwise noted.

                                 General



Sec. 404.1200  General.

    (a) Coverage under section 218 of the Act.  Under section 218 of the 
Social Security Act (the Act) a State may ask the Commissioner of Social 
Security to enter into an agreement to extend Federal old-age, 
survivors, disability and hospital insurance coverage to groups of 
employees of the State and its political subdivisions. The Commissioner 
shall enter into such an agreement. State and local government 
employees, after being covered under an agreement, have the same benefit 
rights and responsibilities as other employees who are mandatorily 
covered under the programs. For payments due on wages paid before 1987, 
the State assumes full financial and reporting responsibility for all 
groups covered under its agreement. The agreement may not be terminated 
in its entirety or with respect to any coverage group under that 
agreement. For payments due on wages paid in the year 1987 and years 
later,

[[Page 310]]

section 9002 of Pub. L. 99-509 amends section 218 of the Act by 
transferring responsibility for collecting contributions due and 
receiving wage reports from the Social Security Administration (SSA) to 
the Internal Revenue Service (IRS). Sections of the regulations wholly 
or partly affected by this amendment to the Act are appended with the 
phrase ``--for wages paid prior to 1987.''
    (b) Mandatory old-age, survivors, disability, and hospital insurance 
coverage. Under section 210(a)(7)(F) of the Act, mandatory old-age, 
survivors, disability, and hospital insurance coverage is extended to 
certain services performed after July 1, 1991, by individuals who are 
employees of a State (other than the District of Columbia, Guam, or 
American Samoa), a political subdivision of the State, or any wholly 
owned instrumentality of one or more of the foregoing, and who are not 
members of the employer's retirement system. Certain services are 
excluded from such mandatory coverage (see Sec. 404.1020(a)(3).

[53 FR 32976, Aug. 29, 1988, as amended at 57 FR 59911, Dec. 17, 1992; 
62 FR 38450, July 18, 1997]



Sec. 404.1201  Scope of this subpart regarding coverage and wage 
reports and adjustments.

    This subpart contains the rules of SSA about:
    (a) Coverage under section 218 of the Act--
    (1) How a State enters into and modifies an agreement; and
    (2) What groups of employees a State can cover by agreement.
    (b) Contributions, wage reports, and adjustments--for wages paid 
prior to 1987--
    (1) How a State must identify covered employees and what records it 
must keep on those employees;
    (2) Periodic reviews of the source records kept on covered 
employees;
    (3) How and when a State must report wages and pay contributions;
    (4) What the State's liability for contributions is and how SSA 
figures the amount of those contributions;
    (5) What happens if a State fails to pay its contributions timely;
    (6) How errors in reports and contribution payments are corrected;
    (7) How overpayments of contributions are credited or refunded;
    (8) How assessments are made if contributions are underpaid; and
    (9) How a State can obtain administrative or judicial review of a 
decision on a credit, refund, or assessment.

[53 FR 32976, Aug. 29, 1988, as amended at 57 FR 59911, Dec. 17, 1992; 
65 FR 16813, Mar. 30, 2000]



Sec. 404.1202  Definitions.

    (a) Terms which have special meaning in this subpart are described 
in this section. Where necessary, further explanation is included in the 
section where the term is used.
    (b) Coverage terms:
    Agreement--The agreement between the Commissioner of Social Security 
and the State containing the conditions under which retirement, 
survivors, disability and hospital insurance coverage is provided for 
State and local government employees.
    Coverage--The extension of Social Security protection (retirement, 
survivors, disability, and hospital insurance) by agreement between the 
Commissioner of Social Security and a State to employees of the State 
and its political subdivisions or by agreement between the Commissioner 
of Social Security and an interstate instrumentality to employees of the 
interstate instrumentality.
    Coverage group--The grouping by which employees are covered under an 
agreement.
    Employee--An employee as defined in section 210(j) of the Act. 
Usually, the common-law control test is used in determining whether an 
employer-employee relationship exists. The term also includes an officer 
of a State or political subdivision.
    Governmental function--The traditional functions of government: 
legislative, executive, and judicial.
    Interstate instrumentality--An independent legal entity organized by 
two or more States to carry out one or more functions. For Social 
Security coverage purposes under section 218 of the Act, an interstate 
instrumentality is treated, to the extent practicable, as a ``State.''

[[Page 311]]

    Modification--A change to the agreement between the Commissioner of 
Social Security and a State which provides coverage of the services of 
employees not previously covered or which alters the agreement in some 
other respect.
    Political subdivision--A separate legal entity of a State which 
usually has specific governmental functions. The term ordinarily 
includes a county, city, town, village, or school district, and in many 
States, a sanitation, utility, reclamation, drainage, flood control, or 
similar district. A political subdivision includes an instrumentality of 
a State, one or more politicial subdivisions of a State, or a State and 
one or more of its political subdivisions.
    Proprietary function--A business engaged in by a State or political 
subdivision such as a public amusement park or public parking lot.
    Retirement system--A pension, annuity, retirement, or similar fund 
or system established by a State or political subdivision.
    SSA--The Social Security Administration.
    State--Includes the fifty States, Puerto Rico, and the Virgin 
Islands. It does not include the District of Columbia, Guam or American 
Samoa. ``State'' also refers to an interstate instrumentality where 
applicable.
    We--The Social Security Administration.
    (c) Contributions, wage reporting, and adjustment terms--for wages 
paid prior to 1987:
    Allowance of a credit or refund--The written notice to a State of 
the determination by SSA of the amount owed to the State by SSA, the 
period involved, and the basis for the determination.
    Assessment--The written notice to a State of the determination by 
SSA of the amount (contributions or accrued interest) owed to SSA by the 
State, the period involved, and the basis for the determination.
    Contributions--Payments made under an agreement which the State 
deposits in a Federal Reserve bank. The amounts are based on the wages 
paid to employees whose services are covered under an agreement. These 
amounts are equal to the taxes imposed under the Internal Revenue Code 
on emp1oyers and employees in private employment.
    Contribution return--Form used to identify and account for all 
contributions actions.
    Disallowance of a State's claim for credit or refund--The written 
notice to a State of the determination by SSA that the State's claim for 
credit or refund is denied, the period involved, and the basis for the 
determination.
    Overpayment--A payment of more than the correct amount of 
contributions or interest.
    Underpayment--A payment of less than the correct amount of 
contributions or interest.
    Wage Reports--Forms used to identify employees who were paid wages 
for covered employment and the amounts of those wages paid. This 
includes corrective reports.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38450, July 18, 1997



Sec. 404.1203  Evidence--for wages paid prior to 1987.

    (a) State's responsibility for submitting evidence. The State, under 
the provisions of the agreement, is responsible for accurately reporting 
the wages paid employees for services covered by the agreement and for 
paying the correct amount of contributions due on those wages. This 
responsibility includes submitting evidence to verify the accuracy of 
the reports and payments.
    (b) Failure to submit requested evidence. The State is required to 
submit information timely to SSA. If we request additional evidence to 
verify the accuracy of reports and payments, we specify when that 
evidence must be submitted. If we do not receive the evidence timely, 
and the State provides no satisfactory explanation for its failure to 
submit the evidence timely, we may proceed, if appropriate, on the basis 
of the information we have. Proceeding on the basis of the information 
we have permits us to credit the wage records of employees properly, 
where possible, while continuing to work with

[[Page 312]]

the State to resolve remaining discrepancies.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]



Sec. 404.1204  Designating officials to act on behalf of the State.

    (a) Each State which enters into an agreement shall designate the 
official or officials authorized to act on the State's behalf in 
administering the agreement. Each State shall inform SSA of the name, 
title, and address of the designated official(s) and the extent of each 
official's authority. For example, a State may indicate that the State 
official is authorized:
    (1) To enter into an agreement and execute modifications to the 
agreement; and
    (2) To carry out the ministerial duties necessary to administer the 
agreement.
    For wages paid prior to 1987:
    (3) To enter into agreements to extend or re-extend the time limit 
for assessment or credit;
    (4) To make arrangements in connection with onsite reviews; and
    (5) To request administrative review of an assessment, an allowance 
of a credit or refund, or a disallowance of a credit or refund.
    (b) Each State shall inform SSA timely of changes in designated 
officials or changes in their authority.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]

                 What Groups of Employees May Be Covered



Sec. 404.1205  Absolute coverage groups.

    (a) General. An absolute coverage group is a permanent grouping of 
employees, e.g., all the employees of a city or town. It is a coverage 
group for coverage and reporting purposes. When used for coverage 
purposes, the term refers to groups of employees whose positions are not 
under a retirement system. An absolute coverage group may include 
positions which were formerly under a retirement system and, at the 
State's option, employees who are in positions under a retirement system 
but who are ineligible (see Sec. 404.1208) to become members of that 
system.
    (b) What an absolute coverage group consists of. An absolute 
coverage group consists of one of the following employee groups:
    (1) State employees performing services in connection with the 
State's governmental functions;
    (2) State employees performing services in connection with a single 
proprietary function of the State;
    (3) Employees of a State's political subdivision performing services 
in connection with that subdivision's governmental functions;
    (4) Employees of a State's political subdivision performing services 
in connection with a single proprietary function of the subdivision;
    (5) Civilian employees of a State's National Guard units; and
    (6) Individuals employed under an agreement between a State and the 
U.S. Department of Agriculture as agricultural products inspectors.
    (c) Designated coverage groups. A State may provide coverage for 
designated (i.e., selected) absolute coverage groups of the State or a 
political subdivision. When coverage is extended to these designated 
groups, the State must specifically identify each group as a designated 
absolute coverage group and furnish the effective date of coverage and 
any optional exclusion(s) for each group. Where a State has provided 
coverage to designated absolute coverage groups, the State may, by 
modifying its agreement, extend that coverage to any absolute coverage 
group in the State.



Sec. 404.1206  Retirement system coverage groups.

    (a) General. Section 218(d) of the Act authorizes coverage of 
services of employees in positions under a retirement system. For 
purposes of obtaining coverage, a system may be considered a separate 
retirement system authorized by sections 218(d)(6) (A) or (B) or 218(l) 
of the Act. Under these sections of the Act a State may designate the 
positions of any one of the following groupings of employees as a 
separate retirement system:

[[Page 313]]

    (1) The entire system;
    (2) The employees of the State under the system;
    (3) The employees of each political subdivision in the State under 
the system;
    (4) The employees of the State and the employees of any one or more 
of the State's political subdivisions;
    (5) The employees of any combination of the State's political 
subdivisions;
    (6) The employees of each institution of higher learning, including 
junior colleges and teachers colleges;
    (7) The employees of a hospital which is an integral part of a 
political subdivision; or
    (8) The employees in police officers' positions or firefighters' 
positions, or both.

If State law requires a State or political subdivision to have a 
retirement system, it is considered established even though no action 
has been taken to establish the system.
    (b) Retirement system coverage groups. A retirement system coverage 
group is a grouping of employees in positions under a retirement system. 
Employees in positions under the system have voted for coverage for the 
system by referendum and a State has provided coverage by agreement or 
modification of its agreement. It is not a permanent grouping. It exists 
only for referendum and coverage purposes and is not a separate group 
for reporting purposes. Once coverage has been obtained, the retirememt 
system coverage group becomes part of one of the absolute coverage 
groups described in Sec. 404.1205(b).
    (c) What a retirement system coverage group consists of. A 
retirement system coverage group consists of:
    (1) Current employees--all employees whose services are not already 
covered by the agreement, who are in positions covered by the same 
retirement system on the date an agreement or modification of the 
agreement is made applicable to the system;
    (2) Future employees--all employees in positions brought under the 
system after an agreement or modification of the agreement is signed; 
and
    (3) Other employees--all employees in positions which had been under 
the retirement system but which were not under the retirement system 
when the group was covered (including ineligibles who had been 
optionally excluded from coverage under section 218(c)(3)(B) of the 
Act).
    (d) Referendum procedures. Prior to signing the agreement or 
modification, the governor or an official of the State named by the 
governor (for an interstate instrumentality, its chief executive 
officer) must certify to the Commissioner that:
    (1) All eligible employees were given at least 90 days' notice of 
the referendum;
    (2) All eligible employees were given an opportunity to vote in the 
referendum;
    (3) Only eligible employees were permitted to vote in the 
referendum;
    (4) Voting was by secret written ballot on the question of whether 
service in positions covered by the retirement system should be included 
under an agreement;
    (5) The referendum was conducted under the supervision of the 
governor or agency or individual named by him; and
    (6) A majority of the retirement system's eligible employees voted 
for coverage under an agreement.

The State has two years from the date of a favorable referendum to enter 
into an agreement or modification extending coverage to the retirement 
system coverage group. If the referendum is unfavorable, another 
referendum cannot be held until at least one year after that unfavorable 
referendum.
    (e) Who is covered. If a majority of the eligible employees in a 
retirement system vote for coverage, all employees in positions in that 
retirement system become covered.
    (f) Coverage of employees in positions under more than one 
retirement system. (1) If an employee occupies two or more positions 
each of which is under a different retirement system, the employee's 
coverage in each position depends upon the coverage extended to each 
position under each system.
    (2) If an employee is in a single position which is under more than 
one retirement system (because the employee's occupancy of that position 
permits her or him to become a member of more than one retirement 
system), the

[[Page 314]]

employee is covered when the retirement system coverage group including 
her or his position is covered under an agreement unless (A) he or she 
is not a member of the retirement system being covered and (B) he or she 
is a member of a retirement system which has not been covered. This rule 
also applies to the coverage of services in police officers' and 
firefighters' positions in States and interstate instrumentalities as 
discussed in Sec. 404.1212(c).

[53 FR 32976, Aug. 29, 1988, as amended at 61 FR 38367, July 24, 1996; 
62 FR 38451, July 18, 1997]



Sec. 404.1207  Divided retirement system coverage groups.

    (a) General. Under section 218(d)(6)(C) of the Act certain States 
and under section 218(g)(2) of the Act all interstate instrumentalities 
may divide a retirement system based on whether the employees in 
positions under that system want coverage. The States having this 
authority are Alaska, California, Connecticut, Florida, Georgia, Hawaii, 
Illinois, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New 
York, North Dakota, Pennsylvania, Rhode Island, Tennessee, Texas, 
Vermont, Washington, and Wisconsin.
    (b) Divided retirement system coverage group. A divided retirement 
system coverage group is a grouping under a retirement system of 
positions of members of the system who voted for coverage and positions 
of individuals who become members of the system (the ``yes'' group), and 
positions of members of the system who did not elect coverage (the 
``no'' group) and ineligible employees (see Sec. 404.1208). For 
purposes of this section for groups covered after 1959, the term 
``member'' also includes individuals who have an option to become 
members of the retirement system but have not done so. The position of a 
member in the ``no'' group can be covered if, within two years after the 
agreement or modification extending coverage to the ``yes'' group is 
executed, the State provides an opportunity to transfer the position to 
the covered ``yes'' group and the individual occupying the position 
makes a written request for the transfer. The members of the ``no'' 
group can also be covered if, by referendum, a majority of them vote for 
coverage. If the majority votes for coverage, all positions of the 
members of the ``no'' group become covered. There is no further 
subdivision of the ``no'' group into those who voted for and those who 
voted against coverage. If the State requests, the ineligibles in the 
``no'' group may become part of the ``yes'' group and have their 
services covered.
    (c) Referendum procedures. To divide a retirement system, the State 
must conduct a referendum among the system's employees. If the system is 
to be divided, the governor or an individual named by him must certify 
to the Secretary that:
    (1) The referendum was held by written ballot on the question of 
whether members of a retirement system wish coverage under an agreement;
    (2) All members of the retirement system at the time the vote was 
held had the opportunity to vote;
    (3) All members of the system on the date the notice of the 
referendum was issued were given at least 90 days' notice regarding the 
referendum;
    (4) The referendum was conducted under the supervision of the 
governor or agency or person designated by him; and
    (5) The retirement system was divided into two parts, one composed 
of positions of members of the system who voted for coverage and the 
other composed of the remaining positions under the retirement system.

After the referendum the State may include those members who chose 
coverage under its agreement as a retirement system coverage group. The 
State has two years from the date of the referendum to enter into an 
agreement or modification extending coverage to that group.



Sec. 404.1208  Ineligible employees.

    (a) Definition. An ineligible is an employee who, on first occupying 
a position under a retirement system, is not eligible for membership in 
that system because of a personal disqualification like age, physical 
condition, or length of service.
    (b) Coverage of ineligible employees. A State may, in its agreement 
or any modification to the agreement, provide

[[Page 315]]

coverage for the services of ineligible employees in one of three ways:
    (1) As part of or as an addition to an absolute coverage group;
    (2) As part of a retirement system coverage group covering all 
positions under the retirement system; or
    (3) As part of or as an addition to a retirement system coverage 
group composed of those members in positions in a retirement system who 
chose coverage.



Sec. 404.1209  Mandatorily excluded services.

    Some services are mandatorily excluded from coverage under a State's 
agreement. They are:
    (a) Services of employees who are hired to relieve them from 
unemployment;
    (b) Services performed in an institution by a patient or inmate of 
the institution;
    (c) Transportation service subject to the Federal Insurance 
Contributions Act;
    (d) Certain emergency services in case of fire, storm, snow, 
volcano, earthquake, flood or other similar emergency; and
    (e) Services other than agricultural labor or student services which 
would be excluded from coverage if performed for a private employer.
    (f) Services covered under section 210(a)(7)(F) of the Act. (See 
Sec. 404.1200(b).)

[53 FR 32976, Aug. 29, 1988, as amended at 57 FR 59911, Dec. 17, 1992]



Sec. 404.1210  Optionally excluded services.

    Certain services and positions may, if the State requests it, be 
excluded from coverage. These exclusions may be applied on a statewide 
basis or selectively by coverage groups. They are:
    (a) Services in any class or classes of elective positions;
    (b) Services in any class or classes of part-time positions;
    (c) Services in any class or classes of positions where the pay is 
on a fee basis;
    (d) Any agricultural labor or student services which would also be 
excluded if performed for a private employer; and
    (e) For modifications executed after 1994, services performed by 
election officials or election workers if the payments for those 
services in a calendar year are less than $1000 for calendar years after 
1994 and before 2000, or, for calendar years after 1999, are less than 
the $1000 base amount as adjusted pursuant to section 218(c)(8)(B) of 
the Act to reflect changes in wages in the economy. We will publish this 
adjustment of the $1000 base amount in the Federal Register on or before 
November 1 preceding the year for which the adjustment is made.

[53 FR 32976, Aug. 29, 1988, as amended at 61 FR 38367, July 24, 1996]



Sec. 404.1211  Interstate instrumentalities.

    For Social Security coverage purposes under section 218 of the Act, 
interstate instrumentalities are treated, to the extent practicable, as 
States, that is:
    (a) They must be legally authorized to enter into an agreement with 
the Commissioner;
    (b) They are subject to the same rules that are applied to the 
States;
    (c) They may divide retirement systems and cover only the positions 
of members who want coverage; and
    (d) They may provide coverage for firefighters and police officers 
in positions under a retirement system.

[53 FR 32976, Aug. 29, 1988, as amended at 61 FR 38368, July 24, 1996; 
62 FR 38451, July 18, 1997]



Sec. 404.1212   Police officers and firefighters.

    (a) General. For Social Security coverage purposes under section 218 
of the Act, a police officer's or firefighter's position is any position 
so classified under State statutes or court decisions. Generally, these 
positions are in the organized police and fire departments of 
incorporated cities, towns, and villages. In most States, a police 
officer is a member of the ``police'' which is an organized civil force 
for maintaining order, preventing and detecting crimes, and enforcing 
laws. The terms ``police officer'' and ``firefighter'' do not include 
services in positions which, although connected with police and 
firefighting functions, are

[[Page 316]]

not police officer or firefighter positions.
    (b) Providing coverage. A State may provide coverage of:
    (1) Police officers' and firefighters' positions not under a 
retirement system as part of an absolute coverage group; or
    (2) Police officers' or firefighters' positions, or both, as part of 
a retirement system coverage group.
    (c) Police officers and firefighters in positions under a retirement 
system. All States and interstate instrumentalities may provide coverage 
for employees in police officers' or firefighters' positions, or both, 
which are under a retirement system by following the majority vote 
referendum procedures in Sec. 404.1206(d). In addition, all interstate 
instrumentalities and the States listed in Sec. 404.1207 may use the 
desire for coverage procedures described in Sec. 404.1207.

[61 FR 38368, July 24, 1996]

         How Coverage Under Agreements Is Obtained and Continues



Sec. 404.1214  Agreement for coverage.

    (a) General. A State may enter into a written agreement with the 
Commissioner to provide for Social Security coverage for its employees 
or the employees of one or more of its political subdivisions. An 
interstate instrumentality may enter into a similar agreement for its 
employees. These agreements cover employees in groups of positions or by 
types of services rather than the individual employees.
    (b) Procedures. A State or interstate instrumentality may request 
coverage by submitting to SSA a proposed written agreement for the 
desired coverage.
    (c) Authority to enter into an agreement for coverage--(1) Federal 
law. Section 218(a) of the Act requires the Commissioner to enter into 
an agreement, at the request of the State, to extend Social Security 
coverage to the State's employees or those of its political 
subdivisions. Section 218(g) authorizes the Commissioner to enter into 
an agreement, at the request of an interstate instrumentality, to extend 
Social Security coverage to the employees of the interstate 
instrumentality.
    (2) State law. State law must authorize a State or an interstate 
instrumentality to enter into an agreement with the Commissioner for 
Social Security coverage.
    (d) Provisions of the agreement. The agreement must include:
    (1) A description of the specific services to be covered and 
excluded;
    (2) The State's promise to pay, to the Secretary of the Treasury, 
contributions equal to the sum of the taxes which would be required 
under the Federal Insurance Contributions Act from employers and 
employees if the employment were in the private sector;
    (3) The State's promise to comply with the regulations the 
Commissioner prescribes for carrying out the provisions of section 218 
of the Act; and
    (4) Identification of the political subdivisions, coverage groups, 
or services being covered and the services that are excluded.

The agreement must be signed by the authorized State or interstate 
instrumentality official and the Commissioner or his or her designee.
    (e) Effective date. The agreement must specify an effective date of 
coverage. However, the effective date cannot be earlier than the last 
day of the sixth calendar year preceding the year in which the agreement 
is mailed or delivered by other means to the Commissioner. The agreement 
is effective after the effective date.
    (f) Applicability of agreement. The agreement establishes the 
continuing relationship between the Commissioner and the State or 
interstate instrumentality except as it is modified (see Sec. Sec. 
404.1215-404.1217).

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997; 
66 FR 28836, May 25, 2001]



Sec. 404.1215  Modification of agreement.

    (a) General. A State or interstate instrumentality may modify in 
writing its agreement, for example, to:
    (1) Exclude, in limited situations, employee services or positions 
previously covered;
    (2) Include additional coverage groups; or
    (3) Include as covered services:

[[Page 317]]

    (i) Services of covered employees for additional retroactive periods 
of time; and
    (ii) Services previously excluded from coverage.
    (b) Controlling date for retroactive coverage. A State may specify 
in the modification a date to make all individuals in the coverage group 
who were in an employment relationship on that date eligible for 
retroactive coverage. This date is known as the controlling date for 
retroactive coverage. It can be no earlier than the date the 
modification is mailed or otherwise delivered to the Commissioner nor 
can it be later than the date the modification is signed by the 
Commissioner. If the State does not designate a controlling date, the 
date the modification is signed by the Commissioner is the controlling 
date.
    (c) Conditions for modification. The provisions of section 218 of 
the Act which apply to the original agreement also apply to a 
modification to the agreement.
    (d) Effective date. Generally, a modification must specify an 
effective date of coverage. However, the effective date cannot be 
earlier than the last day of the sixth calendar year preceding the year 
in which the modification is mailed or delivered by other means to the 
Commissioner. The modification is effective after the effective date.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997; 
66 FR 28836, May 25, 2001]



Sec. 404.1216  Modification of agreement to correct an error.

    (a) General. If an agreement or modification contains an error, the 
State may correct the error by a subsequent modification to the 
agreement. For example, the agreement or modification incorrectly lists 
a covered service as an optionally excluded service or shows an improper 
effective date of coverage. In correcting this type of error, which 
affects the extent of coverage, the State must submit a modification 
along with evidence to establish that the error occurred. However, a 
modification is not needed to correct minor typographical or clerical 
errors. For example, an agreement or modification incorrectly lists 
School District No. 12 as School District No. 13. This type of error can 
be corrected based on a written request from the appropriate official of 
the State or interstate instrumentality.
    (b) Correction of errors involving erroneous reporting to the IRS--
for wages paid prior to 1987. Where a State or political subdivision 
makes reports and payments to the Internal Revenue Service under the 
provisions of the Federal Insurance Contributions Act which apply to 
employees in private employment in the mistaken belief that this action 
would provide coverage for its employees, the State may provide the 
desired coverage for those same periods of time by a subsequent 
modification to its agreement. If State law permits, the State may make 
that coverage effective with the first day of the first period for which 
the erroneous reports and payments were made. (In this instance, the 
limitation on retroactive coverage described in Sec. 404.1215(d) is not 
applicable.) Where the State does not want to provide such retroactive 
coverage or is not permitted to do so by State law, the State may 
provide the coverage for the affected coverage group as of a specified 
date (Sec. 404.1215(b)). The coverage would then apply to the services 
performed by individuals as members of the coverage group
    (1) Who were employees on that date, and
    (2) Whose wages were erroneously reported to IRS, and
    (3) For whom a refund of FICA taxes has not been obtained at the 
time the Commissioner.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997; 
66 FR 28836, May 25, 2001]



Sec. 404.1217  Continuation of coverage.

    The coverage of State and local government employees continues as 
follows:
    (a) Absolute coverage group. Generally, the services of an employee 
covered as a part of an absolute coverage group (see Sec. 404.1205) 
continue to be covered indefinitely. A position covered as a

[[Page 318]]

part of an absolute coverage group continues to be covered even if the 
position later comes under a retirement system. This includes 
policemen's and firemen's positions which are covered with an absolute 
coverage group.
    (b) Retirement system coverage group. Generally, the services of 
employees in positions covered as a part of a retirement system coverage 
group continue to be covered indefinitely. For a retirement system 
coverage group made up of members who chose coverage, a position 
continues to be covered until it is removed from the retirement system 
and is no longer occupied by a member who chose coverage or by a new 
member of the system. Coverage is not terminated because the positions 
are later covered under additional retirement systems or removed from 
coverage under a retirement system, or because the retirement system is 
abolished with respect to the positions. However, if the retirement 
system has been abolished, newly created or reclassified positions or 
positions in a newly created political subdivision cannot be covered as 
a part of the retirement system coverage group. If the retirement system 
is not abolished, a newly created or reclassified position is a part of 
the coverage group if the position would have been a part of the group 
had it existed earlier. If the retirement system coverage group is made 
up of members who chose coverage, the newly created or reclassified 
position is a part of the coverage group if it is occupied by a member 
who chose coverage or by a new member.



Sec. 404.1218  Resumption of coverage.

    Before April 20, 1983, an agreement could be terminated in its 
entirety or with respect to one or more coverage groups designated by 
the State. Coverage of any coverage group which has been previously 
terminated may be resumed by a modification to the agreement.



Sec. 404.1219  Dissolution of political subdivision.

    If a political subdivision whose employees are covered under the 
agreement is legally dissolved, the State shall give us satisfactory 
evidence of its dissolution or nonexistence. The evidence must establish 
that the entity is not merely inactive or dormant, but that it no longer 
legally exists. We will notify the State whether the evidence is 
satisfactory.

                    How To Identify Covered Employees



Sec. 404.1220  Identification numbers.

    (a) State and local governments. When a State submits a modification 
to its agreement under section 218 of the Act, which extends coverage to 
periods prior to 1987, SSA will assign a special identification number 
to each political subdivision included in that modification. SSA will 
send the State a Form SSA-214-CD, ``Notice of Identifying Number,'' to 
inform the State of the special identification number(s). The special 
number will be used for reporting the pre-1987 wages to SSA. The special 
number will also be assigned to an interstate instrumentality if pre-
1987 coverage is obtained and SSA will send a Form SSA-214-CD to the 
interstate instrumentality to notify it of the number assigned.
    (b) Coverage group number for coverage groups. If a State's 
agreement provides coverage for a State or a political subdivision based 
on designated proprietary or governmental functions, the State shall 
furnish a list of those groups. The list shall identify each designated 
function and the title and business address of the official responsible 
for filing each designated group's wage report. SSA assigns a coverage 
group number to each designated group based on the information furnished 
in the list.
    (c) Unit numbers for payroll record units. SSA assigns, at a State's 
request, unit numbers to payroll record units within a State or 
political subdivision. When a State requests separate payroll record 
unit numbers, it must furnish the following:
    (1) The name of each payroll record unit for the coverage group; and
    (2) The title and business address of the official responsible for 
each payroll unit.
    (d) Unit numbers where contribution amounts are limited--for wages 
paid prior to 1987. An agreement, or modification of an agreement, may 
provide for the

[[Page 319]]

computation of contributions as prescribed in Sec. 404.1256 for some 
employees of a political subdivision. In this situation, SSA assigns 
special unit numbers to the political subdivision to identify those 
employees. SSA does not assign a special unit number to a political 
subdivision in which the contributions for all employees are computed as 
prescribed in Sec. 404.1256.
    (e) Use. For wages paid prior to 1987, the employer shall show the 
appropriate SSA-issued identifying number, including any coverage group 
or payroll record unit number, on records, reports, returns, and claims 
to report wages, adjustments, and contributions.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 60 FR 42433, Aug. 16, 1995; 
64 FR 33016, June 21, 1999; 66 FR 28836, May 25, 2001]

                  What Records of Coverage Must Be Kept



Sec. 404.1225  Records--for wages paid prior to 1987.

    (a) Who keeps the records. Every State which enters into an 
agreement shall keep, or require the political subdivisions whose 
employees are included under its agreement to keep, accurate records of 
all remuneration (whether in cash or in a medium other than cash) paid 
to employees performing services covered by that agreement. These 
records shall show for each employee:
    (1) The employee's name, address, and Social Security number;
    (2) The total amount of remuneration (including any amount withheld 
as contributions or for any other reason) and the date the remuneration 
was paid and the period of services covered by the payment;
    (3) The amount of remuneration which constitutes wages (see Sec. 
404.1041 for wages and Sec. Sec. 404.1047-404.1059 for exclusions from 
wages); and
    (4) The amount of the employee's contribution, if any, withheld or 
collected, and if collected at a time other than the time such payment 
was made, the date collected. If the total remuneration (paragraph 
(a)(2) of this section) and the amount which is subject to contribution 
(paragraph (a)(3) of this section) are not equal, the reason shall be 
stated.

The State shall keep copies of all returns, reports, schedules, and 
statements required by this subpart, copies of claims for refund or 
credit, and copies of documents about each adjustment made under Sec. 
404.1265 or Sec. 404.1271 as part of its records. These records may be 
maintained by the State or, for employees of a political subdivision, by 
the political subdivision. Each State shall use forms and systems of 
accounting as will enable the Commissioner to determine whether the 
contributions for which the State is liable are correctly figured and 
paid.
    (b) Place and period of time for keeping records. All records 
required by this section shall:
    (1) Be kept at one or more convenient and safe locations accessible 
to reviewing personnel (see Sec. 404.1232(a));
    (2) Be available for inspection by reviewing personnel at any time; 
and
    (3) Be maintained for at least four years from the date of the event 
recorded. (This four-year requirement applies regardless of whether, in 
the meantime, the employing entity has been legally dissolved or, before 
April 20, 1983, the agreement was terminated in its entirety or in 
part.)

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997; 
66 FR 28836, May 25, 2001]

            Review of Compliance by State With Its Agreement



Sec. 404.1230  Onsite review program.

    To ensure that the services of employees covered by a State's 
agreement are reported and that those employees receive Social Security 
credit for their covered earnings, we periodically review the source 
records upon which a State's contribution returns and wage reports are 
based. These reviews are designed:
    (a) To measure the effectiveness of the State's systems for ensuring 
that all wages for those employees covered by its agreement are reported 
and Social Security contributions on those wages are paid;

[[Page 320]]

    (b) To detect any misunderstanding of coverage or reporting errors 
and to advise the State of the corrective action it must take; and
    (c) To find ways to improve a State's recordkeeping and reporting 
operations for the mutual benefit of the State and SSA.



Sec. 404.1231  Scope of review.

    The onsite review focuses on four areas:
    (a) State's controls and recordkeeping--to assess a State's systems 
for assuring timely receipt, correctness, and completeness of wage 
reports and contribution returns;
    (b) Instruction, education, and guidance a State provides local 
reporting officials--to assess a State's systems for assuring on a 
continuing basis that all reporting officials and their staffs have the 
necessary instructions, guidelines, and training to meet the State's 
coverage, reporting and recordkeeping requirements;
    (c) Compliance by reporting officials--to assess a State's systems 
for assuring that the reporting officials in the State have adequate 
recordkeeping procedures, are properly applying the appropriate 
provisions of the State's agreement, and are complying with reporting 
requirements; and
    (d) Quality control with prompt corrective action--to assess a 
State's systems for assuring that its reports and those of its political 
subdivisions are correct, for identifying the causes and extent of any 
deficiencies, and for promptly correcting these deficiencies.



Sec. 404.1232  Conduct of review.

    (a) Generally, SSA staff personnel conduct the onsite review. 
Occasionally, members of the Office of the Inspector General may conduct 
or participate in the review.
    (b) The review is done when considered necessary by SSA or, if 
practicable, in response to a State's specific request for a review.
    (c) All pertinent source records prepared by the State or its 
political subdivisions are reviewed, on site, to verify the wage reports 
and contribution returns. We may review with the appropriate employees 
in a subdivision those source records and how the information is 
gathered, processed, and maintained. We notify the State's Social 
Security Administrator when we plan to make the review and request her 
or him to make the necessary arrangements.
    (d) The review is a cooperative effort between SSA and the States to 
improve the methods for reporting and maintaining wage data to carry out 
the provisions of the agreement.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997]



Sec. 404.1234  Reports of review's findings.

    We provide the State Social Security Administrator with reports of 
the review's findings. These reports may contain coverage questions 
which need development and resolution and reporting errors or omissions 
for the State to correct promptly. These reports may also recommend 
actions the State can take to improve its information gathering, 
recordkeeping, and wage reporting systems, and those of its political 
subdivisions.

   How To Report Wages and Contributions--for Wages Paid Prior to 1987



Sec. 404.1237  Wage reports and contribution returns--general--for wages 
paid prior to 1987.

    (a) Wage reports. Each State shall report each year the wages paid 
each covered employee during that year. With the wage report the State 
shall also identify, as prescribed by SSA, each political subdivision by 
its assigned identification number and, where appropriate, any coverage 
group or payroll record unit number assigned.
    (b) Wage reports of remuneration for agricultural labor. A State may 
exclude from its agreement any services of employees the remuneration 
for which is not wages under section 209(h)(2) of the Act. Section 
209(h)(2) excludes as wages the cash remuneration an employer pays 
employees for agricultural labor which is less than $150 in a calendar 
year, or, if the employee performs the agricultural labor for the 
employer on less than 20 days during a calendar year, the cash 
remuneration computed on a time basis. If a State does exclude the 
services and the individual meets the cash-pay or 20-day test described 
in

[[Page 321]]

Sec. 404.1056, the State shall identify on the wage report and on any 
adjustment report each individual performing agricultural labor and the 
amount paid to her or him.
    (c) Contribution returns. The State shall forward the contribution 
return as set out in Sec. 404.1249(b). It shall make contribution 
payments under Sec. 404.1262.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]



Sec. 404.1239  Wage reports for employees performing services in more 
than one coverage group--for wages paid prior to 1987.

    (a) Employee of State in more than one coverage group. If a State 
employee is in more than one coverage group, the State shall report the 
employee's total wages, up to the annual wage limitations in Sec. 
404.1047, as though the wages were paid by only one of the coverage 
groups.
    (b) Employee of political subdivision in more than one coverage 
group. If an employee of a political subdivision is in more than one 
coverage group, the State shall report the employee's total wages, up to 
the annual wage limitations in Sec. 404.1047, as though the wages were 
paid by only one of the coverage groups.
    (c) Employee of State and one or more political subdivisions. If an 
individual performs covered services as an employee of the State and an 
employee of one or more political subdivisions and the State agreement 
does not provide for limiting contributions under section 218(e)(2) of 
the Act as it read prior to the enactment of Pub. L. 99-509, the State 
and each political subdivision shall report the amount of covered wages 
it paid the employee up to the annual wage limitations in Sec. 
404.1047.
    (d) Employee of more than one political subdivision. If an 
individual performs covered services as an employee of more than one 
political subdivision and the State agreement does not provide for 
limiting contributions under section 218(e)(2) of the Act as it read 
prior to the enactment of Pub. L. 99-509, each political subdivision 
shall report the covered wages it paid the employee up to the annual 
wage limitations in Sec. 404.1047.
    (e) Employee performing covered services for more than one political 
entity where section 218(e)(2) of the Act is applicable. If an agreement 
provides for limiting contributions under section 218(e)(2) of the Act 
as it read prior to the enactment of Pub. L. 99-509, the reporting 
officials compute the total amount of wages paid the employee by two or 
more political subdivisions of a State, or a State and one or more of 
its political subdivisions, which were subject to section 218(e)(2) of 
the Act. The State reports the amount of wages paid up to the annual 
wage limitations in Sec. 404.1047. The employee is treated as having 
only one employer. If the employee also had wages not subject to section 
218(e)(2) of the Act, the State shall report those wages separately.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]



Sec. 404.1242  Back pay.

    (a) Back pay defined. Back pay is pay received in one period of time 
which would have been paid in a prior period of time except for a 
wrongful or improper action taken by an employer. It includes pay made 
under Federal or State laws intended to create an employment 
relationship (including situations where there is unlawful refusal to 
hire) or to protect an employee's right to wages.
    (b) Back pay under a statute. Back pay under a statute is a payment 
by an employer following an award, determination or agreement approved 
or sanctioned by a court or administrative agency responsible for 
enforcing a Federal or State statute protecting an employee's right to 
employment or wages. Examples of these statutes are:
    (1) National Labor Relations Act or a State labor relations act;
    (2) Federal or State laws providing reemployment rights to veterans;
    (3) State minimum wage laws; and
    (4) Civil Rights Act of 1964.

Payments based on legislation comparable to and having a similar effect 
as those listed in this paragraph may also qualify as having been made 
under

[[Page 322]]

a statute. Back pay under a statute, excluding penalties, is wages if 
paid for covered employment. It is allocated to the periods of time in 
which it should have been paid if the employer had not violated the 
statute. For backpay awards affecting periods prior to 1987, a State 
must fill a wage report and pay the contributions due for all periods 
involved in the back pay award under the rules applicable to those 
periods.
    (c) Back pay not under a statute. Where the employer and the 
employee agree on the amount payable without any award, determination or 
agreement approved or sanctioned by a court or administrative agency, 
the payment is not made under a statute. This back pay cannot be 
allocated to prior periods of time but must be reported by the employer 
for the period in which it is paid.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]



Sec. 404.1243  Use of reporting forms--for wages paid prior to 1987.

    (a) Submitting wage reports. In the form and manner required by SSA, 
a State shall submit an annual report of the covered wages the State and 
its political subdivisions paid their employees. Any supplemental, 
adjustment, or correctional wage report filed is considered a part of 
the State's wage report.
    (b) Correction of errors. If a State fails to report or incorrectly 
reports an employee's wages on its wage report, the State shall submit a 
corrective report as required by SSA.
    (c) Reporting on magnetic tape or other media. After approval by 
SSA, a State may substitute magnetic tape or other media for any form 
required for submitting a report or reporting information.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]



Sec. 404.1247  When to report wages--for wages paid prior to 1987.

    A State shall report wages for the calendar year in which they were 
actually paid. If the wages were constructively paid in a prior calendar 
year, the wages shall be reported for the prior year (see Sec. 
404.1042(b) regarding constructive payment of wages).

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]



Sec. 404.1249  When and where to make deposits of contributions and to 
file contribution returns and wage reports--for wages paid prior to 1987.

    (a) Deposits of contributions. The State shall pay contributions in 
the manner required in Sec. 404.1262. (For failure to make deposits 
when due see Sec. 404.1265.) The contribution payment is considered 
made when received by the appropriate Federal Reserve bank or branch 
(see Sec. 404.1262). Except as provided in paragraphs (b) (2) and (3) 
and paragraph (c) of this section, contributions are due and payable as 
follows:
    (1) For wages paid before July 1, 1980. Contribution payments for 
wages paid in a calendar quarter are due on the 15th day of the second 
month following the end of the calendar quarter during which the wages 
were paid.
    (2) For wages paid beginning July 1, 1980, and before January 1984. 
Contribution payments for wages paid in a calendar month are due within 
the thirty day period following the last day of that month.
    (3) For wages paid after December 1983 and prior to 1987. 
Contribution payments for wages paid in the first half of a calendar 
month are due on the last day of that month. Contribution payments for 
wages paid in the second half of that calendar month are due on the 
fifteenth day of the next month. (For purposes of this section, the 
first half of a calendar month is the first 15 days of that month and 
the second half is the remainder of that month.)
    (b) Contribution returns and wage reports--(1) Where to be filed. 
The State shall file the original copies of all contribution returns, 
wage reports, and adjustment reports with the SSA.
    (2) When to be filed--(i) For years prior to execution of agreement 
or modification. If an agreement or modification provides for the 
coverage of employees for periods prior to 1987, the State shall

[[Page 323]]

pay contributions due and shall file wage reports with SSA for these 
periods within 90 days after the date of the notice that the 
Commissioner has signed the agreement or modification.
    (ii) For year of execution of agreement or modification. If the 
agreement or modification provides for the coverage of employees for the 
year of execution of the agreement or modification, the State may, 
within 90 days after the date of the notice that the Commissioner has 
signed the agreement or modification, submit a single contribution 
return and pay all contributions due for the following periods:
    (A) The month in which the agreement or modification was signed;
    (B) Any prior months in that year; and
    (C) Any subsequent months before January 1984 (half-months after 
December 1983) whose contribution return and payment due date is within 
this 90 day period. The State shall file wage reports for that year by 
February 28 of the year following the date of execution or within 90 
days of the date of the notice, whichever is later.
    (iii) For years after execution of agreement or modification. Except 
as described in paragraph (b)(2)(ii) of this section, when the State 
pays its contributions under paragraph (a) of this section, it shall 
also file a contribution return. The State shall file the wage report 
for any calendar year after the year of execution of the agreement or 
modification by February 28 of the following calendar year.
    (iv) For good cause shown, and upon written request by a State, the 
Commissioner may allow additional time for filing the reports and paying 
the related contributions described in paragraphs (b)(2)(i) and 
(b)(2)(ii) of this section.
    (3) Due date is on a weekend, legal holiday or Federal nonworkday. 
If the last day for filing the wage report falls on a weekend, legal 
holiday or Federal nonworkday, the State may file the wage report on the 
next Federal workday. If the due date for paying contributions for the 
wages paid in a period (as specified in paragraph (a) of this section) 
falls on a weekend, legal holiday or Federal nonworkday, the State shall 
pay the contributions and shall file the contribution return no later 
than--
    (i) The preceding Federal workday for wages paid in July 1980 
through December 1983;
    (ii) The next Federal workday for wages paid before July 1980 or 
after December 1983.
    (4) Submitting reports and payments. When submitting the 
contribution returns or wage reports the State shall release them in 
time to reach SSA by the due date. When submitting contribution payments 
as described in Sec. 404.1262, the State shall release the payments in 
time to reach the appropriate Federal Reserve bank or branch by the due 
date. In determining when to release any returns, reports, or payments 
the State shall provide sufficient time for them to timely reach their 
destination under the method of submission used, e.g., mail or 
electronic transfer of funds.
    (c) Payments by third party on account of sickness or accident 
disability. Where a third party makes a payment to an employee on 
account of sickness or accident disability which constitutes wages for 
services covered under a State agreement, the wages will be considered, 
for purposes of the deposits required under this section, to have been 
paid to the employee on the date on which the employer receives notice 
from the third party of the amount of the payment. No interest will be 
assessed for failure to make a timely deposit of contributions due on 
such wages for which a deposit was made after December 1981 and before 
July 1982, to the extent that the failure to make the deposit timely is 
due to reasonable cause and not willful neglect.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997; 
66 FR 28836, May 25, 2001]



Sec. 404.1251  Final reports--for wages paid prior to 1987.

    If a political subdivision is legally dissolved, the State shall 
file a final report on that entity. The report shall include each 
coverage group whose existence ceases with that of the entity. It shall:
    (a) Be marked ``final report'';

[[Page 324]]

    (b) Cover the period during which final payment of wages subject to 
the agreement is made; and
    (c) Indicate the last date wages were paid.

With the final report, the State shall submit a statement showing the 
title and business address of the State official responsible for keeping 
the State's records and of each State and local official responsible for 
keeping the records for each coverage group whose existence is ended. 
The State shall also identify, as prescribed by SSA, each political 
subdivision by its assigned number and, where applicable, any coverage 
group or payroll record unit number assigned.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]

 What Is a State's Liability for Contributions--for Wages Paid Prior to 
                                  1987



Sec. 404.1255  State's liability for contributions--for wages paid prior 
to 1987.

    A State's liability for contributions equals the sum of the taxes 
which would be imposed by sections 3101 and 3111 of the Internal Revenue 
Code of 1954, if the services of the employees covered by the State's 
agreement were employment as defined in section 3121 of the Code. The 
State's liability begins when those covered services are performed, for 
which wages are actually or constructively paid to those individuals, 
including wages paid in a form other than cash (see Sec. 404.1041(d)). 
If an agreement is effective retroactively, the State's liability for 
contributions on wages paid during the retroactive period begins with 
the date of execution of the agreement or applicable modification. Where 
coverage of a coverage group has been terminated, the State is liable 
for contributions on wages paid for covered services even if the wages 
are paid after the effective date of termination of coverage.



Sec. 404.1256  Limitation on State's liability for contributions for 
multiple employment situations--for wages paid prior to 1987.

    (a) Limitation due to multiple employment. Where an individual in 
any calendar year performs covered services as an employee of a State 
and as an employee of one or more political subdivisions of the State, 
or as an employee of more than one political subdivision; and the State 
provides all the funds for payment of the amounts which are equivalent 
to the taxes imposed on the employer under FICA on that individual's 
remuneration for those services; and no political subdivision reimburses 
the State for paying those amounts; the State's agreement or 
modification of an agreement may provide that the State's liability for 
the contributions on that individual's remuneration shall be computed as 
though the individual had performed services in employment for only one 
political subdivision. The State may then total the individual's covered 
wages from all these governmental employers and compute the 
contributions based on that total subject to the wage limitations in 
Sec. 404.1047.
    (b) Identification of employees in multiple employment. An agreement 
or modification of an agreement providing for the computation of 
contributions as described in paragraph (a) of this section shall 
identify the class or classes of employees to whose wages this method of 
computing contributions applies. For example, the State may provide that 
such computation shall apply to the wages paid to all individuals for 
services performed in positions covered by a particular retirement 
system, or to the wages paid to all individuals who are members of any 
two or more coverage groups designated in an agreement or modification. 
The State shall promptly notify SSA if the conditions in paragraph (a) 
of this section are no longer met by any class or classes of employees 
identified in an agreement or modification. In its notification, the 
State shall identify each class of employees and the

[[Page 325]]

date on which the conditions ceased to be met.
    (c) Effective date. In the agreement or modification, the State 
shall provide that the computation of contributions shall apply to wages 
paid after the effective date stated in the agreement or modification. 
That date may be the last day of any calendar year; however, it may be 
no earlier than January 1 of the year in which the agreement or 
modification is submitted to SSA.

 Figuring the Amount of the State's Contributions--for Wages Paid Prior 
                                 to 1987



Sec. 404.1260  Amount of contributions--for wages paid prior to 1987.

    The State's contributions are equal to the product of the applicable 
contribution rate (which is equivalent to both the tax rates imposed 
under sections 3101 and 3111 of the Internal Revenue Code) times the 
amount of wages actually or constructively paid for covered services 
each year (subject to the wage limitations in Sec. 404.1047) to the 
employee.



Sec. 404.1262  Manner of payment of contributions by State--for wages 
paid prior to 1987.

    When paying its contributions, the State shall deposit its payment 
at the specific Federal Reserve bank or branch designated by SSA.



Sec. 404.1263  When fractional part of a cent may be disregarded--for 
wages paid prior to 1987.

    In paying contributions to a Federal Reserve bank or branch, a State 
may disregard a fractional part of a cent unless it amounts to one-half 
cent or more, in which case it shall be increased to one cent. 
Fractional parts of a cent shall be used in computing the total of 
contributions.

 If a State Fails To Make Timely Payments--for Wages Paid Prior to 1987



Sec. 404.1265  Addition of interest to contributions--for wages paid 
prior to 1987.

    (a) Contributions not paid timely. If a State fails to pay its 
contributions to the appropriate Federal Reserve bank or branch (see 
Sec. 404.1262), when due under Sec. 404.1249(a), we add interest on 
the unpaid amount of the contributions beginning with the date the 
payment was due, except as described in paragraphs (b) and (c) of this 
section. Interest, if charged, begins with the due date even if it is a 
weekend, legal holiday or Federal nonwork day. Interest is added at the 
rate prescribed in section 218(j) of the Act as it read prior to the 
enactment of Pub. L. 99-509.
    (b) Method of making adjustment. (1) If a State shall file a 
contribution return and shall accompany such return with payment of 
contributions due and payable as reported on such return in accordance 
with Sec. 404.1249 but the amount of the contributions reported and 
paid is less than the correct amount of contributions due and payable 
and the underpayment of contributions is attributable to an error in 
computing the contributions (other than an error in applying the rate of 
contributions in effect at the time the wages were paid), the State 
shall adjust the underpayment by reporting the additional amount due by 
reason of such underpayment either as an adjustment of total 
contributions due with the first wage report filed after notification of 
the underpayment by the Social Security Administration, or as a single 
adjustment of total contributions due with any contribution return filed 
prior to the filing of such wage report.
    (2) If an underpayment of contributions is due to an underreporting 
of or a failure to report one or more employees:
    (i) Where the underreporting or failure to report has been 
ascertained by the State, the State may cause an adjustment by filing a 
report within 30 days after ascertainment of the error by the State;
    (ii) Where the underreporting or failure to report has been 
ascertained by the Social Security Administration, a notification of 
underpayment shall be forwarded to the State, and the State may cause an 
adjustment of the underpayment by returning to the Social Security 
Administration, within 30 days from the date of the notification, a copy 
of the notification of underpayment and the State's corrected report. 
The report shall show the amount

[[Page 326]]

of wages, if any, erroneously reported for the reporting period and the 
correct amount of wages that should have been reported and the 
identification number of the State or the political subdivision for each 
employee who was omitted or erroneously reported. The filing to correct 
an underreporting of or a failure to report one or more employees' wages 
shall not constitute an adjustment under this section unless the wages 
were erroneously omitted or erroneously reported.
    (c) Payment. The amount of each underpayment adjusted in accordance 
with this section shall be paid to the Federal Reserve Bank, or branch 
thereof, serving the district in which the State is located, without 
interest, at the time of reporting the adjustment; except that where any 
amounts due with respect to such an adjustment had been paid in error to 
IRS and a refund thereof timely requested from, or instituted by, IRS, 
the amount of underpayment adjusted in accordance with this section, 
plus any interest paid by IRS on the amount of such underpayment, shall 
be paid to the Federal Reserve Bank, or branch thereof, serving the 
district in which the State is located, at the time of reporting the 
adjustment or within 30 days after the date of issuance by IRS of the 
refund of the erroneous payments, whichever is later. Except as provided 
in the preceding sentence of this paragraph, if an adjustment is 
reported pursuant to paragraph (b) of this section, but the amount 
thereof is not paid when due, interest thereafter accrues.
    (d) Verifying contributions paid against reported wages. We check 
the computation of contributions to verify that a State has paid the 
correct amount of contributions on the wages it reports for a calendar 
year (see Sec. 404.1249(b)(2)). If we determine that a State paid less 
than the amount of contributions due for that year, we add interest to 
the amount of the underpayment. We would add interest beginning with the 
date the unpaid contributions were initially due to the date those 
contributions are paid. However, if the total amount of the underpayment 
is 5 percent or less than 5 percent of the contributions due for a 
calendar year based upon the State's wage report and the State deposits 
the underpaid amount within 30 days after the date of our notification 
to the State of the amount due, the State may request that the interest 
on the underpaid amount be waived for good cause. This request must be 
made within 30 days of our notification to the State of the amount due. 
Such requests will be evaluated on an individual basis. The evaluation 
will include, but not be limited to, consideration of such factors as 
the circumstances causing the late payment, the State's past record of 
late payments and the amount involved.

    Examples (1) The records of a political subdivision for the month of 
June are destroyed by fire. The State makes an estimated deposit of 
contributions for the month of June for that political subdivision and 
deposits contributions for the month of June for all other political 
subdivisions based on actual records. At the time SSA verifies 
contributions paid against reported wages, we discover that the State 
has paid only 97 percent of its total liability for the year. Within 30 
days after we notify it of the amount due, the State asks that we waive 
the interest on the unpaid amount and the State deposits the unpaid 
amount. In this situation, we would waive the interest on the unpaid 
contributions.
    (2) We would waive interest if:
    (i) Some of the political subdivisions made small arithmetical 
errors in preparing their reports of wages,
    (ii) After verification of the contributions paid against reported 
wages, SSA discovers that minimal additional contributions are due,
    (iii) Within 30 days of our notice to the State regarding this 
underpayment the State, which usually makes its deposits timely, pays 
the amount due, and
    (iv) Within that same 30 day period the State requests that we waive 
the interest due.
    (3) We would not waive interest where a State frequently has 
problems depositing its contributions timely. Reasons given for the 
delays are, e.g., the computer was down, the 5 p.m. mail pickup was 
missed, one of the school district reports was misplaced. If requested 
we would not waive interest on this State's late payment of 
contributions based upon its past record of late payments and because of 
the circumstances cited.

    (e) Due date is on a weekend, legal holiday or Federal nonworkday. 
If the last day of the 30-day periods specified in paragraphs (b) and 
(d) of this section is on a weekend, legal holiday or Federal

[[Page 327]]

nonworkday, the State shall make the required deposit or request for 
waiver of payment of interest on the next Federal workday.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]



Sec. 404.1267  Failure to make timely payments--for wages paid prior to 1987.

    If a State does not pay its contributions when due, the Commissioner 
has the authority under section 218(j) of the Act as it read prior to 
the enactment of Pub. L. 99-509 to deduct the amounts of the unpaid 
contributions plus interest at the rate prescribed from any amounts 
certified by her or him to the Secretary of the Treasury for payments to 
the State under any other provision of the Social Security Act. The 
Commissioner notifies the Secretary of the Treasury of the amounts 
deducted and requests that the amount be credited to the Trust Funds. 
Amounts deducted are considered paid to the State under the other 
provision of the Social Security Act.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997]

  How Errors in Reports and Contributions Are Adjusted--for Wages Paid 
                              Prior to 1987



Sec. 404.1270  Adjustments in general--for wages paid prior to 1987.

    States have the opportunity to adjust errors in the payment of 
contributions. A State but not its political subdivisions is authorized 
to adjust errors in the underpayment of contributions. Similarly, the 
State shall file all claims for credits or refunds and SSA makes the 
credits and refunds only to the State. Generally, we do not refund 
contributions in cash to a State unless the State is not expected to 
have future liability for contributions under section 218 of the Act.



Sec. 404.1271  Adjustment of overpayment of contributions--for wages 
paid prior to 1987.

    (a) General. If a State pays more than the correct amount of 
contributions, the State shall adjust the overpayment with the next 
contribution return filed on which the amount owed equals or exceeds the 
amount of the overpayment.
    (b) Overpayment due to overreporting of wages--(1) Report to file. 
If the overpayment is due to the State's reporting more than the correct 
amount of wages paid to one or more employees during a reporting period 
and the overpayment is not adjusted under paragraph (a) of this section, 
the State shall file a report on the appropriate form showing:
    (i) The corrected wage data as prescribed by SSA; and
    (ii) The reason why the original reporting was incorrect.
    (2) Refund or credit of overpayment where section 218(e)(2) of the 
Act not applicable. If:
    (i) The State collected contributions from employees in excess of 
the amount of taxes that would have been required under section 3101 of 
the Internal Revenue Code; and
    (ii) The State paid to the Secretary of the Treasury those 
contributions plus a matching amount in excess of the taxes which would 
have been required from an employer under section 3111 of the Code; and
    (iii) The services of the employees in question would have 
constituted employment under section 3121(b) of the Code; and
    (iv) Section 218(e)(2) of the Act as it read prior to the enactment 
of Pub. L. 99-509 does not apply (see Sec. 404.1256(a)), then the State 
shall adjust the overpaid contributions under paragraph (b)(1) of this 
section. With its adjustment the State, where appropriate, shall include 
on the prescribed form a statement that the employees from whom the 
excess contributions were collected have not received nor expect to 
receive a refund of excess contributions under section 6413(c) of the 
Internal Revenue Code of 1954 (see Sec. 404.1275(b)). Generally, if the 
State does not include this statement with its adjustment request, we 
only refund or credit the State for up to one-half of the overpaid 
amount.
    (c) Refund or credit of overpayment where section 218(e)(2) of the 
Act applicable--(1) General. If--
    (i) The overreporting of the amount of wages paid to one or more 
employees

[[Page 328]]

during a reporting period(s) is due to a computation of contributions 
under Sec. 404.1256 for a year or years prior to the year in which the 
agreement or modification providing for the computation is entered into, 
or
    (ii) The overreporting is due to a failure to compute Sec. 
404.1256,


the State shall adjust the overpayment under paragraph (b)(1) of this 
section. An overpayment due to overreported wages which does not result 
from the computation of contributions or a failure to compute 
contributions under Sec. 404.1256 shall also be adjusted by the State 
under paragraph (b)(1) of this section. If the adjustment of the 
overpayment results in an underreporting of wages for any employee by 
the State or any political subdivision, the State shall include with the 
report adjusting the overpayment a report adjusting each underreporting. 
If the adjustment of the overpayment does not result in an 
underreporting of wages for any employee by the State or any political 
subdivision, the State shall include with the report adjusting the 
overpayment a statement that the adjustment of the overpayment does not 
result in any underreporting.
    (2) Amount of refund or credit. If the State collects excess 
contributions from employees, the State's claim for refund or credit is 
limited to the overpaid amounts. (See Sec. 404.1275 relating to 
adjustment of employee contributions.) If--
    (i) The State collected the correct amount of contributions from 
employees based on the amount of wages reported and the Forms W-2 issued 
to the employees show only the amount of contributions actually 
collected, but the amount of wages reported is being adjusted downward, 
or
    (ii) The State collects excess contributions from employees but 
Forms W-2 have not been issued for an amount of wages which is being 
adjusted downward, the State may claim a refund or credit for the 
overpaid amounts. Where the State's claim for refund or credit is for 
the total overpaid amount, the adjustment report shall include a 
statement that excess contributions have not been collected from 
employees, or, where excess contributions have been collected, that 
Forms W-2 have not been issued and that, when issued, they will show the 
correct amount of employee contributions.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]



Sec. 404.1272  Refund or recomputation of overpayments which are not 
adjustable--for wages paid prior to 1987.

    (a) General. If a State pays more than the correct amount of 
contributions or interest to the appropriate Federal Reserve bank or 
branch (see Sec. 404.1262), and no adjustment in the amount of reported 
wages is necessary, that State may file a claim for refund or 
recomputation of the overpayment.
    (b) Form of claim. No special form is required to make a claim for a 
refund or recomputation. If a credit is taken under Sec. 404.1271, a 
claim is not required.
    (c) Proof of representative capacity. If a report or return is made 
by an authorized official of the State who ceases to act in an official 
capacity and a claim for a refund is made by a successor official, the 
successor official must submit with the claim written evidence showing 
that he or she has the authority to make a claim for and receive a 
refund of any contributions paid by the former official. The written 
evidence is not necessary if the successor official has previously filed 
one or more reports or returns which contain her or his signature and 
official title.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]



Sec. 404.1275  Adjustment of employee contributions--for wages paid 
prior to 1987.

    The amount of contributions a State deducts from an employee's 
remuneration for covered services, or any correction of that amount, is 
a matter between the employee and the State or political subdivision. 
The State shall show any correction of an employee's contribution on 
statements it furnishes the employee under Sec. 404.1225 of this part. 
Where the State issues an employee a Form W-2 and then submits

[[Page 329]]

an overpayment adjustment but claims less than the total overpaid amount 
as a refund or credit, the State shall not correct the previously issued 
Form W-2 to reflect that adjustment.

[53 FR 32976, Aug. 29, 1988, as amended at 65 FR 16813, Mar. 30, 2000]



Sec. 404.1276  Reports and payments erroneously made to Internal Revenue 
Service-transfer of funds--for wages paid prior to 1987.

    (a) General. In some instances, State or local governmental entities 
not covered under an agreement make reports and pay contributions to IRS 
under the Federal Insurance Contributions Act (FICA) procedures 
applicable to private employers in the mistaken belief that this 
provides Social Security coverage under section 218 of the Act for their 
employees. In other instances, entities which are covered under an 
agreement erroneously report to IRS, or a State or local government 
employee reports other employees to IRS or reports to IRS as a self-
employed individual. Where these reports and payments are erroneously 
made to IRS, the State may correct the error and obtain coverage under 
its agreement as described in paragraphs (b) through (f) of this 
section.
    (b) Political subdivision not included in the State agreement. We 
notify the State that if it desires coverage, it may be provided by 
either a regular modification or an error modification, depending on the 
circumstances (Sec. Sec. 404.1215 and 404.1216). In most cases, the 
State may obtain coverage by a regular modification. If a regular 
modification cannot be used (e.g., State law does not permit the 
retroactive effective date which would be desired), the State may use an 
error modification. The effective date of either modification depends on 
the facts of the situation being corrected.
    (c) Political subdivision included in the agreement. If a political 
subdivision included in the agreement erroneously makes reports and 
payments under FICA procedures, the State must correct the reportings 
for periods not barred by the statute of limitations. If the covered 
entity reported both under the agreement and under FICA procedures, we 
notify IRS and make necessary corrections in the earnings records. We 
also advise the State that the entity which reported under FICA 
procedures should request a refund of payments erroneously made to IRS.
    (d) State and local government employees erroneously reported as 
employees of individual or as self-employed--(1) Covered entity. If 
employees of a covered entity are erroneously reported as employees of 
an individual or as self-employed, we advise the State that the 
individual who made the reports should request a refund from IRS for 
periods not barred by the statute of limitations. We require the State 
to file correctional reports and returns for any periods open under the 
State and local statute of limitations.
    (2) Noncovered entity. We advise the State that the individual who 
made the reports should request a refund from IRS for the periods not 
barred by the statute of limitations. If the State wishes to provide 
coverage, it must submit a modification as discussed in paragraph (b) of 
this section. If the State does not wish to provide coverage, we void 
the reports. Amounts reported for periods barred by the statute of 
limitations remain on the earnings records.
    (e) Filing wage reports and paying contributions. Generally, the 
entity or individual that makes the erroneous reports and payments 
requests the refund from IRS for periods not barred by the statute of 
limitations. The State files the necessary reports with SSA and pays any 
contributions due. The reports shall conform to the coverage provided by 
the agreement to the extent permitted by the statute of limitations. The 
due date for these reports depends on whether original reports or 
adjustment reports are involved. Reports and contribution returns for 
the entire retroactive period of coverage provided by a regular or error 
modification are due 90 days after the date of execution of the 
modification. The time limitations for issuing assessments and credits 
or refunds extend from this due date. Thus, SSA may issue assessments or 
credits or refunds for periods barred to refund by IRS. The State may 
request that reports and payments for the IRS barred periods be 
considered made under the

[[Page 330]]

agreement as described in paragraph (f) of this section.
    (f) Use of transfer procedure. In limited situations, the State may 
request that reports and payments the State or a political subdivision 
(but not an individual) erroneously made under FICA procedures and which 
have been posted to the employee's earnings record be considered made 
under the State's agreement. We use a transfer procedure to do this. The 
transfer procedure may be used only where
    (1) The periods are open to assessment under the State and local 
statute of limitations;
    (2) The erroneous reports to be transferred are posted to SSA's 
records;
    (3) The periods are barred to refund under the IRS statute of 
limitations; and
    (4) A refund is not obtained from IRS by the reporting entity.

 How Overpayments of Contributions Are Credited or Refunded--for Wages 
                           Paid Prior to 1987



Sec. 404.1280  Allowance of credits or refunds--for wages paid prior to 1987.

    If a State pays more than the amount of contributions due under an 
agreement, SSA may allow the State, subject to the time limitations in 
Sec. 404.1282 and the exceptions to the time limitations in Sec. 
404.1283, a credit or refund of the overpayment.



Sec. 404.1281  Credits or refunds for periods of time during which no 
liability exists--for wages paid prior to 1987.

    If a State pays contributions for any period of time for which 
contributions are not due, but the State is liable for contributions for 
another period, we credit the amount paid against the amount of 
contributions for which the State is liable. We refund any balance to 
the State.



Sec. 404.1282  Time limitations on credits or refunds--for wages paid 
prior to 1987.

    (a) General. To get a credit or refund, a State must file a claim 
for a credit or refund of the overpaid amount with the Commissioner 
before the applicable time limitation expires. The State's claim for 
credit or refund is considered filed with the Commissioner when it is 
delivered or mailed to the Commissioner. Where the time limitation ends 
on a weekend, legal holiday or Federal nonworkday, we consider a claim 
timely filed if it is filed on the next Federal workday.
    (b) Time limitation. Subject to the exceptions in Sec. 404.1283, a 
State must file a claim for credit or refund of an overpayment before 
the end of the latest of the following time periods:
    (1) 3 years, 3 months, and 15 days after the year in which the wages 
in question were paid or alleged to have been paid; or
    (2) 3 years after the due date of the payment which included the 
overpayment; or
    (3) 2 years after the overpayment was made to the Secretary of the 
Treasury.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997]



Sec. 404.1283  Exceptions to the time limitations on credits or refunds--for 
wages paid prior to 1987.

    (a)(1) Extension by agreement. The applicable time period described 
in Sec. 404.1282 for filing a claim for credit for, or refund of, an 
overpayment may, before the expiration of such period, be extended for 
no more than 6 months by written agreement between the State and the 
Commissioner. The agreement must involve and identify a known issue or 
reporting error. It must also identify the periods involved, the time 
limitation which is being extended and the date to which it is being 
extended, and the coverage group(s) and position(s) or individual(s) to 
which the agreement applies. The extension of the period of limitation 
shall not become effective until the agreement is signed by the 
appropriate State official and the Commissioner. (See Sec. 404.3(c) for 
the applicable rule where periods of limitation expire on nonwork days.) 
A claim for credit or refund filed by the State before the extended time 
limit ends shall be considered to have been filed within the time period 
limitation specified in section 218(r)(1) of the Act as it read prior to 
the enactment of Pub. L. 99-509. (See Sec. 404.1282.)
    (2) Reextension. An extension agreement provided for in paragraph 
(a)(1) of

[[Page 331]]

this section may be reextended by written agreement between the State 
and the Commissioner for no more than 6 months at a time beyond the 
expiration of the prior extension or reextension agreement, and only if 
one of the following conditions is met:
    (i) Litigation (including intrastate litigation) or a review under 
Sec. Sec. 404.1290 or 404.1297 involving wage reports or corrections on 
the same issue is pending; or
    (ii) The State is actively pursuing corrections of a known error 
which require additional time to complete; or
    (iii) The Social Security Administration is developing a coverage or 
wage issue which was being considered before the statute of limitations 
expired and additional time is needed to make a determination; or
    (iv) The Social Security Administration has not issued to the State 
a final audit statement on the State's wage or correction reports; or
    (v) There is pending Federal legislation which may substantially 
affect the issue in question, or the issue has national implications.
    (b) Deletion of wage entry on employee's earnings record. If the 
Commissioner, under section 205(c)(5) (A), (B), or (E) of the Act, 
deletes a wage entry on an individual's earnings record, a claim for 
credit or refund of the overpayment resulting from the deletion is 
considered filed within the applicable time limitations in Sec. 
404.1282 if
    (1) The State files the claim before the Commissioner's decision 
regarding the deletion of the wage entry from the individual's earnings 
record becomes final or
    (2) The State files a claim regarding the deletion of the wage entry 
from the individual's earnings record which entry is erroneous because 
of fraud.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997]



Sec. 404.1284  Offsetting underpayments against overpayments--for wages 
paid prior to 1987.

    (a) State fails to make adjustment for allowance of credit. If SSA 
notifies a State that a credit is due the State, and the State does not 
make the adjustment for the allowance of the credit, SSA offsets the 
credit against any contributions or interest due. Before making the 
offset, SSA will give the State an opportunity to make the adjustment.
    (b) State fails to make adjustment for underpayment of contributions 
or interest due. If SSA notifies a State that contributions or interest 
are due, and the State does not pay the contributions or interest, SSA 
offsets the contributions or interest due against any credit due the 
State. Before making the offset, SSA will give the State an opportunity 
to pay the underpayment or interest due.

 How Assessments for Underpayments of Contributions Are Made--for Wages 
                           Paid Prior to 1987



Sec. 404.1285  Assessments of amounts due--for wages paid prior to 1987.

    (a) A State is liable for any amount due (which includes 
contributions or interest) under an agreement until the Commissioner is 
satisfied that the amount has been paid to the Secretary of the 
Treasury. If the Commissioner is not satisfied that a State has paid the 
amount due, the Commissioner issues an assessment for the amount due 
subject to the time limitations in Sec. 404.1286 and the exceptions to 
the time limitations in Sec. Sec. 404.1287 and 404.1289. If detailed 
wage information is not available, the assessment is issued based on the 
following:
    (1) The largest number of individuals whose services are known to be 
covered under the agreement is used for computation purposes;
    (2) The individuals are assumed to have maximum creditable earnings 
each year;
    (3) The earnings are considered wages for covered services; and
    (4) The amount computed is increased by twenty percent to insure 
that all covered wages are included in the assessment.
    (b) If the State pays the amount assessed and the assessed amount is 
later determined to be more than the amount actually due, we issue a 
refund or credit to that State for the excess amount. When the 
assessment is issued within the applicable time limitation, there is no 
time limit on collecting the amount due. An assessment is issued

[[Page 332]]

on the date that it is mailed or otherwise delivered to the State.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997]



Sec. 404.1286  Time limitations on assessments--for wages paid prior to 1987.

    (a) Subject to the exceptions to the time limitations in Sec. Sec. 
404.1287 and 404.1289, a State is not liable for an amount due under an 
agreement unless the Commissioner makes an assessment for that amount 
before the later of the following periods ends:
    (1) Three years, 3 months, and 15 days after the year in which the 
wages, upon which the amount is due, were paid; or
    (2) Three years after the date the amount became due.
    (b) Where the time limitation ends on a weekend, legal holiday or 
Federal nonworkday, an assessment is considered timely if the 
Commissioner makes the assessment on the next Federal workday.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997]



Sec. 404.1287  Exceptions to the time limitations on assessments--for wages 
paid prior to 1987.

    (a)(1) Extension by agreement. The applicable time period described 
in Sec. 404.1286 for assessment of an amount due may, before the 
expiration of such period, be extended for no more than 6 months by 
written agreement between the State and the Commissioner. The agreement 
must involve and identify a known issue or reporting error. It must also 
identify the periods involved, the time limitation which is being 
extended and the date to which it is being extended, and the coverage 
group(s) and position(s) or individual(s) to which the agreement 
applies. The extension of the period of limitation shall not become 
effective until the agreement is signed by the appropriate State 
official and the Commissioner. (See Sec. 404.3(c) for the applicable 
rule where periods of limitation expire on nonwork days.) An assessment 
made by the Commissioner before the extended time limit ends shall be 
considered to have been made within the time period limitation specified 
in section 218(q)(2) of the Act as it read prior to the enactment of 
Pub. L. 99-509. (See Sec. 404.1286.)
    (2) Reextension. An extension agreement provided for in paragraph 
(a)(1) of this section may be reextended by written agreement between 
the State and the Commissioner for no more than 6 months at a time 
beyond the expiration of the prior extension or reextension agreement, 
and only if one of the following conditions is met:
    (i) Litigation (including intrastate litigation) or a review under 
Sec. 404.1290 or Sec. 404.1297 involving wage reports or corrections 
on the same issue is pending; or
    (ii) The State is actively pursuing corrections of a known error 
which require additional time to complete; or
    (iii) The Social Security Administration is developing a coverage or 
wage issue which was being considered before the statute of limitations 
expired and additional time is needed to make a determination; or
    (iv) The Social Security Administration has not issued to the State 
a final audit statement on the State's wage or correction reports; or
    (v) There is pending Federal legislation which may substantially 
affect the issue in question, or the issue has national implications.
    (b) The 365-day period. If a State files a report before the 
applicable time limitation in Sec. 404.1286 (or any extension under 
paragraph (a) of this section) ends and makes no payment or pays less 
than the correct amount due, the Commissioner may assess the State for 
the amount due after the applicable time limitation has ended. However, 
the Commissioner must make the assessment no later than the 365th day 
after the day the State makes payment to the Secretary of the Treasury. 
The Commissioner can only make this assessment on the wages paid to the 
reported individuals for the reported periods. The Commissioner, in 
making this assessment, credits the amount paid by the State on these 
individuals' wages for those reported periods.
    (c) Revision of employee's earnings record. If, under section 
205(c)(5) (A) or (B) of the Act, the Commissioner credits wages to an 
individual's earnings record, the Commissioner may make an assessment 
for any amount due on

[[Page 333]]

those wages before the Commissioner's decision on revising the 
individual's earnings record becomes final. (Sections 404.822(c) (1) and 
(2) describe the time limits for revising an earnings record where an 
individual has applied for monthly benefits or a lump-sum death payment 
or requested that we correct his earnings record.)
    (d) Overpayment of contributions on wages of employee having other 
wages in a period barred to assessment. If the Commissioner allows a 
State a credit or refund of an overpayment for wages paid or alleged to 
have been paid an individual in a calendar year but the facts upon which 
the allowance is based establish that contributions are due on other 
wages paid that individual in that year which are barred to assessment, 
we may make an assessment notwithstanding the periods of limitation in 
Sec. 404.1286. The assessment, however, must be made before or at the 
time we notify the State of the allowance of the credit or refund. In 
this situation, the Commissioner reduces the amount of the State's 
credit or refund by the assessed amount and notifies the State 
accordingly. For purposes of this paragraph, the assessment shall only 
include contributions and not interest as provided for in section 218(j) 
of the Act as it read prior to the enactment of Pub. L. 99-509.

    Example: The State files an adjustment report timely to correct an 
error in the amount reported as wages for an employee. The correction 
reduces the employee's wages for the year to less than the maximum 
amount creditable. The employee has other earnings in the same year 
which were not reported because of the previously reported maximum 
amounts. The applicable time limitation for assessing contributions on 
wages for the year has expired before the credit was allowed. The 
Commissioner may assess for the underpaid contributions but no later 
than thd date of the notice to the State that its claim for a credit had 
been allowed.

    (e) Evasion of payment. The Commissioner may make an assessment of 
an amount due at any time where the State's failure to pay the amount 
due results from the fraudulent attempt of an officer or employee of the 
State or political subdivision to defeat or evade payment of that 
amount.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997]



Sec. 404.1289  Payment after expiration of time limitation for 
assessment--for wages paid prior to 1987.

    The Commissioner accepts wage reports filed by a State even though 
the applicable time limitation described in Sec. 404.1286 (or as the 
time limitation is extended under Sec. 404.1287) has expired, provided:
    (a) The State pays to the Secretary of the Treasury the amount due 
on the wages paid to employees performing services in the coverage group 
in the calendar years for which the wage reports are being made; and
    (b) The State agrees in writing with the Secretary to extend the 
time limitation for all employees in the coverage group in the calendar 
years for which the wage reports are being made.

In this situation, the time period for assessment is extended until the 
Commissioner notifies the State that the wage reports are accepted. 
Where the State pays the amount due within the time period as extended 
under this section, the amount shall not include interest as provided 
for in section 218(j) of the Act as it read prior to the enactment of 
Pub. L. 99-509.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997]

Secretary's Review of Decisions on Credits, Refunds, or Assessments--for 
                        Wages Paid Prior to 1987



Sec. 404.1290  Review of decisions by the Secretary--for wages paid prior 
to 1987.

    What decisions will be reviewed. A State, under section 218(s) of 
the Act as it read prior to the enactment of Pub. L. 99-509, may request 
review of an assessment of an amount due from the State, an allowance to 
the State of a credit or refund of an overpayment, or a disallowance of 
the State's claim for credit or refund of an overpayment. The 
Commissioner may review regardless of whether the amount assessed has 
been paid or whether the credit or refund has been accepted by the 
State. Prior to the Commissioner's review, however, an assessment, 
allowance or disallowance may be reconsidered under Sec. Sec. 404.1291 
through 404.1293.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997]

[[Page 334]]



Sec. 404.1291  Reconsideration--for wages paid prior to 1987.

    After the State requests review of the assessment or allowance or 
disallowance of a credit or refund, and prior to the Commissioner's 
review, that decision may be reconsidered, and affirmed, modified, or 
reversed. We notify the State of the reconsidered determination and the 
basis for it. The State may request the Commissioner to review this 
reconsidered determination under Sec. 404.1294(b). In limited 
situations, SSA and the State may agree that the reconsideration process 
should be waived, e.g., where major policy is at issue.



Sec. 404.1292  How to request review--for wages paid prior to 1987.

    (a) Form of request. No particular form of request is required. 
However, a written request for review must:
    (1) Identify the assessment, allowance or disallowance being 
questioned;
    (2) Describe the specific issue on which the review is requested;
    (3) Contain any additional information or argument relevant to that 
issue; and
    (4) Be signed by an official authorized to request the review on 
behalf of the State.
    (b) Submitting additional material. A State has 90 days from the 
date it requests review to submit additional evidence it wishes 
considered during the review process. The time limit for submitting 
additional evidence may be extended upon written request of the State 
and for good cause shown.

(Approved by the Office of Management and Budget under control number 
0960-0425)

[53 FR 32976, Aug. 29, 1988, as amended at 66 FR 28836, May 25, 2001]



Sec. 404.1293  Time for filing request for review--for wages paid prior 
to 1987.

    (a) Time for filing. The State must file its request for review 
within 90 days after the date of the notice of assessment, allowance, or 
disallowance. Usually, the date of the request for review is considered 
the filing date. Where the 90-day period ends on a weekend, legal 
holiday or Federal nonworkday, a request filed on the next Federal 
workday is considered as timely filed.
    (b) Extension of time. For good cause shown, and upon written 
application by a State filed prior to the expiration of the time for 
filing a request for review, additional time for filing the request may 
be allowed.



Sec. 404.1294  Notification to State after reconsideration--for wages 
paid prior to 1987.

    (a) The State will be notified in writing of the reconsidered 
determination on the assessment, allowance, or disallowance, and the 
basis for the determination.
    (b) If the State does not agree with the reconsidered determination, 
it has 90 days from the date of notice of the reconsidered determination 
to request the Commissioner to review that determination. The rules on 
what the request should contain and the time for filing the request are 
the same as in Sec. Sec. 404.1292 and 404.1293.



Sec. 404.1295  Commissioner's review--for wages paid prior to 1987.

    Upon request by the State, the Commissioner will review the 
reconsidered determination (or the assessment, allowance or disallowance 
as initially issued if reconsideration is waived under Sec. 404.1291). 
If necessary, the Commissioner may request the State to furnish 
additional evidence. Based upon the evidence considered in connection 
with the assessment, allowance or disallowance and any additional 
evidence submitted by the State or otherwise obtained by the 
Commissioner, the Commissioner affirms, modifies, or reverses the 
assessment, allowance or disallowance.



Sec. 404.1296  Commissioner's notification to the State--for wages 
paid prior to 1987.

    The Commissioner notifies the State in writing of the decision on 
the assessment, allowance, or disallowance, and the basis for the 
decision.

[[Page 335]]

How a State May Seek Court Review of Commissioner's Decision--for Wages 
                           Paid Prior to 1987



Sec. 404.1297  Review by court--for wages paid prior to 1987.

    (a) Who can file civil action in court. A State may file a civil 
action under section 218(t) of the Act as it read prior to the enactment 
of Pub. L. 99-509 requesting a district court of the United States to 
review any decision the Commissioner makes under section 218(s) of the 
Act as it read prior to the enactment of Pub. L. 99-509 concerning the 
assessment of an amount due, the allowance of a credit or refund, or the 
disallowance of a claim for credit or refund.
    (b) Where the civil action must be filed. A State must file the 
civil action in the district court of the United States for the judicial 
district in which the State's capital is located. If the civil action is 
brought by an interstate instrumentality, it must file the civil action 
in the district court of the United States for the judicial district in 
which the instrumentality's principal office is located. The district 
court's judgment is final except that it is subject to review in the 
same manner as judgments of the court in other civil actions.
    (c) No interest on credit or refund of overpayment. SSA has no 
authority to pay interest to a State after final judgment of a court 
involving a credit or refund of an overpayment made under section 218 of 
the Act.

[53 FR 32976, Aug. 29, 1988, as amended at 62 FR 38451, July 18, 1997]



Sec. 404.1298  Time for filing civil action--for wages paid prior to 1987.

    (a) Time for filing. The State must file the civil action for a 
redetermination of the correctness of the assessment, allowance or 
disallowance within 2 years from the date the Commissioner mails to the 
State the notice of the decision under Sec. 404.1296. Where the 2-year 
period ends on a Saturday, Sunday, legal holiday or Federal nonwork day, 
an action filed on the next Federal workday is considered timely filed.
    (b) Extension of time for filing. The Commissioner, for good cause 
shown, may upon written application by a State filed prior to the end of 
the two-year period, extend the time for filing the civil action.



Sec. 404.1299  Final judgments--for wages paid prior to 1987.

    (a) Overpayments. Payment of amounts due to a State required as the 
result of a final judgment of the court shall be adjusted under 
Sec. Sec. 404.1271 and 404.1272.
    (b) Underpayments. Wage reports and contribution returns required as 
the result of a final judgment of the court shall be filed under 
Sec. Sec. 404.1237-404.1251. We will assess interest under Sec. 
404.1265 where, based upon a final judgment of the court, contributions 
are due from a State because the amount of contributions assessed was 
not paid by the State or the State had used an allowance of a credit or 
refund of an overpayment.



    Subpart N_Wage Credits for Veterans and Members of the Uniformed 
                                Services

    Authority: Secs. 205 (a) and (p), 210 (l) and (m), 215(h), 217, 229, 
and 702(a)(5) of the Social Security Act (42 U.S.C. 405 (a) and (p), 410 
(l) and (m), 415(h), 417, 429, and 902(a)(5)).

    Source: 45 FR 16464, Mar. 14, 1980, unless otherwise noted.

                                 General



Sec. 404.1301  Introduction.

    (a) The Social Security Act (Act), under section 217, provides for 
noncontributory wage credits to veterans who served in the active 
military or naval service of the United States from September 16, 1940, 
through December 31, 1956. These individuals are considered World War II 
or post-World War II veterans. The Act also provides for noncontributory 
wage credits to certain individuals who served in the active military or 
naval service of an allied country during World War II. These 
individuals are considered World War II veterans. In addition, certain 
individuals get wage credits, under section 229 of the Act, for service 
as members of the uniformed services on active duty or active duty for 
training beginning in 1957 when that service was

[[Page 336]]

first covered for social security purposes on a contributory basis. 
These individuals are considered members of the uniformed services.
    (b) World War II or post-World War II veterans receive wage credits 
based on the length of active military or naval service, type of 
separation from service and, in some cases, whether the veteran is 
receiving another Federal benefit. However, a member of a uniformed 
service receives wage credits regardless of length of service, type of 
separation, or receipt of another Federal benefit.
    (c) The Social Security Administration (SSA) uses these wage 
credits, along with any covered wages or self-employment income of the 
veteran or member of a uniformed service, to determine entitlement to, 
and the amount of, benefits and the lump-sum death payment that may be 
paid to them, their dependents or survivors under the old-age, 
survivors', and disability insurance programs. These wage credits can 
also be used by the veteran or member of the uniformed service to meet 
the insured status and quarters of coverage requirements for a period of 
disability.
    (d) This subpart tells how veterans or members of the uniformed 
services obtain wage credits, what evidence of service SSA requires, how 
SSA uses the wage credits, and how the wage credits are affected by 
payment of other benefits.
    (e) This subpart explains that certain World War II veterans who die 
are considered (deemed) fully insured. This gives those veterans' 
survivors the same benefit rights as if the veterans were actually fully 
insured when they died.
    (f) The rules are organized in the following manner:
    (1) Sections 404.1310 through 404.1313 contain the rules on World 
War II veterans. We discuss who may qualify as a World War II veteran, 
how we determine whether the 90-day active service requirement for a 
World War II veteran is met, what we consider to be World War II active 
military or naval service, and what we do not consider to be World War 
II active military or naval service.
    (2) Sections 404.1320 through 404.1323 contain the rules on post-
World War II veterans. We discuss who may qualify as a post-World War II 
veteran, how we determine whether the 90-day active service requirement 
for a post-World War II veteran is met, what we consider to be post-
World War II active military or naval service, and what we do not 
consider to be post-World War II active military or naval service.
    (3) In Sec. 404.1325 we discuss what is a separation under 
conditions other than dishonorable. The law requires that a World War II 
or post-World War II veteran's separation from active military or naval 
service be other than dishonorable for the veteran to get wage credits.
    (4) Section 404.1330 contains the rules on members of the uniformed 
services. We discuss who may qualify as a member of a uniformed service.
    (5) In Sec. Sec. 404.1340 through 404.1343, we discuss the amount 
of wage credits for veterans and members of the uniformed services, 
situations which may limit the use of wage credits for World War II and 
post-World War II veterans, and situations in which the limits do not 
apply.
    (6) Sections 404.1350 through 404.1352 contain the rules on deemed 
insured status for World War II veterans. We discuss when deemed insured 
status applies, the amount of wage credits used for deemed insured World 
War II veterans, how the wage credits affect survivors' social security 
benefits, and when deemed insured status does not apply.
    (7) Sections 404.1360 through 404.1363 contain the rules on the 
effect of other benefits on the payment of social security benefits and 
lump-sum death payments based on wage credits for veterans. We discuss 
what happens when we learn of a determination that a Veterans 
Administration pension or compensation is payable or that a Federal 
benefit is payable before or after we determine entitlement to a montly 
benefit or lump-sum death payment based on the death of the veteran.
    (8) Sections 404.1370 and 404.1371 contain the rules on what we 
accept as evidence of a World War II and post-World War II veteran's 
active military or naval service, including date and type of separation, 
and what we accept as evidence of entitlement to wage credits

[[Page 337]]

for membership in a uniformed service during the years 1957 through 
1967.



Sec. 404.1302  Definitions.

    As used in this subpart--
    Act means the Social Security Act, as amended.
    Active duty means periods of time an individual is on full-time duty 
in the active military or naval service after 1956 and includes active 
duty for training after 1956.
    Active service means periods of time prior to 1957 an individual was 
on full-time duty in the active military or naval service. It does not 
include totaling periods of active duty for training purposes before 
1957 which are less than 90 days.
    Allied country means a country at war on September 16, 1940, with a 
country with which the United States was at war during the World War II 
period. Each of the following countries is considered an allied country: 
Australia, Belgium, Canada, Czechoslovakia, Denmark, France, India, 
Luxembourg, the Netherlands, New Zealand, Norway, Poland, Union of South 
Africa, and the United Kingdom.
    Domiciled in the United States means an individual has a true, 
fixed, and permanent home in the United States to which the individual 
intends to return whenever he or she is absent.
    Federal benefit means a benefit which is payable by another Federal 
agency (other than the Veterans Administration) or an instrumentality 
owned entirely by the United States under any law of the United States 
or under a program or pension system set up by the agency or 
instrumentality.
    Post-World War II period means the time period July 25, 1947, 
through December 31, 1956.
    Reserve component means Army Reserve, Naval Reserve, Marine Corps 
Reserve, Air Force Reserve, Coast Guard Reserve, National Guard of the 
United States or Air National Guard of the United States.
    Resided in the United States means an individual had a place where 
he or she lived, whether permanently or temporarily, in the United 
States and was bodily present in that place.
    Survivor means you are a parent, widow, divorced wife, widower, or 
child of a deceased veteran or member of a uniformed service.
    United States means the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American 
Samoa.
    Veteran means an individual who served in the active military or 
naval service of the United States and was discharged or released from 
that service under conditions other than dishonorable. For a more 
detailed definition of the World War II veteran and a post-World War II 
veteran, see Sec. Sec. 404.1310 and 404.1320.
    Wage credit means a dollar amount we add to the earnings record of a 
veteran of the World War II or the post-World War II period. It is also 
a dollar amount we add to the earnings record of a member of a uniformed 
service who was on active duty after 1956. The amount is set out in the 
Act and is added for each month, calendar quarter, or calendar year of 
service as required by law.
    We, us, or our means the Social Security Administration.
    World War II period means the time period September 16, 1940, 
through July 24, 1947.
    You or your means a veteran, a veteran's survivor or a member of a 
uniformed service applying for or entitled to a social security benefit 
or a lump-sum death payment.

                          World War II Veterans



Sec. 404.1310  Who is a World War II veteran.

    You are a World War II veteran if you were in the active service of 
the United States during the World War II period and, if no longer in 
active service, you were separated from that service under conditions 
other than dishonorable after at least 90 days of active service. The 
90-day active service requirement is discussed in Sec. 404.1311.



Sec. 404.1311  Ninety-day active service requirement for World War II 
veterans.

    (a) The 90 days of active service required for World War II veterans 
do not have to be consecutive if the 90 days were in the World War II 
period. The 90-day requirement cannot be met by totaling the periods of 
active duty for

[[Page 338]]

training purposes which were less than 90 days.
    (b) If, however, all of the 90 days of active service required for 
World War II veterans were not in the World War II period, the 90 days 
must (only in those circumstances) be consecutive if the 90 days began 
before September 16, 1940, and ended on or after that date, or began 
before July 25, 1947, and ended on or after that date.
    (c) The 90 days of active service is not required if the World War 
II veteran died in service or was separated from service under 
conditions other than dishonorable because of a disability or injury 
which began or worsened while performing service duties.



Sec. 404.1312  World War II service included.

    Your service was in the active service of the United States during 
the World War II period if you were in the--
    (a) Army, Navy, Marine Corps, or Coast Guard, or any part of them;
    (b) Commissioned corps of the United States Public Health Service 
and were--
    (1) On active commissioned service during the period beginning 
September 16, 1940, through July 28, 1945, and the active service was 
done while on detail to the Army, Navy, Marine Corps, or Coast Guard; or
    (2) On active commissioned service during the period beginning July 
29, 1945, through July 24, 1947, regardless of whether on detail to the 
Army, Navy, Marine Corps, or Coast Guard;
    (c) Commissioned corps of the United States Coast and Geodetic 
Survey and were--
    (1) During the World War II period--
    (i) Transferred to active service with the Army, Navy, Marine Corps, 
or Coast Guard; or
    (ii) Assigned to active service on military projects in areas 
determined by the Secretary of Defense to be areas of immediate military 
hazard; or
    (2) On active service in the Philippine Islands on December 7, 1941; 
or
    (3) On active service during the period beginning July 29, 1945, 
through July 24, 1947;
    (d) Philippine Scouts and performed active service during the World 
War II period under the direct supervision of recognized military 
authority;
    (e) Active service of an allied country during the World War II 
period and--
    (1) Had entered into that active service before December 9, 1941;
    (2) Were a citizen of the United States throughout that period of 
active service or lost your United States citizenship solely because of 
your entrance into that service;
    (3) Had resided in the United States for a total of four years 
during the five-year period ending on the day you entered that active 
service; and
    (4) Were domiciled in the United States on that day; or
    (f) Women's Army Auxiliary Corps, during the period May 14, 1942, 
through September 29, 1943, and performed active service with the Army, 
Navy, Marine Corps, or Coast Guard after September 29, 1943.



Sec. 404.1313  World War II service excluded.

    Your service was not in the active service of the United States 
during the World War II period if, for example, you were in the--
    (a) Women's Army Auxiliary Corps, except as described in Sec. 
404.1312(f);
    (b) Coast Guard Auxiliary;
    (c) Coast Guard Reserve (Temporary) unless you served on active 
full-time service with military pay and allowances;
    (d) Civil Air Patrol; or
    (e) Civilian Auxiliary to the Military Police.

                       Post-World War II Veterans



Sec. 404.1320  Who is a post-World War II veteran.

    You are a post-World War II veteran if you were in the active 
service of the United States during the post-World War II period and, if 
no longer in active service, you were separated from the service under 
conditions other than dishonorable after at least 90 days of active 
service. The 90-day active service requirement is discussed in Sec. 
404.1321.

[[Page 339]]



Sec. 404.1321  Ninety-day active service requirement for post-World 
War II veterans.

    (a) The 90 days of active service required for post-World War II 
veterans do not have to be consecutive if the 90 days were in the post-
World War II period. The 90-day requirement cannot be met by totaling 
the periods of active duty for training purposes before 1957 which were 
less than 90 days.
    (b) If, however, all of the 90 days of active service required for 
post-World War II veterans were not in the post-World War II period, the 
90 days must (only in those circumstances) be consecutive if the 90 days 
began before July 25, 1947, and ended on or after that date, or began 
before January 1, 1957, and ended on or after that date.
    (c) The 90 days of active service is not required if the post-World 
War II veteran died in service or was separated from service under 
conditions other than dishonorable because of a disability or injury 
which began or worsened while performing service duties.



Sec. 404.1322  Post-World War II service included.

    Your service was in the active service of the United States during 
the post-World War II period if you were in the--
    (a) Air Force, Army, Navy, Marine Corps, Coast Guard, or any part of 
them;
    (b) Commissioned corps of the United States Public Health Service 
and were on active service during that period;
    (c) Commissioned corps of the United States Coast and Geodetic 
Survey and were on active service during that period; or
    (d) Philippine Scouts and performed active service during the post-
World War II period under the direct supervision of recognized military 
authority.



Sec. 404.1323  Post-World War II service excluded.

    Your service was not in the active service of the United States 
during the post-World War II period if, for example, you were in the--
    (a) Coast Guard Auxiliary;
    (b) Coast Guard Reserve (Temporary) unless you served on active 
full-time service with military pay and allowances;
    (c) Civil Air Patrol; or
    (d) Civilian Auxiliary to the Military Police.

                     Separation from Active Service



Sec. 404.1325  Separation from active service under conditions other 
than dishonorable.

    Separation from active service under conditions other than 
dishonorable means any discharge or release from the active service 
except--
    (a) A discharge or release for desertion, absence without leave, or 
fraudulent entry;
    (b) A dishonorable or bad conduct discharge issued by a general 
court martial of the Army, Navy, Air Force, Marine Corps, or Coast Guard 
of the United States, or by the active service of an allied country 
during the World War II period;
    (c) A dishonorable discharge issued by the United States Public 
Health Service or the United States Coast and Geodetic Survey;
    (d) A resignation by an officer for the good of the service;
    (e) A discharge or release because the individual was a 
conscientious objector; or
    (f) A discharge or release because the individual was convicted by a 
civil court for treason, sabotage, espionage, murder, rape, arson, 
burglary, robbery, kidnapping, assault with intent to kill, assault with 
a deadly weapon, or because of an attempt to commit any of these crimes.

[45 FR 16464, Mar. 14, 1980; 45 FR 22023, Apr. 3, 1980]

                    Members of the Uniformed Services



Sec. 404.1330  Who is a member of a uniformed service.

    A member of a uniformed service is an individual who served on 
active duty after 1956. You are a member of a uniformed service if you--
    (a) Are appointed, enlisted, or inducted into--
    (1) The Air Force, Army, Navy, Coast Guard, or Marine Corps; or

[[Page 340]]

    (2) A reserve component of the uniformed services in paragraph 
(a)(1) of this section (except the Coast Guard Reserve as a temporary 
member);
    (b) Served in the Army or Air Force under call or conscription;
    (c) Are a commissioned officer of the National Oceanic and 
Atmospheric Administration or its predecessors, the Environmental 
Science Services Administration and the Coast and Geodetic Survey;
    (d) Are a commissioned officer of the Regular or Reserve Corps of 
the Public Health Service;
    (e) Are a retired member of any of the above services;
    (f) Are a member of the Fleet Reserve or Fleet Marine Corps Reserve;
    (g) Are a cadet at the United States Military Academy, Air Force 
Academy, or Coast Guard Academy, or a midshipman at the United States 
Naval Academy; or
    (h) Are a member of the Reserve Officers Training Corps of the Army, 
Navy or Air Force, when ordered to annual training duty for at least 14 
days and while performing official travel to and from that duty.

             Amounts of Wage Credits and Limits on Their Use



Sec. 404.1340  Wage credits for World War II and post-World War II veterans.

    In determining your entitlement to, and the amount of, your monthly 
benefit or lump-sum death payment based on your active service during 
the World War II period or the post-World War II period, and for 
establishing a period of disability as discussed in Sec. Sec. 404.132 
and 404.133, we add the (deemed) amount of $160 for each month during a 
part of which you were in the active service as described in Sec. 
404.1312 or Sec. 404.1322. For example, if you were in active service 
from October 11, 1942, through August 10, 1943, we add the (deemed) 
amount of $160 for October 1942 and August 1943 as well as November 1942 
through July 1943. The amount of wage credits that are added in a 
calendar year cannot cause the total amount credited to your earnings 
record to exceed the annual earnings limitation explained in Sec. Sec. 
404.1047 and 404.1096(b).



Sec. 404.1341  Wage credits for a member of a uniformed service.

    (a) General. In determining your entitlement to, and the amount of 
your monthly benefit (or lump sum death payment) based on your wages 
while on active duty as a member of the uniformed service after 1956, 
and for establishing a period of disability as discussed in Sec. 
404.132, we add wage credits to the wages paid you as a member of that 
service. The amount of the wage credits, the applicable time periods, 
the wage credit amount limits, and the requirement of a minimum period 
of active duty service for granting these wage credits, are discussed in 
paragraphs (b), (c), and (d) of this section.
    (b) Amount of wage credits. The amount of wage credits added is--
    (1) $100 for each $300 in wages paid to you for your service in each 
calender year after 1977; and
    (2) $300 for each calendar quarter in 1957 through 1977, regardless 
of the amount of wages actually paid you during that quarter for your 
service.
    (c) Limits on wage credits. The amount of these wage credits cannot 
exceed--
    (1) $1200 for any calendar year, or
    (2) An amount which when added to other earnings causes the total 
earnings for the year to exceed the annual earnings limitation explained 
in Sec. Sec. 404.1047 and 404.1096(b).
    (d) Minimum active-duty service requirement. (1) If you enlisted for 
the first time in a regular component of the Armed Forces on or after 
September 8, 1980, you must complete the shorter of 24 months of 
continuous active duty or the full period that you were called to active 
duty to receive these wage credits, unless:
    (i) You are discharged or released from active duty for the 
convenience of the government in accordance with section 1171 of title 
10 U.S.C. or because of hardship as specified in section 1173 of title 
10 U.S.C.;
    (ii) You are discharged or released from active duty for a 
disability incurred or aggravated in line of duty;
    (iii) You are entitled to compensation for service-connected 
disability or death under chapter 11 of title 38 U.S.C.;
    (iv) You die during your period of enlistment; or

[[Page 341]]

    (v) You were discharged prior to October 14, 1982, and your 
discharge was--
    (A) Under chapter 61 of title 10 U.S.C.; or
    (B) Because of a disability which resulted from an injury or disease 
incurred in or aggravated during your enlistment which was not the 
result of your intentional misconduct and did not occur during a period 
of unauthorized absence.
    (2) If you entered on active duty as a member of the uniformed 
services as defined in Sec. 404.1330 on or after October 14, 1982, 
having neither previously completed a period of 24 months' active duty 
nor been discharged or released from this period of active duty under 
section 1171, title 10 U.S.C. (i.e., convenience of the government), you 
must complete the shorter of 24 months of continuous active duty or the 
full period you were called or ordered to active duty to receive these 
wage credits, unless:
    (i) You are discharged or released from active duty for the 
convenience of the government in accordance with section 1171 of title 
10 U.S.C. or because of hardship as specified in section 1173 of title 
10 U.S.C.;
    (ii) You are discharged or released from active duty for a 
disability incurred or aggravated in line of duty;
    (iii) You are entitled to compensation for service-connected 
disability or death under chapter 11 of title 38 U.S.C.; or
    (iv) You die during your period of active service.

[45 FR 16464, Mar. 14, 1980, as amended at 52 FR 29663, Aug. 11, 1987]



Sec. 404.1342  Limits on granting World War II and post-World War II 
wage credits.

    (a) You get wage credits for World War II or post-World War II 
active service only if the use of the wage credits results in 
entitlement to a monthly benefit, a higher monthly benefit, or a lump-
sum death payment.
    (b) You may get wage credits for active service in July 1947 for 
either the World War II period or the post-World War II period but not 
for both. If your active service is before and on or after July 25, 
1947, we add the $160 wage credit to the period which is most 
advantageous to you.
    (c) You do not get wage credits for the World War II period if 
another Federal benefit (other than one payable by the Veterans 
Administration) is determined by a Federal agency or an instrumentality 
owned entirely by the United States to be payable to you, even though 
the Federal benefit is not actually paid or is paid and then terminated, 
based in part on your active service during the World War II period 
except as explained in Sec. 404.1343.
    (d) You do not get wage credits for the post-World War II period if 
another Federal benefit (other than one payable by the Veterans 
Administration) is determined by a Federal agency or an instrumentality 
owned entirely by the United States to be payable to you, even though 
the Federal benefit is not actually paid or is paid and then terminated, 
based in part on your active service during the post-World War II period 
except as explained in Sec. 404.1343.



Sec. 404.1343  When the limits on granting World War II and post-World 
War II wage credits do not apply.

    The limits on granting wage credits described in Sec. 404.1342 (c) 
and (d) do not apply--
    (a) If the wage credits are used solely to meet the insured status 
and quarters of coverage requirements for a period of disability as 
described in Sec. Sec. 404.132 and 404.133;
    (b) If you are the surviving spouse or child of a veteran of the 
World War II period or post-World War II period and you are entitled 
under the Civil Service Retirement Act of 1930 to a survivor's annuity 
based on the veteran's active service and--
    (1) You give up your right to receive the survivor's annuity;
    (2) A benefit under the Civil Service Retirement Act of 1930 based 
on the veteran's active service was not payable to the veteran; and
    (3) Another Federal benefit is not payable to the veteran or his or 
her survivors except as described in paragraph (c) of this section; or
    (c) For the years 1951 through 1956, if another Federal benefit is 
payable by the Army, Navy, Air Force, Marine Corps, Coast Guard, Coast 
and Geodetic

[[Page 342]]

Survey, or the Public Health Service based on post-World War II active 
service but only if the veteran was also paid wages as a member of a 
uniformed service after 1956.

[45 FR 16464, Mar. 14, 1980, as amended at 49 FR 24118, June 12, 1984]

               Deemed Insured Status for World II Veterans



Sec. 404.1350  Deemed insured status.

    (a) When deemed insured status applies. If you are the survivor of a 
World War II veteran, we consider the veteran to have died fully insured 
as discussed in Sec. 404.111 and we include wage credits in determining 
your monthly benefit or lump-sum death payment if--
    (1) The veteran was separated from active service of the United 
States before July 27, 1951; and
    (2) The veteran died within 3 years after separation from active 
service and before July 27, 1954.
    (b) Amount of credit given for deemed insured World War II veterans. 
(1) When we compute a survivor's benefit or lump-sum death payment, we 
give credit for--
    (i) $200 (for increment year purposes) for each calendar year in 
which the veteran had at least 30 days of active service beginning 
September 16, 1940, through 1950; and
    (ii) An average monthly wage of $160.
    (2) If the World War II veteran was fully or currently insured 
without the wage credits, we add increment years (years after 1936 and 
prior to 1951 in which the veteran had at least $200 in creditable 
earnings) to the increment years based on the veteran's wages.



Sec. 404.1351  When deemed insured status does not apply.

    As a survivor of a World War II veteran, you cannot get a monthly 
benefit or lump-sum death payment based on the veteran's deemed insured 
status as explained in Sec. 404.1350 if--
    (a) Your monthly benefit or lump-sum death payment is larger without 
using the wage credits;
    (b) The Veterans Administration has determined that a pension or 
compensation is payable to you based on the veteran's death;
    (c) The veteran died while in the active service of the United 
States;
    (d) The veteran was first separated from active service after July 
26, 1951;
    (e) The veteran died after July 26, 1954; or
    (f) The veteran's only service during the World War II period was by 
enlistment in the Philippine Scouts as authorized by the Armed Forces 
Voluntary Recruitment Act of 1945 (Pub. L. 190 of the 79th Congress).



Sec. 404.1352  Benefits and payments based on deemed insured status.

    (a) Our determination. We determine your monthly benefit or lump-sum 
death payment under the deemed insured status provisions in Sec. Sec. 
404.1350 and 404.1351 regardless of whether the Veterans Administration 
has determined that any pension or compensation is payable to you.
    (b) Certification for payment. If we determine that you can be paid 
a monthly benefit or lump-sum death payment, we certify these benefits 
for payment. However, the amount of your monthly benefit or lump-sum 
death payment may be changed if we are informed by the Veterans 
Administration that a pension or compensation is payable because of the 
veteran's death as explained in Sec. 404.1360.
    (c) Payments not considered as pension or compensation. We do not 
consider as pension or compensation--
    (1) National Service Life Insurance payments;
    (2) United States Government Life Insurance payments; or
    (3) Burial allowance payments made by the Veterans Administration.

  Effect of Other Benefits on Payment of Social Security Benefits and 
                                Payments



Sec. 404.1360  Veterans Administration pension or compensation payable.

    (a) Before we determine and certify payment. If we are informed by 
the Veterans Administration that a pension or compensation is payable to 
you before we determine and certify payment of benefits based on deemed 
insured status, we compute your monthly benefit or lump-sum death 
payment based on the death of the World War II veteran

[[Page 343]]

without using the wage credits discussed in Sec. 404.1350.
    (b) After we determine and certify payment. If we are informed by 
the Veterans Administration that a pension or compensation is payable to 
you after we determine and certify payment of benefits based on deemed 
insured status, we--
    (1) Stop payment of your benefits or recompute the amount of any 
further benefits that can be paid to you; and
    (2) Determine whether you were erroneously paid and the amount of 
any erroneous payment.



Sec. 404.1361  Federal benefit payable other than by Veterans Administration.

    (a) Before we determine and certify payment. If we are informed by 
another Federal agency or instrumentality of the United States (other 
than the Veterans Administration) that a Federal benefit is payable to 
you by that agency or instrumentality based on the veteran's World War 
II or post-World War II active service before we determine and certify 
your monthly benefit or lump-sum death payment, we compute your monthly 
benefit or lump-sum death payment without using the wage credits 
discussed in Sec. 404.1340.
    (b) After we determine and certify payment. If we are informed by 
another Federal agency or instrumentality of the United States (other 
than the Veterans Administration) that a Federal benefit is payable to 
you by that agency or instrumentality based on the veteran's World War 
II or post-World War II active service after we determine and certify 
payment, we--
    (1) Stop payment of your benefits or recompute the amount of any 
further benefits that can be paid to you; and
    (2) Determine whether you were erroneously paid and the amount of 
any erroneous payment.



Sec. 404.1362  Treatment of social security benefits or payments where 
Veterans Administration pension or compensation payable.

    (a) Before we receive notice from the Veterans Administration. If we 
certify your monthly benefit or a lump-sum death payment as determined 
under the deemed insured status provisions in Sec. 404.1350 before we 
receive notice from the Veterans Administration that a pension or 
compensation is payable to you, our payments to you are erroneous only 
to the extent that they exceed the amount of the accrued pension of 
compensation payable.
    (b) After we receive notice from the Veterans Administration. If we 
certify your monthly benefit or lump-sum death payment as determined 
under the deemed insured status provisions in Sec. 404.1350 after we 
receive notice from the Veterans Administration that a pension or 
compensation is payable to you, our payments to you are erroneous 
whether or not they exceed the amount of the accrued pension or 
compensation payable.



Sec. 404.1363  Treatment of social security benefits or payments where 
Federal benefit payable other than by Veterans Administration.

    If we certify your monthly benefit or lump-sum death payment based 
on World War II or post-World War II wage credits after we receive 
notice from another Federal agency or instrumentality of the United 
States (other than the Veterans Administration) that a Federal benefit 
is payable to you by that agency or instrumentality based on the 
veteran's World War II or post-World War II active service, our payments 
to you are erroneous to the extent the payments are based on the World 
War II or post-World War II wage credits. The payments are erroneous 
beginning with the first month you are eligible for the Federal benefit.

    Evidence of Active Service and Membership in a Uniformed Service



Sec. 404.1370  Evidence of active service and separation from active 
service.

    (a) General. When you file an application for a monthly benefit or 
lump-sum death payment based on the active service of a World War II or 
post-World War II veteran, you must submit evidence of--
    (1) Your entitlement as required by subpart H of this part or other 
evidence that may be expressly required;
    (2) The veteran's period in active service of the United States; and
    (3) The veteran's type of separation from active service of the 
United States.

[[Page 344]]

    (b) Evidence we accept. We accept as proof of a veteran's active 
service and separation from active service--
    (1) An original certificate of discharge, or an original certificate 
of service, from the appropriate military service, from the United 
States Public Health Service, or from the United States Coast and 
Geodetic Survey;
    (2) A certified copy of the original certificate of discharge or 
service made by the State, county, city agency or department in which 
the original certificate is recorded;
    (3) A certification from the appropriate military service, United 
States Public Health Service, or United States Coast and Geodetic Survey 
showing the veteran's period of active service and type of separation;
    (4) A certification from a local selective service board showing the 
veteran's period of active service and type of separation; or
    (5) Other evidence that proves the veteran's period of active 
service and type of separation.



Sec. 404.1371  Evidence of membership in a uniformed service during the 
years 1957 through 1967.

    (a) General. When you file an application for a monthly benefit or 
lump-sum death payment based on the services of a member of a uniformed 
service during the years 1957 through 1967, you should submit evidence 
identifying the member's uniformed service and showing the period(s) he 
or she was on active duty during those years.
    (b) Evidence we accept. The evidence we will accept includes any 
official correspondence showing the member's status as an active service 
member during the appropriate period, a certification of service by the 
uniformed service, official earnings statements, copies of the member's 
Form W-2, and military orders, for the appropriate period.



    Subpart O_Interrelationship of Old-Age, Survivors and Disability 
         Insurance Program With the Railroad Retirement Program

    Authority: Secs. 202(l), 205(a), (c)(5)(D), (i), and (o), 210 (a)(9) 
and (l)(4), 211(c)(3), and 702(a)(5) of the Social Security Act (42 
U.S.C. 402(l), 405(a), (c)(5)(D), (i), and (o), 410 (a)(9) and (l)(4), 
411(c)(3), and 902(a)(5)).

    Cross Reference: For regulations under the Railroad Retirement Act, 
see chapter II of this title.



Sec. 404.1401  What is the interrelationship between the Railroad 

Retirement Act and the Old-Age, Survivors and Disability Insurance 
Program of the Social Security Act?

    (a) Background. The Railroad Retirement Act provides a system of 
benefits for railroad employees, their dependents and survivors, and is 
integrated with the Social Security Act to provide a coordinated system 
of retirement, survivor, dependent and disability benefits payable on 
the basis of an individual's work in the railroad industry and in 
employment and self-employment covered by the Social Security Act. With 
respect to the coordination between the two programs, the Railroad 
Retirement Act distinguishes between ``career'' or ``vested'' railroad 
workers and those individuals who may be considered ``casual'' or ``non-
vested'' railroad workers based on the total amount of railroad service 
credited to the worker, as explained in paragraph (b) of this section. 
The Railroad Retirement Board transfers to the Social Security 
Administration (SSA) the compensation records of workers who at the time 
of retirement, onset of disability or death, are non-vested and meet 
certain other requirements. Any compensation paid to non-vested workers 
for service after 1936 becomes wages under the Social Security Act (to 
the extent they do not exceed the annual wage limitations described in 
Sec. 404.1047). Any benefits payable to non-vested workers, their 
dependents, and their survivors, are computed on the basis of the 
combined compensation and social security covered earnings creditable to 
the workers' records. Once a railroad worker meets the vesting 
requirements, the record of the worker's railroad service and 
compensation generally may not be used for benefit purposes under the 
Social Security Act, but under certain circumstances may be transferred 
after the worker's death to SSA for use in

[[Page 345]]

determining social security benefit entitlement for the railroad 
worker's survivors (see Sec. 404.1407). Under certain circumstances 
(see Sec. 404.1413), certification of benefits payable under the 
provisions of the Social Security Act will be made to the Railroad 
Retirement Board. The Railroad Retirement Board will certify such 
benefits to the Secretary of the Treasury.
    (b) Who is a vested railroad worker? You are a vested railroad 
worker if you have:
    (1) Ten years or more of service in the railroad industry, or
    (2) Effective January 1, 2002, you have at least 5 years of service 
in the railroad industry, all of which accrue after December 31, 1995.
    (c) Definition of years of service. As used in paragraph (b) of this 
section, the term years of service has the same meaning as assigned to 
it by section 1(f) of the Railroad Retirement Act of 1974, as amended, 
(45 U.S.C. 231(f)).

[69 FR 5692, Feb. 6, 2004]



Sec. 404.1402  When are railroad industry services by a non-vested worker 
covered under Social Security?

    If you are a non-vested worker, we (the Social Security 
Administration) will consider your services in the railroad industry to 
be ``employment'' as defined in section 210 of the Social Security Act 
for the following purposes:
    (a) To determine entitlement to, or the amount of, any monthly 
benefits or lump-sum death payment on the basis of your wages and self-
employment income;
    (b) To determine entitlement to, or the amount of, any survivor 
monthly benefit or any lump-sum death payment on the basis of your wages 
and self-employment income provided you did not have a ``current 
connection'' with the railroad industry, as defined in section 1(o) of 
the Railroad Retirement Act of 1974, as amended, (45 U.S.C. 231(o)), at 
the time of your death; (in such cases, survivor benefits are not 
payable under the Railroad Retirement Act);
    (c) To determine entitlement to a period of disability (see subpart 
B of this part) on the basis of your wages and self-employment income; 
or
    (d) To apply the provisions of section 203 of the Social Security 
Act concerning deductions from benefits under the annual earnings test 
(see subpart E of this part).

[69 FR 5693, Feb. 6, 2004]



Sec. 404.1404  Effective date of coverage of railroad services under 
the act.

    Coverage under the act of services performed after 1936 by an 
individual in the railroad industry is effective as follows:
    (a) The provisions of paragraphs (a) and (b) of Sec. 404.1402 
insofar as they relate to survivor monthly benefits are effective for 
months after December 1946 and insofar as they relate to lump-sum death 
payments are effective with respect to deaths after 1946;
    (b) The provisions of paragraph (a) of Sec. 404.1402 insofar as 
they relate to old-age insurance benefits or monthly benefits of 
dependents of old-age insurance beneficiaries are effective November 1, 
1951; insofar as they relate to disability insurance benefits are 
effective for months after June 1957; and insofar as they relate to 
monthly benefits for dependents of disability insurance beneficiaries 
are effective for months after August 1958;
    (c) The provisions of paragraph (c) of Sec. 404.1402 are effective 
for benefits for months after June 1955; and
    (d) The provisions of paragraph (d) of Sec. 404.1402 are effective 
November 1, 1951.

[25 FR 5182, June 10, 1960]



Sec. 404.1405  If you have been considered a non-vested worker, what 

are the situations when your railroad industry work will not be covered 
under Social Security?

    (a) Awards by the Railroad Retirement Board prior to October 30, 
1951. The provisions of Sec. 404.1402(a) shall not apply with respect 
to the wages and self-employment income of an individual if, prior to 
October 30, 1951, the Railroad Retirement Board has awarded under the 
Railroad Retirement Act a retirement annuity to such individual or a 
survivor annuity with respect to the death of such individual and such 
retirement or survivor annuity, as the case may be, was payable at the 
time an application for benefits is filed under the Social Security Act 
on the

[[Page 346]]

basis of the wages and self-employment income of such individual. A 
pension payable under section 6 of the Railroad Retirement Act of 1937 
as in effect prior to the Railroad Retirement Act of 1974, or an annuity 
paid in a lump sum equal to its commuted value under section 3(i) of the 
Railroad Retirement Act in effect prior to the Social Security Act of 
October 30, 1951, is not a ``retirement or survivor annuity'' for the 
purpose of this paragraph.
    (b) You continue to work in the railroad industry after establishing 
entitlement to old-age insurance benefits under section 202(a) of the 
Social Security Act. If your service in the railroad industry is used to 
establish your entitlement to, or to determine the amount of, your old-
age insurance benefits under section 202(a) of the Social Security Act, 
but you become vested after the effective date of your benefits, your 
railroad service will no longer be deemed to be in ``employment'' as 
defined in section 210 of the Act. Your benefits and any benefits 
payable to your spouse or child under section 202(b), (c), or (d) of the 
Act will be terminated with the month preceding the month in which you 
become a vested worker. However, if you remain insured (see subpart B of 
this part) without the use of your railroad compensation, your benefits 
will instead be recalculated without using your railroad compensation. 
The recalculated benefits will be payable beginning with the month in 
which you become a vested worker. Any monthly benefits paid prior to the 
month you become a vested worker are deemed to be correct payments.

[18 FR 8694, Dec. 24, 1953, as amended at 25 FR 5182, June 10, 1960; 42 
FR 18273, Apr. 6, 1977; 69 FR 5693, Feb. 6, 2004]



Sec. 404.1406  Eligibility to railroad retirement benefits as a bar to 
payment of social security benefits.

    Notwithstanding the fact that, pursuant to the preceding provisions 
of this subpart, services rendered by an individual in the railroad 
industry are in employment, no lump-sum death payment or survivor 
monthly benefits shall be paid (except as provided in Sec. 404.1407) 
under the regulations in this part on the basis of such individual's 
wages and self-employment income if any person, upon filing application 
therefor, would be entitled to an annuity under section 2 of the 
Railroad Retirement Act of 1974 or a lump-sum payment under section 6(b) 
of such Act with respect to the death of that individual; or for periods 
prior to 1975, would have been entitled to an annuity under section 5 or 
a lump-sum payment under section 5(f)(1) of the Railroad Retirement Act 
of 1937 with respect to the death of that individual.

[42 FR 18273, Apr. 6, 1977]



Sec. 404.1407  When railroad retirement benefits do not bar payment of 
social security benefits.

    The provisions of Sec. 404.1406 shall not operate if:
    (a) The survivor is, or upon filing application would be, entitled 
to a monthly benefit with respect to the death of an insured individual 
for a month prior to January 1947, if such monthly benefit is greater in 
amount than the survivor annuity payable to such survivor after 1946 
under the Railroad Retirement Act; or
    (b) The residual lump-sum payment provided by section 6(c) of the 
Railroad Retirement Act of 1974 (or section 5(f)(2) of the Railroad 
Retirement Act of 1937 prior to the 1974 Act) with respect to the death 
of an insured individual is paid by the Railroad Retirement Board 
pursuant to an irrevocable election filed with the Board by the widow, 
widower, or parent of such individual to waive all future annuities or 
benefits based on the combined record of earnings and compensation to 
which such widow, widower or parent might become entitled, but only to 
the extent that widow's, widower's or parent's benefits may be payable 
under the regulations of this part to such widow, widower or parent, as 
the case may be, solely on the basis of the wages and self-employment 
income of such deceased individual and without regard to any 
compensation which may be treated as wages pursuant to Sec. 404.1408.

[42 FR 18273, Apr. 6, 1977]



Sec. 404.1408  Compensation to be treated as wages.

    (a) General. Where pursuant to the preceding provisions of this 
subpart,

[[Page 347]]

services rendered by an individual in the railroad industry are 
considered to be employment as defined in section 210 of the Social 
Security Act (see Sec. 404.1027 of this part). Thus, any compensation 
(as defined in section 1(h) of the Railroad Retirement Act of 1974 or 
prior to the 1974 Act, section 1(h) of the Railroad Retirement Act of 
1937) received by such individual for such services shall constitute 
wages, provided that the provisions of Sec. 404.1406 do not operate to 
bar the payments of benefits under title II of the Social Security Act.
    (b) Military Service Exception. An exception to paragraph (a) of 
this section applies to any compensation attributable as having been 
paid during any month on account of military service creditable under 
section 1 of the Railroad Retirement Act of 1974 (or section 4 of the 
Railroad Retirement Act of 1937 prior to the 1974 Act). Such 
compensation shall not constitute wages for purposes of title II of the 
Social Security Act if, based on such services, wages are deemed to have 
been paid to such individual during such month under the provisions 
described in Sec. Sec. 404.1350 through 404.1352 of this part.

[65 FR 16813, Mar. 30, 2000]



Sec. 404.1409  Purposes of using compensation.

    Compensation which is treated as wages under Sec. 404.1408 shall be 
used, together with wages (see subpart K of this part) and self-
employment income (see subpart K of this part), for purposes of:
    (a) Determining an individual's insured status for monthly benefits 
or the lump-sum death payment (see subpart B of this part);
    (b) Computing such individual's primary insurance amount (see 
subpart C of this part);
    (c) Determining an individual's entitlement to the establishment of 
a period of disability (see subpart B of this part for disability 
insured status requirements); and
    (d) Applying the deduction provisions of section 203 of the act (see 
subpart E of this part).

[25 FR 5183, June 10, 1960]



Sec. 404.1410  Presumption on basis of certified compensation record.

    (a) Years prior to 1975. Where the Railroad Retirement Board 
certifies to SSA a report of record of compensation, such compensation 
is treated as wages under Sec. 404.1408. For periods of service which 
do not identify the months or quarters in which such compensation was 
paid, the sum of the compensation quarters of coverage (see Sec. 
404.1412) will be presumed, in the absence of evidence to the contrary, 
to represent an equivalent number of quarters of coverage (see Sec. 
404.101). No more than four quarters of coverage shall be credited to an 
individual in a single calendar year.
    (b) Years after 1974. Compensation paid in a calendar year will, in 
the absence of evidence to the contrary, be presumed to have been paid 
in equal proportions with respect to all months in the year in which the 
employee will have been in railroad service. (For years prior to 1975, 
see Sec. 404.1412.)
    (c) Allocation of compensation to months of service. If by means of 
the presumptions in this section an individual does not have an insured 
status (see subpart B of this part) on the basis of quarters of coverage 
with which he is credited, or a deceased individual's primary insurance 
amount (see Sec. 404.201) may be affected because he attained age 22 
after 1936, the Administration may request the Railroad Retirement Board 
to furnish a report of the months in which such individual rendered 
service for compensation which is treated as wages under Sec. 404.1408 
if it appears the identification of such months may result in an insured 
status or if it will affect such primary insurance amount.
    (d) Effect of self-employment income and maximum earnings. However, 
if such individual also had self-employment income for a taxable year 
and the sum of such income and wages (including compensation which is 
treated as wages under Sec. 404.1408) paid to or received by him during 
such taxable year equals the following amounts, each calendar quarter 
any part of which falls in such taxable year, shall be a quarter of 
coverage:
    (1) After 1950 and prior to 1955, equals $3,600 of remuneration;

[[Page 348]]

    (2) After 1954 and prior to 1959, equals $4,200 of remuneration;
    (3) After 1958 and prior to 1966, equals $4,800 of remuneration;
    (4) After 1965 and prior to 1968, equals $6,600 of remuneration;
    (5) After 1967 and beginning prior to 1972, equals $7,800 of 
remuneration (including a fiscal year which began in 1971 and ended in 
1972);
    (6) Beginning after 1971 and prior to 1973, equals $9,000 of 
remuneration;
    (7) Beginning after 1972 and prior to 1974, equals $10,800 of 
remuneration;
    (8) Beginning after 1973 and prior to 1975, equals $13,200 of 
remuneration;
    (9) Beginning after 1974 and prior to 1976, equals $14,100 of 
remuneration;
    (10) Beginning after 1975 and prior to 1977, equals $15,300 of 
remuneration; or
    (11) Beginning after 1976, and amount equal to the contribution and 
benefit base as determined under section 230 of the Social Security Act 
which is effective for such calendar year.


This subsection is an exception to the rule in paragraph (a) of this 
section concerning a presumption applicable to conversion of railroad 
compensation into quarters of coverage for years prior to 1975.

[42 FR 18273, Apr. 6, 1977, as amended at 65 FR 16814, Mar. 30, 2000]



Sec. 404.1412  Compensation quarters of coverage.

    As used in this subpart, a compensation quarter of coverage is any 
quarter of coverage computed with respect to compensation paid to an 
individual for railroad employment after 1936 and prior to 1975 in 
accordance with the provisions for determining such quarters of coverage 
as contained in section 5(l)(4) of the Railroad Retirement Act of 1937. 
(For years beginning 1975, see Sec. 404.1410(b)).

[42 FR 18274, Apr. 6, 1977]



Sec. 404.1413  When will we certify payment to the Railroad Retirement 
Board (RRB)?

    (a) When we will certify payment to RRB. If we find that you are 
entitled to any payment under title II of the Social Security Act, we 
will certify payment to the Railroad Retirement Board if you meet any of 
the following requirements:
    (1) You are a vested worker; or
    (2) You are the wife or husband of a vested worker; or
    (3) You are the survivor of a vested worker and you are entitled, or 
could upon application be entitled to, an annuity under section 2 of the 
Railroad Retirement Act of 1974, as amended, (45 U.S.C. 231(a)); or
    (4) You are entitled to benefits under section 202 of the Social 
Security Act on the basis of the wages and self-employment income of a 
vested worker (unless you are the survivor of a vested worker who did 
not have a current connection, as defined in section 1(o) of the 
Railroad Retirement Act of 1974, as amended, (45 U.S.C. 231(o)) with the 
railroad industry at the time of his or her death).
    (b) What information does certification include? The certification 
we make to the Railroad Retirement Board for individuals entitled to any 
payment(s) under title II will include your name, address, payment 
amount(s), and the date the payment(s) should begin.
    (c) Applicability limitations. The applicability limitations in 
paragraphs (a)(1) through (4) of this section affect claimants who first 
become entitled to benefits under title II of the Social Security Act 
after 1974. (See also Sec. 404.1810.)

[69 FR 5693, Feb. 6, 2004]



             Subpart P_Determining Disability and Blindness

    Authority: Secs. 202, 205(a), (b), and (d)-(h), 216(i), 221 (a) and 
(i), 222(c), 223, 225, and 702(a)(5) of the Social Security Act (42 
U.S.C. 402, 405 (a), (b), and (d)-(h), 416(i), 421(a) and (i), 422(c), 
423, 425, and 902(a)(5)); sec. 211(b), Pub. L. 104-193, 110 Stat. 2105, 
2189.

    Source: 45 FR 55584, Aug. 20, 1980, unless otherwise noted.

                                 General



Sec. 404.1501  Scope of subpart.

    In order for you to become entitled to any benefits based upon 
disability or blindness or to have a period of disability established, 
you must be disabled or blind as defined in title II of the Social 
Security Act. This subpart

[[Page 349]]

explains how we determine whether you are disabled or blind. We discuss 
a period of disability in subpart D of this part. We have organized the 
rules in the following way.
    (a) We define general terms, then discuss who makes our disability 
determinations and state that disability determinations made under other 
programs are not binding on our determinations.
    (b) We explain the term disability and note some of the major 
factors that are considered in determining whether you are disabled in 
Sec. Sec. 404.1505 through 404.1510.
    (c) Sections 404.1512 through 404.1518 contain our rules on 
evidence. We explain your responsibilities for submitting evidence of 
your impairment, state what we consider to be acceptable sources of 
medical evidence, and describe what information should be included in 
medical reports.
    (d) Our general rules on evaluating disability if you are filing a 
new application are stated in Sec. Sec. 404.1520 through 404.1523. We 
describe the steps that we go through and the order in which they are 
considered.
    (e) Our rules on medical considerations are found in Sec. Sec. 
404.1525 through 404.1530. We explain in these rules--
    (1) The purpose of the Listing of Impairments found in appendix 1 of 
this subpart and how to use it;
    (2) What we mean by the term medical equivalence and how we 
determine medical equivalence;
    (3) The effect of a conclusion by your physician that you are 
disabled;
    (4) What we mean by symptoms, signs, and laboratory findings;
    (5) How we evaluate pain and other symptoms; and
    (6) The effect on your benefits if you fail to follow treatment that 
is expected to restore your ability to work, and how we apply the rule.
    (f) In Sec. Sec. 404.1545 through 404.1546 we explain what we mean 
by the term residual functional capacity, state when an assessment of 
residual functional capacity is required, and who may make it.
    (g) Our rules on vocational considerations are in Sec. Sec. 
404.1560 through 404.1569a. We explain in these rules--
    (1) When we must consider vocational factors along with the medical 
evidence;
    (2) How we use our residual functional capacity assessment to 
determine if you can still do your past relevant work or other work;
    (3) How we consider the vocational factors of age, education, and 
work experience;
    (4) What we mean by ``work which exists in the national economy'';
    (5) How we consider the exertional, nonexertional, and skill 
requirements of work, and when we will consider the limitations or 
restrictions that result from your impairment(s) and related symptoms to 
be exertional, nonexertional, or a combination of both; and
    (6) How we use the Medical-Vocational Guidelines in appendix 2 of 
this subpart.
    (h) Our rules on substantial gainful activity are found in 
Sec. Sec. 404.1571 through 404.1574. These explain what we mean by 
substantial gainful activity and how we evaluate your work activity.
    (i) In Sec. Sec. 404.1577, 404.1578, and 404.1579, we explain the 
special rules covering disability for widows, widowers, and surviving 
divorced spouses for monthly benefits payable for months prior to 
January 1991, and in Sec. Sec. 404.1581 through 404.1587 we discuss 
disability due to blindness.
    (j) Our rules on when disability continues and stops are contained 
in Sec. 404.1579 and Sec. Sec. 404.1588 through 404.1598. We explain 
what your responsibilities are in telling us of any events that may 
cause a change in your disability status, when you may have a trial work 
period, and when we will review to see if you are still disabled. We 
also explain how we consider the issue of medical improvement (and the 
exceptions to medical improvement) in deciding whether you are still 
disabled.

[45 FR 55584, Aug. 20, 1980, as amended at 50 FR 50126, Dec. 6, 1985; 56 
FR 57941, Nov. 14, 1991; 57 FR 30120, July 8, 1992; 68 FR 51161, Aug. 
26, 2003]



Sec. 404.1502  General definitions and terms for this subpart.

    As used in the subpart--
    Acceptable medical source refers to one of the sources described in 
Sec. 404.1513(a)

[[Page 350]]

who provides evidence about your impairments. It includes treating 
sources, nontreating sources, and nonexamining sources.
    Commissioner means the Commissioner of Social Security or his or her 
authorized designee.
    Medical sources refers to acceptable medical sources, or other 
health care providers who are not acceptable medical sources.
    Nonexamining source means a physician, psychologist, or other 
acceptable medical source who has not examined you but provides a 
medical or other opinion in your case. At the administrative law judge 
hearing and Appeals Council levels of the administrative review process, 
it includes State agency medical and psychological consultants, other 
program physicians and psychologists, and medical experts we consult. 
See Sec. 404.1527.
    Nontreating source means a physician, psychologist, or other 
acceptable medical source who has examined you but does not have, or did 
not have, an ongoing treatment relationship with you. The term includes 
an acceptable medical source who is a consultative examiner for us, when 
the consultative examiner is not your treating source. See Sec. 
404.1527.
    State agency means that agency of a State which has been designated 
by the State to carry out the disability or blindness determination 
function.
    Treating source means your own physician, psychologist, or other 
acceptable medical source who provides you, or has provided you, with 
medical treatment or evaluation and who has, or has had, an ongoing 
treatment relationship with you. Generally, we will consider that you 
have an ongoing treatment relationship with an acceptable medical source 
when the medical evidence establishes that you see, or have seen, the 
source with a frequency consistent with accepted medical practice for 
the type of treatment and/or evaluation required for your medical 
condition(s). We may consider an acceptable medical source who has 
treated or evaluated you only a few times or only after long intervals 
(e.g., twice a year) to be your treating source if the nature and 
frequency of the treatment or evaluation is typical for your 
condition(s). We will not consider an acceptable medical source to be 
your treating source if your relationship with the source is not based 
on your medical need for treatment or evaluation, but solely on your 
need to obtain a report in support of your claim for disability. In such 
a case, we will consider the acceptable medical source to be a 
nontreating source.
    We or us refers to either the Social Security Administration or the 
State agency making the disability or blindness determination.
    You or your means, as appropriate, the person who applies for 
benefits or for a period of disability, the person for whom an 
application is filed, or the person who is receiving benefits based on 
disability or blindness.

[56 FR 36954, Aug. 1, 1991, as amended at 62 FR 38451, July 18, 1997; 65 
FR 11875, Mar. 7, 2000]

                             Determinations



Sec. 404.1503  Who makes disability and blindness determinations.

    (a) State agencies. State agencies make disability and blindness 
determinations for the Commissioner for most persons living in the 
State. State agencies make these disability and blindness determinations 
under regulations containing performance standards and other 
administrative requirements relating to the disability and blindness 
determination function. States have the option of turning the function 
over to the Federal Government if they no longer want to make disability 
determinations. Also, the Commissioner may take the function away from 
any State which has substantially failed to make disability and 
blindness determinations in accordance with these regulations. Subpart Q 
of this part contains the rules the States must follow in making 
disability and blindness determinations.
    (b) Social Security Administration. The Social Security 
Administration will make disability and blindness determinations for--
    (1) Any person living in a State which is not making for the 
Commissioner any disability and blindness determinations or which is not 
making those determinations for the class of

[[Page 351]]

claimants to which that person belongs; and
    (2) Any person living outside the United States.
    (c) What determinations are authorized. The Commissioner has 
authorized the State agencies and the Social Security Administration to 
make determinations about--
    (1) Whether you are disabled or blind;
    (2) The date your disability or blindness began; and
    (3) The date your disability or blindness stopped.
    (d) Review of State Agency determinations. On review of a State 
agency determination or redetermination of disability or blindness we 
may find that--
    (1) You are, or are not, disabled or blind, regardless of what the 
State agency found;
    (2) Your disability or blindness began earlier or later than the 
date found by the State agency; and
    (3) Your disability or blindness stopped earlier or later than the 
date found by the State agency.
    (e) Initial determinations for mental impairments. An initial 
determination by a State agency or the Social Security Administration 
that you are not disabled (or a Social Security Administration review of 
a State agency's initial determination), in any case where there is 
evidence which indicates the existence of a mental impairment, will be 
made only after every reasonable effort has been made to ensure that a 
qualified psychiatrist or psychologist has completed the medical portion 
of the case review and any applicable residual functional capacity 
assessment. (See Sec. 404.1616 for the qualifications we consider 
necessary for a psychologist to be a psychological consultant and Sec. 
404.1617 for what we consider reasonable effort.) If the services of 
qualified psychiatrists or psychologists cannot be obtained because of 
impediments at the State level, the Commissioner may contract directly 
for the services. In a case where there is evidence of mental and 
nonmental impairments and a qualified psychologist serves as a 
psychological consultant, the psychologist will evaluate only the mental 
impairment, and a physician will evaluate the nonmental impairment.

[46 FR 29204, May 29, 1981, as amended at 52 FR 33926, Sept. 9, 1987; 62 
FR 38451, July 18, 1997; 65 FR 34957, June 1, 2000]



Sec. 404.1503a  Program integrity.

    We will not use in our program any individual or entity, except to 
provide existing medical evidence, who is currently excluded, suspended, 
or otherwise barred from participation in the Medicare or Medicaid 
programs, or any other Federal or Federally-assisted program; whose 
license to provide health care services is currently revoked or 
suspended by any State licensing authority pursuant to adequate due 
process procedures for reasons bearing on professional competence, 
professional conduct, or financial integrity; or who, until a final 
determination is made, has surrendered such a license while formal 
disciplinary proceedings involving professional conduct are pending. By 
individual or entity we mean a medical or psychological consultant, 
consultative examination provider, or diagnostic test facility. Also see 
Sec. Sec. 404.1519 and 404.1519g(b).

[56 FR 36954, Aug. 1, 1991]



Sec. 404.1504  Determinations by other organizations and agencies.

    A decision by any nongovernmental agency or any other governmental 
agency about whether you are disabled or blind is based on its rules and 
is not our decision about whether you are disabled or blind. We must 
make a disability or blindness determination based on social security 
law. Therefore, a determination made by another agency that you are 
disabled or blind is not binding on us.

                        Definition of Disability



Sec. 404.1505  Basic definition of disability.

    (a) The law defines disability as the inability to do any 
substantial gainful activity by reason of any medically determinable 
physical or mental impairment which can be expected to result in death 
or which has lasted or can be expected to last for a continuous period 
of not less than 12 months. To meet

[[Page 352]]

this definition, you must have a severe impairment(s) that makes you 
unable to do your past relevant work (see Sec. 404.1560(b)) or any 
other substantial gainful work that exists in the national economy. If 
your severe impairment(s) does not meet or medically equal a listing in 
appendix 1, we will assess your residual functional capacity as provided 
in Sec. Sec. 404.1520(e) and 404.1545. (See Sec. Sec. 404.1520(g)(2) 
and 404.1562 for an exception to this rule.) We will use this residual 
functional capacity assessment to determine if you can do your past 
relevant work. If we find that you cannot do your past relevant work, we 
will use the same residual functional capacity assessment and your 
vocational factors of age, education, and work experience to determine 
if you can do other work. We will use this definition of disability if 
you are applying for a period of disability, or disability insurance 
benefits as a disabled worker, or child's insurance benefits based on 
disability before age 22 or, with respect to disability benefits payable 
for months after December 1990, as a widow, widower, or surviving 
divorced spouse.
    (b) There are different rules for determining disability for 
individuals who are statutorily blind. We discuss these in Sec. Sec. 
404.1581 through 404.1587. There are also different rules for 
determining disability for widows, widowers, and surviving divorced 
spouses for monthly benefits for months prior to January 1991. We 
discuss these rules in Sec. Sec. 404.1577, 404.1578, and 404.1579.

[45 FR 55584, Aug. 20, 1980, as amended at 51 FR 10616, Mar. 28, 1986; 
57 FR 30120, July 8, 1992; 68 FR 51161, Aug. 26, 2003]



Sec. 404.1506  When we will not consider your impairment.

    (a) Permanent exclusion of felony-related impairment. In determining 
whether you are under a disability, we will not consider any physical or 
mental impairment, or any increase in severity (aggravation) of a 
preexisting impairment, which arises in connection with your commission 
of a felony after October 19, 1980, if you are subsequently convicted of 
this crime.Your subsequent conviction will invalidate any prior 
determination establishing disability if that determination was based 
upon any impairment, or aggravation, which we must exclude under this 
rule.
    (b) Limited use of impairment arising in prison. In determining 
whether you are under a disability for purposes of benefit payments, we 
will not consider any physical or mental impairment, or any increase in 
severity (aggravation) of a preexisting impairment, which arises in 
connection with your confinement in a jail, prison, or other penal 
institution or correctional facility for conviction of a felony 
committed after October 19, 1980. The exclusion of the impairment, or 
aggravation, applies in determining disability for benefits payable for 
any month during which you are confined. This rule does not preclude the 
establishment of a period of disability based upon the impairment or 
aggravation. You may become entitled to benefits upon release from 
prison provided that you apply and are under a disability at the time.
    (c) Felonious offenses. We will consider an offense a felony if--
    (1) It is a felony under applicable law; or
    (2) In a jurisdiction which does not classify any crime as a felony, 
it is an offense punishable by death or imprisonment for a term 
exceeding one year.
    (d) Confinement. In general, a jail, prison, or other penal 
institution or correctional facility is a facility which is under the 
control and jurisdiction of the agency in charge of the penal system or 
in which convicted criminals can be incarcerated. Confinement in such a 
facility continues as long as you are under a sentence of confinement 
and have not been released due to parole or pardon. You are considered 
confined even though you are temporarily or intermittently outside of 
the facility (e.g., on work release, attending school, or hospitalized).

[48 FR 5714, Feb. 8, 1983]



Sec. 404.1508  What is needed to show an impairment.

    If you are not doing substantial gainful activity, we always look 
first at your physical or mental impairment(s) to determine whether you 
are disabled or blind. Your impairment must result from anatomical, 
physiological, or psychological abnormalities which can be

[[Page 353]]

shown by medically acceptable clinical and laboratory diagnostic 
techniques. A physical or mental impairment must be established by 
medical evidence consisting of signs, symptoms, and laboratory findings, 
not only by your statement of symptoms (see Sec. 404.1527). (See Sec. 
404.1528 for further information about what we mean by symptoms, signs, 
and laboratory findings.)

[45 FR 55584, Aug. 20, 1980, as amended at 56 FR 36954, Aug. 1, 1991]



Sec. 404.1509  How long the impairment must last.

    Unless your impairment is expected to result in death, it must have 
lasted or must be expected to last for a continuous period of at least 
12 months. We call this the duration requirement.



Sec. 404.1510  Meaning of substantial gainful activity.

    Substantial gainful activity means work that--
    (a) Involves doing significant and productive physical or mental 
duties; and
    (b) Is done (or intended) for pay or profit.
    (See Sec. 404.1572 for further details about what we mean by 
substantial gainful activity.)



Sec. 404.1511  Definition of a disabling impairment.

    (a) Disabled workers, persons disabled since childhood and, for 
months after December 1990, disabled widows, widowers, and surviving 
divorced spouses. If you are entitled to disability cash benefits as a 
disabled worker, or to child's insurance benefits, or, for monthly 
benefits payable after December 1990, to widow's, widower's, or 
surviving divorced spouse's monthly benefits, a disabling impairment is 
an impairment (or combination of impairments) which, of itself, is so 
severe that it meets or equals a set of criteria in the Listing of 
Impairments in appendix 1 of this subpart or which, when considered with 
your age, education, and work experience, would result in a finding that 
you are disabled under Sec. 404.1594. In determining whether you have a 
disabling impairment, earnings are not considered.
    (b) Disabled widows, widowers, and surviving divorced spouses, for 
monthly benefits for months prior to January 1991. If you have been 
entitled to disability benefits as a disabled widow, widower, or 
surviving divorced spouse and we must decide whether you had a disabling 
impairment for any time prior to January 1991, a disabling impairment is 
an impairment (or combination of impairments) which, of itself, was so 
severe that it met or equaled a set of criteria in the Listing of 
Impairments in appendix 1 of this subpart, or results in a finding that 
you were disabled under Sec. 404.1579. In determining whether you had a 
disabling impairment, earnings are not considered.

[57 FR 30120, July 8, 1992]

                                Evidence



Sec. 404.1512  Evidence.

    (a) General. In general, you have to prove to us that you are blind 
or disabled. Therefore, you must bring to our attention everything that 
shows that you are blind or disabled. This means that you must furnish 
medical and other evidence that we can use to reach conclusions about 
your medical impairment(s) and, if material to the determination of 
whether you are blind or disabled, its effect on your ability to work on 
a sustained basis. We will consider only impairment(s) you say you have 
or about which we receive evidence.
    (b) What we mean by ``evidence.'' Evidence is anything you or anyone 
else submits to us or that we obtain that relates to your claim. This 
includes, but is not limited to:
    (1) Objective medical evidence, that is, medical signs and 
laboratory findings as defined in Sec. 404.1528 (b) and (c);
    (2) Other evidence from medical sources, such as medical history, 
opinions, and statements about treatment you have received;
    (3) Statements you or others make about your impairment(s), your 
restrictions, your daily activities, your efforts to work, or any other 
relevant statements you make to medical sources during the course of 
examination or treatment, or to us during interviews, on applications, 
in letters,

[[Page 354]]

and in testimony in our administrative proceedings;
    (4) Information from other sources, as described in Sec. 
404.1513(d);
    (5) Decisions by any governmental or nongovernmental agency about 
whether you are disabled or blind; and
    (6) At the administrative law judge and Appeals Council levels, 
findings, other than the ultimate determination about whether you are 
disabled, made by State agency medical or psychological consultants and 
other program physicians or psychologists, and opinions expressed by 
medical experts we consult based on their review of the evidence in your 
case record. See Sec. Sec. 404.1527(f)(2) and (f)(3).
    (c) Your responsibility. You must provide medical evidence showing 
that you have an impairment(s) and how severe it is during the time you 
say that you are disabled. You must provide evidence showing how your 
impairment(s) affects your functioning during the time you say that you 
are disabled, and any other information that we need to decide your 
case. If we ask you, you must provide evidence about:
    (1) Your age;
    (2) Your education and training;
    (3) Your work experience;
    (4) Your daily activities both before and after the date you say 
that you became disabled;
    (5) Your efforts to work; and
    (6) Any other factors showing how your impairment(s) affects your 
ability to work. In Sec. Sec. 404.1560 through 404.1569, we discuss in 
more detail the evidence we need when we consider vocational factors.
    (d) Our responsibility. Before we make a determination that you are 
not disabled, we will develop your complete medical history for at least 
the 12 months preceding the month in which you file your application 
unless there is a reason to believe that development of an earlier 
period is necessary or unless you say that your disability began less 
than 12 months before you filed your application. We will make every 
reasonable effort to help you get medical reports from your own medical 
sources when you give us permission to request the reports.
    (1) ``Every reasonable effort'' means that we will make an initial 
request for evidence from your medical source and, at any time between 
10 and 20 calendar days after the initial request, if the evidence has 
not been received, we will make one followup request to obtain the 
medical evidence necessary to make a determination. The medical source 
will have a minimum of 10 calendar days from the date of our followup 
request to reply, unless our experience with that source indicates that 
a longer period is advisable in a particular case.
    (2) By ``complete medical history,'' we mean the records of your 
medical source(s) covering at least the 12 months preceding the month in 
which you file your application. If you say that your disability began 
less than 12 months before you filed your application, we will develop 
your complete medical history beginning with the month you say your 
disability began unless we have reason to believe your disability began 
earlier. If applicable, we will develop your complete medical history 
for the 12-month period prior to (1) the month you were last insured for 
disability insurance benefits (see Sec. 404.130), (2) the month ending 
the 7-year period you may have to establish your disability and you are 
applying for widow's or widower's benefits based on disability (see 
Sec. 404.335(c)(1)), or (3) the month you attain age 22 and you are 
applying for child's benefits based on disability (see Sec. 
404.350(e)).
    (e) Recontacting medical sources. When the evidence we receive from 
your treating physician or psychologist or other medical source is 
inadequate for us to determine whether you are disabled, we will need 
additional information to reach a determination or a decision. To obtain 
the information, we will take the following actions.
    (1) We will first recontact your treating physician or psychologist 
or other medical source to determine whether the additional information 
we need is readily available. We will seek additional evidence or 
clarification from your medical source when the report from your medical 
source contains a conflict or ambiguity that must be resolved, the 
report does not contain all the necessary information, or does not

[[Page 355]]

appear to be based on medically acceptable clinical and laboratory 
diagnostic techniques. We may do this by requesting copies of your 
medical source's records, a new report, or a more detailed report from 
your medical source, including your treating source, or by telephoning 
your medical source. In every instance where medical evidence is 
obtained over the telephone, the telephone report will be sent to the 
source for review, signature and return.
    (2) We may not seek additional evidence or clarification from a 
medical source when we know from past experience that the source either 
cannot or will not provide the necessary findings.
    (f) Need for consultative examination. If the information we need is 
not readily available from the records of your medical treatment source, 
or we are unable to seek clarification from your medical source, we will 
ask you to attend one or more consultative examinations at our expense. 
See Sec. Sec. 404.1517 through 404.1519t for the rules governing the 
consultative examination process. Generally, we will not request a 
consultative examination until we have made every reasonable effort to 
obtain evidence from your own medical sources. However, in some 
instances, such as when a source is known to be unable to provide 
certain tests or procedures or is known to be nonproductive or 
uncooperative, we may order a consultative examination while awaiting 
receipt of medical source evidence. We will not evaluate this evidence 
until we have made every reasonable effort to obtain evidence from your 
medical sources.
    (g) Other work. In order to determine under Sec. 404.1520(g) that 
you are able to make an adjustment to other work, we must provide 
evidence about the existence of work in the national economy that you 
can do (see Sec. Sec. 404.1560 through 404.1569a), given your residual 
functional capacity (which we have already assessed, as described in 
Sec. 404.1520(e)), age, education, and work experience.

[56 FR 36954, Aug. 1, 1991, as amended at 65 FR 11875, Mar. 7, 2000; 65 
FR 34957, June 1, 2000; 68 FR 51161, Aug. 26, 2003]



Sec. 404.1513  Medical and other evidence of your impairment(s).

    (a) Sources who can provide evidence to establish an impairment. We 
need evidence from acceptable medical sources to establish whether you 
have a medically determinable impairment(s). See Sec. 404.1508. 
Acceptable medical sources are--
    (1) Licensed physicians (medical or osteopathic doctors);
    (2) Licensed or certified psychologists. Included are school 
psychologists, or other licensed or certified individuals with other 
titles who perform the same function as a school psychologist in a 
school setting, for purposes of establishing mental retardation, 
learning disabilities, and borderline intellectual functioning only;
    (3) Licensed optometrists, for the measurement of visual acuity and 
visual fields (we may need a report from a physician to determine other 
aspects of eye diseases);
    (4) Licensed podiatrists, for purposes of establishing impairments 
of the foot, or foot and ankle only, depending on whether the State in 
which the podiatrist practices permits the practice of podiatry on the 
foot only, or the foot and ankle; and
    (5) Qualified speech-language pathologists, for purposes of 
establishing speech or language impairments only. For this source, 
``qualified'' means that the speech-language pathologist must be 
licensed by the State professional licensing agency, or be fully 
certified by the State education agency in the State in which he or she 
practices, or hold a Certificate of Clinical Competence from the 
American Speech-Language-Hearing Association.
    (b) Medical reports. Medical reports should include--
    (1) Medical history;
    (2) Clinical findings (such as the results of physical or mental 
status examinations);
    (3) Laboratory findings (such as blood pressure, x-rays);
    (4) Diagnosis (statement of disease or injury based on its signs and 
symptoms);
    (5) Treatment prescribed with response, and prognosis; and

[[Page 356]]

    (6) A statement about what you can still do despite your 
impairment(s) based on the acceptable medical source's findings on the 
factors under paragraphs (b)(1) through (b)(5) of this section (except 
in statutory blindness claims). Although we will request a medical 
source statement about what you can still do despite your impairment(s), 
the lack of the medical source statement will not make the report 
incomplete. See Sec. 404.1527.
    (c) Statements about what you can still do. At the administrative 
law judge and Appeals Council levels, we will consider residual 
functional capacity assessments made by State agency medical and 
psychological consultants and other program physicians and psychologists 
to be ``statements about what you can still do'' made by nonexamining 
physicians and psychologists based on their review of the evidence in 
the case record. Statements about what you can still do (based on the 
acceptable medical source's findings on the factors under paragraphs 
(b)(1) through (b)(5) of this section) should describe, but are not 
limited to, the kinds of physical and mental capabilities listed as 
follows (See Sec. Sec. 404.1527 and 404.1545(c)):
    (1) The acceptable medical source's opinion about your ability, 
despite your impairment(s), to do work-related activities such as 
sitting, standing, walking, lifting, carrying, handling objects, 
hearing, speaking, and traveling; and
    (2) In cases of mental impairment(s), the acceptable medical 
source's opinion about your ability to understand, to carry out and 
remember instructions, and to respond appropriately to supervision, 
coworkers, and work pressures in a work setting.
    (d) Other sources. In addition to evidence from the acceptable 
medical sources listed in paragraph (a) of this section, we may also use 
evidence from other sources to show the severity of your impairment(s) 
and how it affects your ability to work. Other sources include, but are 
not limited to--
    (1) Medical sources not listed in paragraph (a) of this section (for 
example, nurse-practitioners, physicians' assistants, naturopaths, 
chiropractors, audiologists, and therapists);
    (2) Educational personnel (for example, school teachers, counselors, 
early intervention team members, developmental center workers, and 
daycare center workers);
    (3) Public and private social welfare agency personnel; and
    (4) Other non-medical sources (for example, spouses, parents and 
other caregivers, siblings, other relatives, friends, neighbors, and 
clergy).
    (e) Completeness. The evidence in your case record, including the 
medical evidence from acceptable medical sources (containing the 
clinical and laboratory findings) and other medical sources not listed 
in paragraph (a) of this section, information you give us about your 
medical condition(s) and how it affects you, and other evidence from 
other sources, must be complete and detailed enough to allow us to make 
a determination or decision about whether you are disabled or blind. It 
must allow us to determine--
    (1) The nature and severity of your impairment(s) for any period in 
question;
    (2) Whether the duration requirement described in Sec. 404.1509 is 
met; and
    (3) Your residual functional capacity to do work-related physical 
and mental activities, when the evaluation steps described in Sec. 
404.1520(e) or (f)(1) apply.

[45 FR 55584, Aug. 20, 1980, as amended at 56 FR 36955, Aug. 1, 1991; 65 
FR 11875, Mar. 7, 2000; 65 FR 34957, June 1, 2000]



Sec. 404.1514  When we will purchase existing evidence.

    We need specific medical evidence to determine whether you are 
disabled or blind. You are responsible for providing that evidence. 
However, we will pay physicians not employed by the Federal government 
and other non-Federal providers of medical services for the reasonable 
cost of providing us with existing medical evidence that we need and ask 
for after November 30, 1980.

[46 FR 45757, Sept. 15, 1981]



Sec. 404.1515  Where and how to submit evidence.

    You may give us evidence about your impairment at any of our offices 
or at the office of any State agency authorized to make disability 
determinations. You may also give evidence to one of

[[Page 357]]

our employees authorized to accept evidence at another place. For more 
information about this, see subpart H of this part.



Sec. 404.1516  If you fail to submit medical and other evidence.

    If you do not give us the medical and other evidence that we need 
and request, we will have to make a decision based on information 
available in your case. We will not excuse you from giving us evidence 
because you have religious or personal reasons against medical 
examinations, tests, or treatment.



Sec. 404.1517  Consultative examination at our expense.

    If your medical sources cannot or will not give us sufficient 
medical evidence about your impairment for us to determine whether you 
are disabled or blind, we may ask you to have one or more physical or 
mental examinations or tests. We will pay for these examinations. 
However, we will not pay for any medical examination arranged by you or 
your representative without our advance approval. If we arrange for the 
examination or test, we will give you reasonable notice of the date, 
time, and place the examination or test will be given, and the name of 
the person or facility who will do it. We will also give the examiner 
any necessary background information about your condition.

[56 FR 36956, Aug. 1, 1991]



Sec. 404.1518  If you do not appear at a consultative examination.

    (a) General. If you are applying for benefits and do not have a good 
reason for failing or refusing to take part in a consultative 
examination or test which we arrange for you to get information we need 
to determine your disability or blindness, we may find that you are not 
disabled or blind. If you are already receiving benefits and do not have 
a good reason for failing or refusing to take part in a consultative 
examination or test which we arranged for you, we may determine that 
your disability or blindness has stopped because of your failure or 
refusal. Therefore, if you have any reason why you cannot go for the 
scheduled appointment, you should tell us about this as soon as possible 
before the examination date. If you have a good reason, we will schedule 
another examination. We will consider your physical, mental, 
educational, and linguistic limitations (including any lack of facility 
with the English language) when determining if you have a good reason 
for failing to attend a consultative examination.
    (b) Examples of good reasons for failure to appear. Some examples of 
what we consider good reasons for not going to a scheduled examination 
include--
    (1) Illness on the date of the scheduled examination or test;
    (2) Not receiving timely notice of the scheduled examination or 
test, or receiving no notice at all;
    (3) Being furnished incorrect or incomplete information, or being 
given incorrect information about the physician involved or the time or 
place of the examination or test, or;
    (4) Having had death or serious illness occur in your immediate 
family.
    (c) Objections by your physician. If any of your treating physicians 
tell you that you should not take the examination or test, you should 
tell us at once. In many cases, we may be able to get the information we 
need in another way. Your physician may agree to another type of 
examination for the same purpose.

[45 FR 55584, Aug. 20, 1980, as amended at 59 FR 1635, Jan. 12, 1994]

Standards To Be Used in Determining When a Consultative Examination Will 
        Be Obtained in Connection With Disability Determinations



Sec. 404.1519  The consultative examination.

    A consultative examination is a physical or mental examination or 
test purchased for you at our request and expense from a treating source 
or another medical source, including a pediatrician when appropriate. 
The decision to purchase a consultative examination will be made on an 
individual case basis in accordance with the provisions of Sec. Sec. 
404.1519a through 404.1519f. Selection of the source for the examination 
will be consistent with the provisions of Sec. 404.1503a and Sec. Sec. 
404.1519g

[[Page 358]]

through 404.1519j. The rules and procedures for requesting consultative 
examinations set forth in Sec. Sec. 404.1519a and 404.1519b are 
applicable at the reconsideration and hearing levels of review, as well 
as the initial level of determination.

[56 FR 36956, Aug. 1, 1991, as amended at 65 FR 11875, Mar. 7, 2000]



Sec. 404.1519a  When we will purchase a consultative examination and how we will use it.

    (a)(1) General. The decision to purchase a consultative examination 
for you will be made after we have given full consideration to whether 
the additional information needed (e.g., clinical findings, laboratory 
tests, diagnosis, and prognosis) is readily available from the records 
of your medical sources. See Sec. 404.1512 for the procedures we will 
follow to obtain evidence from your medical sources. Before purchasing a 
consultative examination, we will consider not only existing medical 
reports, but also the disability interview form containing your 
allegations as well as other pertinent evidence in your file.
    (2) When we purchase a consultative examination, we will use the 
report from the consultative examination to try to resolve a conflict or 
ambiguity if one exists. We will also use a consultative examination to 
secure needed medical evidence the file does not contain such as 
clinical findings, laboratory tests, a diagnosis or prognosis necessary 
for decision.
    (b) Situations requiring a consultative examination. A consultative 
examination may be purchased when the evidence as a whole, both medical 
and nonmedical, is not sufficient to support a decision on your claim. 
Other situations, including but not limited to the situations listed 
below, will normally require a consultative examination:
    (1) The additional evidence needed is not contained in the records 
of your medical sources;
    (2) The evidence that may have been available from your treating or 
other medical sources cannot be obtained for reasons beyond your 
control, such as death or noncooperation of a medical source;
    (3) Highly technical or specialized medical evidence that we need is 
not available from your treating or other medical sources;
    (4) A conflict, inconsistency, ambiguity or insufficiency in the 
evidence must be resolved, and we are unable to do so by recontacting 
your medical source; or
    (5) There is an indication of a change in your condition that is 
likely to affect your ability to work, but the current severity of your 
impairment is not established.

[56 FR 36956, Aug. 1, 1991]



Sec. 404.1519b  When we will not purchase a consultative examination.

    We will not purchase a consultative examination in situations 
including, but not limited to, the following situations:
    (a) In period of disability and disability insurance benefit claims, 
when you do not meet the insured status requirement in the calendar 
quarter you allege you became disabled or later and there is no 
possibility of establishing an earlier onset;
    (b) In claims for widow's or widower's benefits based on disability, 
when your alleged month of disability is after the end of the 7-year 
period specified in Sec. 404.335(c)(1) and there is no possibility of 
establishing an earlier onset date, or when the 7-year period expired in 
the past and there is no possibility of establishing an onset date prior 
to the date the 7-year period expired;
    (c) In disability insurance benefit claims, when your insured status 
expired in the past and there is no possibility of establishing an onset 
date prior to the date your insured status expired;
    (d) When any issues about your actual performance of substantial 
gainful activity or gainful activity have not been resolved;
    (e) In claims for child's benefits based on disability, when it is 
determined that your alleged disability did not begin before the month 
you attained age 22, and there is no possibility of establishing an 
onset date earlier than the month in which you attained age 22;

[[Page 359]]

    (f) In claims for child's benefits based on disability that are 
filed concurrently with the insured individual's claim and entitlement 
cannot be established for the insured individual;
    (g) In claims for child's benefits based on disability where 
entitlement is precluded based on other nondisability factors.

[56 FR 36956, Aug. 1, 1991]

        Standards for the Type of Referral and for Report Content



Sec. 404.1519f  Type of purchased examinations.

    We will purchase only the specific examinations and tests we need to 
make a determination in your claim. For example, we will not authorize a 
comprehensive medical examination when the only evidence we need is a 
special test, such as an X-ray, blood studies, or an electrocardiogram.

[56 FR 36956, Aug. 1, 1991]



Sec. 404.1519g  Who we will select to perform a consultative examination.

    (a) We will purchase a consultative examination only from a 
qualified medical source. The medical source may be your own physician 
or psychologist, or another source. If you are a child, the medical 
source we choose may be a pediatrician. For a more complete list of 
medical sources, see Sec. 404.1513.
    (b) By ``qualified,'' we mean that the medical source must be 
currently licensed in the State and have the training and experience to 
perform the type of examination or test we will request; the medical 
source must not be barred from participation in our programs under the 
provisions of Sec. 404.1503a. The medical source must also have the 
equipment required to provide an adequate assessment and record of the 
existence and level of severity of your alleged impairments.
    (c) The medical source we choose may use support staff to help 
perform the consultative examination. Any such support staff (e.g., X-
ray technician, nurse) must meet appropriate licensing or certification 
requirements of the State. See Sec. 404.1503a.

[56 FR 36957, Aug. 1, 1991, as amended at 65 FR 11876, Mar. 7, 2000]



Sec. 404.1519h  Your treating source.

    When in our judgment your treating source is qualified, equipped, 
and willing to perform the additional examination or tests for the fee 
schedule payment, and generally furnishes complete and timely reports, 
your treating source will be the preferred source to do the purchased 
examination. Even if only a supplemental test is required, your treating 
source is ordinarily the preferred source.

[65 FR 11876, Mar. 7, 2000]



Sec. 404.1519i  Other sources for consultative examinations.

    We will use a medical source other than your treating source for a 
purchased examination or test in situations including, but not limited 
to, the following situations:
    (a) Your treating source prefers not to perform such an examination 
or does not have the equipment to provide the specific data needed;
    (b) There are conflicts or inconsistencies in your file that cannot 
be resolved by going back to your treating source;
    (c) You prefer a source other than your treating source and have a 
good reason for your preference;
    (d) We know from prior experience that your treating source may not 
be a productive source, e.g., he or she has consistently failed to 
provide complete or timely reports.

[65 FR 11876, Mar. 7, 2000]



Sec. 404.1519j  Objections to the medical source designated to perform 
the consultative examination.

    You or your representative may object to your being examined by a 
medical source we have designated to perform a consultative examination. 
If there is a good reason for the objection, we will schedule the 
examination with another medical source. A good reason may be that the 
medical source we designated had previously represented an interest 
adverse to you. For example, the medical source may

[[Page 360]]

have represented your employer in a workers' compensation case or may 
have been involved in an insurance claim or legal action adverse to you. 
Other things we will consider include: The presence of a language 
barrier, the medical source's office location (e.g., 2nd floor, no 
elevator), travel restrictions, and whether the medical source had 
examined you in connection with a previous disability determination or 
decision that was unfavorable to you. If your objection is that a 
medical source allegedly ``lacks objectivity'' in general, but not in 
relation to you personally, we will review the allegations. See Sec. 
404.1519s. To avoid a delay in processing your claim, the consultative 
examination in your case will be changed to another medical source while 
a review is being conducted. We will handle any objection to use of the 
substitute medical source in the same manner. However, if we had 
previously conducted such a review and found that the reports of the 
medical source in question conformed to our guidelines, we will not 
change your examination.

[65 FR 11876, Mar. 7, 2000]



Sec. 404.1519k  Purchase of medical examinations, laboratory tests, and 
other services.

    We may purchase medical examinations, including psychiatric and 
psychological examinations, X-rays and laboratory tests (including 
specialized tests, such as pulmonary function studies, 
electrocardiograms, and stress tests) from a medical source.
    (a) The rate of payment to be used for purchasing medical or other 
services necessary to make determinations of disability may not exceed 
the highest rate paid by Federal or public agencies in the State for the 
same or similar types of service. See Sec. Sec. 404.1624 and 404.1626.
    (b) If a physician's bill or a request for payment for a physician's 
services includes a charge for a laboratory test for which payment may 
be made under this part, the amount payable with respect to the test 
shall be determined as follows:
    (1) If the bill or request for payment indicates that the test was 
personally performed or supervised by the physician who submitted the 
bill (or for whose services the request for payment was made) or by 
another physician with whom that physician shares his or her practice, 
the payment will be based on the physician's usual and customary charge 
for the test or the rates of payment which the State uses for purchasing 
such services, whichever is the lesser amount.
    (2) If the bill or request for payment indicates that the test was 
performed by an independent laboratory, the amount of reimbursement will 
not exceed the billed cost of the independent laboratory or the rate of 
payment which the State uses for purchasing such services, whichever is 
the lesser amount. A nominal payment may be made to the physician for 
collecting, handling and shipping a specimen to the laboratory if the 
physician bills for such a service. The total reimbursement may not 
exceed the rate of payment which the State uses for purchasing such 
services.
    (c) The State will assure that it can support the rate of payment it 
uses. The State shall also be responsible for monitoring and overseeing 
the rate of payment it uses to ensure compliance with paragraphs (a) and 
(b) of this section.

[56 FR 36957, Aug. 1, 1991, as amended at 65 FR 11876, Mar. 7, 2000]



Sec. 404.1519m  Diagnostic tests or procedures.

    We will request the results of any diagnostic tests or procedures 
that have been performed as part of a workup by your treating source or 
other medical source and will use the results to help us evaluate 
impairment severity or prognosis. However, we will not order diagnostic 
tests or procedures that involve significant risk to you, such as 
myelograms, arteriograms, or cardiac catheterizations for the evaluation 
of disability under the Social Security program. Also, a State agency 
medical consultant must approve the ordering of any diagnostic test or 
procedure when there is a chance it may involve significant risk. The 
responsibility for deciding whether to perform the examination rests 
with the medical source

[[Page 361]]

designated to perform the consultative examination.

[56 FR 36957, Aug. 1, 1991, as amended at 65 FR 11876, Mar. 7, 2000]



Sec. 404.1519n  Informing the medical source of examination scheduling, 
report content, and signature requirements.

    The medical sources who perform consultative examinations will have 
a good understanding of our disability programs and their evidentiary 
requirements. They will be made fully aware of their responsibilities 
and obligations regarding confidentiality as described in Sec. 
401.105(e). We will fully inform medical sources who perform 
consultative examinations at the time we first contact them, and at 
subsequent appropriate intervals, of the following obligations:
    (a) Scheduling. In scheduling full consultative examinations, 
sufficient time should be allowed to permit the medical source to take a 
case history and perform the examination, including any needed tests. 
The following minimum scheduling intervals (i.e., time set aside for the 
individual, not the actual duration of the consultative examination) 
should be used.
    (1) Comprehensive general medical examination--at least 30 minutes;
    (2) Comprehensive musculoskeletal or neurological examination--at 
least 20 minutes;
    (3) Comprehensive psychiatric examination--at least 40 minutes;
    (4) Psychological examination--at least 60 minutes (Additional time 
may be required depending on types of psychological tests administered); 
and
    (5) All others--at least 30 minutes, or in accordance with accepted 
medical practices.


We recognize that actual practice will dictate that some examinations 
may require longer scheduling intervals depending on the circumstances 
in a particular situation. We also recognize that these minimum 
intervals may have to be adjusted to allow for those claimants who do 
not attend their scheduled examination. The purpose of these minimum 
scheduling timeframes is to ensure that such examinations are complete 
and that sufficient time is made available to obtain the information 
needed to make an accurate determination in your case. State agencies 
will monitor the scheduling of examinations (through their normal 
consultative examination oversight activities) to ensure that any 
overscheduling is avoided, as overscheduling may lead to examinations 
that are not thorough.
    (b) Report content. The reported results of your medical history, 
examination, requested laboratory findings, discussions and conclusions 
must conform to accepted professional standards and practices in the 
medical field for a complete and competent examination. The facts in a 
particular case and the information and findings already reported in the 
medical and other evidence of record will dictate the extent of detail 
needed in the consultative examination report for that case. Thus, the 
detail and format for reporting the results of a purchased examination 
will vary depending upon the type of examination or testing requested. 
The reporting of information will differ from one type of examination to 
another when the requested examination relates to the performance of 
tests such as ventilatory function tests, treadmill exercise tests, or 
audiological tests. The medical report must be complete enough to help 
us determine the nature, severity, and duration of the impairment, and 
residual functional capacity. The report should reflect your statement 
of your symptoms, not simply the medical source's statements or 
conclusions. The medical source's report of the consultative examination 
should include the objective medical facts as well as observations and 
opinions.
    (c) Elements of a complete consultative examination. A complete 
consultative examination is one which involves all the elements of a 
standard examination in the applicable medical specialty. When the 
report of a complete consultative examination is involved, the report 
should include the following elements:
    (1) Your major or chief complaint(s);
    (2) A detailed description, within the area of specialty of the 
examination, of the history of your major complaint(s);
    (3) A description, and disposition, of pertinent ``positive'' and 
``negative'' detailed findings based on the history,

[[Page 362]]

examination and laboratory tests related to the major complaint(s), and 
any other abnormalities or lack thereof reported or found during 
examination or laboratory testing;
    (4) The results of laboratory and other tests (e.g., X-rays) 
performed according to the requirements stated in the Listing of 
Impairments (see appendix 1 of this subpart P);
    (5) The diagnosis and prognosis for your impairment(s);
    (6) A statement about what you can still do despite your 
impairment(s), unless the claim is based on statutory blindness. This 
statement should describe the opinion of the medical source about your 
ability, despite your impairment(s), to do work-related activities, such 
as sitting, standing, walking, lifting, carrying, handling objects, 
hearing, speaking, and traveling; and, in cases of mental impairment(s), 
the opinion of the medical source about your ability to understand, to 
carry out and remember instructions, and to respond appropriately to 
supervision, coworkers and work pressures in a work setting. Although we 
will ordinarily request, as part of the consultative examination 
process, a medical source statement about what you can still do despite 
your impairment(s), the absence of such a statement in a consultative 
examination report will not make the report incomplete. See Sec. 
404.1527; and
    (7) In addition, the medical source will consider, and provide some 
explanation or comment on, your major complaint(s) and any other 
abnormalities found during the history and examination or reported from 
the laboratory tests. The history, examination, evaluation of laboratory 
test results, and the conclusions will represent the information 
provided by the medical source who signs the report.
    (d) When a complete consultative examination is not required. When 
the evidence we need does not require a complete consultative 
examination (for example, we need only a specific laboratory test result 
to complete the record), we may not require a report containing all of 
the elements in paragraph (c).
    (e) Signature requirements. All consultative examination reports 
will be personally reviewed and signed by the medical source who 
actually performed the examination. This attests to the fact that the 
medical source doing the examination or testing is solely responsible 
for the report contents and for the conclusions, explanations or 
comments provided with respect to the history, examination and 
evaluation of laboratory test results. The signature of the medical 
source on a report annotated ``not proofed'' or ``dictated but not 
read'' is not acceptable. A rubber stamp signature of a medical source 
or the medical source's signature entered by any other person is not 
acceptable.

[56 FR 36958, Aug. 1, 1991, as amended at 65 FR 11876, Mar. 7, 2000]



Sec. 404.1519o  When a properly signed consultative examination report 
has not been received.

    If a consultative examination report is received unsigned or 
improperly signed we will take the following action.
    (a) When we will make determinations and decisions without a 
properly signed report. We will make a determination or decision in the 
circumstances specified in paragraphs (a)(1) and (a)(2) of this section 
without waiting for a properly signed consultative examination report. 
After we have made the determination or decision, we will obtain a 
properly signed report and include it in the file unless the medical 
source who performed the original consultative examination has died:
    (1) Continuous period of disability allowance with an onset date as 
alleged or earlier than alleged; or
    (2) Continuance of disability.
    (b) When we will not make determinations and decisions without a 
properly signed report. We will not use an unsigned or improperly signed 
consultative examination report to make the determinations or decisions 
specified in paragraphs (b)(1), (b)(2), (b)(3), and (b)(4) of this 
section. When we need a properly signed consultative examination report 
to make these determinations or decisions, we must obtain such a report. 
If the signature of the medical source who performed the original 
examination cannot be obtained because the medical source is out of the 
country for an extended period of time,

[[Page 363]]

or on an extended vacation, seriously ill, deceased, or for any other 
reason, the consultative examination will be rescheduled with another 
medical source:
    (1) Denial; or
    (2) Cessation; or
    (3) Allowance of a period of disability which has ended; or
    (4) Allowance with an onset date later than alleged.

[56 FR 36958, Aug. 1, 1991, as amended at 65 FR 11877, Mar. 7, 2000]



Sec. 404.1519p  Reviewing reports of consultative examinations.

    (a) We will review the report of the consultative examination to 
determine whether the specific information requested has been furnished. 
We will consider the following factors in reviewing the report:
    (1) Whether the report provides evidence which serves as an adequate 
basis for decisionmaking in terms of the impairment it assesses;
    (2) Whether the report is internally consistent; Whether all the 
diseases, impairments and complaints described in the history are 
adequately assessed and reported in the clinical findings; Whether the 
conclusions correlate the findings from your medical history, clinical 
examination and laboratory tests and explain all abnormalities;
    (3) Whether the report is consistent with the other information 
available to us within the specialty of the examination requested; 
Whether the report fails to mention an important or relevant complaint 
within that specialty that is noted in other evidence in the file (e.g., 
your blindness in one eye, amputations, pain, alcoholism, depression);
    (4) Whether this is an adequate report of examination as compared to 
standards set out in the course of a medical education; and
    (5) Whether the report is properly signed.
    (b) If the report is inadequate or incomplete, we will contact the 
medical source who performed the consultative examination, give an 
explanation of our evidentiary needs, and ask that the medical source 
furnish the missing information or prepare a revised report.
    (c) With your permission, or when the examination discloses new 
diagnostic information or test results that reveal a potentially life-
threatening situation, we will refer the consultative examination report 
to your treating source. When we refer the consultative examination 
report to your treating source without your permission, we will notify 
you that we have done so.
    (d) We will perform ongoing special management studies on the 
quality of consultative examinations purchased from major medical 
sources and the appropriateness of the examinations authorized.
    (e) We will take steps to ensure that consultative examinations are 
scheduled only with medical sources who have access to the equipment 
required to provide an adequate assessment and record of the existence 
and level of severity of your alleged impairments.

[56 FR 36959, Aug. 1, 1991, as amended at 65 FR 11877, Mar. 7, 2000]



Sec. 404.1519q  Conflict of interest.

    All implications of possible conflict of interest between medical or 
psychological consultants and their medical or psychological practices 
will be avoided. Such consultants are not only those physicians and 
psychologists who work for us directly but are also those who do review 
and adjudication work in the State agencies. Physicians and 
psychologists who work for us directly as employees or under contract 
will not work concurrently for a State agency. Physicians and 
psychologists who do review work for us will not perform consultative 
examinations for us without our prior approval. In such situations, the 
physician or psychologist will disassociate himself or herself from 
further involvement in the case and will not participate in the 
evaluation, decision, or appeal actions. In addition, neither they, nor 
any member of their families, will acquire or maintain, either directly 
or indirectly, any financial interest in a medical partnership, 
corporation, or similar relationship in which consultative examinations 
are provided. Sometimes physicians and psychologists who do review work 
for us will have prior knowledge of a case; for example, when the 
claimant was a patient. Where this is so, the

[[Page 364]]

physician or psychologist will not participate in the review or 
determination of the case. This does not preclude the physician or 
psychologist from submitting medical evidence based on treatment or 
examination of the claimant.

[56 FR 36959, Aug. 1, 1991]

             Authorizing and Monitoring the Referral Process



Sec. 404.1519s  Authorizing and monitoring the consultative examination.

    (a) Day-to-day responsibility for the consultative examination 
process rests with the State agencies that make disability 
determinations for us.
    (b) The State agency will maintain a good working relationship with 
the medical community in order to recruit sufficient numbers of 
physicians and other providers of medical services to ensure ready 
availability of consultative examination providers.
    (c) Consistent with Federal and State laws, the State agency 
administrator will work to achieve appropriate rates of payment for 
purchased medical services.
    (d) Each State agency will be responsible for comprehensive 
oversight management of its consultative examination program, with 
special emphasis on key providers.
    (e) A key consultative examination provider is a provider that meets 
at least one of the following conditions:
    (1) Any consultative examination provider with an estimated annual 
billing to the Social Security disability programs of at least $100,000; 
or
    (2) Any consultative examination provider with a practice directed 
primarily towards evaluation examinations rather than the treatment of 
patients; or
    (3) Any consultative examination provider that does not meet the 
above criteria, but is one of the top five consultative examination 
providers in the State by dollar volume, as evidenced by prior year 
data.
    (f) State agencies have flexibility in managing their consultative 
examination programs, but at a minimum will provide:
    (1) An ongoing active recruitment program for consultative 
examination providers;
    (2) A process for orientation, training, and review of new 
consultative examination providers, with respect to SSA's program 
requirements involving consultative examination report content and not 
with respect to medical techniques;
    (3) Procedures for control of scheduling consultative examinations;
    (4) Procedures to ensure that close attention is given to specific 
evaluation issues involved in each case;
    (5) Procedures to ensure that only required examinations and tests 
are authorized in accordance with the standards set forth in this 
subpart;
    (6) Procedures for providing medical or supervisory approval for the 
authorization or purchase of consultative examinations and for 
additional tests or studies requested by consulting medical sources. 
This includes physician approval for the ordering of any diagnostic test 
or procedure where the question of significant risk to the claimant/
beneficiary might be raised. See Sec. 404.1519m.
    (7) Procedures for the ongoing review of consultative examination 
results to ensure compliance with written guidelines;
    (8) Procedures to encourage active participation by physicians in 
the consultative examination oversight program;
    (9) Procedures for handling complaints;
    (10) Procedures for evaluating claimant reactions to key providers; 
and
    (11) A program of systematic, onsite reviews of key providers that 
will include annual onsite reviews of such providers when claimants are 
present for examinations. This provision does not contemplate that such 
reviews will involve participation in the actual examinations but, 
rather, offer an opportunity to talk with claimants at the provider's 
site before and after the examination and to review the provider's 
overall operation.
    (g) The State agencies will cooperate with us when we conduct 
monitoring activities in connection with their

[[Page 365]]

oversight management of their consultative examination programs.

[56 FR 36959, Aug. 1, 1991, as amended at 65 FR 11877, Mar. 7, 2000]

           Procedures To Monitor the Consultative Examination



Sec. 404.1519t  Consultative examination oversight.

    (a) We will ensure that referrals for consultative examinations and 
purchases of consultative examinations are made in accordance with our 
policies. We will also monitor both the referral processes and the 
product of the consultative examinations obtained. This monitoring may 
include reviews by independent medical specialists under direct contract 
with SSA.
    (b) Through our regional offices, we will undertake periodic 
comprehensive reviews of each State agency to evaluate each State's 
management of the consultative examination process. The review will 
involve visits to key providers, with State staff participating, 
including a program physician when the visit will deal with medical 
techniques or judgment, or factors that go to the core of medical 
professionalism.
    (c) We will also perform ongoing special management studies of the 
quality of consultative examinations purchased from key providers and 
other sources and the appropriateness of the examinations authorized.

[56 FR 36960, Aug. 1, 1991]

                        Evaluation of Disability



Sec. 404.1520  Evaluation of disability in general.

    (a) General--(1) Purpose of this section. This section explains the 
five-step sequential evaluation process we use to decide whether you are 
disabled, as defined in Sec. 404.1505.
    (2) Applicability of these rules. These rules apply to you if you 
file an application for a period of disability or disability insurance 
benefits (or both) or for child's insurance benefits based on 
disability. They also apply if you file an application for widow's or 
widower's benefits based on disability for months after December 1990. 
(See Sec. 404.1505(a).)
    (3) Evidence considered. We will consider all evidence in your case 
record when we make a determination or decision whether you are 
disabled.
    (4) The five-step sequential evaluation process. The sequential 
evaluation process is a series of five ``steps'' that we follow in a set 
order. If we can find that you are disabled or not disabled at a step, 
we make our determination or decision and we do not go on to the next 
step. If we cannot find that you are disabled or not disabled at a step, 
we go on to the next step. Before we go from step three to step four, we 
assess your residual functional capacity. (See paragraph (e) of this 
section.) We use this residual functional capacity assessment at both 
step four and step five when we evaluate your claim at these steps. 
These are the five steps we follow:
    (i) At the first step, we consider your work activity, if any. If 
you are doing substantial gainful activity, we will find that you are 
not disabled. (See paragraph (b) of this section.)
    (ii) At the second step, we consider the medical severity of your 
impairment(s). If you do not have a severe medically determinable 
physical or mental impairment that meets the duration requirement in 
Sec. 404.1509, or a combination of impairments that is severe and meets 
the duration requirement, we will find that you are not disabled. (See 
paragraph (c) of this section.)
    (iii) At the third step, we also consider the medical severity of 
your impairment(s). If you have an impairment(s) that meets or equals 
one of our listings in appendix 1 of this subpart and meets the duration 
requirement, we will find that you are disabled. (See paragraph (d) of 
this section.)
    (iv) At the fourth step, we consider our assessment of your residual 
functional capacity and your past relevant work. If you can still do 
your past relevant work, we will find that you are not disabled. (See 
paragraph (f) of this section and Sec. 404.1560(b).)
    (v) At the fifth and last step, we consider our assessment of your 
residual functional capacity and your age, education, and work 
experience to see if you can make an adjustment to other work. If you 
can make an adjustment to other work, we will find that you are not 
disabled. If you cannot make

[[Page 366]]

an adjustment to other work, we will find that you are disabled. (See 
paragraph (g) of this section and Sec. 404.1560(c).)
    (5) When you are already receiving disability benefits. If you are 
already receiving disability benefits, we will use a different 
sequential evaluation process to decide whether you continue to be 
disabled. We explain this process in Sec. 404.1594(f).
    (b) If you are working. If you are working and the work you are 
doing is substantial gainful activity, we will find that you are not 
disabled regardless of your medical condition or your age, education, 
and work experience.
    (c) You must have a severe impairment. If you do not have any 
impairment or combination of impairments which significantly limits your 
physical or mental ability to do basic work activities, we will find 
that you do not have a severe impairment and are, therefore, not 
disabled. We will not consider your age, education, and work experience. 
However, it is possible for you to have a period of disability for a 
time in the past even though you do not now have a severe impairment.
    (d) When your impairment(s) meets or equals a listed impairment in 
appendix 1. If you have an impairment(s) which meets the duration 
requirement and is listed in appendix 1 or is equal to a listed 
impairment(s), we will find you disabled without considering your age, 
education, and work experience.
    (e) When your impairment(s) does not meet or equal a listed 
impairment. If your impairment(s) does not meet or equal a listed 
impairment, we will assess and make a finding about your residual 
functional capacity based on all the relevant medical and other evidence 
in your case record, as explained in Sec. 404.1545. (See paragraph 
(g)(2) of this section and Sec. 404.1562 for an exception to this 
rule.) We use our residual functional capacity assessment at the fourth 
step of the sequential evaluation process to determine if you can do 
your past relevant work (paragraph (f) of this section) and at the fifth 
step of the sequential evaluation process (if the evaluation proceeds to 
this step) to determine if you can adjust to other work (paragraph (g) 
of this section).
    (f) Your impairment(s) must prevent you from doing your past 
relevant work. If we cannot make a determination or decision at the 
first three steps of the sequential evaluation process, we will compare 
our residual functional capacity assessment, which we made under 
paragraph (e) of this section, with the physical and mental demands of 
your past relevant work. (See Sec. 404.1560(b).) If you can still do 
this kind of work, we will find that you are not disabled.
    (g) Your impairment(s) must prevent you from making an adjustment to 
any other work. (1) If we find that you cannot do your past relevant 
work because you have a severe impairment(s) (or you do not have any 
past relevant work), we will consider the same residual functional 
capacity assessment we made under paragraph (e) of this section, 
together with your vocational factors (your age, education, and work 
experience) to determine if you can make an adjustment to other work. 
(See Sec. 404.1560(c).) If you can make an adjustment to other work, we 
will find you not disabled. If you cannot, we will find you disabled.
    (2) We use different rules if you meet one of the two special 
medical-vocational profiles described in Sec. 404.1562. If you meet one 
of those profiles, we will find that you cannot make an adjustment to 
other work, and that you are disabled.

[50 FR 8727, Mar. 5, 1985; 50 FR 19164, May 7, 1985, as amended at 56 FR 
36960, Aug. 1, 1991; 65 FR 80308, Dec. 21, 2000; 68 FR 51161, Aug. 26, 
2003]



Sec. 404.1520a  Evaluation of mental impairments.

    (a) General. The steps outlined in Sec. 404.1520 apply to the 
evaluation of physical and mental impairments. In addition, when we 
evaluate the severity of mental impairments for adults (persons age 18 
and over) and in persons under age 18 when Part A of the Listing of 
Impairments is used, we must follow a special technique at each level in 
the administrative review process. We describe this special technique in 
paragraphs (b) through (e) of this section. Using the technique helps 
us:
    (1) Identify the need for additional evidence to determine 
impairment severity;

[[Page 367]]

    (2) Consider and evaluate functional consequences of the mental 
disorder(s) relevant to your ability to work; and
    (3) Organize and present our findings in a clear, concise, and 
consistent manner.
    (b) Use of the technique. (1) Under the special technique, we must 
first evaluate your pertinent symptoms, signs, and laboratory findings 
to determine whether you have a medically determinable mental 
impairment(s). See Sec. 404.1508 for more information about what is 
needed to show a medically determinable impairment. If we determine that 
you have a medically determinable mental impairment(s), we must specify 
the symptoms, signs, and laboratory findings that substantiate the 
presence of the impairment(s) and document our findings in accordance 
with paragraph (e) of this section.
    (2) We must then rate the degree of functional limitation resulting 
from the impairment(s) in accordance with paragraph (c) of this section 
and record our findings as set out in paragraph (e) of this section.
    (c) Rating the degree of functional limitation. (1) Assessment of 
functional limitations is a complex and highly individualized process 
that requires us to consider multiple issues and all relevant evidence 
to obtain a longitudinal picture of your overall degree of functional 
limitation. We will consider all relevant and available clinical signs 
and laboratory findings, the effects of your symptoms, and how your 
functioning may be affected by factors including, but not limited to, 
chronic mental disorders, structured settings, medication, and other 
treatment.
    (2) We will rate the degree of your functional limitation based on 
the extent to which your impairment(s) interferes with your ability to 
function independently, appropriately, effectively, and on a sustained 
basis. Thus, we will consider such factors as the quality and level of 
your overall functional performance, any episodic limitations, the 
amount of supervision or assistance you require, and the settings in 
which you are able to function. See 12.00C through 12.00H of the Listing 
of Impairments in appendix 1 to this subpart for more information about 
the factors we consider when we rate the degree of your functional 
limitation.
    (3) We have identified four broad functional areas in which we will 
rate the degree of your functional limitation: Activities of daily 
living; social functioning; concentration, persistence, or pace; and 
episodes of decompensation. See 12.00C of the Listing of Impairments.
    (4) When we rate the degree of limitation in the first three 
functional areas (activities of daily living; social functioning; and 
concentration, persistence, or pace), we will use the following five-
point scale: None, mild, moderate, marked, and extreme. When we rate the 
degree of limitation in the fourth functional area (episodes of 
decompensation), we will use the following four-point scale: None, one 
or two, three, four or more. The last point on each scale represents a 
degree of limitation that is incompatible with the ability to do any 
gainful activity.
    (d) Use of the technique to evaluate mental impairments. After we 
rate the degree of functional limitation resulting from your 
impairment(s), we will determine the severity of your mental 
impairment(s).
    (1) If we rate the degree of your limitation in the first three 
functional areas as ``none'' or ``mild'' and ``none'' in the fourth 
area, we will generally conclude that your impairment(s) is not severe, 
unless the evidence otherwise indicates that there is more than a 
minimal limitation in your ability to do basic work activities (see 
Sec. 404.1521).
    (2) If your mental impairment(s) is severe, we will then determine 
if it meets or is equivalent in severity to a listed mental disorder. We 
do this by comparing the medical findings about your impairment(s) and 
the rating of the degree of functional limitation to the criteria of the 
appropriate listed mental disorder. We will record the presence or 
absence of the criteria and the rating of the degree of functional 
limitation on a standard document at the initial and reconsideration 
levels of the administrative review process, or in the decision at the 
administrative law judge hearing and Appeals Council levels (in cases in 
which the Appeals Council issues a decision). See paragraph (e) of this 
section.

[[Page 368]]

    (3) If we find that you have a severe mental impairment(s) that 
neither meets nor is equivalent in severity to any listing, we will then 
assess your residual functional capacity.
    (e) Documenting application of the technique. At the initial and 
reconsideration levels of the administrative review process, we will 
complete a standard document to record how we applied the technique. At 
the administrative law judge hearing and Appeals Council levels (in 
cases in which the Appeals Council issues a decision), we will document 
application of the technique in the decision.
    (1) At the initial and reconsideration levels, except in cases in 
which a disability hearing officer makes the reconsideration 
determination, our medical or psychological consultant has overall 
responsibility for assessing medical severity. The disability examiner, 
a member of the adjudicative team (see Sec. 404.1615), may assist in 
preparing the standard document. However, our medical or psychological 
consultant must review and sign the document to attest that it is 
complete and that he or she is responsible for its content, including 
the findings of fact and any discussion of supporting evidence. When a 
disability hearing officer makes a reconsideration determination, the 
determination must document application of the technique, incorporating 
the disability hearing officer's pertinent findings and conclusions 
based on this technique.
    (2) At the administrative law judge hearing and Appeals Council 
levels, the written decision issued by the administrative law judge or 
Appeals Council must incorporate the pertinent findings and conclusions 
based on the technique. The decision must show the significant history, 
including examination and laboratory findings, and the functional 
limitations that were considered in reaching a conclusion about the 
severity of the mental impairment(s). The decision must include a 
specific finding as to the degree of limitation in each of the 
functional areas described in paragraph (c) of this section.
    (3) If the administrative law judge requires the services of a 
medical expert to assist in applying the technique but such services are 
unavailable, the administrative law judge may return the case to the 
State agency or the appropriate Federal component, using the rules in 
Sec. 404.941, for completion of the standard document. If, after 
reviewing the case file and completing the standard document, the State 
agency or Federal component concludes that a determination favorable to 
you is warranted, it will process the case using the rules found in 
Sec. 404.941(d) or (e). If, after reviewing the case file and 
completing the standard document, the State agency or Federal component 
concludes that a determination favorable to you is not warranted, it 
will send the completed standard document and the case to the 
administrative law judge for further proceedings and a decision.

[65 FR 50774, Aug. 21, 2000; 65 FR 60584, Oct. 12, 2000]



Sec. 404.1521  What we mean by an impairment(s) that is not severe.

    (a) Non-severe impairment(s). An impairment or combination of 
impairments is not severe if it does not significantly limit your 
physical or mental ability to do basic work activities.
    (b) Basic work activities. When we talk about basic work activities, 
we mean the abilities and aptitudes necessary to do most jobs. Examples 
of these include--
    (1) Physical functions such as walking, standing, sitting, lifting, 
pushing, pulling, reaching, carrying, or handling;
    (2) Capacities for seeing, hearing, and speaking;
    (3) Understanding, carrying out, and remembering simple 
instructions;
    (4) Use of judgment;
    (5) Responding appropriately to supervision, co-workers and usual 
work situations; and
    (6) Dealing with changes in a routine work setting.

[50 FR 8728, Mar. 5, 1985]



Sec. 404.1522  When you have two or more unrelated impairments--initial 
claims.

    (a) Unrelated severe impairments. We cannot combine two or more 
unrelated severe impairments to meet the 12-

[[Page 369]]

month duration test. If you have a severe impairment(s) and then develop 
another unrelated severe impairment(s) but neither one is expected to 
last for 12 months, we cannot find you disabled, even though the two 
impairments in combination last for 12 months.
    (b) Concurrent impairments. If you have two or more concurrent 
impairments which, when considered in combination, are severe, we must 
also determine whether the combined effect of your impairments can be 
expected to continue to be severe for 12 months. If one or more of your 
impairments improves or is expected to improve within 12 months, so that 
the combined effect of your remaining impairments is no longer severe, 
we will find that you do not meet the 12-month duration test.

[50 FR 8728, Mar. 5, 1985]



Sec. 404.1523  Multiple impairments.

    In determining whether your physical or mental impairment or 
impairments are of a sufficient medical severity that such impairment or 
impairments could be the basis of eligibility under the law, we will 
consider the combined effect of all of your impairments without regard 
to whether any such impairment, if considered separately, would be of 
sufficient severity. If we do find a medically severe combination of 
impairments, the combined impact of the impairments will be considered 
throughout the disability determination process. If we do not find that 
you have a medically severe combination of impairments, we will 
determine that you are not disabled (see Sec. 404.1520).

[50 FR 8728, Mar. 5, 1985]

                         Medical Considerations



Sec. 404.1525  Listing of Impairments in appendix 1.

    (a) Purpose of the Listing of Impairments. The Listing of 
Impairments describes, for each of the major body systems, impairments 
which are considered severe enough to prevent a person from doing any 
gainful activity. Most of the listed impairments are permanent or 
expected to result in death, or a specific statement of duration is 
made. For all others, the evidence must show that the impairment has 
lasted or is expected to last for a continuous period of at least 12 
months.
    (b) Adult and childhood diseases. The Listing of Impairments 
consists of two parts:
    (1) Part A contains medical criteria that apply to adult persons age 
18 and over. The medical criteria in part A may also be applied in 
evaluating impairments in persons under age 18 if the disease processes 
have a similar effect on adults and younger persons.
    (2) Part B contains additional medical criteria that apply only to 
the evaluation of impairments of persons under age 18. Certain criteria 
in part A do not give appropriate consideration to the particular 
effects of the disease processes in childhood; i.e., when the disease 
process is generally found only in children or when the disease process 
differs in its effect on children than on adults. Additional criteria 
are included in part B, and the impairment categories are, to the extent 
possible, numbered to maintain a relationship with their counterparts in 
part A. In evaluating disability for a person under age 18, part B will 
be used first. If the medical criteria in part B do not apply, then the 
medical criteria in part A will be used.
    (c) How to use the Listing of Impairments. Each section of the 
Listing of Impairments has a general introduction containing definitions 
of key concepts used in that section. Certain specific medical findings, 
some of which are required in establishing a diagnosis or in confirming 
the existence of an impairment for the purpose of this Listing, are also 
given in the narrative introduction. If the medical findings needed to 
support a diagnosis are not given in the introduction or elsewhere in 
the listing, the diagnosis must still be established on the basis of 
medically acceptable clinical and laboratory diagnostic techniques. 
Following the introduction in each section, the required level of 
severity of impairment is shown under ``Category of Impairments'' by one 
or more sets of medical findings. The medical findings consist of 
symptoms, signs, and laboratory findings.

[[Page 370]]

    (d) Diagnosis of impairments. We will not consider your impairment 
to be one listed in appendix 1 solely because it has the diagnosis of a 
listed impairment. It must also have the findings shown in the Listing 
of that impairment.
    (e) Addiction to alcohol or drugs. If you have a condition diagnosed 
as addiction to alcohol or drugs, this will not, by itself, be a basis 
for determining whether you are, or are not, disabled. As with any other 
medical condition, we will decide whether you are disabled based on 
symptoms, signs, and laboratory findings.
    (f) Symptoms as criteria of listed impairment(s). Some listed 
impairment(s) include symptoms usually associated with those 
impairment(s) as criteria. Generally, when a symptom is one of the 
criteria in a listed impairment, it is only necessary that the symptom 
be present in combination with the other criteria. It is not necessary, 
unless the listing specifically states otherwise, to provide information 
about the intensity, persistence or limiting effects of the symptom as 
long as all other findings required by the specific listing are present.

[45 FR 55584, Aug. 20, 1980, as amended at 56 FR 57941, Nov. 14, 1991]



Sec. 404.1526  Medical equivalence.

    (a) How medical equivalence is determined. We will decide that your 
impairment(s) is medically equivalent to a listed impairment in appendix 
1 if the medical findings are at least equal in severity and duration to 
the listed findings. We will compare the symptoms, signs, and laboratory 
findings about your impairment(s), as shown in the medical evidence we 
have about your claim, with the medical criteria shown with the listed 
impairment. If your impairment is not listed, we will consider the 
listed impairment most like your impairment to decide whether your 
impairment is medically equal. If you have more than one impairment, and 
none of them meets or equals a listed impairment, we will review the 
symptoms, signs, and laboratory findings about your impairments to 
determine whether the combination of your impairments is medically equal 
to any listed impairment.
    (b) Medical equivalence must be based on medical findings. We will 
always base our decision about whether your impairment(s) is medically 
equal to a listed impairment on medical evidence only. Any medical 
findings in the evidence must be supported by medically acceptable 
clinical and laboratory diagnostic techniques. We will also consider the 
medical opinion given by one or more medical or psychological 
consultants designated by the Commissioner in deciding medical 
equivalence. (See Sec. 404.1616.)
    (c) Who is a designated medical or psychological consultant. A 
medical or psychological consultant designated by the Commissioner 
includes any medical or psychological consultant employed or engaged to 
make medical judgments by the Social Security Administration, the 
Railroad Retirement Board, or a State agency authorized to make 
disability determinations. A medical consultant must be an acceptable 
medical source identified in Sec. 404.1513(a)(1) or (a)(3) through 
(a)(5). A psychological consultant used in cases where there is evidence 
of a mental impairment must be a qualified psychologist. (See Sec. 
404.1616 for limitations on what medical consultants who are not 
physicians can evaluate and the qualifications we consider necessary for 
a psychologist to be a consultant.)

[45 FR 55584, Aug. 20, 1980, as amended at 52 FR 33926, Sept. 9, 1987; 
62 FR 38451, July 18, 1997; 65 FR 34957, June 1, 2000]



Sec. 404.1527  Evaluating opinion evidence.

    (a) General. (1) You can only be found disabled if you are unable to 
do any substantial gainful activity by reason of any medically 
determinable physical or mental impairment which can be expected to 
result in death or which has lasted or can be expected to last for a 
continuous period of not less than 12 months. See Sec. 404.1505. Your 
impairment must result from anatomical, physiological, or psychological 
abnormalities which are demonstrable by medically acceptable clinical 
and laboratory diagnostic techniques. See Sec. 404.1508.
    (2) Evidence that you submit or that we obtain may contain medical 
opinions. Medical opinions are statements

[[Page 371]]

from physicians and psychologists or other acceptable medical sources 
that reflect judgments about the nature and severity of your 
impairment(s), including your symptoms, diagnosis and prognosis, what 
you can still do despite impairment(s), and your physical or mental 
restrictions.
    (b) How we consider medical opinions. In deciding whether you are 
disabled, we will always consider the medical opinions in your case 
record together with the rest of the relevant evidence we receive.
    (c) Making disability determinations. After we review all of the 
evidence relevant to your claim, including medical opinions, we make 
findings about what the evidence shows.
    (1) If all of the evidence we receive, including all medical 
opinion(s), is consistent, and there is sufficient evidence for us to 
decide whether you are disabled, we will make our determination or 
decision based on that evidence.
    (2) If any of the evidence in your case record, including any 
medical opinion(s), is inconsistent with other evidence or is internally 
inconsistent, we will weigh all of the evidence and see whether we can 
decide whether you are disabled based on the evidence we have.
    (3) If the evidence is consistent but we do not have sufficient 
evidence to decide whether you are disabled, or if after weighing the 
evidence we decide we cannot reach a conclusion about whether you are 
disabled, we will try to obtain additional evidence under the provisions 
of Sec. Sec. 404.1512 and 404.1519 through 404.1519h. We will request 
additional existing records, recontact your treating sources or any 
other examining sources, ask you to undergo a consultative examination 
at our expense, or ask you or others for more information. We will 
consider any additional evidence we receive together with the evidence 
we already have.
    (4) When there are inconsistencies in the evidence that cannot be 
resolved, or when despite efforts to obtain additional evidence the 
evidence is not complete, we will make a determination or decision based 
on the evidence we have.
    (d) How we weigh medical opinions. Regardless of its source, we will 
evaluate every medical opinion we receive. Unless we give a treating 
source's opinion controlling weight under paragraph (d)(2) of this 
section, we consider all of the following factors in deciding the weight 
we give to any medical opinion.
    (1) Examining relationship. Generally, we give more weight to the 
opinion of a source who has examined you than to the opinion of a source 
who has not examined you.
    (2) Treatment relationship. Generally, we give more weight to 
opinions from your treating sources, since these sources are likely to 
be the medical professionals most able to provide a detailed, 
longitudinal picture of your medical impairment(s) and may bring a 
unique perspective to the medical evidence that cannot be obtained from 
the objective medical findings alone or from reports of individual 
examinations, such as consultative examinations or brief 
hospitalizations. If we find that a treating source's opinion on the 
issue(s) of the nature and severity of your impairment(s) is well-
supported by medically acceptable clinical and laboratory diagnostic 
techniques and is not inconsistent with the other substantial evidence 
in your case record, we will give it controlling weight. When we do not 
give the treating source's opinion controlling weight, we apply the 
factors listed in paragraphs (d)(2)(i) and (d)(2)(ii) of this section, 
as well as the factors in paragraphs (d)(3) through (d)(6) of this 
section in determining the weight to give the opinion. We will always 
give good reasons in our notice of determination or decision for the 
weight we give your treating source's opinion.
    (i) Length of the treatment relationship and the frequency of 
examination. Generally, the longer a treating source has treated you and 
the more times you have been seen by a treating source, the more weight 
we will give to the source's medical opinion. When the treating source 
has seen you a number of times and long enough to have obtained a 
longitudinal picture of your impairment, we will give the source's 
opinion more weight than we would give it if it were from a nontreating 
source.
    (ii) Nature and extent of the treatment relationship. Generally, the 
more knowledge a treating source has about

[[Page 372]]

your impairment(s) the more weight we will give to the source's medical 
opinion. We will look at the treatment the source has provided and at 
the kinds and extent of examinations and testing the source has 
performed or ordered from specialists and independent laboratories. For 
example, if your ophthalmologist notices that you have complained of 
neck pain during your eye examinations, we will consider his or her 
opinion with respect to your neck pain, but we will give it less weight 
than that of another physician who has treated you for the neck pain. 
When the treating source has reasonable knowledge of your impairment(s), 
we will give the source's opinion more weight than we would give it if 
it were from a nontreating source.
    (3) Supportability. The more a medical source presents relevant 
evidence to support an opinion, particularly medical signs and 
laboratory findings, the more weight we will give that opinion. The 
better an explanation a source provides for an opinion, the more weight 
we will give that opinion. Furthermore, because nonexamining sources 
have no examining or treating relationship with you, the weight we will 
give their opinions will depend on the degree to which they provide 
supporting explanations for their opinions. We will evaluate the degree 
to which these opinions consider all of the pertinent evidence in your 
claim, including opinions of treating and other examining sources.
    (4) Consistency. Generally, the more consistent an opinion is with 
the record as a whole, the more weight we will give to that opinion.
    (5) Specialization. We generally give more weight to the opinion of 
a specialist about medical issues related to his or her area of 
specialty than to the opinion of a source who is not a specialist.
    (6) Other factors. When we consider how much weight to give to a 
medical opinion, we will also consider any factors you or others bring 
to our attention, or of which we are aware, which tend to support or 
contradict the opinion. For example, the amount of understanding of our 
disability programs and their evidentiary requirements that an 
acceptable medical source has, regardless of the source of that 
understanding, and the extent to which an acceptable medical source is 
familiar with the other information in your case record are relevant 
factors that we will consider in deciding the weight to give to a 
medical opinion.
    (e) Medical source opinions on issues reserved to the Commissioner. 
Opinions on some issues, such as the examples that follow, are not 
medical opinions, as described in paragraph (a)(2) of this section, but 
are, instead, opinions on issues reserved to the Commissioner because 
they are administrative findings that are dispositive of a case; i.e., 
that would direct the determination or decision of disability.
    (1) Opinions that you are disabled. We are responsible for making 
the determination or decision about whether you meet the statutory 
definition of disability. In so doing, we review all of the medical 
findings and other evidence that support a medical source's statement 
that you are disabled. A statement by a medical source that you are 
``disabled'' or ``unable to work'' does not mean that we will determine 
that you are disabled.
    (2) Other opinions on issues reserved to the Commissioner. We use 
medical sources, including your treating source, to provide evidence, 
including opinions, on the nature and severity of your impairment(s). 
Although we consider opinions from medical sources on issues such as 
whether your impairment(s) meets or equals the requirements of any 
impairment(s) in the Listing of Impairments in appendix 1 to this 
subpart, your residual functional capacity (see Sec. Sec. 404.1545 and 
404.1546), or the application of vocational factors, the final 
responsibility for deciding these issues is reserved to the 
Commissioner.
    (3) We will not give any special significance to the source of an 
opinion on issues reserved to the Commissioner described in paragraphs 
(e)(1) and (e)(2) of this section.
    (f) Opinions of nonexamining sources. We consider all evidence from 
nonexamining sources to be opinion evidence. When we consider the 
opinions of nonexamining sources, we apply the rules in paragraphs (a) 
through (e) of this section. In addition, the following

[[Page 373]]

rules apply to State agency medical and psychological consultants, other 
program physicians and psychologists, and medical experts we consult in 
connection with administrative law judge hearings and Appeals Council 
review:
    (1) At the initial and reconsideration steps in the administrative 
review process, except in disability hearings, State agency medical and 
psychological consultants are members of the teams that make the 
determinations of disability. A State agency medical or psychological 
consultant will consider the evidence in your case record and make 
findings of fact about the medical issues, including, but not limited 
to, the existence and severity of your impairment(s), the existence and 
severity of your symptoms, whether your impairment(s) meets or equals 
the requirements for any impairment listed in appendix 1 to this 
subpart, and your residual functional capacity. These administrative 
findings of fact are based on the evidence in your case record but are 
not themselves evidence at these steps.
    (2) Administrative law judges are responsible for reviewing the 
evidence and making findings of fact and conclusions of law. They will 
consider opinions of State agency medical or psychological consultants, 
other program physicians and psychologists, and medical experts as 
follows:
    (i) Administrative law judges are not bound by any findings made by 
State agency medical or psychological consultants, or other program 
physicians or psychologists. However, State agency medical and 
psychological consultants and other program physicians and psychologists 
are highly qualified physicians and psychologists who are also experts 
in Social Security disability evaluation. Therefore, administrative law 
judges must consider findings of State agency medical and psychological 
consultants or other program physicians or psychologists as opinion 
evidence, except for the ultimate determination about whether you are 
disabled. See Sec. 404.1512(b)(6).
    (ii) When an administrative law judge considers findings of a State 
agency medical or psychological consultant or other program physician or 
psychologist, the administrative law judge will evaluate the findings 
using relevant factors in paragraphs (a) through (e) of this section, 
such as the physician's or psychologist's medical specialty and 
expertise in our rules, the supporting evidence in the case record, 
supporting explanations provided by the physician or psychologist, and 
any other factors relevant to the weighing of the opinions. Unless the 
treating source's opinion is given controlling weight, the 
administrative law judge must explain in the decision the weight given 
to the opinions of a State agency medical or psychological consultant or 
other program physician or psychologist, as the administrative law judge 
must do for any opinions from treating sources, nontreating sources, and 
other nonexamining sources who do not work for us.
    (iii) Administrative law judges may also ask for and consider 
opinions from medical experts on the nature and severity of your 
impairment(s) and on whether your impairment(s) equals the requirements 
of any impairment listed in appendix 1 to this subpart. When 
administrative law judges consider these opinions, they will evaluate 
them using the rules in paragraphs (a) through (e) of this section.
    (3) When the Appeals Council makes a decision, it will follow the 
same rules for considering opinion evidence as administrative law judges 
follow.

[56 FR 36960, Aug. 1, 1991, as amended at 62 FR 38451, July 18, 1997; 65 
FR 11877, Mar. 7, 2000]



Sec. 404.1528  Symptoms, signs, and laboratory findings.

    Medical findings consist of symptoms, signs, and laboratory 
findings:
    (a) Symptoms are your own description of your physical or mental 
impairment. Your statements alone are not enough to establish that there 
is a physical or mental impairment.
    (b) Signs are anatomical, physiological, or psychological 
abnormalities which can be observed, apart from your statements 
(symptoms). Signs must be shown by medically acceptable clinical 
diagnostic techniques. Psychiatric

[[Page 374]]

signs are medically demonstrable phenomena that indicate specific 
psychological abnormalities, e.g., abnormalities of behavior, mood, 
thought, memory, orientation, development, or perception. They must also 
be shown by observable facts that can be medically described and 
evaluated.
    (c) Laboratory findings are anatomical, physiological, or 
psychological phenomena which can be shown by the use of medically 
acceptable laboratory diagnostic techniques. Some of these diagnostic 
techniques include chemical tests, electrophysiological studies 
(electrocardiogram, electroencephalogram, etc.), roent geno log ical 
studies (X-rays), and psychological tests.

[45 FR 55584, Aug. 20, 1980, as amended at 65 FR 50775, Aug. 21, 2000]



Sec. 404.1529  How we evaluate symptoms, including pain.

    (a) General. In determining whether you are disabled, we consider 
all your symptoms, including pain, and the extent to which your symptoms 
can reasonably be accepted as consistent with the objective medical 
evidence and other evidence. By objective medical evidence, we mean 
medical signs and laboratory findings as defined in Sec. 404.1528 (b) 
and (c). By other evidence, we mean the kinds of evidence described in 
Sec. Sec. 404.1512(b) (2) through (6) and 404.1513(b) (1), (4), and (5) 
and (e). These include statements or reports from you, your treating or 
examining physician or psychologist, and others about your medical 
history, diagnosis, prescribed treatment, daily activities, efforts to 
work, and any other evidence showing how your impairment(s) and any 
related symptoms affect your ability to work. We will consider all of 
your statements about your symptoms, such as pain, and any description 
you, your physician, your psychologist, or other persons may provide 
about how the symptoms affect your activities of daily living and your 
ability to work. However, statements about your pain or other symptoms 
will not alone establish that you are disabled; there must be medical 
signs and laboratory findings which show that you have a medical 
impairment(s) which could reasonably be expected to produce the pain or 
other symptoms alleged and which, when considered with all of the other 
evidence (including statements about the intensity and persistence of 
your pain or other symptoms which may reasonably be accepted as 
consistent with the medical signs and laboratory findings), would lead 
to a conclusion that you are disabled. In evaluating the intensity and 
persistence of your symptoms, including pain, we will consider all of 
the available evidence, including your medical history, the medical 
signs and laboratory findings and statements about how your symptoms 
affect you. (Section 404.1527 explains how we consider opinions of your 
treating source and other medical opinions on the existence and severity 
of your symptoms, such as pain.) We will then determine the extent to 
which your alleged functional limitations and restrictions due to pain 
or other symptoms can reasonably be accepted as consistent with the 
medical signs and laboratory findings and other evidence to decide how 
your symptoms affect your ability to work.
    (b) Need for medically determinable impairment that could reasonably 
be expected to produce your symptoms, such as pain. Your symptoms, such 
as pain, fatigue, shortness of breath, weakness, or nervousness, will 
not be found to affect your ability to do basic work activities unless 
medical signs or laboratory findings show that a medically determinable 
impairment(s) is present. Medical signs and laboratory findings, 
established by medically acceptable clinical or laboratory diagnostic 
techniques, must show the existence of a medical impairment(s) which 
results from anatomical, physiological, or psychological abnormalities 
and which could reasonably be expected to produce the pain or other 
symptoms alleged. At the initial or reconsideration step in the 
administrative review process (except in disability hearings), a State 
agency medical or psychological consultant (or other medical or 
psychological consultant designated by the Commissioner) directly 
participates in determining whether your medically determinable 
impairment(s) could reasonably be expected to produce your alleged 
symptoms. In the disability hearing process, a medical or psychological

[[Page 375]]

consultant may provide an advisory assessment to assist a disability 
hearing officer in determining whether your impairment(s) could 
reasonably be expected to produce your alleged symptoms. At the 
administrative law judge hearing or Appeals Council level, the 
administrative law judge or the Appeals Council may ask for and consider 
the opinion of a medical advisor concerning whether your impairment(s) 
could reasonably be expected to produce your alleged symptoms. The 
finding that your impairment(s) could reasonably be expected to produce 
your pain or other symptoms does not involve a determination as to the 
intensity, persistence, or functionally limiting effects of your 
symptoms. We will develop evidence regarding the possibility of a 
medically determinable mental impairment when we have information to 
suggest that such an impairment exists, and you allege pain or other 
symptoms but the medical signs and laboratory findings do not 
substantiate any physical impairment(s) capable of producing the pain or 
other symptoms.
    (c) Evaluating the intensity and persistence of your symptoms, such 
as pain, and determining the extent to which your symptoms limit your 
capacity for work--(1) General. When the medical signs or laboratory 
findings show that you have a medically determinable impairment(s) that 
could reasonably be expected to produce your symptoms, such as pain, we 
must then evaluate the intensity and persistence of your symptoms so 
that we can determine how your symptoms limit your capacity for work. In 
evaluating the intensity and persistence of your symptoms, we consider 
all of the available evidence, including your medical history, the 
medical signs and laboratory findings, and statements from you, your 
treating or examining physician or psychologist, or other persons about 
how your symptoms affect you. We also consider the medical opinions of 
your treating source and other medical opinions as explained in Sec. 
404.1527. Paragraphs (c)(2) through (c)(4) of this section explain 
further how we evaluate the intensity and persistence of your symptoms 
and how we determine the extent to which your symptoms limit your 
capacity for work, when the medical signs or laboratory findings show 
that you have a medically determinable impairment(s) that could 
reasonably be expected to produce your symptoms, such as pain.
    (2) Consideration of objective medical evidence. Objective medical 
evidence is evidence obtained from the application of medically 
acceptable clinical and laboratory diagnostic techniques, such as 
evidence of reduced joint motion, muscle spasm, sensory deficit or motor 
disruption. Objective medical evidence of this type is a useful 
indicator to assist us in making reasonable conclusions about the 
intensity and persistence of your symptoms and the effect those 
symptoms, such as pain, may have on your ability to work. We must always 
attempt to obtain objective medical evidence and, when it is obtained, 
we will consider it in reaching a conclusion as to whether you are 
disabled. However, we will not reject your statements about the 
intensity and persistence of your pain or other symptoms or about the 
effect your symptoms have on your ability to work solely because the 
available objective medical evidence does not substantiate your 
statements.
    (3) Consideration of other evidence. Since symptoms sometimes 
suggest a greater severity of impairment than can be shown by objective 
medical evidence alone, we will carefully consider any other information 
you may submit about your symptoms. The information that you, your 
treating or examining physician or psychologist, or other persons 
provide about your pain or other symptoms (e.g., what may precipitate or 
aggravate your symptoms, what medications, treatments or other methods 
you use to alleviate them, and how the symptoms may affect your pattern 
of daily living) is also an important indicator of the intensity and 
persistence of your symptoms. Because symptoms, such as pain, are 
subjective and difficult to quantify, any symptom-related functional 
limitations and restrictions which you, your treating or examining 
physician or psychologist, or other persons report, which can reasonably 
be accepted as consistent with the objective medical evidence and other 
evidence, will be taken into account as explained in paragraph

[[Page 376]]

(c)(4) of this section in reaching a conclusion as to whether you are 
disabled. We will consider all of the evidence presented, including 
information about your prior work record, your statements about your 
symptoms, evidence submitted by your treating, examining or consulting 
physician or psychologist, and observations by our employees and other 
persons. Section 404.1527 explains in detail how we consider and weigh 
treating source and other medical opinions about the nature and severity 
of your impairment(s) and any related symptoms, such as pain. Factors 
relevant to your symptoms, such as pain, which we will consider include:
    (i) Your daily activities;
    (ii) The location, duration, frequency, and intensity of your pain 
or other symptoms;
    (iii) Precipitating and aggravating factors;
    (iv) The type, dosage, effectiveness, and side effects of any 
medication you take or have taken to alleviate your pain or other 
symptoms;
    (v) Treatment, other than medication, you receive or have received 
for relief of your pain or other symptoms;
    (vi) Any measures you use or have used to relieve your pain or other 
symptoms (e.g., lying flat on your back, standing for 15 to 20 minutes 
every hour, sleeping on a board, etc.); and
    (vii) Other factors concerning your functional limitations and 
restrictions due to pain or other symptoms.
    (4) How we determine the extent to which symptoms, such as pain, 
affect your capacity to perform basic work activities. In determining 
the extent to which your symptoms, such as pain, affect your capacity to 
perform basic work activities, we consider all of the available evidence 
described in paragraphs (c)(1) through (c)(3) of this section. We will 
consider your statements about the intensity, persistence, and limiting 
effects of your symptoms, and we will evaluate your statements in 
relation to the objective medical evidence and other evidence, in 
reaching a conclusion as to whether you are disabled. We will consider 
whether there are any inconsistencies in the evidence and the extent to 
which there are any conflicts between your statements and the rest of 
the evidence, including your medical history, the medical signs and 
laboratory findings, and statements by your treating or examining 
physician or psychologist or other persons about how your symptoms 
affect you. Your symptoms, including pain, will be determined to 
diminish your capacity for basic work activities to the extent that your 
alleged functional limitations and restrictions due to symptoms, such as 
pain, can reasonably be accepted as consistent with the objective 
medical evidence and other evidence.
    (d) Consideration of symptoms in the disability determination 
process. We follow a set order of steps to determine whether you are 
disabled. If you are not doing substantial gainful activity, we consider 
your symptoms, such as pain, to evaluate whether you have a severe 
physical or mental impairment(s), and at each of the remaining steps in 
the process. Sections 404.1520 and 404.1520a explain this process in 
detail. We also consider your symptoms, such as pain, at the appropriate 
steps in our review when we consider whether your disability continues. 
Sections 404.1579 and 404.1594 explain the procedure we follow in 
reviewing whether your disability continues.
    (1) Need to establish a severe medically determinable impairment(s). 
Your symptoms, such as pain, fatigue, shortness of breath, weakness, or 
nervousness, are considered in making a determination as to whether your 
impairment or combination of impairment(s) is severe. (See Sec. 
404.1520(c).)
    (2) Decision whether the Listing of Impairments is met. Some listed 
impairment(s) include symptoms, such as pain, as criteria. Section 
404.1525(f) explains how we consider your symptoms when your symptoms 
are included as criteria for a listed impairment.
    (3) Decision whether the Listing of Impairments is equaled. If your 
impairment is not the same as a listed impairment, we must determine 
whether your impairment(s) is medically equivalent to a listed 
impairment. Section 404.1526 explains how we make this determination. 
Under Sec. 404.1526(b), we will consider equivalence based on medical 
evidence only. In considering whether your symptoms, signs, and 
laboratory findings are medically equal to the

[[Page 377]]

symptoms, signs, and laboratory findings of a listed impairment, we will 
look to see whether your symptoms, signs, and laboratory findings are at 
least equal in severity to the listed criteria. However, we will not 
substitute your allegations of pain or other symptoms for a missing or 
deficient sign or laboratory finding to raise the severity of your 
impairment(s) to that of a listed impairment. If the symptoms, signs, 
and laboratory findings of your impairment(s) are equivalent in severity 
to those of a listed impairment, we will find you disabled. If it does 
not, we will consider the impact of your symptoms on your residual 
functional capacity. (See paragraph (d)(4) of this section.)
    (4) Impact of symptoms (including pain) on residual functional 
capacity. If you have a medically determinable severe physical or mental 
impairment(s), but your impairment(s) does not meet or equal an 
impairment listed in appendix 1 of this subpart, we will consider the 
impact of your impairment(s) and any related symptoms, including pain, 
on your residual functional capacity. (See Sec. 404.1545.)

[56 FR 57941, Nov. 14, 1991, as amended at 62 FR 38451, July 18, 1997]



Sec. 404.1530  Need to follow prescribed treatment.

    (a) What treatment you must follow. In order to get benefits, you 
must follow treatment prescribed by your physician if this treatment can 
restore your ability to work.
    (b) When you do not follow prescribed treatment. If you do not 
follow the prescribed treatment without a good reason, we will not find 
you disabled or, if you are already receiving benefits, we will stop 
paying you benefits.
    (c) Acceptable reasons for failure to follow prescribed treatment. 
We will consider your physical, mental, educational, and linguistic 
limitations (including any lack of facility with the English language) 
when determining if you have an acceptable reason for failure to follow 
prescribed treatment. The following are examples of a good reason for 
not following treatment:
    (1) The specific medical treatment is contrary to the established 
teaching and tenets of your religion.
    (2) The prescribed treatment would be cataract surgery for one eye, 
when there is an impairment of the other eye resulting in a severe loss 
of vision and is not subject to improvement through treatment.
    (3) Surgery was previously performed with unsuccessful results and 
the same surgery is again being recommended for the same impairment.
    (4) The treatment because of its magnitude (e.g. open heart 
surgery), unusual nature (e.g., organ transplant), or other reason is 
very risky for you; or
    (5) The treatment involves amputation of an extremity, or a major 
part of an extremity.

[45 FR 55584, Aug. 20, 1980, as amended at 59 FR 1635, Jan. 12, 1994]



Sec. 404.1535  How we will determine whether your drug addiction or 

alcoholism is a contributing factor material to the determination of 
disability.

    (a) General. If we find that you are disabled and have medical 
evidence of your drug addiction or alcoholism, we must determine whether 
your drug addiction or alcoholism is a contributing factor material to 
the determination of disability.
    (b) Process we will follow when we have medical evidence of your 
drug addiction or alcoholism. (1) The key factor we will examine in 
determining whether drug addiction or alcoholism is a contributing 
factor material to the determination of disability is whether we would 
still find you disabled if you stopped using drugs or alcohol.
    (2) In making this determination, we will evaluate which of your 
current physical and mental limitations, upon which we based our current 
disability determination, would remain if you stopped using drugs or 
alcohol and then determine whether any or all of your remaining 
limitations would be disabling.
    (i) If we determine that your remaining limitations would not be 
disabling, we will find that your drug addiction or alcoholism is a 
contributing factor material to the determination of disability.
    (ii) If we determine that your remaining limitations are disabling, 
you are disabled independent of your drug

[[Page 378]]

addiction or alcoholism and we will find that your drug addiction or 
alcoholism is not a contributing factor material to the determination of 
disability.

[60 FR 8147, Feb. 10, 1995]



Sec. 404.1536  Treatment required for individuals whose drug addiction 

or alcoholism is a contributing factor material to the determination of 
disability.

    (a) If we determine that you are disabled and drug addiction or 
alcoholism is a contributing factor material to the determination of 
disability (as described in Sec. 404.1535), you must avail yourself of 
appropriate treatment for your drug addiction or alcoholism at an 
institution or facility approved by us when this treatment is available 
and make progress in your treatment. Generally, you are not expected to 
pay for this treatment. You will not be paid benefits for any month 
after the month we have notified you in writing that--
    (1) You did not comply with the terms, conditions and requirements 
of the treatment which has been made available to you; or
    (2) You did not avail yourself of the treatment after you had been 
notified that it is available to you.
    (b) If your benefits are suspended for failure to comply with 
treatment requirements, your benefits can be reinstated in accordance 
with the rules in Sec. 404.470.

[60 FR 8147, Feb. 10, 1995]



Sec. 404.1537  What we mean by appropriate treatment.

    By appropriate treatment, we mean treatment for drug addiction or 
alcoholism that serves the needs of the individual in the least 
restrictive setting possible consistent with your treatment plan. These 
settings range from outpatient counseling services through a variety of 
residential treatment settings including acute detoxification, short-
term intensive residential treatment, long-term therapeutic residential 
treatment, and long-term recovery houses. Appropriate treatment is 
determined with the involvement of a State licensed or certified 
addiction professional on the basis of a detailed assessment of the 
individual's presenting symptomatology, psychosocial profile, and other 
relevant factors. This assessment may lead to a determination that more 
than one treatment modality is appropriate for the individual. The 
treatment will be provided or overseen by an approved institution or 
facility. This treatment may include (but is not limited to)--
    (a) Medical examination and medical management;
    (b) Detoxification;
    (c) Medication management to include substitution therapy (e.g., 
methadone);
    (d) Psychiatric, psychological, psychosocial, vocational, or other 
substance abuse counseling in a residential or outpatient treatment 
setting; or
    (e) Relapse prevention.

[60 FR 8148, Feb. 10, 1995]



Sec. 404.1538  What we mean by approved institutions or facilities.

    Institutions or facilities that we may approve include--
    (a) An institution or facility that furnishes medically recognized 
treatment for drug addiction or alcoholism in conformity with applicable 
Federal or State laws and regulations;
    (b) An institution or facility used by or licensed by an appropriate 
State agency which is authorized to refer persons for treatment of drug 
addiction or alcoholism;
    (c) State licensed or certified care providers;
    (d) Programs accredited by the Commission on Accreditation for 
Rehabilitation Facilities (CARF) and/or the Joint Commission for the 
Accreditation of Healthcare Organizations (JCAHO) for the treatment of 
drug addiction or alcoholism;
    (e) Medicare or Medicaid certified care providers; or
    (f) Nationally recognized self-help drug addiction or alcoholism 
recovery programs (e.g., Alcoholics Anonymous or Narcotics Anonymous) 
when participation in these programs is specifically prescribed by a 
treatment professional at an institution or facility described in 
paragraphs (a) through (e) of this section as part of an individual's 
treatment plan.

[60 FR 8148, Feb. 10, 1995]

[[Page 379]]



Sec. 404.1539  How we consider whether treatment is available.

    Our determination about whether treatment is available to you for 
your drug addiction or your alcoholism will depend upon--
    (a) The capacity of an approved institution or facility to admit you 
for appropriate treatment;
    (b) The location of the approved institution or facility, or the 
place where treatment, services or resources could be provided to you;
    (c) The availability and cost of transportation for you to the place 
of treatment;
    (d) Your general health, including your ability to travel and 
capacity to understand and follow the prescribed treatment;
    (e) Your particular condition and circumstances; and
    (f) The treatment that is prescribed for your drug addiction or 
alcoholism.

[60 FR 8148, Feb. 10, 1995]



Sec. 404.1540  Evaluating compliance with the treatment requirements.

    (a) General. Generally, we will consider information from the 
treatment institution or facility to evaluate your compliance with your 
treatment plan. The treatment institution or facility will:
    (1) Monitor your attendance at and participation in treatment 
sessions;
    (2) Provide reports of the results of any clinical testing (such as, 
hematological or urinalysis studies for individuals with drug addiction 
and hematological studies and breath analysis for individuals with 
alcoholism) when such tests are likely to yield important information;
    (3) Provide observational reports from the treatment professionals 
familiar with your individual case (subject to verification and Federal 
confidentiality requirements); or
    (4) Provide their assessment or views on your noncompliance with 
treatment requirements.
    (b) Measuring progress. Generally, we will consider information from 
the treatment institution or facility to evaluate your progress in 
completing your treatment plan. Examples of milestones for measuring 
your progress with the treatment which has been prescribed for your drug 
addiction or alcoholism may include (but are not limited to)--
    (1) Abstinence from drug or alcohol use (initial progress may 
include significant reduction in use);
    (2) Consistent attendance at and participation in treatment 
sessions;
    (3) Improved social functioning and levels of gainful activity;
    (4) Participation in vocational rehabilitation activities; or
    (5) Avoidance of criminal activity.

[60 FR 8148, Feb. 10, 1995]



Sec. 404.1541  Establishment and use of referral and monitoring agencies.

    We will contract with one or more agencies in each of the States, 
Puerto Rico and the District of Columbia to provide services to 
individuals whose disabilities are based on a determination that drug 
addiction or alcoholism is a contributing factor material to the 
determination of disability (as described in Sec. 404.1535) and to 
submit information to us which we will use to make decisions about these 
individuals' benefits. These agencies will be known as referral and 
monitoring agencies. Their duties and responsibilities include (but are 
not limited to)--
    (a) Identifying appropriate treatment placements for individuals we 
refer to them;
    (b) Referring these individuals for treatment;
    (c) Monitoring the compliance and progress with the appropriate 
treatment of these individuals; and
    (d) Promptly reporting to us any individual's failure to comply with 
treatment requirements as well as failure to achieve progress through 
the treatment.

[60 FR 8148, Feb. 10, 1995]

                      Residual Functional Capacity



Sec. 404.1545  Your residual functional capacity.

    (a) General--(1) Residual functional capacity assessment. Your 
impairment(s), and any related symptoms, such as pain, may cause 
physical and mental limitations that affect what you can do in a work 
setting. Your residual functional capacity is the most you can still do 
despite your limitations. We

[[Page 380]]

will assess your residual functional capacity based on all the relevant 
evidence in your case record. (See Sec. 404.1546.)
    (2) If you have more than one impairment. We will consider all of 
your medically determinable impairments of which we are aware, including 
your medically determinable impairments that are not ``severe,'' as 
explained in Sec. Sec. 404.1520(c), 404.1521, and 404.1523, when we 
assess your residual functional capacity. (See paragraph (e) of this 
section.)
    (3) Evidence we use to assess your residual functional capacity. We 
will assess your residual functional capacity based on all of the 
relevant medical and other evidence. In general, you are responsible for 
providing the evidence we will use to make a finding about your residual 
functional capacity. (See Sec. 404.1512(c).) However, before we make a 
determination that you are not disabled, we are responsible for 
developing your complete medical history, including arranging for a 
consultative examination(s) if necessary, and making every reasonable 
effort to help you get medical reports from your own medical sources. 
(See Sec. Sec. 404.1512(d) through (f).) We will consider any 
statements about what you can still do that have been provided by 
medical sources, whether or not they are based on formal medical 
examinations. (See Sec. 404.1513.) We will also consider descriptions 
and observations of your limitations from your impairment(s), including 
limitations that result from your symptoms, such as pain, provided by 
you, your family, neighbors, friends, or other persons. (See paragraph 
(e) of this section and Sec. 404.1529.)
    (4) What we will consider in assessing residual functional capacity. 
When we assess your residual functional capacity, we will consider your 
ability to meet the physical, mental, sensory, and other requirements of 
work, as described in paragraphs (b), (c), and (d) of this section.
    (5) How we will use our residual functional capacity assessment.
    (i) We will first use our residual functional capacity assessment at 
step four of the sequential evaluation process to decide if you can do 
your past relevant work. (See Sec. Sec. 404.1520(f) and 404.1560(b).)
    (ii) If we find that you cannot do your past relevant work (or you 
do not have any past relevant work), we will use the same assessment of 
your residual functional capacity at step five of the sequential 
evaluation process to decide if you can make an adjustment to any other 
work that exists in the national economy. (See Sec. Sec. 404.1520(g) 
and 404.1566.) At this step, we will not use our assessment of your 
residual functional capacity alone to decide if you are disabled. We 
will use the guidelines in Sec. Sec. 404.1560 through 404.1569a, and 
consider our residual functional capacity assessment together with the 
information about your vocational background to make our disability 
determination or decision. For our rules on residual functional capacity 
assessment in deciding whether your disability continues or ends, see 
Sec. 404.1594.
    (b) Physical abilities. When we assess your physical abilities, we 
first assess the nature and extent of your physical limitations and then 
determine your residual functional capacity for work activity on a 
regular and continuing basis. A limited ability to perform certain 
physical demands of work activity, such as sitting, standing, walking, 
lifting, carrying, pushing, pulling, or other physical functions 
(including manipulative or postural functions, such as reaching, 
handling, stooping or crouching), may reduce your ability to do past 
work and other work.
    (c) Mental abilities. When we assess your mental abilities, we first 
assess the nature and extent of your mental limitations and restrictions 
and then determine your residual functional capacity for work activity 
on a regular and continuing basis. A limited ability to carry out 
certain mental activities, such as limitations in understanding, 
remembering, and carrying out instructions, and in responding 
appropriately to supervision, co-workers, and work pressures in a work 
setting, may reduce your ability to do past work and other work.
    (d) Other abilities affected by impairment(s). Some medically 
determinable

[[Page 381]]

impairment(s), such as skin impairment(s), epilepsy, impairment(s) of 
vision, hearing or other senses, and impairment(s) which impose 
environmental restrictions, may cause limitations and restrictions which 
affect other work-related abilities. If you have this type of 
impairment(s), we consider any resulting limitations and restrictions 
which may reduce your ability to do past work and other work in deciding 
your residual functional capacity.
    (e) Total limiting effects. When you have a severe impairment(s), 
but your symptoms, signs, and laboratory findings do not meet or equal 
those of a listed impairment in appendix 1 of this subpart, we will 
consider the limiting effects of all your impairment(s), even those that 
are not severe, in determining your residual functional capacity. Pain 
or other symptoms may cause a limitation of function beyond that which 
can be determined on the basis of the anatomical, physiological or 
psychological abnormalities considered alone; e.g., someone with a low 
back disorder may be fully capable of the physical demands consistent 
with those of sustained medium work activity, but another person with 
the same disorder, because of pain, may not be capable of more than the 
physical demands consistent with those of light work activity on a 
sustained basis. In assessing the total limiting effects of your 
impairment(s) and any related symptoms, we will consider all of the 
medical and nonmedical evidence, including the information described in 
Sec. 404.1529(c).

[56 FR 57943, Nov, 14, 1991, as amended at 68 FR 51162, Aug. 26, 2003]



Sec. 404.1546  Responsibility for assessing your residual functional capacity.

    (a) Responsibility for assessing residual functional capacity at the 
State agency. When a State agency makes the disability determination, a 
State agency medical or psychological consultant(s) is responsible for 
assessing your residual functional capacity.
    (b) Responsibility for assessing residual functional capacity in the 
disability hearings process. If your case involves a disability hearing 
under Sec. 404.914, a disability hearing officer is responsible for 
assessing your residual functional capacity. However, if the disability 
hearing officer's reconsidered determination is changed under Sec. 
404.918, the Associate Commissioner for the Office of Disability 
Determinations or his or her delegate is responsible for assessing your 
residual functional capacity.
    (c) Responsibility for assessing residual functional capacity at the 
administrative law judge hearing or Appeals Council level. If your case 
is at the administrative law judge hearing level under Sec. 404.929 or 
at the Appeals Council review level under Sec. 404.967, the 
administrative law judge or the administrative appeals judge at the 
Appeals Council (when the Appeals Council makes a decision) is 
responsible for assessing your residual functional capacity.

[68 FR 51162, Aug. 26, 2003]

                        Vocational Considerations



Sec. 404.1560  When we will consider your vocational background.

    (a) General. If you are applying for a period of disability, or 
disability insurance benefits as a disabled worker, or child's insurance 
benefits based on disability which began before age 22, or widow's or 
widower's benefits based on disability for months after December 1990, 
and we cannot decide whether you are disabled at one of the first three 
steps of the sequential evaluation process (see Sec. 404.1520), we will 
consider your residual functional capacity together with your vocational 
background, as discussed in paragraphs (b) and (c) of this section.
    (b) Past relevant work. We will first compare our assessment of your 
residual functional capacity with the physical and mental demands of 
your past relevant work.
    (1) Definition of past relevant work. Past relevant work is work 
that you have done within the past 15 years, that was substantial 
gainful activity, and that lasted long enough for you to learn to do it. 
(See Sec. 404.1565(a).)
    (2) Determining whether you can do your past relevant work. We will 
ask you for information about work you have done in the past. We may 
also ask other people who know about your work. (See Sec. 404.1565(b).) 
We may use the

[[Page 382]]

services of vocational experts or vocational specialists, or other 
resources, such as the ``Dictionary of Occupational Titles'' and its 
companion volumes and supplements, published by the Department of Labor, 
to obtain evidence we need to help us determine whether you can do your 
past relevant work, given your residual functional capacity. A 
vocational expert or specialist may offer relevant evidence within his 
or her expertise or knowledge concerning the physical and mental demands 
of a claimant's past relevant work, either as the claimant actually 
performed it or as generally performed in the national economy. Such 
evidence may be helpful in supplementing or evaluating the accuracy of 
the claimant's description of his past work. In addition, a vocational 
expert or specialist may offer expert opinion testimony in response to a 
hypothetical question about whether a person with the physical and 
mental limitations imposed by the claimant's medical impairment(s) can 
meet the demands of the claimant's previous work, either as the claimant 
actually performed it or as generally performed in the national economy.
    (3) If you can do your past relevant work. If we find that you have 
the residual functional capacity to do your past relevant work, we will 
determine that you can still do your past work and are not disabled. We 
will not consider your vocational factors of age, education, and work 
experience or whether your past relevant work exists in significant 
numbers in the national economy.
    (c) Other work. (1) If we find that your residual functional 
capacity is not enough to enable you to do any of your past relevant 
work, we will use the same residual functional capacity assessment we 
used to decide if you could do your past relevant work when we decide if 
you can adjust to any other work. We will look at your ability to adjust 
to other work by considering your residual functional capacity and your 
vocational factors of age, education, and work experience. Any other 
work (jobs) that you can adjust to must exist in significant numbers in 
the national economy (either in the region where you live or in several 
regions in the country).
    (2) In order to support a finding that you are not disabled at this 
fifth step of the sequential evaluation process, we are responsible for 
providing evidence that demonstrates that other work exists in 
significant numbers in the national economy that you can do, given your 
residual functional capacity and vocational factors. We are not 
responsible for providing additional evidence about your residual 
functional capacity because we will use the same residual functional 
capacity assessment that we used to determine if you can do your past 
relevant work.

[68 FR 51163, Aug. 26, 2003]



Sec. 404.1562  Medical-vocational profiles showing an inability to make 
an adjustment to other work.

    (a) If you have done only arduous unskilled physical labor. If you 
have no more than a marginal education (see Sec. 404.1564) and work 
experience of 35 years or more during which you did only arduous 
unskilled physical labor, and you are not working and are no longer able 
to do this kind of work because of a severe impairment(s) (see 
Sec. Sec. 404.1520(c), 404.1521, and 404.1523), we will consider you 
unable to do lighter work, and therefore, disabled.

    Example to paragraph (a): B is a 58-year-old miner's helper with a 
fourth grade education who has a lifelong history of unskilled arduous 
physical labor. B says that he is disabled because of arthritis of the 
spine, hips, and knees, and other impairments. Medical evidence shows a 
``severe'' combination of impairments that prevents B from performing 
his past relevant work. Under these circumstances, we will find that B 
is disabled.

    (b) If you are at least 55 years old, have no more than a limited 
education, and have no past relevant work experience. If you have a 
severe, medically determinable impairment(s) (see Sec. Sec. 
404.1520(c), 404.1521, and 404.1523), are of advanced age (age 55 or 
older, see Sec. 404.1563), have a limited education or less (see Sec. 
404.1564), and have no past relevant work experience (see Sec. 
404.1565), we will find you disabled. If the evidence shows that you 
meet this profile, we will not need to assess your

[[Page 383]]

residual functional capacity or consider the rules in appendix 2 to this 
subpart.

[68 FR 51163, Aug. 26, 2003]



Sec. 404.1563  Your age as a vocational factor.

    (a) General. ``Age'' means your chronological age. When we decide 
whether you are disabled under Sec. 404.1520(g)(1), we will consider 
your chronological age in combination with your residual functional 
capacity, education, and work experience. We will not consider your 
ability to adjust to other work on the basis of your age alone. In 
determining the extent to which age affects a person's ability to adjust 
to other work, we consider advancing age to be an increasingly limiting 
factor in the person's ability to make such an adjustment, as we explain 
in paragraphs (c) through (e) of this section. If you are unemployed but 
you still have the ability to adjust to other work, we will find that 
you are not disabled. In paragraphs (b) through (e) of this section and 
in appendix 2 to this subpart, we explain in more detail how we consider 
your age as a vocational factor.
    (b) How we apply the age categories. When we make a finding about 
your ability to do other work under Sec. 404.1520(f)(1), we will use 
the age categories in paragraphs (c) through (e) of this section. We 
will use each of the age categories that applies to you during the 
period for which we must determine if you are disabled. We will not 
apply the age categories mechanically in a borderline situation. If you 
are within a few days to a few months of reaching an older age category, 
and using the older age category would result in a determination or 
decision that you are disabled, we will consider whether to use the 
older age category after evaluating the overall impact of all the 
factors of your case.
    (c) Younger person. If you are a younger person (under age 50), we 
generally do not consider that your age will seriously affect your 
ability to adjust to other work. However, in some circumstances, we 
consider that persons age 45-49 are more limited in their ability to 
adjust to other work than persons who have not attained age 45. See Rule 
201.17 in appendix 2.
    (d) Person closely approaching advanced age. If you are closely 
approaching advanced age (age 50-54), we will consider that your age 
along with a severe impairment(s) and limited work experience may 
seriously affect your ability to adjust to other work.
    (e) Person of advanced age. We consider that at advanced age (age 55 
or older) age significantly affects a person's ability to adjust to 
other work. We have special rules for persons of advanced age and for 
persons in this category who are closely approaching retirement age (age 
60-64). See Sec. 404.1568(d)(4).
    (f) Information about your age. We will usually not ask you to prove 
your age. However, if we need to know your exact age to determine 
whether you get disability benefits or if the amount of your benefit 
will be affected, we will ask you for evidence of your age.

[45 FR 55584, Aug. 20, 1980, as amended at 65 FR 18000, Apr. 6, 2000; 68 
FR 51163, Aug. 26, 2003]



Sec. 404.1564  Your education as a vocational factor.

    (a) General. Education is primarily used to mean formal schooling or 
other training which contributes to your ability to meet vocational 
requirements, for example, reasoning ability, communication skills, and 
arithmetical ability. However, if you do not have formal schooling, this 
does not necessarily mean that you are uneducated or lack these 
abilities. Past work experience and the kinds of responsibilities you 
had when you were working may show that you have intellectual abilities, 
although you may have little formal education. Your daily activities, 
hobbies, or the results of testing may also show that you have 
significant intellectual ability that can be used to work.
    (b) How we evaluate your education. The importance of your 
educational background may depend upon how much time has passed between 
the completion of your formal education and the beginning of your 
physical or mental impairment(s) and by what you have done with your 
education in a work or other setting. Formal education that you 
completed many years

[[Page 384]]

before your impairment began, or unused skills and knowledge that were a 
part of your formal education, may no longer be useful or meaningful in 
terms of your ability to work. Therefore, the numerical grade level that 
you completed in school may not represent your actual educational 
abilities. These may be higher or lower. However, if there is no other 
evidence to contradict it, we will use your numerical grade level to 
determine your educational abilities. The term education also includes 
how well you are able to communicate in English since this ability is 
often acquired or improved by education. In evaluating your educational 
level, we use the following categories:
    (1) Illiteracy. Illiteracy means the inability to read or write. We 
consider someone illiterate if the person cannot read or write a simple 
message such as instructions or inventory lists even though the person 
can sign his or her name. Generally, an illiterate person has had little 
or no formal schooling.
    (2) Marginal education. Marginal education means ability in 
reasoning, arithmetic, and language skills which are needed to do 
simple, unskilled types of jobs. We generally consider that formal 
schooling at a 6th grade level or less is a marginal education.
    (3) Limited education. Limited education means ability in reasoning, 
arithmetic, and language skills, but not enough to allow a person with 
these educational qualifications to do most of the more complex job 
duties needed in semi-skilled or skilled jobs. We generally consider 
that a 7th grade through the 11th grade level of formal education is a 
limited education.
    (4) High school education and above. High school education and above 
means abilities in reasoning, arithmetic, and language skills acquired 
through formal schooling at a 12th grade level or above. We generally 
consider that someone with these educational abilities can do semi-
skilled through skilled work.
    (5) Inability to communicate in English. Since the ability to speak, 
read and understand English is generally learned or increased at school, 
we may consider this an educational factor. Because English is the 
dominant language of the country, it may be difficult for someone who 
doesn't speak and understand English to do a job, regardless of the 
amount of education the person may have in another language. Therefore, 
we consider a person's ability to communicate in English when we 
evaluate what work, if any, he or she can do. It generally doesn't 
matter what other language a person may be fluent in.
    (6) Information about your education. We will ask you how long you 
attended school and whether you are able to speak, understand, read and 
write in English and do at least simple calculations in arithmetic. We 
will also consider other information about how much formal or informal 
education you may have had through your previous work, community 
projects, hobbies, and any other activities which might help you to 
work.



Sec. 404.1565  Your work experience as a vocational factor.

    (a) General. Work experience means skills and abilities you have 
acquired through work you have done which show the type of work you may 
be expected to do. Work you have already been able to do shows the kind 
of work that you may be expected to do. We consider that your work 
experience applies when it was done within the last 15 years, lasted 
long enough for you to learn to do it, and was substantial gainful 
activity. We do not usually consider that work you did 15 years or more 
before the time we are deciding whether you are disabled (or when the 
disability insured status requirement was last met, if earlier) applies. 
A gradual change occurs in most jobs so that after 15 years it is no 
longer realistic to expect that skills and abilities acquired in a job 
done then continue to apply. The 15-year guide is intended to insure 
that remote work experience is not currently applied. If you have no 
work experience or worked only ``off-and-on'' or for brief periods of 
time during the 15-year period, we generally consider that these do not 
apply. If you have acquired skills through your past work, we consider 
you to have these work skills unless you cannot use them in other 
skilled or semi-skilled work that you can now do. If you cannot use

[[Page 385]]

your skills in other skilled or semi-skilled work, we will consider your 
work background the same as unskilled. However, even if you have no work 
experience, we may consider that you are able to do unskilled work 
because it requires little or no judgment and can be learned in a short 
period of time.
    (b) Information about your work. Under certain circumstances, we 
will ask you about the work you have done in the past. If you cannot 
give us all of the information we need, we will try, with your 
permission, to get it from your employer or other person who knows about 
your work, such as a member of your family or a co-worker. When we need 
to consider your work experience to decide whether you are able to do 
work that is different from what you have done in the past, we will ask 
you to tell us about all of the jobs you have had in the last 15 years. 
You must tell us the dates you worked, all of the duties you did, and 
any tools, machinery, and equipment you used. We will need to know about 
the amount of walking, standing, sitting, lifting and carrying you did 
during the work day, as well as any other physical or mental duties of 
your job. If all of your work in the past 15 years has been arduous and 
unskilled, and you have very little education, we will ask you to tell 
us about all of your work from the time you first began working. This 
information could help you to get disability benefits.



Sec. 404.1566  Work which exists in the national economy.

    (a) General. We consider that work exists in the national economy 
when it exists in significant numbers either in the region where you 
live or in several other regions of the country. It does not matter 
whether--
    (1) Work exists in the immediate area in which you live;
    (2) A specific job vacancy exists for you; or
    (3) You would be hired if you applied for work.
    (b) How we determine the existence of work. Work exists in the 
national economy when there is a significant number of jobs (in one or 
more occupations) having requirements which you are able to meet with 
your physical or mental abilities and vocational qualifications. 
Isolated jobs that exist only in very limited numbers in relatively few 
locations outside of the region where you live are not considered ``work 
which exists in the national economy''. We will not deny you disability 
benefits on the basis of the existence of these kinds of jobs. If work 
that you can do does not exist in the national economy, we will 
determine that you are disabled. However, if work that you can do does 
exist in the national economy, we will determine that you are not 
disabled.
    (c) Inability to obtain work. We will determine that you are not 
disabled if your residual functional capacity and vocational abilities 
make it possible for you to do work which exists in the national 
economy, but you remain unemployed because of--
    (1) Your inability to get work;
    (2) Lack of work in your local area;
    (3) The hiring practices of employers;
    (4) Technological changes in the industry in which you have worked;
    (5) Cyclical economic conditions;
    (6) No job openings for you;
    (7) You would not actually be hired to do work you could otherwise 
do; or
    (8) You do not wish to do a particular type of work.
    (d) Administrative notice of job data. When we determine that 
unskilled, sedentary, light, and medium jobs exist in the national 
economy (in significant numbers either in the region where you live or 
in several regions of the country), we will take administrative notice 
of reliable job information available from various governmental and 
other publications. For example, we will take notice of--
    (1) Dictionary of Occupational Titles, published by the Department 
of Labor;
    (2) County Business Patterns, published by the Bureau of the Census;
    (3) Census Reports, also published by the Bureau of the Census;
    (4) Occupational Analyses, prepared for the Social Security 
Administration by various State employment agencies; and
    (5) Occupational Outlook Handbook, published by the Bureau of Labor 
Statistics.

[[Page 386]]

    (e) Use of vocational experts and other specialists. If the issue in 
determining whether you are disabled is whether your work skills can be 
used in other work and the specific occupations in which they can be 
used, or there is a similarly complex issue, we may use the services of 
a vocational expert or other specialist. We will decide whether to use a 
vocational expert or other specialist.



Sec. 404.1567  Physical exertion requirements.

    To determine the physical exertion requirements of work in the 
national economy, we classify jobs as sedentary, light, medium, heavy, 
and very heavy. These terms have the same meaning as they have in the 
Dictionary of Occupational Titles, published by the Department of Labor. 
In making disability determinations under this subpart, we use the 
following definitions:
    (a) Sedentary work. Sedentary work involves lifting no more than 10 
pounds at a time and occasionally lifting or carrying articles like 
docket files, ledgers, and small tools. Although a sedentary job is 
defined as one which involves sitting, a certain amount of walking and 
standing is often necessary in carrying out job duties. Jobs are 
sedentary if walking and standing are required occasionally and other 
sedentary criteria are met.
    (b) Light work. Light work involves lifting no more than 20 pounds 
at a time with frequent lifting or carrying of objects weighing up to 10 
pounds. Even though the weight lifted may be very little, a job is in 
this category when it requires a good deal of walking or standing, or 
when it involves sitting most of the time with some pushing and pulling 
of arm or leg controls. To be considered capable of performing a full or 
wide range of light work, you must have the ability to do substantially 
all of these activities. If someone can do light work, we determine that 
he or she can also do sedentary work, unless there are additional 
limiting factors such as loss of fine dexterity or inability to sit for 
long periods of time.
    (c) Medium work. Medium work involves lifting no more than 50 pounds 
at a time with frequent lifting or carrying of objects weighing up to 25 
pounds. If someone can do medium work, we determine that he or she can 
also do sedentary and light work.
    (d) Heavy work. Heavy work involves lifting no more than 100 pounds 
at a time with frequent lifting or carrying of objects weighing up to 50 
pounds. If someone can do heavy work, we determine that he or she can 
also do medium, light, and sedentary work.
    (e) Very heavy work. Very heavy work involves lifting objects 
weighing more than 100 pounds at a time with frequent lifting or 
carrying of objects weighing 50 pounds or more. If someone can do very 
heavy work, we determine that he or she can also do heavy, medium, light 
and sedentary work.



Sec. 404.1568  Skill requirements.

    In order to evaluate your skills and to help determine the existence 
in the national economy of work you are able to do, occupations are 
classified as unskilled, semi-skilled, and skilled. In classifying these 
occupations, we use materials published by the Department of Labor. When 
we make disability determinations under this subpart, we use the 
following definitions:
    (a) Unskilled work. Unskilled work is work which needs little or no 
judgment to do simple duties that can be learned on the job in a short 
period of time. The job may or may not require considerable strength. 
For example, we consider jobs unskilled if the primary work duties are 
handling, feeding and offbearing (that is, placing or removing materials 
from machines which are automatic or operated by others), or machine 
tending, and a person can usually learn to do the job in 30 days, and 
little specific vocational preparation and judgment are needed. A person 
does not gain work skills by doing unskilled jobs.
    (b) Semi-skilled work. Semi-skilled work is work which needs some 
skills but does not require doing the more complex work duties. Semi-
skilled jobs may require alertness and close attention to watching 
machine processes; or inspecting, testing or otherwise looking for 
irregularities; or tending or guarding equipment, property, materials, 
or persons against loss, damage or injury; or other types of activities 
which are similarly less complex than

[[Page 387]]

skilled work, but more complex than unskilled work. A job may be 
classified as semi-skilled where coordination and dexterity are 
necessary, as when hands or feet must be moved quickly to do repetitive 
tasks.
    (c) Skilled work. Skilled work requires qualifications in which a 
person uses judgment to determine the machine and manual operations to 
be performed in order to obtain the proper form, quality, or quantity of 
material to be produced. Skilled work may require laying out work, 
estimating quality, determining the suitability and needed quantities of 
materials, making precise measurements, reading blueprints or other 
specifications, or making necessary computations or mechanical 
adjustments to control or regulate the work. Other skilled jobs may 
require dealing with people, facts, or figures or abstract ideas at a 
high level of complexity.
    (d) Skills that can be used in other work (transferability)--(1) 
What we mean by transferable skills. We consider you to have skills that 
can be used in other jobs, when the skilled or semi-skilled work 
activities you did in past work can be used to meet the requirements of 
skilled or semi-skilled work activities of other jobs or kinds of work. 
This depends largely on the similarity of occupationally significant 
work activities among different jobs.
    (2) How we determine skills that can be transferred to other jobs. 
Transferability is most probable and meaningful among jobs in which--
    (i) The same or a lesser degree of skill is required;
    (ii) The same or similar tools and machines are used; and
    (iii) The same or similar raw materials, products, processes, or 
services are involved.
    (3) Degrees of transferability. There are degrees of transferability 
of skills ranging from very close similarities to remote and incidental 
similarities among jobs. A complete similarity of all three factors is 
not necessary for transferability. However, when skills are so 
specialized or have been acquired in such an isolated vocational setting 
(like many jobs in mining, agriculture, or fishing) that they are not 
readily usable in other industries, jobs, and work settings, we consider 
that they are not transferable.
    (4) Transferability of skills for individuals of advanced age. If 
you are of advanced age (age 55 or older), and you have a severe 
impairment(s) that limits you to sedentary or light work, we will find 
that you cannot make an adjustment to other work unless you have skills 
that you can transfer to other skilled or semiskilled work (or you have 
recently completed education which provides for direct entry into 
skilled work) that you can do despite your impairment(s). We will decide 
if you have transferable skills as follows. If you are of advanced age 
and you have a severe impairment(s) that limits you to no more than 
sedentary work, we will find that you have skills that are transferable 
to skilled or semiskilled sedentary work only if the sedentary work is 
so similar to your previous work that you would need to make very 
little, if any, vocational adjustment in terms of tools, work processes, 
work settings, or the industry. (See Sec. 404.1567(a) and Sec. 
201.00(f) of appendix 2.) If you are of advanced age but have not 
attained age 60, and you have a severe impairment(s) that limits you to 
no more than light work, we will apply the rules in paragraphs (d)(1) 
through (d)(3) of this section to decide if you have skills that are 
transferable to skilled or semiskilled light work (see Sec. 
404.1567(b)). If you are closely approaching retirement age (age 60-64) 
and you have a severe impairment(s) that limits you to no more than 
light work, we will find that you have skills that are transferable to 
skilled or semiskilled light work only if the light work is so similar 
to your previous work that you would need to make very little, if any, 
vocational adjustment in terms of tools, work processes, work settings, 
or the industry. (See Sec. 404.1567(b) and Rule 202.00(f) of appendix 2 
to this subpart.)

[45 FR 55584, Aug. 20, 1980, as amended at 65 FR 18000, Apr. 6, 2000]



Sec. 404.1569  Listing of Medical-Vocational Guidelines in appendix 2.

    The Dictionary of Occupational Titles includes information about 
jobs (classified by their exertional and skill

[[Page 388]]

requirements) that exist in the national economy. Appendix 2 provides 
rules using this data reflecting major functional and vocational 
patterns. We apply these rules in cases where a person is not doing 
substantial gainful activity and is prevented by a severe medically 
determinable impairment from doing vocationally relevant past work. The 
rules in appendix 2 do not cover all possible variations of factors. 
Also, as we explain in Sec. 200.00 of appendix 2, we do not apply these 
rules if one of the findings of fact about the person's vocational 
factors and residual functional capacity is not the same as the 
corresponding criterion of a rule. In these instances, we give full 
consideration to all relevant facts in accordance with the definitions 
and discussions under vocational considerations. However, if the 
findings of fact made about all factors are the same as the rule, we use 
that rule to decide whether a person is disabled.



Sec. 404.1569a  Exertional and nonexertional limitations.

    (a) General. Your impairment(s) and related symptoms, such as pain, 
may cause limitations of function or restrictions which limit your 
ability to meet certain demands of jobs. These limitations may be 
exertional, nonexertional, or a combination of both. Limitations are 
classified as exertional if they affect your ability to meet the 
strength demands of jobs. The classification of a limitation as 
exertional is related to the United States Department of Labor's 
classification of jobs by various exertional levels (sedentary, light, 
medium, heavy, and very heavy) in terms of the strength demands for 
sitting, standing, walking, lifting, carrying, pushing, and pulling. 
Sections 404.1567 and 404.1569 explain how we use the classification of 
jobs by exertional levels (strength demands) which is contained in the 
Dictionary of Occupational Titles published by the Department of Labor, 
to determine the exertional requirements of work which exists in the 
national economy. Limitations or restrictions which affect your ability 
to meet the demands of jobs other than the strength demands, that is, 
demands other than sitting, standing, walking, lifting, carrying, 
pushing or pulling, are considered nonexertional. When we decide whether 
you can do your past relevant work (see Sec. Sec. 404.1520(f) and 
404.1594(f)(7)), we will compare our assessment of your residual 
functional capacity with the demands of your past relevant work. If you 
cannot do your past relevant work, we will use the same residual 
functional capacity assessment along with your age, education, and work 
experience to decide if you can adjust to any other work which exists in 
the national economy. (See Sec. Sec. 404.1520(g) and 404.1594(f)(8).) 
Paragraphs (b), (c), and (d) of this section explain how we apply the 
medical-vocational guidelines in appendix 2 of this subpart in making 
this determination, depending on whether the limitations or restrictions 
imposed by your impairment(s) and related symptoms, such as pain, are 
exertional, nonexertional, or a combination of both.
    (b) Exertional limitations. When the limitations and restrictions 
imposed by your impairment(s) and related symptoms, such as pain, affect 
only your ability to meet the strength demands of jobs (sitting, 
standing, walking, lifting, carrying, pushing, and pulling), we consider 
that you have only exertional limitations. When your impairment(s) and 
related symptoms only impose exertional limitations and your specific 
vocational profile is listed in a rule contained in appendix 2 of this 
subpart, we will directly apply that rule to decide whether you are 
disabled.
    (c) Nonexertional limitations. (1) When the limitations and 
restrictions imposed by your impairment(s) and related symptoms, such as 
pain, affect only your ability to meet the demands of jobs other than 
the strength demands, we consider that you have only nonexertional 
limitations or restrictions. Some examples of nonexertional limitations 
or restrictions include the following:
    (i) You have difficulty functioning because you are nervous, 
anxious, or depressed;
    (ii) You have difficulty maintaining attention or concentrating;
    (iii) You have difficulty understanding or remembering detailed 
instructions;

[[Page 389]]

    (iv) You have difficulty in seeing or hearing;
    (v) You have difficulty tolerating some physical feature(s) of 
certain work settings, e.g., you cannot tolerate dust or fumes; or
    (vi) You have difficulty performing the manipulative or postural 
functions of some work such as reaching, handling, stooping, climbing, 
crawling, or crouching.
    (2) If your impairment(s) and related symptoms, such as pain, only 
affect your ability to perform the nonexertional aspects of work-related 
activities, the rules in appendix 2 do not direct factual conclusions of 
disabled or not disabled. The determination as to whether disability 
exists will be based on the principles in the appropriate sections of 
the regulations, giving consideration to the rules for specific case 
situations in appendix 2.
    (d) Combined exertional and nonexertional limitations. When the 
limitations and restrictions imposed by your impairment(s) and related 
symptoms, such as pain, affect your ability to meet both the strength 
and demands of jobs other than the strength demands, we consider that 
you have a combination of exertional and nonexertional limitations or 
restrictions. If your impairment(s) and related symptoms, such as pain, 
affect your ability to meet both the strength and demands of jobs other 
than the strength demands, we will not directly apply the rules in 
appendix 2 unless there is a rule that directs a conclusion that you are 
disabled based upon your strength limitations; otherwise the rules 
provide a framework to guide our decision.

[56 FR 57943, Nov, 14, 1991, as amended at 68 FR 51163, Aug. 26, 2003]

                      Substantial Gainful Activity



Sec. 404.1571  General.

    The work, without regard to legality, that you have done during any 
period in which you believe you are disabled may show that you are able 
to work at the substantial gainful activity level. If you are able to 
engage in substantial gainful activity, we will find that you are not 
disabled. (We explain the rules for persons who are statutorily blind in 
Sec. 404.1584.) Even if the work you have done was not substantial 
gainful activity, it may show that you are able to do more work than you 
actually did. We will consider all of the medical and vocational 
evidence in your file to decide whether or not you have the ability to 
engage in substantial gainful activity.

[45 FR 55584, Aug. 20, 1980, as amended at 65 FR 42783, July 11, 2000]



Sec. 404.1572  What we mean by substantial gainful activity.

    Substantial gainful activity is work activity that is both 
substantial and gainful:
    (a) Substantial work activity. Substantial work activity is work 
activity that involves doing significant physical or mental activities. 
Your work may be substantial even if it is done on a part-time basis or 
if you do less, get paid less, or have less responsibility than when you 
worked before.
    (b) Gainful work activity. Gainful work activity is work activity 
that you do for pay or profit. Work activity is gainful if it is the 
kind of work usually done for pay or profit, whether or not a profit is 
realized.
    (c) Some other activities. Generally, we do not consider activities 
like taking care of yourself, household tasks, hobbies, therapy, school 
attendance, club activities, or social programs to be substantial 
gainful activity.



Sec. 404.1573  General information about work activity.

    (a) The nature of your work. If your duties require use of your 
experience, skills, supervision and responsibilities, or contribute 
substantially to the operation of a business, this tends to show that 
you have the ability to work at the substantial gainful activity level.
    (b) How well you perform. We consider how well you do your work when 
we determine whether or not you are doing substantial gainful activity. 
If you do your work satisfactorily, this may show that you are working 
at the substantial gainful activity level. If you are unable, because of 
your impairments, to do ordinary or simple tasks satisfactorily without 
more supervision or assistance than is usually given other people doing 
similar work,

[[Page 390]]

this may show that you are not working at the substantial gainful 
activity level. If you are doing work that involves minimal duties that 
make little or no demands on you and that are of little or no use to 
your employer, or to the operation of a business if you are self-
employed, this does not show that you are working at the substantial 
gainful activity level.
    (c) If your work is done under special conditions. The work you are 
doing may be done under special conditions that take into account your 
impairment, such as work done in a sheltered workshop or as a patient in 
a hospital. If your work is done under special conditions, we may find 
that it does not show that you have the ability to do substantial 
gainful activity. Also, if you are forced to stop or reduce your work 
because of the removal of special conditions that were related to your 
impairment and essential to your work, we may find that your work does 
not show that you are able to do substantial gainful activity. However, 
work done under special conditions may show that you have the necessary 
skills and ability to work at the substantial gainful activity level. 
Examples of the special conditions that may relate to your impairment 
include, but are not limited to, situations in which--
    (1) You required and received special assistance from other 
employees in performing your work;
    (2) You were allowed to work irregular hours or take frequent rest 
periods;
    (3) You were provided with special equipment or were assigned work 
especially suited to your impairment;
    (4) You were able to work only because of specially arranged 
circumstances, for example, other persons helped you prepare for or get 
to and from your work;
    (5) You were permitted to work at a lower standard of productivity 
or efficiency than other employees; or
    (6) You were given the opportunity to work despite your impairment 
because of family relationship, past association with your employer, or 
your employer's concern for your welfare.
    (d) If you are self-employed. Supervisory, managerial, advisory or 
other significant personal services that you perform as a self-employed 
individual may show that you are able to do substantial gainful 
activity.
    (e) Time spent in work. While the time you spend in work is 
important, we will not decide whether or not you are doing substantial 
gainful activity only on that basis. We will still evaluate the work to 
decide whether it is substantial and gainful regardless of whether you 
spend more time or less time at the job than workers who are not 
impaired and who are doing similar work as a regular means of their 
livelihood.

[45 FR 55584, Aug. 20, 1980, as amended at 65 FR 42783, July 11, 2000]



Sec. 404.1574  Evaluation guides if you are an employee.

    (a) We use several guides to decide whether the work you have done 
shows that you are able to do substantial gainful activity. If you are 
working or have worked as an employee, we will use the provisions in 
paragraphs (a) through (d) of this section that are relevant to your 
work activity. We will use these provisions whenever they are 
appropriate, whether in connection with your application for disability 
benefits (when we make an initial determination on your application and 
throughout any appeals you may request), after you have become entitled 
to a period of disability or to disability benefits, or both.
    (1) Your earnings may show you have done substantial gainful 
activity. Generally, in evaluating your work activity for substantial 
gainful activity purposes, our primary consideration will be the 
earnings you derive from the work activity. We will use your earnings to 
determine whether you have done substantial gainful activity unless we 
have information from you, your employer, or others that shows that we 
should not count all of your earnings. The amount of your earnings from 
work you have done (regardless of whether it is unsheltered or sheltered 
work) may show that you have engaged in substantial gainful activity. 
Generally, if you worked for substantial earnings, we will find that you 
are able to do substantial gainful activity. However, the fact that your 
earnings were not substantial will not necessarily

[[Page 391]]

show that you are not able to do substantial gainful activity. We 
generally consider work that you are forced to stop or to reduce below 
the substantial gainful activity level after a short time because of 
your impairment to be an unsuccessful work attempt. Your earnings from 
an unsuccessful work attempt will not show that you are able to do 
substantial gainful activity. We will use the criteria in paragraph (c) 
of this section to determine if the work you did was an unsuccessful 
work attempt.
    (2) We consider only the amounts you earn. When we decide whether 
your earnings show that you have done substantial gainful activity, we 
do not consider any income that is not directly related to your 
productivity. When your earnings exceed the reasonable value of the work 
you perform, we consider only that part of your pay which you actually 
earn. If your earnings are being subsidized, we do not consider the 
amount of the subsidy when we determine if your earnings show that you 
have done substantial gainful activity. We consider your work to be 
subsidized if the true value of your work, when compared with the same 
or similar work done by unimpaired persons, is less than the actual 
amount of earnings paid to you for your work. For example, when a person 
with a serious impairment does simple tasks under close and continuous 
supervision, our determination of whether that person has done 
substantial gainful activity will not be based only on the amount of the 
wages paid. We will first determine whether the person received a 
subsidy; that is, we will determine whether the person was being paid 
more than the reasonable value of the actual services performed. We will 
then subtract the value of the subsidy from the person's gross earnings 
to determine the earnings we will use to determine if he or she has done 
substantial gainful activity.
    (3) If you are working in a sheltered or special environment. If you 
are working in a sheltered workshop, you may or may not be earning the 
amounts you are being paid. The fact that the sheltered workshop or 
similar facility is operating at a loss or is receiving some charitable 
contributions or governmental aid does not establish that you are not 
earning all you are being paid. Since persons in military service being 
treated for severe impairments usually continue to receive full pay, we 
evaluate work activity in a therapy program or while on limited duty by 
comparing it with similar work in the civilian work force or on the 
basis of reasonable worth of the work, rather than on the actual amount 
of the earnings.
    (b) Earnings guidelines. (1) General. If you are an employee, we 
first consider the criteria in paragraph (a) of this section and Sec. 
404.1576, and then the guides in paragraphs (b)(2), (3), (4), (5), and 
(6) of this section. When we review your earnings to determine if you 
have been performing substantial gainful activity, we will subtract the 
value of any subsidized earnings (see paragraph (a)(2) of this section) 
and the reasonable cost of any impairment-related work expenses from 
your gross earnings (see Sec. 404.1576). The resulting amount is the 
amount we use to determine if you have done substantial gainful 
activity. We will generally average your earnings for comparison with 
the earnings guidelines in paragraphs (b)(2), (3), (4), and (6) of this 
section. See Sec. 404.1574a for our rules on averaging earnings.
    (2) Earnings that will ordinarily show that you have engaged in 
substantial gainful activity. We will consider that your earnings from 
your work activity as an employee (including earnings from sheltered 
work, see paragraph (b)(4) of this section) show that you engaged in 
substantial gainful activity if:
    (i) Before January 1, 2001, they averaged more than the amount(s) in 
Table 1 of this section for the time(s) in which you worked.
    (ii) Beginning January 1, 2001, and each year thereafter, they 
average more than the larger of:
    (A) The amount for the previous year, or
    (B) An amount adjusted for national wage growth, calculated by 
multiplying $700 by the ratio of the national average wage index for the 
year 2 calendar years before the year for which the amount is being 
calculated to the national average wage index for the

[[Page 392]]

year 1998. We will then round the resulting amount to the next higher 
multiple of $10 where such amount is a multiple of $5 but not of $10 and 
to the nearest multiple of $10 in any other case.

                                 Table 1
------------------------------------------------------------------------
                                                                 Your
                                                               monthly
                        For months:                            earnings
                                                               averaged
                                                              more than:
------------------------------------------------------------------------
In calendar years before 1976..............................         $200
In calendar year 1976......................................          230
In calendar year 1977......................................          240
In calendar year 1978......................................          260
In calendar year 1979......................................          280
In calendar years 1980-1989................................          300
January 1990-June 1999.....................................          500
July 1999-December 2000....................................          700
------------------------------------------------------------------------

    (3) Earnings that will ordinarily show that you have not engaged in 
substantial gainful activity. If your earnings for months beginning 
January, 2001, are equal to or less than the amount(s) determined under 
paragraph (b)(2)(ii) of this section for the year(s) in which you work, 
we will generally consider that the earnings from your work as an 
employee will show that you have not engaged in substantial gainful 
activity. If your earnings for months before January, 2001, were less 
than the amount(s) in Table 2 of this section for the year(s) in which 
you worked, we will generally consider that the earnings from your work 
as an employee will show that you have not engaged in substantial 
gainful activity.

                                 Table 2
------------------------------------------------------------------------
                                                                 Your
                                                               monthly
                        For months:                            earnings
                                                               averaged
                                                              less than:
------------------------------------------------------------------------
In calendar years before 1976..............................         $130
In calendar year 1976......................................          150
In calendar year 1977......................................          160
In calendar year 1978......................................          170
In calendar year 1979......................................          180
In calendar years 1980-1989................................          190
In calendar years 1990-2000................................          300
------------------------------------------------------------------------

    (4) Before January 1, 2001, if you worked in a sheltered workshop. 
Before January 1, 2001, if you worked in a sheltered workshop or a 
comparable facility especially set up for severely impaired persons, we 
will ordinarily consider that your earnings from this work show that you 
have engaged in substantial gainful activity if your earnings averaged 
more than the amounts in table 1 of paragraph (b)(2) of this section. 
Average monthly earnings from a sheltered workshop or a comparable 
facility that are equal to or less than those amounts indicated in table 
1 of paragraph (b)(2) of this section will ordinarily show that you have 
not engaged in substantial gainful activity without the need to consider 
other information, as described in paragraph (b)(6) of this section, 
regardless of whether they are more or less than those indicated in 
paragraph (b)(3) of this section. When your earnings from a sheltered 
workshop or comparable facility are equal to or less than those amounts 
indicated in table 1 of paragraph (b)(2), we will consider the 
provisions of paragraph (b)(6) of this section only if there is evidence 
showing that you may have engaged in substantial gainful activity. For 
work performed in a sheltered workshop in months beginning January 2001, 
the rules of paragraph (b)(2), (3), and (6) apply the same as they do to 
any other work done by an employee.
    (5) If there is evidence showing that you may have done substantial 
gainful activity. If there is evidence showing that you may have done 
substantial gainful activity, we will apply the criteria in paragraph 
(b)(6) of this section regarding comparability and value of services.
    (6) Earnings that are not high enough to ordinarily show that you 
engaged in substantial gainful activity.
    (i) Before January 1, 2001, if your average monthly earnings were 
between the amounts shown in paragraphs (b)(2) and (3) of this section, 
we will generally consider other information in addition to your 
earnings (see paragraph (b)(6)(iii) of this section). This rule 
generally applies to employees who did not work in a sheltered workshop 
or a comparable facility, although we may apply it to some people who 
work in sheltered workshops or comparable facilities (see paragraph 
(b)(4) of this section).
    (ii) Beginning January 1, 2001, if your average monthly earnings are 
equal to or less than the amounts determined under paragraph (b)(2) of 
this section, we will generally not consider other information in 
addition to your earnings

[[Page 393]]

unless there is evidence indicating that you may be engaging in 
substantial gainful activity or that you are in a position to defer or 
suppress your earnings.
    (iii) Examples of other information we may consider include, 
whether--
    (A) Your work is comparable to that of unimpaired people in your 
community who are doing the same or similar occupations as their means 
of livelihood, taking into account the time, energy, skill, and 
responsibility involved in the work, and
    (B) Your work, although significantly less than that done by 
unimpaired people, is clearly worth the amounts shown in paragraph 
(b)(2) of this section, according to pay scales in your community.
    (c) The unsuccessful work attempt--(1) General. Ordinarily, work you 
have done will not show that you are able to do substantial gainful 
activity if, after working for a period of 6 months or less, your 
impairment forced you to stop working or to reduce the amount of work 
you do so that your earnings from such work fall below the substantial 
gainful activity earnings level in paragraph (b)(2) of this section, and 
you meet the conditions described in paragraphs (c)(2), (3), (4), and 
(5), of this section. We will use the provisions of this paragraph when 
we make an initial determination on your application for disability 
benefits and throughout any appeal you may request. Except as set forth 
in Sec. 404.1592a(a), we will also apply the provisions of this 
paragraph if you are already entitled to disability benefits, when you 
work and we consider whether the work you are doing is substantial 
gainful activity or demonstrates the ability to do substantial gainful 
activity.
    (2) Event that must precede an unsuccessful work attempt. There must 
be a significant break in the continuity of your work before we will 
consider that you began a work attempt that later proved unsuccessful. 
You must have stopped working or reduced your work and earnings below 
the substantial gainful activity earnings level because of your 
impairment or because of the removal of special conditions that were 
essential to the further performance of your work. We explain what we 
mean by special conditions in Sec. 404.1573(c). We will consider your 
prior work to be ``discontinued'' for a significant period if you were 
out of work at least 30 consecutive days. We will also consider your 
prior work to be ``discontinued'' if, because of your impairment, you 
were forced to change to another type of work or another employer.
    (3) If you worked 3 months or less. We will consider work of 3 
months or less to be an unsuccessful work attempt if you stopped 
working, or you reduced your work and earnings below the substantial 
gainful activity earnings level, because of your impairment or because 
of the removal of special conditions which took into account your 
impairment and permitted you to work.
    (4) If you worked between 3 and 6 months. We will consider work that 
lasted longer than 3 months to be an unsuccessful work attempt if it 
ended, or was reduced below substantial gainful activity earnings level, 
within 6 months because of your impairment or because of the removal of 
special conditions which took into account your impairment and permitted 
you to work and--
    (i) You were frequently absent from work because of your impairment;
    (ii) Your work was unsatisfactory because of your impairment;
    (iii) You worked during a period of temporary remission of your 
impairment; or
    (iv) You worked under special conditions that were essential to your 
performance and these conditions were removed.
    (5) If you worked more than 6 months. We will not consider work you 
performed at the substantial gainful activity earnings level for more 
than 6 months to be an unsuccessful work attempt regardless of why it 
ended or was reduced below the substantial gainful activity earnings 
level.
    (d) Work activity in certain volunteer programs. If you work as a 
volunteer in certain programs administered by the Federal government 
under the Domestic Volunteer Service Act of 1973 or the Small Business 
Act, we will not count any payments you receive from these

[[Page 394]]

programs as earnings when we determine whether you are engaging in 
substantial gainful activity. These payments may include a minimal 
stipend, payments for supportive services such as housing, supplies and 
equipment, an expense allowance, or reimbursement of out-of-pocket 
expenses. We will also disregard the services you perform as a volunteer 
in applying any of the substantial gainful activity tests discussed in 
paragraph (b)(6) of this section. This exclusion from the substantial 
gainful activity provisions will apply only if you are a volunteer in a 
program explicitly mentioned in the Domestic Volunteer Service Act of 
1973 or the Small Business Act. Programs explicitly mentioned in those 
Acts include Volunteers in Service to America, University Year for 
ACTION, Special Volunteer Programs, Retired Senior Volunteer Program, 
Foster Grandparent Program, Service Corps of Retired Executives, and 
Active Corps of Executives. We will not exclude under this paragraph, 
volunteer work you perform in other programs or any nonvolunteer work 
you may perform, including nonvolunteer work under one of the specified 
programs. For civilians in certain government-sponsored job training and 
employment programs, we evaluate the work activity on a case-by-case 
basis under the substantial gainful activity earnings test. In programs 
such as these, subsidies often occur. We will subtract the value of any 
subsidy and use the remainder to determine if you have done substantial 
gainful activity. See paragraphs (a)(2)-(3) of this section.

[46 FR 4869, Jan. 19, 1981, as amended at 48 FR 21936, May 16, 1983; 49 
FR 22272, May 29, 1984; 54 FR 53605, Dec. 29, 1989; 64 FR 18570, Apr. 
15, 1999; 64 FR 22903, Apr. 28, 1999; 65 FR 42783, July 11, 2000; 65 FR 
82910, Dec. 29, 2000]



Sec. 404.1574a  When and how we will average your earnings.

    (a) If your work as an employee or as a self-employed person was 
continuous without significant change in work patterns or earnings, and 
there has been no change in the substantial gainful activity earnings 
levels, we will average your earnings over the entire period of work 
requiring evaluation to determine if you have done substantial gainful 
activity. See Sec. 404.1592a for information on the reentitlement 
period.
    (b) If you work over a period of time during which the substantial 
gainful activity earnings levels change, we will average your earnings 
separately for each period in which a different substantial gainful 
activity earnings level applies.
    (c) If there is a significant change in your work pattern or 
earnings during the period of work requiring evaluation, we will average 
your earnings over each separate period of work to determine if any of 
your work efforts were substantial gainful activity.
    (d) We will not average your earnings in determining whether 
benefits should be paid for any month(s) during or after the 
reentitlement period that occurs after the month disability has been 
determined to have ceased because of the performance of substantial 
gainful activity. See Sec. 404.1592a for information on the 
reentitlement period. The following examples illustrate what we mean by 
a significant change in the work pattern of an employee and when we will 
average and will not average earnings.

    Example 1: Mrs. H. began receiving disability insurance benefits in 
March 1993. In January 1995 she began selling magazines by telephone 
solicitation, expending a minimum of time, for which she received $225 
monthly. As a result, Mrs. H. used up her trial work period during the 
months of January 1995 through September 1995. After the trial work 
period ended, we determined that Mrs. H. had not engaged in substantial 
gainful activity during her trial work period. Her reentitlement period 
began October 1995. In December 1995, Mrs. H. discontinued her telephone 
solicitation work to take a course in secretarial skills. In January 
1997, she began work as a part-time temporary secretary in a banking 
firm. Mrs. H. worked 20 hours a week, without any subsidy or impairment-
related work expenses, at beginner rates. She earned $285 per month in 
January 1997 and February 1997. In March 1997 she had increased her 
secretarial skills to journeyman level and was assigned as a part-time 
private secretary to one of the vice presidents of the banking firm. 
Mrs. H.'s earnings increased to $525 per month effective March 1997. We 
determined that Mrs. H. was engaging in substantial gainful activity 
beginning March 1997 and that her disability ceased that month, the 
first month of substantial gainful activity after the end of the trial 
work period. Mrs. H. is due payment for March 1997,

[[Page 395]]

the month of cessation, and the following 2 months (April 1997 and May 
1997) because disability benefits terminate the third month following 
the earliest month in which she performed substantial gainful activity. 
We did not average earnings for the period January 1997 and February 
1997 with the period beginning March 1997 because there was a 
significant change in earnings and work activity beginning March 1997. 
Thus, the earnings of January 1997 and February 1997 could not be 
averaged with those of March 1997 to reduce March 1997 earnings below 
the substantial gainful activity level. After we determine that Mrs. 
H.'s disability had ceased because of her performance of substantial 
gainful activity, we cannot average her earnings to determine whether 
she is due payment for any month during or after the reentitlement 
period. Beginning June 1997, the third month following the cessation 
month, we would evaluate all of Mrs. H.'s work activity on a month-by-
month basis (see Sec. 404.1592a(a)).
    Example 2: Ms. M. began receiving disability insurance benefits in 
March 1992. In January 1995, she began selling cable television 
subscriptions by telephone solicitation, expending a minimum of time, 
for which she received $275 monthly. Ms. M. did not work in June 1995, 
and she resumed selling cable television subscriptions beginning July 
1995. In this way, Ms. M. used up her 9-month trial work period during 
the months of January 1995 through May 1995 and July 1995 through 
October 1995. After Ms. M.'s trial work period ended, we determined that 
she had not engaged in substantial gainful activity during her trial 
work period. Ms. M.'s reentitlement period began November 1995. In 
December 1995, Ms. M. discontinued her telephone solicitation work to 
take a course in secretarial skills. In January 1997, she began work as 
a part-time temporary secretary in an accounting firm. Ms. M. worked, 
without any subsidy or impairment-related work expenses, at beginner 
rates. She earned $460 in January 1997, $420 in February 1997, and $510 
in March 1997. In April 1997, she had increased her secretarial skills 
to journeyman level, and she was assigned as a part-time private 
secretary to one of the vice presidents of the firm. Ms. M.'s earnings 
increased to $860 per month effective April 1997. We determined that Ms. 
M. was engaging in substantial gainful activity beginning April 1997 and 
that her disability ceased that month, the first month of substantial 
gainful activity after the end of the trial work period. She is due 
payment for April 1997, May 1997 and June 1997, because disability 
benefits terminate the third month following the earliest month in which 
she performs substantial gainful activity (the month of cessation). We 
averaged her earnings for the period January 1997 through March 1997 and 
determined them to be about $467 per month for that period. We did not 
average earnings for the period January 1997 through March 1997 with 
earnings for the period beginning April 1997 because there was a 
significant change in work activity and earnings beginning April 1997. 
Therefore, we found that the earnings for January 1997 through March 
1997 were under the substantial gainful activity level. After we 
determine that Ms M.'s disability has ceased because she performed 
substantial gainful activity, we cannot average her earnings in 
determining whether she is due payment for any month during or after the 
reentitlement period. In this example, beginning July 1997, the third 
month following the month of cessation, we would evaluate all of Ms. 
M.'s work activity on a month-by-month basis (see Sec. 404.1592a(a)).

[65 FR 42784, July 11, 2000]



Sec. 404.1575  Evaluation guides if you are self-employed.

    (a) If you are a self-employed person. If you are working or have 
worked as a self-employed person, we will use the provisions in 
paragraphs (a) through (d) of this section that are relevant to your 
work activity. We will use these provisions whenever they are 
appropriate, whether in connection with your application for disability 
benefits (when we make an initial determination on your application and 
throughout any appeals you may request), after you have become entitled 
to a period of disability or to disability benefits, or both. We will 
consider your activities and their value to your business to decide 
whether you have engaged in substantial gainful activity if you are 
self-employed. We will not consider your income alone because the amount 
of income you actually receive may depend on a number of different 
factors, such as capital investment and profit-sharing agreements. We 
will generally consider work that you were forced to stop or reduce to 
below substantial gainful activity after 6 months or less because of 
your impairment as an unsuccessful work attempt. See paragraph (d) of 
this section. We will evaluate your work activity based on the value of 
your services to the business regardless of whether you receive an 
immediate income for your services. We determine whether you have 
engaged in substantial gainful activity by applying three tests. If you 
have not engaged in substantial gainful activity under test one, then we 
will consider

[[Page 396]]

tests two and three. The tests are as follows:
    (1) Test One: You have engaged in substantial gainful activity if 
you render services that are significant to the operation of the 
business and receive a substantial income from the business. Paragraphs 
(b) and (c) of this section explain what we mean by significant services 
and substantial income for purposes of this test.
    (2) Test Two: You have engaged in substantial gainful activity if 
your work activity, in terms of factors such as hours, skills, energy 
output, efficiency, duties, and responsibilities, is comparable to that 
of unimpaired individuals in your community who are in the same or 
similar businesses as their means of livelihood.
    (3) Test Three: You have engaged in substantial gainful activity if 
your work activity, although not comparable to that of unimpaired 
individuals, is clearly worth the amount shown in Sec. 404.1574(b)(2) 
when considered in terms of its value to the business, or when compared 
to the salary that an owner would pay to an employee to do the work you 
are doing.
    (b) What we mean by significant services. (1) If you are not a farm 
landlord and you operate a business entirely by yourself, any services 
that you render are significant to the business. If your business 
involves the services of more than one person, we will consider you to 
be rendering significant services if you contribute more than half the 
total time required for the management of the business, or you render 
management services for more than 45 hours a month regardless of the 
total management time required by the business.
    (2) If you are a farm landlord, that is, you rent farm land to 
another, we will consider you to be rendering significant services if 
you materially particpate in the production or the management of the 
production of the things raised on the rented farm. (See Sec. 404.1082 
of this chapter for an explanation of material participation.) If you 
were given social security earnings credits because you materially 
participated in the activities of the farm and you continue these same 
activities, we will consider you to be rendering significant services.
    (c) What we mean by substantial income. We deduct your normal 
business expenses from your gross income to determine net income. Once 
we determine your net income, we deduct the reasonable value of any 
significant amount of unpaid help furnished by your spouse, children, or 
others. Miscellaneous duties that ordinarily would not have commercial 
value would not be considered significant. We deduct impairment-related 
work expenses that have not already been deducted in determining your 
net income. Impairment-related work expenses are explained in Sec. 
404.1576. We deduct unincurred business expenses paid for you by another 
individual or agency. An unincurred business expense occurs when a 
sponsoring agency or another person incurs responsibility for the 
payment of certain business expenses, e.g., rent, utilities, or 
purchases and repair of equipment, or provides you with equipment, 
stock, or other material for the operation of your business. We deduct 
soil bank payments if they were included as farm income. That part of 
your income remaining after we have made all applicable deductions 
represents the actual value of work performed. The resulting amount is 
the amount we use to determine if you have done substantial gainful 
activity. We will generally average your income for comparison with the 
earnings guidelines in Sec. Sec. 404.1574(b)(2) and 404.1574(b)(3). 
See Sec. 404.1574a for our rules on averaging of earnings. We will 
consider this amount to be substantial if--
    (1) It averages more than the amounts described in Sec. 
404.1574(b)(2); or
    (2) It averages less than the amounts described in Sec. 
404.1574(b)(2) but it is either comparable to what it was before you 
became seriously impaired if we had not considered your earnings or is 
comparable to that of unimpaired self-employed persons in your community 
who are in the same or a similar business as their means of livelihood.
    (d) The unsuccessful work attempt--(1) General. Ordinarily, work you 
have done will not show that you are able to do substantial gainful 
activity if, after working for a period of 6 months or

[[Page 397]]

less, you were forced by your impairment to stop working or to reduce 
the amount of work you do so that you are no longer performing 
substantial gainful activity and you meet the conditions described in 
paragraphs (d)(2), (3), (4), and (5) of this section. We will use the 
provisions of this paragraph when we make an initial determination on 
your application for disability benefits and throughout any appeal you 
may request. Except as set forth in Sec. 404.1592a(a), we will also 
apply the provisions of this paragraph if you are already entitled to 
disability benefits, when you work and we consider whether the work you 
are doing is substantial gainful activity or demonstrates the ability to 
do substantial gainful activity.
    (2) Event that must precede an unsuccessful work attempt. There must 
be a significant break in the continuity of your work before we will 
consider you to have begun a work attempt that later proved 
unsuccessful. You must have stopped working or reduced your work and 
earnings below substantial gainful activity because of your impairment 
or because of the removal of special conditions which took into account 
your impairment and permitted you to work. Examples of such special 
conditions may include any significant amount of unpaid help furnished 
by your spouse, children, or others, or unincurred business expenses, as 
described in paragraph (c) of this section, paid for you by another 
individual or agency. We will consider your prior work to be 
``discontinued'' for a significant period if you were out of work at 
least 30 consecutive days. We will also consider your prior work to be 
``discontinued'' if, because of your impairment, you were forced to 
change to another type of work.
    (3) If you worked 3 months or less. We will consider work of 3 
months or less to be an unsuccessful work attempt if it ended, or was 
reduced below substantial gainful activity, because of your impairment 
or because of the removal of special conditions which took into account 
your impairment and permitted you to work.
    (4) If you worked between 3 and 6 months. We will consider work that 
lasted longer than 3 months to be an unsuccessful work attempt if it 
ended, or was reduced below substantial gainful activity, within 6 
months because of your impairment or because of the removal of special 
conditions which took into account your impairment and permitted you to 
work and--
    (i) You were frequently unable to work because of your impairment;
    (ii) Your work was unsatisfactory because of your impairment;
    (iii) You worked during a period of temporary remission of your 
impairment; or
    (iv) You worked under special conditions that were essential to your 
performance and these conditions were removed.
    (5) If you worked more than 6 months. We will not consider work you 
performed at the substantial gainful activity level for more than 6 
months to be an unsuccessful work attempt regardless of why it ended or 
was reduced below the substantial gainful activity earnings level.

[46 FR 4870, Jan. 19, 1981, as amended at 48 FR 21936, May 16, 1983; 49 
FR 22272, May 29, 1984; 65 FR 42785, July 11, 2000]



Sec. 404.1576  Impairment-related work expenses.

    (a) General. When we figure your earnings in deciding if you have 
done substantial gainful activity, we will subtract the reasonable costs 
to you of certain items and services which, because of your 
impairment(s), you need and use to enable you to work. The costs are 
deductible even though you also need or use the items and services to 
carry out daily living functions unrelated to your work. Paragraph (b) 
of this section explains the conditions for deducting work expenses. 
Paragraph (c) of this section describes the expenses we will deduct. 
Paragraph (d) of this section explains when expenses may be deducted. 
Paragraph (e) of this section describes how expenses may be allocated. 
Paragraph (f) of this section explains the limitations on deducting 
expenses. Paragraph (g) of this section explains our verification 
procedures.
    (b) Conditions for deducting impairment-related work expenses. We 
will deduct impairment-related work expenses if--

[[Page 398]]

    (1) You are otherwise disabled as defined in Sec. Sec. 404.1505, 
404.1577 and 404.1581-404.1583;
    (2) The severity of your impairment(s) requires you to purchase (or 
rent) certain items and services in order to work;
    (3) You pay the cost of the item or service. No deduction will be 
allowed to the extent that payment has been or will be made by another 
source. No deduction will be allowed to the extent that you have been, 
could be, or will be reimbursed for such cost by any other source (such 
as through a private insurance plan, Medicare or Medicaid, or other plan 
or agency). For example, if you purchase crutches for $80 but you were, 
could be, or will be reimbursed $64 by some agency, plan, or program, we 
will deduct only $16;
    (4) You pay for the item or service in a month you are working (in 
accordance with paragraph (d) of this section); and
    (5) Your payment is in cash (including checks or other forms of 
money). Payment in kind is not deductible.
    (c) What expenses may be deducted--(1) Payments for attendant care 
services. (i) If because of your impairment(s) you need assistance in 
traveling to and from work, or while at work you need assistance with 
personal functions (e.g., eating, toileting) or with work-related 
functions (e.g., reading, communicating), the payments you make for 
those services may be deducted.
    (ii) If because of your impairment(s) you need assistance with 
personal functions (e.g., dressing, administering medications) at home 
in preparation for going to and assistance in returning from work, the 
payments you make for those services may be deducted.
    (iii)(A) We will deduct payments you make to a family member for 
attendant care services only if such person, in order to perform the 
services, suffers an economic loss by terminating his or her employment 
or by reducing the number of hours he or she worked.
    (B) We consider a family member to be anyone who is related to you 
by blood, marriage or adoption, whether or not that person lives with 
you.
    (iv) If only part of your payment to a person is for services that 
come under the provisions of paragraph (c)(1) of this section, we will 
only deduct that part of the payment which is attributable to those 
services. For example, an attendant gets you ready for work and helps 
you in returning from work, which takes about 2 hours a day. The rest of 
his or her 8 hour day is spent cleaning your house and doing your 
laundry, etc. We would only deduct one-fourth of the attendant's daily 
wages as an impairment-related work expense.
    (2) Payments for medical devices. If your impairment(s) requires 
that you utilize medical devices in order to work, the payments you make 
for those devices may be deducted. As used in this subparagraph, medical 
devices include durable medical equipment which can withstand repeated 
use, is customarily used for medical purposes, and is generally not 
useful to a person in the absence of an illness or injury. Examples of 
durable medical equipment are wheelchairs, hemodialysis equipment, 
canes, crutches, inhalators and pacemakers.
    (3) Payments for prosthetic devices. If your impairment(s) requires 
that you utilize a prosthetic device in order to work, the payments you 
make for that device may be deducted. A prosthetic device is that which 
replaces an internal body organ or external body part. Examples of 
prosthetic devices are artificial replacements of arms, legs and other 
parts of the body.
    (4) Payments for equipment. (i) Work-related equipment. If your 
impairment(s) requires that you utilize special equipment in order to do 
your job, the payments you make for that equipment may be deducted. 
Examples of work-related equipment are one-hand typewriters, vision 
aids, sensory aids for the blind, telecommunication devices for the deaf 
and tools specifically designed to accommodate a person's impairment(s).
    (ii) Residential modifications. If your impairment(s) requires that 
you make modifications to your residence, the location of your place of 
work will determine if the cost of these modifications will be deducted. 
If you are employed away from home, only the cost of changes made 
outside of your home to permit you to get to your means of 
transportation (e.g., the installation of

[[Page 399]]

an exterior ramp for a wheelchair confined person or special exterior 
railings or pathways for someone who requires crutches) will be 
deducted. Costs relating to modifications of the inside of your home 
will not be deducted. If you work at home, the costs of modifying the 
inside of your home in order to create a working space to accommodate 
your impairment(s) will be deducted to the extent that the changes 
pertain specifically to the space in which you work. Examples of such 
changes are the enlargement of a doorway leading into the workspace or 
modification of the workspace to accommodate problems in dexterity. 
However, if you are self-employed at home, any cost deducted as a 
business expense cannot be deducted as an impairment-related work 
expense.
    (iii) Nonmedical appliances and equipment. Expenses for appliances 
and equipment which you do not ordinarily use for medical purposes are 
generally not deductible. Examples of these items are portable room 
heaters, air conditioners, humidifiers, dehumidifiers, and electric air 
cleaners. However, expenses for such items may be deductible when 
unusual circumstances clearly establish an impairment-related and 
medically verified need for such an item because it is essential for the 
control of your disabling condition, thus enabling you to work. To be 
considered essential, the item must be of such a nature that if it were 
not available to you there would be an immediate adverse impact on your 
ability to function in your work activity. In this situation, the 
expense is deductible whether the item is used at home or in the working 
place. An example would be the need for an electric air cleaner by an 
individual with severe respiratory disease who cannot function in a non-
purified air environment. An item such as an exercycle is not deductible 
if used for general physical fitness. If it is prescribed and used as 
necessary treatment of your impairment and necessary to enable you to 
work, we will deduct payments you make toward its cost.
    (5) Payments for drugs and medical services. (i) If you must use 
drugs or medical services (including diagnostic procedures) to control 
your impairment(s) the payments you make for them may be deducted. The 
drugs or services must be prescribed (or utilized) to reduce or 
eliminate symptoms of your impairment(s) or to slow down its 
progression. The diagnostic procedures must be performed to ascertain 
how the impairment(s) is progressing or to determine what type of 
treatment should be provided for the impairment(s).
    (ii) Examples of deductible drugs and medical services are 
anticonvulsant drugs to control epilepsy or anticonvulsant blood level 
monitoring; antidepressant medication for mental disorders; medication 
used to allay the side effects of certain treatments; radiation 
treatment or chemotherapy for cancer patients; corrective surgery for 
spinal disorders; electro enceph alo grams and brain scans related to a 
disabling epileptic condition; tests to determine the efficacy of 
medication on a diabetic condition; and immunosuppressive medications 
that kidney transplant patients regularly take to protect against graft 
rejection.
    (iii) We will only deduct the costs of drugs or services that are 
directly related to your impairment(s). Examples of non-deductible items 
are routine annual physical examinations, optician services (unrelated 
to a disabling visual impairment) and dental examinations.
    (6) Payments for similar items and services--(i) General. If you are 
required to utilize items and services not specified in paragraphs (c) 
(1) through (5) of this section but which are directly related to your 
impairment(s) and which you need to work, their costs are deductible. 
Examples of such items and services are medical supplies and services 
not discussed above, the purchase and maintenance of a dog guide which 
you need to work, and transportation.
    (ii) Medical supplies and services not described above. We will 
deduct payments you make for expendable medical supplies, such as 
incontinence pads, catheters, bandages, elastic stockings, face masks, 
irrigating kits, and disposable sheets and bags. We will also deduct 
payments you make for physical therapy which you require because of your 
impairment(s) and which you need in order to work.

[[Page 400]]

    (iii) Payments for transportation costs. We will deduct 
transportation costs in these situations:
    (A) Your impairment(s) requires that in order to get to work you 
need a vehicle that has structural or operational modifications. The 
modifications must be critical to your operation or use of the vehicle 
and directly related to your impairment(s). We will deduct the costs of 
the modifications, but not the cost of the vehicle. We will also deduct 
a mileage allowance for the trip to and from work. The allowance will be 
based on data compiled by the Federal Highway Administration relating to 
vehicle operating costs.
    (B) Your impairment(s) requires you to use driver assistance, 
taxicabs or other hired vehicles in order to work. We will deduct 
amounts paid to the driver and, if your own vehicle is used, we will 
also deduct a mileage allowance, as provided in paragraph (c)(6)(iii)(A) 
of this section, for the trip to and from work.
    (C) Your impairment(s) prevents your taking available public 
transportation to and from work and you must drive your (unmodified) 
vehicle to work. If we can verify through your physician or other 
sources that the need to drive is caused by your impairment(s) (and not 
due to the unavailability of public transportation), we will deduct a 
mileage allowance, as provided in paragraph (c)(6)(iii)(A) of this 
section, for the trip to and from work.
    (7) Payments for installing, maintaining, and repairing deductible 
items. If the device, equipment, appliance, etc., that you utilize 
qualifies as a deductible item as described in paragraphs (c) (2), (3), 
(4) and (6) of this section, the costs directly related to installing, 
maintaining and repairing these items are also deductible. (The costs 
which are associated with modifications to a vehicle are deductible. 
Except for a mileage allowance, as provided for in paragraph (c)(6)(iii) 
of this section, the costs which are associated with the vehicle itself 
are not deductible.)
    (d) When expenses may be deducted. (1) Effective date. To be 
deductible an expense must be incurred after November 30, 1980. An 
expense may be considered incurred after that date if it is paid 
thereafter even though pursuant to a contract or other arrangement 
entered into before December 1, 1980.
    (2) Payments for services. A payment you make for services may be 
deducted if the services are received while you are working and the 
payment is made in a month you are working. We consider you to be 
working even though you must leave work temporarily to receive the 
services.
    (3) Payments for items. A payment you make toward the cost of a 
deductible item (regardless of when it is acquired) may be deducted if 
payment is made in a month you are working. See paragraph (e)(4) of this 
section when purchases are made in anticipation of work.
    (e) How expenses are allocated. (1) Recurring expenses. You may pay 
for services on a regular periodic basis, or you may purchase an item on 
credit and pay for it in regular periodic installments or you may rent 
an item. If so, each payment you make for the services and each payment 
you make toward the purchase or rental (including interest) is 
deductible in the month it is made.

    Example: B starts work in October 1981 at which time she purchases a 
medical device at a cost of $4,800 plus interest charges of $720. Her 
monthly payments begin in October. She earns and receives $400 a month. 
The term of the installment contract is 48 months. No downpayment is 
made. The monthly allowable deduction for the item would be $115 ($5520 
divided by 48) for each month of work during the 48 months.

    (2) Nonrecurring expenses. Part or all of your expenses may not be 
recurring. For example, you may make a one-time payment in full for an 
item or service or make a downpayment. If you are working when you make 
the payment we will either deduct the entire amount in the month you pay 
it or allocate the amount over a 12 consecutive month period beginning 
with the month of payment, whichever you select.

    Example: A begins working in October 1981 and earns $525 a month. In 
the same month he purchases and pays for a deductible item at a cost of 
$250. In this situation we could allow a $250 deduction for October 
1981, reducing A's earnings below the SGA level for that month.
    If A's earnings had been $15 above the SGA earnings amount, A 
probably would select

[[Page 401]]

the option of projecting the $250 payment over the 12-month period, 
October 1981-September 1982, giving A an allowable deduction of $20.83 a 
month for each month of work during that period. This deduction would 
reduce A's earnings below the SGA level for 12 months.

    (3) Allocating downpayments. If you make a downpayment we will, if 
you choose, make a separate calculation for the downpayment in order to 
provide for uniform monthly deductions. In these situations we will 
determine the total payment that you will make over a 12 consecutive 
month period beginning with the month of the downpayment and allocate 
that amount over the 12 months. Beginning with the 13th month, the 
regular monthly payment will be deductible. This allocation process will 
be for a shorter period if your regular monthly payments will extend 
over a period of less than 12 months.

    Example 1. C starts working in October 1981, at which time he 
purchases special equipment at a cost of $4,800, paying $1,200 down. The 
balance of $3,600, plus interest of $540, is to be repaid in 36 
installments of $115 a month beginning November 1981. C earns $500 a 
month. He chooses to have the downpayment allocated. In this situation 
we would allow a deduction of $205.42 a month for each month of work 
during the period October 1981 through September 1982. After September 
1982, the deduction amount would be the regular monthly payment of $115 
for each month of work during the remaining installment period.

Explanation:
  Downpayment in 10/81..........................      $1,200  ..........
  Monthly payments 11/81 through 09/82..........       1,265  ..........
                                                 ------------
                                                   12) 2,465    =$205.42
 

    Example 2. D, while working, buys a deductible item in July 1981, 
paying $1,450 down. However, his first monthly payment of $125 is not 
due until September 1981. D chooses to have the downpayment allocated. 
In this situation we would allow a deduction of $225 a month for each 
month of work during the period July 1981 through June 1982. After June 
1982, the deduction amount would be the regular monthly payment of $125 
for each month of work.

Explanation:
  Downpayment in 07/81................................   $1,450  .......
  Monthly payments 09/81 through 06/82................    1,250  .......
                                                       ---------
                                                            12)    =$225
                                                          2,700
 

    (4) Payments made in anticipation of work. A payment toward the cost 
of a deductible item that you made in any of the 11 months preceding the 
month you started working will be taken into account in determining your 
impairment-related work expenses. When an item is paid for in full 
during the 11 months preceding the month you started working the payment 
will be allocated over the 12-consecutive month period beginning with 
the month of the payment. However, the only portion of the payment which 
may be deductible is the portion allocated to the month work begins and 
the following months. For example, if an item is purchased 3 months 
before the month work began and is paid for with a one-time payment of 
$600, the deductible amount would be $450 ($600 divided by 12, 
multiplied by 9). Installment payments (including a downpayment) that 
you made for a particular item during the 11 months preceding the month 
you started working will be totaled and considered to have been made in 
the month of your first payment for that item within this 11 month 
period. The sum of these payments will be allocated over the 12-
consecutive month period beginning with the month of your first payment 
(but never earlier than 11 months before the month work began). However, 
the only portion of the total which may be deductible is the portion 
allocated to the month work begins and the following months. For 
example, if an item is purchased 3 months before the month work began 
and is paid for in 3 monthly installments of $200 each, the total 
payment of $600 will be considered to have been made in the month of the 
first payment, that is, 3 months before the month work began. The 
deductible amount would be $450 ($600 divided by 12, multiplied by 9). 
The amount, as determined by these formulas, will then be considered to 
have been paid in the first month of work. We will deduct either this 
entire amount in the first month of work or allocate it over a 12-
consecutive month period beginning with the first month of work, 
whichever you select. In the above examples, the individual would have 
the choice of having the entire $450 deducted in the first month of work 
or of having $37.50 a month ($450

[[Page 402]]

divided by 12) deducted for each month that he works over a 12-
consecutive month period, beginning with the first month of work. To be 
deductible the payments must be for durable items such as medical 
devices, prostheses, work-related equipment, residential modifications, 
nonmedical appliances and vehicle modifications. Payments for services 
and expendable items such as drugs, oxygen, diagnostic procedures, 
medical supplies and vehicle operating costs are not deductible for 
purposes of this paragraph.
    (f) Limits on deductions. (1) We will deduct the actual amounts you 
pay towards your impairment-related work expenses unless the amounts are 
unreasonable. With respect to durable medical equipment, prosthetic 
devices, medical services, and similar medically-related items and 
services, we will apply the prevailing charges under Medicare (part B of 
title XVIII, Health Insurance for the Aged and Disabled) to the extent 
that this information is readily available. Where the Medicare guides 
are used, we will consider the amount that you pay to be reasonable if 
it is no more than the prevailing charge for the same item or service 
under the Medicare guidelines. If the amount you actually pay is more 
than the prevailing charge for the same item under the Medicare 
guidelines, we will deduct from your earnings the amount you paid to the 
extent you establish that the amount is consistent with the standard or 
normal charge for the same or similar item or service in your community. 
For items and services that are not listed in the Medicare guidelines, 
and for items and services that are listed in the Medicare guidelines 
but for which such guides cannot be used because the information is not 
readily available, we will consider the amount you pay to be reasonable 
if it does not exceed the standard or normal charge for the same or 
similar item(s) or service(s) in your community.
    (2) Impairment-related work expenses are not deducted in computing 
your earnings for purposes of determining whether your work was 
``services'' as described in Sec. 404.1592(b).
    (3) The decision as to whether you performed substantial gainful 
activity in a case involving impairment-related work expenses for items 
or services necessary for you to work generally will be based upon your 
``earnings'' and not on the value of ``services'' you rendered. (See 
Sec. Sec. 404.1574(b)(6) (i) and (ii), and 404.1575(a)). This is not 
necessarily so, however, if you are in a position to control or 
manipulate your earnings.
    (4) The amount of the expenses to be deducted must be determined in 
a uniform manner in both the disability insurance and SSI programs.
    (5) No deduction will be allowed to the extent that any other source 
has paid or will pay for an item or service. No deduction will be 
allowed to the extent that you have been, could be, or will be, 
reimbursed for payments you made. (See paragraph (b)(3) of this 
section.)
    (6) The provisions described in the foregoing paragraphs of this 
section are effective with respect to expenses incurred on and after 
December 1, 1980, although expenses incurred after November 1980 as a 
result of contractual or other arrangements entered into before December 
1980, are deductible. For months before December 1980 we will deduct 
impairment-related work expenses from your earnings only to the extent 
they exceeded the normal work-related expenses you would have had if you 
did not have your impairment(s). We will not deduct expenses, however, 
for those things which you needed even when you were not working.
    (g) Verification. We will verify your need for items or services for 
which deductions are claimed, and the amount of the charges for those 
items or services. You will also be asked to provide proof that you paid 
for the items or services.

[48 FR 21936, May 16, 1983]

            Widows, Widowers, and Surviving Divorced Spouses



Sec. 404.1577  Disability defined for widows, widowers, and surviving 

divorced spouses for monthly benefits payable for months prior to January 
1991.

    For monthly benefits payable for months prior to January 1991, the 
law provides that to be entitled to a widow's or widower's benefit as a 
disabled widow, widower, or surviving divorced

[[Page 403]]

spouse, you must have a medically determinable physical or mental 
impairment which can be expected to result in death or has lasted or can 
be expected to last for a continuous period of not less than 12 months. 
The impairment(s) must have been of a level of severity to prevent a 
person from doing any gainful activity. To determine whether you were 
disabled, we consider only your physical or mental impairment(s). We do 
not consider your age, education, and work experience. We also do not 
consider certain felony-related and prison-related impairments, as 
explained in Sec. 404.1506. (For monthly benefits payable for months 
after December 1990, see Sec. 404.1505(a).)

[57 FR 30120, July 8, 1992]



Sec. 404.1578  How we determine disability for widows, widowers, and 

surviving divorced spouses for monthly benefits payable for months 
prior to January 1991.

    (a) For monthly benefits payable for months prior to January 1991, 
we will find that you were disabled and pay you widow's or widower's 
benefits as a widow, widower, or surviving divorced spouse if--
    (1) Your impairment(s) had specific clinical findings that were the 
same as those for any impairment in the Listing of Impairments in 
appendix 1 of this subpart or were medically equivalent to those for any 
impairment shown there;
    (2) Your impairment(s) met the duration requirement.
    (b) However, even if you met the requirements in paragraphs (a) (1) 
and (2) of this section, we will not find you disabled if you were doing 
substantial gainful activity.

[57 FR 30121, July 8, 1992]



Sec. 404.1579  How we will determine whether your disability continues 
or ends.

    (a) General. (1) The rules for determining whether disability 
continues for widow's or widower's monthly benefits for months after 
December 1990 are discussed in Sec. Sec. 404.1594 through 404.1598. The 
rules for determining whether disability continues for monthly benefits 
for months prior to January 1991 are discussed in paragraph (a)(2) of 
this section and paragraphs (b) through (h) of this section.
    (2) If you are entitled to disability benefits as a disabled widow, 
widower, or surviving divorced spouse, and we must decide whether your 
disability continued or ended for monthly benefits for months prior to 
January 1991, there are a number of factors we consider in deciding 
whether your disability continued. We must determine if there has been 
any medical improvement in your impairment(s) and, if so, whether this 
medical improvement is related to your ability to work. If your 
impairment(s) has not so medically improved, we must address whether one 
or more exceptions applies. If medical improvement related to your 
ability to work has not occurred and no exception applies, your benefits 
will continue. Even where medical improvement related to your ability to 
work has occurred or an exception applies, in most cases (see paragraph 
(e) of this section for exceptions) before we can find that you are no 
longer disabled, we must also show that your impairment(s), as shown by 
current medical evidence, is no longer deemed, under appendix 1 of this 
subpart, sufficient to preclude you from engaging in gainful activity.
    (b) Terms and definitions. There are several terms and definitions 
which are important to know in order to understand how we review your 
claim to determine whether your disability continues.
    (1) Medical improvement. Medical improvement is any decrease in the 
medical severity of your impairment(s) which was present at the time of 
the most recent favorable medical decision that you were disabled or 
continued to be disabled. A determination that there has been a decrease 
in medical severity must be based on changes (improvement) in the 
symptoms, signs and/or laboratory findings (see Sec. 404.1528) 
associated with your impairment(s).

    Example 1: You were awarded disability benefits due to a herniated 
nucleus pulposus which was determined to equal the level of severity 
contemplated by Listing 1.05.C. At the time of our prior favorable 
decision, you had had a laminectomy. Postoperatively, a myelogram still 
showed evidence of a persistent deficit in your lumbar spine. You had 
pain in your back, and pain and a burning

[[Page 404]]

sensation in your right foot and leg. There were no muscle weakness or 
neurological changes and a modest decrease in motion in your back and 
leg. When we reviewed your claim your treating physician reported that 
he had seen you regularly every 2 to 3 months for the past 2 years. No 
further myelograms had been done, complaints of pain in the back and 
right leg continued especially on sitting or standing for more than a 
short period of time. Your doctor further reported a moderately 
decreased range of motion in your back and right leg, but again no 
muscle atrophy or neurological changes were reported. Medical 
improvement has not occurred because there has been no decrease in the 
severity of your back impairment as shown by changes in symptoms, signs, 
or laboratory findings.
    Example 2: You were awarded disability benefits due to rheumatoid 
arthritis of a severity as described in Listing 1.02 of appendix 1 of 
this subpart. At the time, laboratory findings were positive for this 
condition. Your doctor reported persistent swelling and tenderness of 
your fingers and wrists and that you complained of joint pain. Current 
medical evidence shows that while laboratory tests are still positive 
for rheumatoid arthritis, your impairment has responded favorably to 
therapy so that for the last year your fingers and wrists have not been 
significantly swollen or painful. Medical improvement has occurred 
because there has been a decrease in the severity of your impairment as 
documented by the current symptoms and signs reported by your physician. 
Although your impairment is subject to temporary remissions and 
exacerbations the improvement that has occurred has been sustained long 
enough to permit a finding of medical improvement. We would then 
determine if this medical improvement is related to your ability to 
work.

    (2) Determining whether medical improvement is related to your 
ability to work. If medical improvement has occurred and the severity of 
the prior impairment(s) no longer meets or equals the listing section 
which was used in making our most recent favorable decision, we will 
find that the medical improvement was related to your ability to work. 
We make this finding because the criteria in appendix 1 of this subpart 
are related to ability to work because they reflect impairments which 
are considered severe enough to prevent a person from doing any gainful 
work. We must, of course, also establish that, considering all of your 
current impairments not just those which existed at the time of the most 
recent prior favorable medical decision, your condition does not meet or 
equal the requirements of appendix 1 before we could find that your 
disability has ended. If there has been any medical improvement in your 
impairment(s), but it is not related to your ability to do work and none 
of the exceptions applies, your benefits will be continued.
    (3) Determining whether your impairment(s) is deemed, under appendix 
1 of this subpart, sufficient to preclude you from engaging in gainful 
activity. Even where medical improvement related to your ability to work 
has occurred or an exception applies, in most cases before we can find 
that you are no longer disabled, we must also show that your 
impairment(s) is no longer deemed, under appendix 1 of this subpart, 
sufficient to preclude you from engaging in gainful activity. All 
current impairments will be considered, not just the impairment(s) 
present at the time of our most recent favorable determination. Sections 
404.1525, 404.1526, and 404.1578 set out how we will decide whether your 
impairment(s) meets or equals the requirements of appendix 1 of this 
subpart.
    (4) Evidence and basis for our decision. Our decisions under this 
section will be made on a neutral basis without any initial inference as 
to the presence or absence of disability being drawn from the fact that 
you have previously been determined to be disabled. We will consider all 
evidence you submit, as well as all evidence we obtain from your 
treating physician(s) and other medical or nonmedical sources. What 
constitutes ``evidence'' and our procedures for obtaining it are set out 
in Sec. Sec. 404.1512 through 404.1518. Our determination regarding 
whether your disability continues will be made on the basis of the 
weight of the evidence.
    (5) Point of comparison. For purposes of determining whether medical 
improvement has occurred, we will compare the current severity of that 
impairment(s) which was present at the time of the most recent favorable 
medical decision that you were disabled or continued to be disabled to 
the medical severity of that impairment(s) at that time. If medical 
improvement has occurred, we will determine whether the medical 
improvement is related to your ability to do work based on this

[[Page 405]]

previously existing impairment(s). The most recent favorable medical 
decision is the latest decision involving a consideration of the medical 
evidence and the issue of whether you were disabled or continued to be 
disabled which became final.
    (c) Determining medical improvement and its relationship to your 
ability to do work. Paragraphs (b) (1) and (2) of this section discuss 
what we mean by medical improvement and how we determine whether medical 
improvement is related to your ability to work.
    (1) Medical improvement. Medical improvement is any decrease in the 
medical severity of impairment(s) present at the time of the most recent 
favorable medical decision that you were disabled or continued to be 
disabled. Whether medical improvement has occurred is determined by a 
comparison of prior and current medical evidence which must show that 
there have been changes (improvement) in the symptoms, signs or 
laboratory findings associated with that impairment(s).
    (2) Determining whether medical improvement is related to ability to 
work. If there is a decrease in medical severity as shown by the signs, 
symptoms and laboratory findings, we then must determine if it is 
related to your ability to do work, as explained in paragraph (b)(2) of 
this section. In determining if the medical improvement that has 
occurred is related to your ability to work, we will assess whether the 
previously existing impairments still meet or equal the level of 
severity contemplated by the same listing section in appendix 1 of this 
subpart which was used in making our most recent favorable decision. 
Appendix 1 of this subpart describes impairments which, if severe 
enough, affect a person's ability to work. If the appendix level of 
severity is met or equaled, the individual is deemed, in the absence of 
evidence of the contrary, to be unable to engage in gainful activity. If 
there has been medical improvement to the degree that the requirement of 
the listing section is no longer met or equaled, then the medical 
improvement is related to your ability to work. Unless an objective 
assessment shows that the listing requirement is no longer met or 
equaled based on actual changes shown by the medical evidence, the 
medical improvement that has occurred will not be considered to be 
related to your ability to work.
    (3) Prior file cannot be located. If the prior file cannot be 
located, we will first determine whether your current impairment(s) is 
deemed, under appendix 1 of this subpart, sufficient to preclude you 
from engaging in gainful activity. (In this way, we will be able to 
determine that your disability continues at the earliest time without 
addressing the issue of reconstructing prior evidence which can be a 
lengthy process.) If so, your benefits will continue unless one of the 
second group of exceptions applies (see paragraph (e) of this section). 
If not, we will determine whether an attempt should be made to 
reconstruct those portions of the file that were relevant to our most 
recent favorable medical decision (e.g., medical evidence from treating 
sources and the results of consultative examinations). This 
determination will consider the potential availability of old records in 
light of their age, whether the source of the evidence is still in 
operation, etc.; and whether reconstruction efforts will yield a 
complete record of the basis for the most recent favorable medical 
decision. If relevant parts of the prior record are not reconstructed 
either because it is determined not to attempt reconstruction or because 
such efforts fail, medical improvement cannot be found. The 
documentation of your current impairments will provide a basis for any 
future reviews. If the missing file is later found, it may serve as a 
basis for reopening any decision under this section in accordance with 
the rules in Sec. 404.988.
    (4) Impairment(s) subject to temporary remission. In some cases the 
evidence shows that an individual's impairment is subject to temporary 
remission. In assessing whether medical improvement has occurred in 
persons with this type of impairment, we will be careful to consider the 
longitudinal history of the impairment(s), including the occurrence of 
prior remissions, and prospects for future worsening of the 
impairment(s). Improvement in such impairments that is only temporary 
will not

[[Page 406]]

warrant a finding of medical improvement.
    (5) Applicable listing has been revised since the most recent 
favorable medical decision. When determining whether any medical 
improvement is related to your ability to work, we use the same listing 
section in appendix 1 of this subpart which was used to make our prior 
favorable decision. We will use the listing as it appeared at the time 
of the prior decision, even where the requirement(s) of the listing was 
subsequently changed. The current revised listing requirement will be 
used if we determine that you have medically improved and it is 
necessary to determine whether you are now considered unable to engage 
in gainful activity.
    (d) First group of exceptions to medical improvement. The law 
provides for certain limited situations when your disability can be 
found to have ended even though medical improvement has not occurred, if 
your impairment(s) is no longer considered, under appendix 1 of this 
subpart, sufficient to preclude you from engaging in gainful activity. 
These exceptions to medical improvement are intended to provide a way of 
finding that a person is no longer disabled in those limited situations 
where, even though there has been no decrease in severity of the 
impairment(s), evidence shows that the person should no longer be 
considered disabled or never should have been considered disabled. If 
one of these exceptions applies, before we can find you are no longer 
disabled, we must also show that, taking all your current impairment(s) 
into account, not just those that existed at the time of our most recent 
favorable medical decision, your impairment(s) is no longer deemed, 
under appendix 1 of this subpart, sufficient to preclude you from 
engaging in gainful activity. As part of the review process, you will be 
asked about any medical therapy you received or are receiving. Your 
answers and the evidence gathered as a result as well as all other 
evidence, will serve as the basis for the finding that an exception does 
or does not apply.
    (1) Substantial evidence shows that you are the beneficiary of 
advances in medical therapy or technology (related to your ability to 
work). Advances in medical therapy or technology are improvements in 
treatment or rehabilitative methods which have favorably affected the 
severity of your impairment(s). We will apply this exception when 
substantial evidence shows that you have been the beneficiary of 
services which reflect these advances and they have favorably affected 
the severity of your impairment(s). This decision will be based on new 
medical evidence. In many instances, an advanced medical therapy or 
technology will result in a decrease in severity as shown by symptoms, 
signs and laboratory findings which will meet the definition of medical 
improvement. This exception will, therefore, see very limited 
application.
    (2) Substantial evidence shows that based on new or improved 
diagnostic or evaluative techniques your impairment(s) is not as 
disabling as it was considered to be at the time of the most recent 
favorable decision. Changing methodologies and advances in medical and 
other diagnostic or evaluative techniques have given, and will continue 
to give, rise to improved methods for measuring and documenting the 
effect of various impairments on the ability to do work. Where, by such 
new or improved methods, substantial evidence shows that your 
impairment(s) is not as severe as was determined at the time of our most 
recent favorable medical decision, such evidence may serve as a basis 
for finding that you are no longer disabled, if your impairment(s) is no 
longer deemed, under appendix 1 of this subpart, sufficient to preclude 
you from engaging in gainful activity. In order to be used under this 
exception, however, the new or improved techniques must have become 
generally available after the date of our most recent favorable medical 
decision.
    (i) How we will determine which methods are new or improved 
techniques and when they become generally available. New or improved 
diagnostic techniques or evaluations will come to our attention by 
several methods. In reviewing cases, we often become aware of new 
techniques when their results are presented as evidence. Such techniques 
and evaluations are also discussed and acknowledged in medical 
literature by medical professional groups and other governmental 
entities. Through these

[[Page 407]]

sources, we develop listings of new techniques and when they become 
generally available. For example, we will consult the Health Care 
Financing Administration for its experience regarding when a technique 
is recognized for payment under Medicare and when they began paying for 
the technique.
    (ii) How you will know which methods are new or improved techniques 
and when they become generally available. We will let you know which 
methods we consider to be new or improved techniques and when they 
become available through two vehicles.
    (A) Some of the future changes in the Listing of Impairments in 
appendix 1 of this subpart will be based on new or improved diagnostic 
or evaluative techniques. Such listing changes will clearly state this 
fact as they are published as Notices of Proposed Rulemaking and the new 
or improved technique will be considered generally available as of the 
date of the final publication of that particular listing in the Federal 
Register.
    (B) A cumulative list since 1970 of new or improved diagnostic 
techniques or evaluations, how they changed the evaluation of the 
applicable impairment and the month and year they became generally 
available, will be published in the Notices section of the Federal 
Register. Included will be any changes in the Listing of Impairments 
published in the Code of Federal Regulations since 1970 which are 
reflective of new or improved techniques. No cases will be processed 
under this exception until this cumulative listing is so published. 
Subsequent changes to the list will be published periodically. The 
period will be determined by the volume of changes needed.

    Example: The electrocardiographic exercise test has replaced the 
Master's 2-step test as a measurement of heart function since the time 
of your last favorable medical decision. Current evidence could show 
that your condition, which was previously evaluated based on the 
Master's 2-step test, is not now as disabling as was previously thought. 
If, taking all your current impairments into account, you are now able 
to engage in gainful activity, this exception would be used to find that 
you are no longer disabled even if medical improvement has not occurred.

    (3) Substantial evidence demonstrates that any prior disability 
decision was in error. We will apply the exception to medical 
improvement based on error if substantial evidence (which may be 
evidence on the record at the time any prior determination of the 
entitlement to benefits based on disability was made, or newly obtained 
evidence which relates to that determination) demonstrates that a prior 
determination was in error. A prior determination will be found in error 
only if:
    (i) Substantial evidence shows on its face that the decision in 
question should not have been made (e.g., the evidence in your file such 
as pulmonary function study values was misread or an adjudicative 
standard such as a listing in appendix 1 of this subpart was 
misapplied).

    Example: You were granted benefits when it was determined that your 
epilepsy met Listing 11.02. This listing calls for a finding of major 
motor seizures more frequently than once a month as documented by EEG 
evidence and by a detailed description of a typical seizure pattern. A 
history of either diurnal episodes or nocturnal episodes with residuals 
interfering with daily activities is also required. On review, it is 
found that a history of the frequency of your seizures showed that they 
occurred only once or twice a year. The prior decision would be found to 
be in error, and whether you were still considered to be disabled would 
be based on whether your current impairment(s) meets or equals the 
requirements of appendix 1 of this subpart.

    (ii) At the time of the prior evaluation, required and material 
evidence of the severity of your impairment(s) was missing. That 
evidence becomes available upon review, and substantial evidence 
demonstrates that had such evidence been present at the time of the 
prior determination, disability would not have been found.
    (iii) Substantial evidence which is new evidence which relates to 
the prior determination (of allowance or continuance) refutes the 
conclusions that were based upon the prior evidence (e.g., a tumor 
thought to be malignant was later shown to have actually been benign). 
Substantial evidence must show that had the new evidence (which relates 
to the prior determination) been considered at the time of the prior 
decision, the claim would not have been allowed or continued. A 
substitution of current judgment for that

[[Page 408]]

used in the prior favorable decision will not be the basis for applying 
this exception.

    Example: You were previously granted disability benefits on the 
basis of diabetes mellitus which the prior adjudicator believed was 
equivalent to the level of severity contemplated in the Listing of 
Impairments. The prior record shows that you had ``brittle'' diabetes 
for which you were taking insulin. Your urine was 3+ for sugar, and you 
alleged occasional hypoglycemic attacks caused by exertion. On review, 
symptoms, signs and laboratory findings are unchanged. The current 
adjudicator believes, however, that your impairment does not equal the 
severity contemplated by the listings. Error cannot be found because it 
would represent a substitution of current judgment for that of the prior 
adjudicator that your impairment equaled a listing.

    (iv) The exception for error will not be applied retroactively under 
the conditions set out above unless the conditions for reopening the 
prior decision (see Sec. 404.988) are met.
    (4) You are currently engaging in substantial gainful activity. If 
you are currently engaging in substantial gainful activity before we 
determine whether you are no longer disabled because of your work 
activity, we will consider whether you are entitled to a trial work 
period as set out in Sec. 404.1592. We will find that your disability 
has ended in the month in which you demonstrated your ability to engage 
in substantial gainful activity (following completion of a trial work 
period, where it applies). This exception does not apply in determining 
whether you continue to have a disabling impairment(Sec. 404.1511) for 
purposes of deciding your eligibility for a reentitlement period (Sec. 
404.1592a).
    (e) Second group of exceptions to medical improvement. In addition 
to the first group of exceptions to medical improvement, the following 
exceptions may result in a determination that you are no longer 
disabled. In these situations the decision will be made without a 
determination that you have medically improved or can engage in gainful 
activity.
    (1) A prior determination or decision was fraudulently obtained. If 
we find that any prior favorable determination or decision was obtained 
by fraud, we may find that you are not disabled. In addition, we may 
reopen your claim under the rules in Sec. 404.988. In determining 
whether a prior favorable determination or decision was fraudulently 
obtained, we will take into account any physical, mental, educational, 
or linguistic limitations (including any lack of facility with the 
English language) which you may have had at the time.
    (2) You do not cooperate with us. If there is a question about 
whether you continue to be disabled and we ask you to give us medical or 
other evidence or to go for a physical or mental examination by a 
certain date, we will find that your disability has ended if you fail, 
without good cause, to do what we ask. Section 404.911 explains the 
factors we consider and how we will determine generally whether you have 
good cause for failure to cooperate. In addition, Sec. 404.1518 
discusses how we determine whether you have good cause for failing to 
attend a consultative examination. The month in which your disability 
ends will be the first month in which you failed to do what we asked.
    (3) We are unable to find you. If there is a question about whether 
you continue to be disabled and we are unable to find you to resolve the 
question, we will determine that your disability has ended. The month 
your disability ends will be the first month in which the question arose 
and we could not find you.
    (4) You fail to follow prescribed treatment which would be expected 
to restore your ability to engage in gainful activity. If treatment has 
been prescribed for you which would be expected to restore your ability 
to work, you must follow that treatment in order to be paid benefits. If 
you are not following that treatment and you do not have good cause for 
failing to follow that treatment, we will find that your disability has 
ended (see Sec. 404.1530(c)). The month your disability ends will be 
the first month in which you failed to follow the prescribed treatment.
    (f) Evaluation steps. To assure that disability reviews are carried 
out in a uniform manner, that decisions of continuing disability can be 
made in the most expeditious and administratively efficient way, and 
that any decisions to

[[Page 409]]

stop disability benefits are made objectively, neutrally and are fully 
documented, we will follow specific steps in reviewing the question of 
whether your disability continues. Our review may stop and benefits may 
be continued at any point if we determine there is sufficient evidence 
to find that you are still unable to engage in gainful activity. The 
steps are:
    (1) Are you engaging in substantial gainful activity? If you are 
(and any applicable trial work period has been completed), we will find 
disability to have ended.
    (2) If you are not, has there been medical improvement as defined in 
paragraph (b)(1) of this section? If there has been medical improvement 
as shown by a decrease in medical severity, see step (3). If there has 
been no decrease in medical severity, there has been no medical 
improvement. (see step (4).)
    (3) If there has been medical improvement, we must determine (in 
accordance with paragraph (b)(2) of this section) whether it is related 
to your ability to work. If medical improvement is not related to your 
ability to do work, see step (4). If medical improvement is related to 
your ability to do work, see step (5).
    (4) If we found at step (2) that there has been no medical 
improvement or if we found at step (3) that the medical improvement is 
not related to your ability to work, we consider whether any of the 
exceptions in paragraphs (d) and (e) of this section apply. If none of 
them apply, your disability will be found to continue. If one of the 
first group of exceptions to medical improvement (see paragraph (d) of 
this section) applies, we will proceed to step (5). If an exception from 
the second group of exceptions to medical improvement applies, your 
disability will be found to have ended. The second group of exceptions 
to medical improvement may be considered at any point in this process.
    (5) If medical improvement is related to your ability to work or if 
one of the first group of exceptions to medical improvement applies, we 
will determine (considering all your impairments) whether the 
requirements of appendix 1 of this subpart are met or equaled. If your 
impairment(s) meets or equals the requirements of appendix 1 of this 
subpart, your disability will be found to continue. If not, your 
disability will be found to have ended.
    (g) The month in which we will find you are no longer disabled. If 
the evidence shows that you are no longer disabled, we will find that 
your disability ended in the earliest of the following months--
    (1) The month the evidence shows you are no longer disabled under 
the rules set out in this section, and you were disabled only for a 
specified period of time in the past;
    (2) The month the evidence shows you are no longer disabled under 
the rules set out in this section, but not earlier than the month in 
which we mail you a notice saying that the information we have shows 
that you are not disabled;
    (3) The month in which you demonstrated your ability to engage in 
substantial gainful activity (following completion of a trial work 
period); however, we may pay you benefits for certain months in and 
after the reentitlement period which follows the trial work period. (See 
Sec. 404.1592 for a discussion of the trial work period, Sec. 
404.1592a for a discussion of the reentitlement period, and Sec. 
404.337 for when your benefits will end.);
    (4) The month in which you return to full-time work, with no 
significant medical restrictions and acknowledge that medical 
improvement has occurred, as long as we expected your impairment(s) to 
improve (see Sec. 404.1591);
    (5) The first month in which you failed to do what we asked, without 
good cause when the rule set out in paragraph (e)(2) of this section 
applies;
    (6) The first month in which the question of continuing disability 
arose and we could not find you, when the rule set out in paragraph 
(e)(3) of this section applies;
    (7) The first month in which you failed to follow prescribed 
treatment without good cause, when the rule set out in paragraph (e)(4) 
of this section applies; or
    (8) The first month you were told by your physician that you could 
return to work provided there is no substantial conflict between your 
physician's

[[Page 410]]

and your statements regarding your awareness of your capacity for work 
and the earlier date is supported by medical evidence.
    (h) Before we stop your benefits. Before we determine you are no 
longer disabled, we will give you a chance to explain why we should not 
do so. Sections 404.1595 and 404.1597 describe your rights (including 
appeal rights) and the procedures we will follow.

[50 FR 50126, Dec. 6, 1985; 51 FR 7063, Feb. 28, 1986; 51 FR 16015, Apr. 
30, 1986, as amended at 57 FR 30121, July 8, 1992; 59 FR 1635, Jan. 12, 
1994]

                                Blindness



Sec. 404.1581  Meaning of blindness as defined in the law.

    We will consider you blind under the law for a period of disability 
and for payment of disability insurance benefits if we determine that 
you are statutorily blind. Statutory blindness is defined in the law as 
central visual acuity of 20/200 or less in the better eye with the use 
of correcting lens. An eye which has a limitation in the field of vision 
so that the widest diameter of the visual field subtends an angle no 
greater than 20 degrees is considered to have a central visual acuity of 
20/200 or less. Your blindness must meet the duration requirement in 
Sec. 404.1509. We do not consider certain felony-related and prison-
related impairments, as explained in Sec. 404.1506.

[45 FR 55584, Aug. 20, 1980, as amended at 48 FR 5715, Feb. 8, 1983]



Sec. 404.1582  A period of disability based on blindness.

    If we find that you are blind and you meet the insured status 
requirement, we may establish a period of disability for you regardless 
of whether you can do substantial gainful activity. A period of 
disability protects your earnings record under Social Security so that 
the time you are disabled will not count against you in determining 
whether you will have worked long enough to qualify for benefits and the 
amount of your benefits. However, you will not necessarily be entitled 
to receive disability insurance cash benefits even though you are blind. 
If you are a blind person under age 55, you must be unable to do any 
substantial gainful activity in order to be paid disability insurance 
cash benefits.



Sec. 404.1583  How we determine disability for blind persons who are 
age 55 or older.

    We will find that you are eligible for disability insurance benefits 
even though you are still engaging in substantial gainful activity, if--
    (a) You are blind;
    (b) You are age 55 or older; and
    (c) You are unable to use the skills or abilities like the ones you 
used in any substantial gainful activity which you did regularly and for 
a substantial period of time. (However, you will not be paid any cash 
benefits for any month in which you are doing substantial gainful 
activity.)



Sec. 404.1584  Evaluation of work activity of blind people.

    (a) General. If you are blind (as explained in Sec. 404.1581), we 
will consider the earnings from the work you are doing to determine 
whether or not you should be paid cash benefits.
    (b) Under Age 55. If you are under age 55, we will evaluate the work 
you are doing using the guides in paragraph (d) of this section to 
determine whether or not your work shows that you are doing substantial 
gainful activity. If you are not doing substantial gainful activity, we 
will pay you cash benefits. If you are doing substantial gainful 
activity, we will not pay you cash benefits. However, you will be given 
a period of disability as described in subpart D of this part.
    (c) Age 55 or older. If you are age 55 or older, we will evaluate 
your work using the guides in paragraph (d) of this section to determine 
whether or not your work shows that you are doing substantial gainful 
activity. If you have not shown this ability, we will pay you cash 
benefits. If you have shown an ability to do substantial gainful 
activity, we will evaluate your work activity to find out how your work 
compares with the work you did before. If the skills and abilities of 
your new work are about the same as those you used in the work you did 
before, we will not pay you cash benefits. However, if your new work 
requires skills

[[Page 411]]

and abilities which are less than or different than those you used in 
the work you did before, we will pay you cash benefits, but not for any 
month in which you actually perform substantial gainful activity.
    (d) Evaluation of earnings--(1) Earnings that will ordinarily show 
that you have engaged in substantial gainful activity. We will 
ordinarily consider that your earnings from your work activities show 
that you have engaged in substantial gainful activity if your monthly 
earnings average more than the amount(s) shown in paragraphs (d)(2) and 
(3) of this section. We will apply Sec. Sec. 404.1574(a)(2), 
404.1575(c), and 404.1576 in determining the amount of your average 
earnings.
    (2) Substantial gainful activity guidelines for taxable years before 
1978. For work activity performed in taxable years before 1978, the 
average earnings per month that we ordinarily consider enough to show 
that you have done substantial gainful activity are the same for blind 
people as for others. See Sec. 404.1574(b)(2) for the earnings 
guidelines for other than blind individuals.
    (3) Substantial gainful activity guidelines for taxable years 
beginning 1978. For taxable years beginning 1978, if you are blind, the 
law provides different earnings guidelines for determining if your 
earnings from your work activities are substantial gainful activity. 
Ordinarily, we consider your work to be substantial gainful activity, if 
your average monthly earnings are more than those shown in Table I. For 
years after 1977 and before 1996, increases in the substantial gainful 
activity guideline were linked to increases in the monthly exempt amount 
under the retirement earnings test for individuals aged 65 to 69. 
Beginning with 1996, increases in the substantial gainful activity 
amount have depended only on increases in the national average wage 
index.

                                 Table I
------------------------------------------------------------------------
                            Over                              In year(s)
------------------------------------------------------------------------
$334........................................................        1978
$375........................................................        1979
$417........................................................        1980
$459........................................................        1981
$500........................................................        1982
$550........................................................        1983
$580........................................................        1984
$610........................................................        1985
$650........................................................        1986
$680........................................................        1987
$700........................................................        1988
$740........................................................        1989
$780........................................................        1990
$810........................................................        1991
$850........................................................        1992
$880........................................................        1993
$930........................................................        1994
$940........................................................        1995
$960........................................................        1996
$1,000......................................................        1997
$1,050......................................................        1998
$1,110......................................................        1999
$1,170......................................................        2000
------------------------------------------------------------------------


[45 FR 55584, Aug. 20, 1980, as amended at 48 FR 21939, May 16, 1983; 65 
FR 42786, July 11, 2000]



Sec. 404.1585  Trial work period for persons age 55 or older who are blind.

    If you become eligible for disability benefits even though you were 
doing substantial gainful activity because you are blind and age 55 or 
older, you are entitled to a trial work period if--
    (a) You later return to substantial gainful activity that requires 
skills or abilities comparable to those required in the work you 
regularly did before you became blind or became 55 years old, whichever 
is later; or
    (b) Your last previous work ended because of an impairment and the 
current work requires a significant vocational adjustment.



Sec. 404.1586  Why and when we will stop your cash benefits.

    (a) When you are not entitled to benefits. If you become entitled to 
disability cash benefits as a statutorily blind person, we will find 
that you are no longer entitled to benefits beginning with the earliest 
of--
    (1) The month your vision, based on current medical evidence, does 
not meet the definition of blindness and your disability does not 
continue under the rules in Sec. 404.1594 and you were disabled only 
for a specified period of time in the past;
    (2) The month your vision, based on current medical evidence, does 
not meet the definition of blindness and your disability does not 
continue under the rules in Sec. 404.1594, but not earlier than the 
month in which we mail you

[[Page 412]]

a notice saying that the information we have shows that you are not 
disabled;
    (3) If you are under age 55, the month in which you demonstrated 
your ability to engage in substantial gainful activity (following 
completion of a trial work period); however, we may pay you benefits for 
certain months in and after the reentitlement period which follows the 
trial work period. (See Sec. 404.1592a for a discussion of the 
reentitlement period, and Sec. 404.316 on when your benefits will 
end.); or
    (4) If you are age 55 or older, the month (following completion of a 
trial work period) when your work activity shows you are able to use, in 
substantial gainful activity, skills and abilities comparable to those 
of some gainful activity which you did with some regularity and over a 
substantial period of time. The skills and abilities are compared to the 
activity you did prior to age 55 or prior to becoming blind, whichever 
is later.
    (b) If we find that you are not entitled to disability cash 
benefits. If we find that you are not entitled to disability cash 
benefits on the basis of your work activity but your visual impairment 
is sufficiently severe to meet the definition of blindness, the period 
of disability that we established for you will continue.
    (c) If you do not follow prescribed treatment. If treatment has been 
prescribed for you that can restore your ability to work, you must 
follow that treatment in order to be paid benefits. If you are not 
following that treatment and you do not have a good reason for failing 
to follow that treatment (see Sec. 404.1530(c)), we will find that your 
disability has ended. The month in which your disability will be found 
to have ended will be the first month in which you failed to follow the 
prescribed treatment.
    (d) If you do not cooperate with us. If we ask you to give us 
medical or other evidence or to go for a medical examination by a 
certain date, we will find that your disability has ended if you fail, 
without good cause, to do what we ask. Section 404.911 explains the 
factors we consider and how we will determine generally whether you have 
good cause for failure to cooperate. In addition, Sec. 404.1518 
discusses how we determine whether you have good cause for failing to 
attend a consultative examination. The month in which your disability 
will be found to have ended will be the month in which you failed to do 
what we asked.
    (e) If we are unable to find you. If there is a question about 
whether you continue to be disabled by blindness and we are unable to 
find you to resolve the question, we will find that your disability, has 
ended. The month it ends will be the first month in which the question 
arose and we could not find you.
    (f) Before we stop your benefits. Before we stop your benefits or 
period of disability, we will give you a chance to give us your reasons 
why we should not stop your benefits or your period of disability. 
Section 404.1595 describes your rights and the procedures we will 
follow.
    (g) If you are in an appropriate vocational rehabilitation program. 
(1) Your benefits, and those of your dependents, may be continued for 
months after November 1980 after your impairment is no longer disabling 
if--
    (i) Your disability did not end before December 1980;
    (ii) You are participating in an appropriate program of vocational 
rehabilitation, that is, one that has been approved under a State plan 
approved under title I of the Rehabilitation Act of 1973 and which meets 
the requirements outlined in 34 CFR part 361 for a rehabilitation 
program;
    (iii) You began the program before your disability ended; and
    (iv) We have determined that your completion of the program, or your 
continuation in the program for a specified period of time, will 
significantly increase the likelihood that you will not have to return 
to the disability benefit rolls.
    (2) Your benefits generally will be stopped with the month--
    (i) You complete the program;
    (ii) You stop participating in the program for any reason; or
    (iii) We determine that your continuing participation in the program 
will no longer significantly increase the likelihood that you will be 
permanently removed from the disability benefit rolls.


[[Page 413]]


Exception: In no case will your benefits be stopped with a month earlier 
than the second month after your disability ends.

[45 FR 55584, Aug. 20, 1980, as amended at 47 FR 31543, July 21, 1982; 
47 FR 52693, Nov. 23, 1982; 49 FR 22272, May 29, 1984; 50 FR 50130, Dec. 
6, 1985; 51 FR 17617, May 14, 1986; 59 FR 1635, Jan. 12, 1994]



Sec. 404.1587  Circumstances under which we may suspend your benefits 
before we make a determination.

    We will suspend your benefits if all of the information we have 
clearly shows that you are not disabled and we will be unable to 
complete a determination soon enough to prevent us from paying you more 
monthly benefits than you are entitled to. This may occur when you are 
blind as defined in the law and age 55 or older and you have returned to 
work similar to work you previously performed.

                    Continuing or Stopping Disability



Sec. 404.1588  Your responsibility to tell us of events that may change 
your disability status.

    If you are entitled to cash benefits or to a period of disability 
because you are disabled, you should promptly tell us if--
    (a) Your condition improves;
    (b) You return to work;
    (c) You increase the amount of your work; or
    (d) Your earnings increase.



Sec. 404.1589  We may conduct a review to find out whether you continue 
to be disabled.

    After we find that you are disabled, we must evaluate your 
impairment(s) from time to time to determine if you are still eligible 
for disability cash benefits. We call this evaluation a continuing 
disability review. We may begin a continuing disability review for any 
number of reasons including your failure to follow the provisions of the 
Social Security Act or these regulations. When we begin such a review, 
we will notify you that we are reviewing your eligibility for disability 
benefits, why we are reviewing your eligibility, that in medical reviews 
the medical improvement review standard will apply, that our review 
could result in the termination of your benefits, and that you have the 
right to submit medical and other evidence for our consideration during 
the continuing disability review. In doing a medical review, we will 
develop a complete medical history of at least the preceding 12 months 
in any case in which a determination is made that you are no longer 
under a disability. If this review shows that we should stop payment of 
your benefits, we will notify you in writing and give you an opportunity 
to appeal. In Sec. 404.1590 we describe those events that may prompt us 
to review whether you continue to be disabled.

[51 FR 16825, May 7, 1986]



Sec. 404.1590  When and how often we will conduct a continuing disability 
review.

    (a) General. We conduct continuing disability reviews to determine 
whether or not you continue to meet the disability requirements of the 
law. Payment of cash benefits or a period of disability ends if the 
medical or other evidence shows that you are not disabled as determined 
under the standards set out in section 223(f) of the Social Security 
Act.
    (b) When we will conduct a continuing disability review. A 
continuing disability review will be started if--
    (1) You have been scheduled for a medical improvement expected diary 
review;
    (2) You have been scheduled for a periodic review (medical 
improvement possible or medical improvement not expected) in accordance 
with the provisions of paragraph (d) of this section;
    (3) We need a current medical or other report to see if your 
disability continues. (This could happen when, for example, an advance 
in medical technology, such as improved treatment for Alzheimer's 
disease or a change in vocational therapy or technology raises a 
disability issue.);
    (4) You return to work and successfully complete a period of trial 
work;
    (5) Substantial earnings are reported to your wage record;
    (6) You tell us that you have recovered from your disability or that 
you have returned to work;
    (7) Your State Vocational Rehabilitation Agency tells us that--

[[Page 414]]

    (i)t The services have been completed; or
    (ii) You are now working; or
    (iii) You are able to work;
    (8) Someone in a position to know of your physical or mental 
condition tells us that you are not disabled, that you are not following 
prescribed treatment, that you have returned to work, or that you are 
failing to follow the provisions of the Social Security Act or these 
regulations, and it appears that the report could be substantially 
correct;
    (9) Evidence we receive raises a question as to whether your 
disability continues; or
    (10) You have been scheduled for a vocational reexamination diary 
review.
    (c) Definitions. As used in this section--
    Medical improvement expected diary--refers to a case which is 
scheduled for review at a later date because the individual's 
impairment(s) is expected to improve. Generally, the diary period is set 
for not less than 6 months or for not more than 18 months. Examples of 
cases likely to be scheduled for medical improvement expected diary are 
fractures and cases in which corrective surgery is planned and recovery 
can be anticipated.
    Permanent impairment--medical improvement not expected--refers to a 
case in which any medical improvement in the person's impairment(s) is 
not expected. This means an extremely severe condition determined on the 
basis of our experience in administering the disability programs to be 
at least static, but more likely to be progressively disabling either by 
itself or by reason of impairment complications, and unlikely to improve 
so as to permit the individual to engage in substantial gainful 
activity. The interaction of the individual's age, impairment 
consequences and lack of recent attachment to the labor market may also 
be considered in determining whether an impairment is permanent. 
Improvement which is considered temporary under Sec. 404.1579(c)(4) or 
Sec. 404.1594(c)(3)(iv), as appropriate, will not be considered in 
deciding if an impairment is permanent. Examples of permanent 
impairments taken from the list contained in our other written 
guidelines which are available for public review are as follows and are 
not intended to be all inclusive:
    (1) Parkinsonian Syndrome which has reached the level of severity 
necessary to meet the Listing in appendix 1.
    (2) Amyotrophic Lateral Sclerosis which has reached the level of 
severity necessary to meet the Listing in appendix 1.
    (3) Diffuse pulmonary fibrosis in an individual age 55 or over which 
has reached the level of severity necessary to meet the Listing in 
appendix 1.
    (4) Amputation of leg at hip.
    Nonpermanent impairment--refers to a case in which any medical 
improvement in the person's impairment(s) is possible. This means an 
impairment for which improvement cannot be predicted based on current 
experience and the facts of the particular case but which is not at the 
level of severity of an impairment that is considered permanent. 
Examples of nonpermanent impairments are: regional enteritis, 
hyperthyroidism, and chronic ulcerative colitis.
    Vocational reexamination diary--refers to a case which is scheduled 
for review at a later date because the individual is undergoing 
vocational therapy, training or an educational program which may improve 
his or her ability to work so that the disability requirement of the law 
is no longer met. Generally, the diary period will be set for the length 
of the training, therapy, or program of education.
    (d) Frequency of review. If your impairment is expected to improve, 
generally we will review your continuing eligibility for disability 
benefits at intervals from 6 months to 18 months following our most 
recent decision. Our notice to you about the review of your case will 
tell you more precisely when the review will be conducted. If your 
disability is not considered permanent but is such that any medical 
improvement in your impairment(s) cannot be accurately predicted, we 
will review your continuing eligibility for disability benefits at least 
once every 3 years. If your disability is considered permanent, we will 
review your continuing eligibility for benefits no less frequently than 
once every 7 years but

[[Page 415]]

no more frequently than once every 5 years. Regardless of your 
classification, we will conduct an immediate continuing disability 
review if a question of continuing disability is raised pursuant to 
paragraph (b) of this section.
    (e) Change in classification of impairment. If the evidence 
developed during a continuing disability review demonstrates that your 
impairment has improved, is expected to improve, or has worsened since 
the last review, we may reclassify your impairment to reflect this 
change in severity. A change in the classification of your impairment 
will change the frequency with which we will review your case. We may 
also reclassify certain impairments because of improved tests, 
treatment, and other technical advances concerning those impairments.
    (f) Review after administrative appeal. If you were found eligible 
to receive or to continue to receive disability benefits on the basis of 
a decision by an administrative law judge, the Appeals Council or a 
Federal court, we will not conduct a continuing disability review 
earlier than 3 years after that decision unless your case should be 
scheduled for a medical improvement expected or vocational reexamination 
diary review or a question of continuing disability is raised pursuant 
to paragraph (b) of this section.
    (g) Waiver of timeframes. All cases involving a nonpermanent 
impairment will be reviewed by us at least once every 3 years unless we, 
after consultation with the State agency, determine that the requirement 
should be waived to ensure that only the appropriate number of cases are 
reviewed. The appropriate number of cases to be reviewed is to be based 
on such considerations as the backlog of pending reviews, the projected 
number of new applications, and projected staffing levels. Such waiver 
shall be given only after good faith effort on the part of the State to 
meet staffing requirements and to process the reviews on a timely basis. 
Availability of independent medical resources may also be a factor. A 
waiver in this context refers to our administrative discretion to 
determine the appropriate number of cases to be reviewed on a State by 
State basis. Therefore, your continuing disability review may be delayed 
longer than 3 years following our original decision or other review 
under certain circumstances. Such a delay would be based on our need to 
ensure that backlogs, reviews required to be performed by the Social 
Security Disability Benefits Reform Act of 1984 (Pub. L. 98-460), and 
new disability claims workloads are accomplished within available 
medical and other resources in the State agency and that such reviews 
are done carefully and accurately.

[51 FR 16825, May 7, 1986]



Sec. 404.1591  If your medical recovery was expected and you returned to work.

    If your impairment was expected to improve and you returned to full-
time work with no significant medical limitations and acknowledge that 
medical improvement has occurred, we may find that your disability ended 
in the month you returned to work. Unless there is evidence showing that 
your disability has not ended, we will use the medical and other 
evidence already in your file and the fact that you returned to full-
time work without significant limitations to determine that you are no 
longer disabled. (If your impairment is not expected to improve, we will 
not ordinarily review your claim until the end of the trial work period, 
as described in Sec. 404.1592.)

    Example: Evidence obtained during the processing of your claim 
showed that you had an impairment that was expected to improve about 18 
months after your disability began. We, therefore, told you that your 
claim would be reviewed again at that time. However, before the time 
arrived for your scheduled medical re-examination, you told us that you 
had returned to work and your impairment had improved. We investigated 
immediately and found that, in the 16th month after your disability 
began, you returned to full-time work without any significant medical 
restrictions. Therefore, we would find that your disability ended in the 
first month you returned to full-time work.

[50 FR 50130, Dec. 6, 1985]



Sec. 404.1592  The trial work period.

    (a) Definition of the trial work period. The trial work period is a 
period during which you may test your ability to

[[Page 416]]

work and still be considered disabled. It begins and ends as described 
in paragraph (e) of this section. During this period, you may perform 
services (see paragraph (b) of this section) in as many as 9 months, but 
these months do not have to be consecutive. We will not consider those 
services as showing that your disability has ended until you have 
performed services in at least 9 months. However, after the trial work 
period has ended we will consider the work you did during the trial work 
period in determining whether your disability ended at any time after 
the trial work period.
    (b) What we mean by services. When used in this section, services 
means any activity (whether legal or illegal), even though it is not 
substantial gainful activity, which is done in employment or self-
employment for pay or profit, or is the kind normally done for pay or 
profit. We generally do not consider work done without remuneration to 
be services if it is done merely as therapy or training or if it is work 
usually done in a daily routine around the house or in self-care. We 
will not consider work you have done as a volunteer in the federal 
programs described in section 404.1574(d) in determining whether you 
have performed services in the trial work period.
    (1) If you are an employee. We will consider your work as an 
employee to be services if:
    (i) Before January 1, 2002, your earnings in a month were more than 
the amount(s) indicated in Table 1 for the year(s) in which you worked.
    (ii) Beginning January 1, 2002, your earnings in a month are more 
than an amount determined for each calendar year to be the larger of:
    (A) Such amount for the previous year, or
    (B) An amount adjusted for national wage growth, calculated by 
multiplying $530 by the ratio of the national average wage index for the 
year 2 calendar years before the year for which the amount is being 
calculated to the national average wage index for 1999. We will then 
round the resulting amount to the next higher multiple of $10 where such 
amount is a multiple of $5 but not of $10 and to the nearest multiple of 
$10 in any other case.
    (2) If you are self-employed. We will consider your activities as a 
self-employed person to be services if:
    (i) Before January 1, 2002, your net earnings in a month were more 
than the amount(s) indicated in Table 2 of this section for the year(s) 
in which you worked, or the hours you worked in the business in a month 
are more than the number of hours per month indicated in Table 2 for the 
years in which you worked.
    (ii) Beginning January 1, 2002, you work more than 80 hours a month 
in the business, or your net earnings in a month are more than an amount 
determined for each calendar year to be the larger of:
    (A) Such amount for the previous year, or
    (B) An amount adjusted for national wage growth, calculated by 
multiplying $530 by the ratio of the national average wage index for the 
year 2 calendar years before the year for which the amount is being 
calculated to the national average wage index for 1999. We will then 
round the resulting amount to the next higher multiple of $10 where such 
amount is a multiple of $5 but not of $10 and to the nearest multiple of 
$10 in any other case.

                         Table 1--For Employees
------------------------------------------------------------------------
                                                               You earn
                         For months                           more than
------------------------------------------------------------------------
In calendar years before 1979..............................          $50
In calendar years 1979-1989................................           75
In calendar years 1990-2000................................          200
In calendar year 2001......................................          530
------------------------------------------------------------------------


                     Table 2--For the Self-Employed
------------------------------------------------------------------------
                                     Your net
                                     earnings      Or you work in the
            For months               are more      business more than
                                       than
------------------------------------------------------------------------
In calendar years before 1979....          $50  15 hours.
In calendar years 1979-1989......           75  15 hours.
In calendar years 1990-2000......          200  40 hours.
In calendar year 2001............          530  80 hours.
------------------------------------------------------------------------


[[Page 417]]

    (c) Limitations on the number of trial work periods. You may have 
only one trial work period during a period of entitlement to cash 
benefits.
    (d) Who is and is not entitled to a trial work period. (1) You are 
generally entitled to a trial work period if you are entitled to 
disability insurance benefits, child's benefits based on disability, or 
widow's or widower's or surviving divorced spouse's benefits based on 
disability.
    (2) You are not entitled to a trial work period--
    (i) If you are entitled to a period of disability but not to 
disability insurance benefits, and you are not entitled to any other 
type of disability benefit under title II of the Social Security Act 
(i.e., child's benefits based on disability, or widow's or widower's 
benefits or surviving divorced spouse's benefits based on disability);
    (ii) If you perform work demonstrating the ability to engage in 
substantial gainful activity during any required waiting period for 
benefits;
    (iii) If you perform work demonstrating the ability to engage in 
substantial gainful activity within 12 months of the onset of the 
impairment(s) that prevented you from performing substantial gainful 
activity and before the date of any notice of determination or decision 
finding that you are disabled; or
    (iv) For any month prior to the month of your application for 
disability benefits (see paragraph (e) of this section).
    (e) When the trial work period begins and ends. The trial work 
period begins with the month in which you become entitled to disability 
insurance benefits, to child's benefits based on disability or to 
widow's, widower's, or surviving divorced spouse's benefits based on 
disability. It cannot begin before the month in which you file your 
application for benefits, and for widows, widowers, and surviving 
divorced spouses, it cannot begin before December 1, 1980. It ends with 
the close of whichever of the following calendar months is the earliest:
    (1) The 9th month (whether or not the months have been consecutive) 
in which you have performed services if that 9th month is prior to 
January 1992;
    (2) The 9th month (whether or not the months have been consecutive 
and whether or not the previous 8 months of services were prior to 
January 1992) in which you have performed services within a period of 60 
consecutive months if that 9th month is after December 1991; or
    (3) The month in which new evidence, other than evidence relating to 
any work you did during the trial work period, shows that you are not 
disabled, even though you have not worked a full 9 months. We may find 
that your disability has ended at any time during the trial work period 
if the medical or other evidence shows that you are no longer disabled. 
See Sec. 404.1594 for information on how we decide whether your 
disability continues or ends.

[45 FR 55584, Aug. 20, 1980, as amended at 49 FR 22273, May 29, 1984; 50 
FR 50130, Dec. 6, 1985; 54 FR 53605, Dec. 29, 1989; 65 FR 42787, July 
11, 2000; 65 FR 82910, Dec. 29, 2000]



Sec. 404.1592a  The reentitlement period.

    (a) General. The reentitlement period is an additional period after 
9 months of trial work during which you may continue to test your 
ability to work if you have a disabling impairment, as defined in Sec. 
404.1511. If you work during the reentitlement period, we may decide 
that your disability has ceased because your work is substantial gainful 
activity and stop your benefits. However, if, after the month for which 
we found that your disability ceased because you performed substantial 
gainful activity, you stop engaging in substantial gainful activity, we 
will start paying you benefits again; you will not have to file a new 
application. The following rules apply if you complete a trial work 
period and continue to have a disabling impairment:
    (1) The first time you work after the end of your trial work period 
and engage in substantial gainful activity, we will find that your 
disability ceased. When we decide whether this work is substantial 
gainful activity, we will apply all of the relevant provisions of Sec. 
Sec. 404.1571-404.1576 including, but not limited to, the provisions 
for averaging earnings, unsuccessful work attempts, and deducting 
impairment-related

[[Page 418]]

work expenses. We will find that your disability ceased in the first 
month after the end of your trial work period in which you do 
substantial gainful activity, applying all the relevant provisions in 
Sec. Sec. 404.1571-404.1576.
    (2)(i) If we determine under paragraph (a)(1) of this section that 
your disability ceased during the reentitlement period because you 
perform substantial gainful activity, you will be paid benefits for the 
first month after the trial work period in which you do substantial 
gainful activity (i.e., the month your disability ceased) and the two 
succeeding months, whether or not you do substantial gainful activity in 
those succeeding months. After those three months, we will stop your 
benefits for any month in which you do substantial gainful activity. 
(See Sec. Sec. 404.316, 404.337, 404.352 and 404.401a.) If your 
benefits are stopped because you do substantial gainful activity, they 
may be started again without a new application and a new determination 
of disability if you stop doing substantial gainful activity in a month 
during the reentitlement period. In determining whether you do 
substantial gainful activity in a month for purposes of stopping or 
starting benefits during the reentitlement period, we will consider only 
your work in, or earnings for, that month. Once we have determined that 
your disability has ceased during the reentitlement period because of 
the performance of substantial gainful activity as explained in 
paragraph (a)(1) of this section, we will not apply the provisions of 
Sec. Sec. 404.1574(c) and 404.1575(d) regarding unsuccessful work 
attempts or the provisions of Sec. 404.1574a regarding averaging of 
earnings to determine whether benefits should be paid for any particular 
month in the reentitlement period that occurs after the month your 
disability ceased.
    (ii) If anyone else is receiving monthly benefits based on your 
earnings record, that individual will not be paid benefits for any month 
for which you cannot be paid benefits during the reentitlement period.
    (3) The way we will consider your work activity after your 
reentitlement period ends (see paragraph (b)(2) of this section) will 
depend on whether you worked during the reentitlement period and if you 
did substantial gainful activity. If you worked during the reentitlement 
period and we decided that your disability ceased during the 
reentitlement period because of your work under paragraph (a)(1) of this 
section, we will find that your entitlement to disability benefits 
terminates in the first month in which you engage in substantial gainful 
activity after the end of the reentitlement period (see Sec. 404.325). 
(See Sec. 404.321 for when entitlement to a period of disability ends.) 
When we make this determination, we will consider only your work in, or 
earnings for, that month; we will not apply the provisions of Sec. Sec. 
404.1574(c) and 404.1575(d) regarding unsuccessful work attempts or the 
provisions of Sec. 404.1574a regarding averaging of earnings. If we did 
not find that your disability ceased because of work activity during the 
reentitlement period, we will apply all of the relevant provisions of 
Sec. Sec. 404.1571-404.1576 including, but not limited to, the 
provisions for averaging earnings, unsuccessful work attempts, and 
deducting impairment-related work expenses, to determine whether your 
disability ceased because you performed substantial gainful activity 
after the reentitlement period. If we find that your disability ceased 
because you performed substantial gainful activity in a month after your 
reentitlement period ended, you will be paid benefits for the month in 
which your disability ceased and the two succeeding months. After those 
three months, your entitlement to a period of disability or to 
disability benefits terminates (see Sec. Sec. 404.321 and 404.325).
    (b) When the reentitlement period begins and ends. The reentitlement 
period begins with the first month following completion of 9 months of 
trial work but cannot begin earlier than December 1, 1980. It ends with 
whichever is earlier--
    (1) The month before the first month in which your impairment no 
longer exists or is not medically disabling; or
    (2)(i) The last day of the 15th month following the end of your 
trial work period if you were not entitled to benefits after December 
1987; or
    (ii) The last day of the 36th month following the end of your trial 
work period if you were entitled to benefits

[[Page 419]]

after December 1987 or if the 15-month period described in paragraph 
(b)(2)(i) of this section had not ended as of January 1988. (See 
Sec. Sec. 404.316, 404.337, and 404.352 for when your benefits end.)
    (c) When you are not entitled to a reentitlement period. You are not 
entitled to a reentitlement period if:
    (1) You are entitled to a period of disability, but not to 
disability insurance cash benefits;
    (2) You are not entitled to a trial work period;
    (3) Your entitlement to disability insurance benefits ended before 
you completed 9 months of trial work in that period of disability.

[49 FR 22273, May 29, 1984, as amended at 58 FR 64883, Dec. 10, 1993; 65 
FR 42787, July 11, 2000]



Sec. 404.1593  Medical evidence in continuing disability review cases.

    (a) General. If you are entitled to benefits or if a period of 
disability has been established for you because you are disabled, we 
will have your case file with the supporting medical evidence previously 
used to establish or continue your entitlement. Generally, therefore, 
the medical evidence we will need for a continuing disability review 
will be that required to make a current determination or decision as to 
whether you are still disabled, as defined under the medical improvement 
review standard. See Sec. Sec. 404.1579 and 404.1594.
    (b) Obtaining evidence from your medical sources. You must provide 
us with reports from your physician, psychologist, or others who have 
treated or evaluated you, as well as any other evidence that will help 
us determine if you are still disabled. See Sec. 404.1512. You must 
have a good reason for not giving us this information or we may find 
that your disability has ended. See Sec. 404.1594(e)(2). If we ask you, 
you must contact your medical sources to help us get the medical 
reports. We will make every reasonable effort to help you in getting 
medical reports when you give us permission to request them from your 
physician, psychologist, or other medical sources. See Sec. 
404.1512(d)(1) concerning what we mean by every reasonable effort. In 
some instances, such as when a source is known to be unable to provide 
certain tests or procedures or is known to be nonproductive or 
uncooperative, we may order a consultative examination while awaiting 
receipt of medical source evidence. Before deciding that your disability 
has ended, we will develop a complete medical history covering at least 
the 12 months preceding the date you sign a report about your continuing 
disability status. See Sec. 404.1512(c).
    (c) When we will purchase a consultative examination. A consultative 
examination may be purchased when we need additional evidence to 
determine whether or not your disability continues. As a result, we may 
ask you, upon our request and reasonable notice, to undergo consultative 
examinations and tests to help us determine if you are still disabled. 
See Sec. 404.1517. We will decide whether or not to purchase a 
consultative examination in accordance with the standards in Sec. Sec. 
404.1519a through 404.1519b.

[56 FR 36962, Aug. 1, 1991]



Sec. 404.1594  How we will determine whether your disability continues 
or ends.

    (a) General. There is a statutory requirement that, if you are 
entitled to disability benefits, your continued entitlement to such 
benefits must be reviewed periodically. If you are entitled to 
disability benefits as a disabled worker or as a person disabled since 
childhood, or, for monthly benefits payable for months after December 
1990, as a disabled widow, widower, or surviving divorced spouse, there 
are a number of factors we consider in deciding whether your disability 
continues. We must determine if there has been any medical improvement 
in your impairment(s) and, if so, whether this medical improvement is 
related to your ability to work. If your impairment(s) has not medically 
improved we must consider whether one or more of the exceptions to 
medical improvement applies. If medical improvement related to your 
ability to work has not occurred and no exception applies, your benefits 
will continue. Even where medical improvement related to your ability to 
work has occurred or an exception applies, in most cases (see

[[Page 420]]

paragraph (e) of this section for exceptions), we must also show that 
you are currently able to engage in substantial gainful activity before 
we can find that you are no longer disabled.
    (b) Terms and definitions. There are several terms and definitions 
which are important to know in order to understand how we review whether 
your disability continues.
    (1) Medical improvement. Medical improvement is any decrease in the 
medical severity of your impairment(s) which was present at the time of 
the most recent favorable medical decision that you were disabled or 
continued to be disabled. A determination that there has been a decrease 
in medical severity must be based on changes (improvement) in the 
symptoms, signs and/or laboratory findings associated with your 
impairment(s) (see Sec. 404.1528).

    Example 1: You were awarded disability benefits due to a herniated 
nucleus pulposus. At the time of our prior decision granting you 
benefits you had had a laminectomy. Postoperatively, a myelogram still 
shows evidence of a persistent deficit in your lumbar spine. You had 
pain in your back, and pain and a burning sensation in your right foot 
and leg. There were no muscle weakness or neurological changes and a 
modest decrease in motion in your back and leg. When we reviewed your 
claim your treating physician reported that he had seen you regularly 
every 2 to 3 months for the past 2 years. No further myelograms had been 
done, complaints of pain in the back and right leg continued especially 
on sitting or standing for more than a short period of time. Your doctor 
further reported a moderately decreased range of motion in your back and 
right leg, but again no muscle atrophy or neurological changes were 
reported. Medical improvement has not occurred because there has been no 
decrease in the severity of your back impairment as shown by changes in 
symptoms, signs or laboratory findings.
    Example 2: You were awarded disability benefits due to rheumatoid 
arthritis. At the time, laboratory findings were positive for this 
condition. Your doctor reported persistent swelling and tenderness of 
your fingers and wrists and that you complained of joint pain. Current 
medical evidence shows that while laboratory tests are still positive 
for rheumatoid arthritis, your impairment has responded favorably to 
therapy so that for the last year your fingers and wrists have not been 
significantly swollen or painful. Medical improvement has occurred 
because there has been a decrease in the severity of your impairment as 
documented by the current symptoms and signs reported by your physician. 
Although your impairment is subject to temporary remission and 
exacerbations, the improvement that has occurred has been sustained long 
enough to permit a finding of medical improvement. We would then 
determine if this medical improvement is related to your ability to 
work.

    (2) Medical improvement not related to ability to do work. Medical 
improvement is not related to your ability to work if there has been a 
decrease in the severity of the impairment(s) as defined in paragraph 
(b)(1) of this section, present at the time of the most recent favorable 
medical decision, but no increase in your functional capacity to do 
basic work activities as defined in paragraph (b)(4) of this section. If 
there has been any medical improvement in your impairment(s), but it is 
not related to your ability to do work and none of the exceptions 
applies, your benefits will be continued.

    Example: You are 65 inches tall and weighed 246 pounds at the time 
your disability was established. You had venous insufficiency and 
persistent edema in your legs. At the time, your ability to do basic 
work activities was affected because you were able to sit for 6 hours, 
but were able to stand or walk only occasionally. At the time of our 
continuing disability review, you had undergone a vein stripping 
operation. You now weigh 220 pounds and have intermittent edema. You are 
still able to sit for 6 hours at a time and to stand or walk only 
occasionally although you report less discomfort on walking. Medical 
improvement has occurred because there has been a decrease in the 
severity of the existing impairment as shown by your weight loss and the 
improvement in your edema. This medical improvement is not related to 
your ability to work, however, because your functional capacity to do 
basic work activities (i.e., the ability to sit, stand and walk) has not 
increased.

    (3) Medical improvement that is related to ability to do work. 
Medical improvement is related to your ability to work if there has been 
a decrease in the severity, as defined in paragraph (b)(1) of this 
section, of the impairment(s) present at the time of the most recent 
favorable medical decision and an increase in your functional capacity 
to do basic work activities as discussed in paragraph (b)(4) of this 
section. A determination that medical improvement related to your 
ability to do work has occurred does not, necessarily, mean

[[Page 421]]

that your disability will be found to have ended unless it is also shown 
that you are currently able to engage in substantial gainful activity as 
discussed in paragraph (b)(5) of this section.

    Example 1: You have a back impairment and had a laminectomy to 
relieve the nerve root impingement and weakness in your left leg. At the 
time of our prior decision, basic work activities were affected because 
you were able to stand less than 6 hours, and sit no more than \1/2\ 
hour at a time. You had a successful fusion operation on your back about 
1 year before our review of your entitlement. At the time of our review, 
the weakness in your leg has decreased. Your functional capacity to 
perform basic work activities now is unimpaired because you now have no 
limitation on your ability to sit, walk, or stand. Medical improvement 
has occurred because there has been a decrease in the severity of your 
impairment as demonstrated by the decreased weakness in your leg. This 
medical improvement is related to your ability to work because there has 
also been an increase in your functional capacity to perform basic work 
activities (or residual functional capacity) as shown by the absence of 
limitation on your ability to sit, walk, or stand. Whether or not your 
disability is found to have ended, however, will depend on our 
determination as to whether you can currently engage in substantial 
gainful activity.
    Example 2: You were injured in an automobile accident receiving a 
compound fracture to your right femur and a fractured pelvis. When you 
applied for disability benefits 10 months after the accident your doctor 
reported that neither fracture had yet achieved solid union based on his 
clinical examination. X-rays supported this finding. Your doctor 
estimated that solid union and a subsequent return to full weight 
bearing would not occur for at least 3 more months. At the time of our 
review 6 months later, solid union had occurred and you had been 
returned to full weight-bearing for over a month. Your doctor reported 
this and the fact that your prior fractures no longer placed any 
limitation on your ability to walk, stand, lift, etc., and, that in 
fact, you could return to fulltime work if you so desired.
    Medical improvement has occurred because there has been a decrease 
in the severity of your impairments as shown by X-ray and clinical 
evidence of solid union and your return to full weight-bearing. This 
medical improvement is related to your ability to work because you no 
longer meet the same listed impairment in appendix 1 of this subpart 
(see paragraph (c)(3)(i) of this section). In fact, you no longer have 
an impairment which is severe (see Sec. 404.1521) and your disability 
will be found to have ended.

    (4) Functional capacity to do basic work activities. Under the law, 
disability is defined, in part, as the inability to do any substantial 
gainful activity by reason of any medically determinable physical or 
mental impairment(s). In determining whether you are disabled under the 
law, we must measure, therefore, how and to what extent your 
impairment(s) has affected your ability to do work. We do this by 
looking at how your functional capacity for doing basic work activities 
has been affected. Basic work activities means the abilities and 
aptitudes necessary to do most jobs. Included are exertional abilities 
such as walking, standing, pushing, pulling, reaching and carrying, and 
nonexertional abilities and aptitudes such as seeing, hearing, speaking, 
remembering, using judgment, dealing with changes and dealing with both 
supervisors and fellow workers. A person who has no impairment(s) would 
be able to do all basic work activities at normal levels; he or she 
would have an unlimited functional capacity to do basic work activities. 
Depending on its nature and severity, an impairment will result in some 
limitation to the functional capacity to do one or more of these basic 
work activities. Diabetes, for example, can result in circulatory 
problems which could limit the length of time a person could stand or 
walk and damage to his or her eyes as well, so that the person also had 
limited vision. What a person can still do despite an impairment, is 
called his or her residual functional capacity. How the residual 
functional capacity is assessed is discussed in more detail in Sec. 
404.1545. Unless an impairment is so severe that it is deemed to prevent 
you from doing substantial gainful activity (see Sec. Sec. 404.1525 and 
404.1526), it is this residual functional capacity that is used to 
determine whether you can still do your past work or, in conjunction 
with your age, education and work experience, any other work.
    (i) A decrease in the severity of an impairment as measured by 
changes (improvement) in symptoms, signs or laboratory findings can, if 
great enough, result in an increase in the

[[Page 422]]

functional capacity to do work activities. Vascular surgery (e.g., 
femoropopliteal bypass) may sometimes reduce the severity of the 
circulatory complications of diabetes so that better circulation results 
and the person can stand or walk for longer periods. When new evidence 
showing a change in signs, symptoms and laboratory findings establishes 
that both medical improvement has occurred and your functional capacity 
to perform basic work activities, or residual functional capacity, has 
increased, we say that medical improvement which is related to your 
ability to do work has occurred. A residual functional capacity 
assessment is also used to determine whether you can engage in 
substantial gainful activity and, thus, whether you continue to be 
disabled (see paragraph (b)(5) of this section).
    (ii) Many impairment-related factors must be considered in assessing 
your functional capacity for basic work activities. Age is one key 
factor. Medical literature shows that there is a gradual decrease in 
organ function with age; that major losses and deficits become 
irreversible over time and that maximum exercise performance diminishes 
with age. Other changes related to sustained periods of inactivity and 
the aging process include muscle atrophy, degenerative joint changes, 
decrease in range of motion, and changes in the cardiac and respiratory 
systems which limit the exertional range.
    (iii) Studies have also shown that the longer an individual is away 
from the workplace and is inactive, the more difficult it becomes to 
return to ongoing gainful employment. In addition, a gradual change 
occurs in most jobs so that after about 15 years, it is no longer 
realistic to expect that skills and abilities acquired in these jobs 
will continue to apply to the current workplace. Thus, if you are age 50 
or over and have been receiving disability benefits for a considerable 
period of time, we will consider this factor along with your age in 
assessing your residual functional capacity. This will ensure that the 
disadvantages resulting from inactivity and the aging process during a 
long period of disability will be considered. In some instances where 
available evidence does not resolve what you can or cannot do on a 
sustained basis, we will provide special work evaluations or other 
appropriate testing.
    (5) Ability to engage in substantial gainful activity. In most 
instances, we must show that you are able to engage in substantial 
gainful activity before your benefits are stopped. When doing this, we 
will consider all your current impairments not just that impairment(s) 
present at the time of the most recent favorable determination. If we 
cannot determine that you are still disabled based on medical 
considerations alone (as discussed in Sec. Sec. 404.1525 and 404.1526), 
we will use the new symptoms, signs and laboratory findings to make an 
objective assessment of your functional capacity to do basic work 
activities or residual functional capacity and we will consider your 
vocational factors. See Sec. Sec. 404.1545 through 404.1569.
    (6) Evidence and basis for our decision. Our decisions under this 
section will be made on a neutral basis without any initial inference as 
to the presence or absence of disability being drawn from the fact that 
you have previously been determined to be disabled. We will consider all 
evidence you submit, as well as all evidence we obtain from your 
treating physician(s) and other medical or nonmedical sources. What 
constitutes evidence and our procedures for obtaining it are set out in 
Sec. Sec. 404.1512 through 404.1518. Our determination regarding 
whether your disability continues will be made on the basis of the 
weight of the evidence.
    (7) Point of comparison. For purposes of determining whether medical 
improvement has occurred, we will compare the current medical severity 
of that impairment(s) which was present at the time of the most recent 
favorable medical decision that you were disabled or continued to be 
disabled to the medical severity of that impairment(s) at that time. If 
medical improvement has occurred, we will compare your current 
functional capacity to do basic work activities (i.e., your residual 
functional capacity) based on this previously existing impairment(s) 
with your prior residual functional capacity in order to determine 
whether the medical improvement is related to

[[Page 423]]

your ability to do work. The most recent favorable medical decision is 
the latest decision involving a consideration of the medical evidence 
and the issue of whether you were disabled or continued to be disabled 
which became final.
    (c) Determining medical improvement and its relationship to your 
abilities to do work. Paragraphs (b) (1) through (3) of this section 
discuss what we mean by medical improvement, medical improvement not 
related to your ability to work and medical improvement that is related 
to your ability to work. How we will arrive at the decision that medical 
improvement has occurred and its relationship to the ability to do work, 
is discussed below.
    (1) Medical improvement. Medical improvement is any decrease in the 
medical severity of impairment(s) present at the time of the most recent 
favorable medical decision that you were disabled or continued to be 
disabled and is determined by a comparison of prior and current medical 
evidence which must show that there have been changes (improvement) in 
the symptoms, signs or laboratory findings associated with that 
impairment(s).
    (2) Determining if medical improvement is related to ability to 
work. If there is a decrease in medical severity as shown by the 
symptoms, signs and laboratory findings, we then must determine if it is 
related to your ability to do work. In paragraph (b)(4) of this section, 
we explain the relationship between medical severity and limitation on 
functional capacity to do basic work activities (or residual functional 
capacity) and how changes in medical severity can affect your residual 
functional capacity. In determining whether medical improvement that has 
occurred is related to your ability to do work, we will assess your 
residual functional capacity (in accordance with paragraph (b)(4) of 
this section) based on the current severity of the impairment(s) which 
was present at your last favorable medical decision. Your new residual 
functional capacity will then be compared to your residual functional 
capacity at the time of our most recent favorable medical decision. 
Unless an increase in the current residual functional capacity is based 
on changes in the signs, symptoms, or laboratory findings, any medical 
improvement that has occurred will not be considered to be related to 
your ability to do work.
    (3) Following are some additional factors and considerations which 
we will apply in making these determinations.
    (i) Previous impairment met or equaled listings. If our most recent 
favorable decision was based on the fact that your impairment(s) at the 
time met or equaled the severity contemplated by the Listing of 
Impairments in appendix 1 of this subpart, an assessment of your 
residual functional capacity would not have been made. If medical 
improvement has occurred and the severity of the prior impairment(s) no 
longer meets or equals the same listing section used to make our most 
recent favorable decision, we will find that the medical improvement was 
related to your ability to work. Appendix 1 of this subpart describes 
impairments which, if severe enough, affect a person's ability to work. 
If the appendix level of severity is met or equaled, the individual is 
deemed, in the absence of evidence to the contrary, to be unable to 
engage in substantial gainful activity. If there has been medical 
improvement to the degree that the requirement of the listing section is 
no longer met or equaled, then the medical improvement is related to 
your ability to work. We must, of course, also establish that you can 
currently engage in gainful activity before finding that your disability 
has ended.
    (ii) Prior residual functional capacity assessment made. The 
residual functional capacity assessment used in making the most recent 
favorable medical decision will be compared to the residual functional 
capacity assessment based on current evidence in order to determine if 
your functional capacity for basic work activities has increased. There 
will be no attempt made to reassess the prior residual functional 
capacity.
    (iii) Prior residual functional capacity assessment should have been 
made, but was not. If the most recent favorable medical decision should 
have contained an assessment of your residual functional capacity (i.e., 
your impairments

[[Page 424]]

did not meet or equal the level of severity contemplated by the Listing 
of Impairments in appendix 1 of this subpart) but does not, either 
because this assessment is missing from your file or because it was not 
done, we will reconstruct the residual functional capacity. This 
reconstructed residual functional capacity will accurately and 
objectively assess your functional capacity to do basic work activities. 
We will assign the maximum functional capacity consistent with an 
allowance.

    Example: You were previously found to be disabled on the basis that 
``while your impairment did not meet or equal a listing, it did prevent 
you from doing your past or any other work.'' The prior adjudicator did 
not, however, include a residual functional capacity assessment in the 
rationale of this decision and a review of the prior evidence does not 
show that such an assessment was ever made. If a decrease in medical 
severity, i.e., medical improvement, has occurred, the residual 
functional capacity based on the current level of severity of your 
impairment will have to be compared with your residual functional 
capacity based on its prior severity in order to determine if the 
medical improvement is related to your ability to do work. In order to 
make this comparison, we will review the prior evidence and make an 
objective assessment of your residual functional capacity at the time of 
our most recent favorable medical determination, based on the symptoms, 
signs and laboratory findings as they then existed.

    (iv) Impairment subject to temporary remission. In some cases the 
evidence shows that an individual's impairments are subject to temporary 
remission. In assessing whether medical improvement has occurred in 
persons with this type of impairment, we will be careful to consider the 
longitudinal history of the impairments, including the occurrence of 
prior remission, and prospects for future worsenings. Improvement in 
such impairments that is only temporary will not warrant a finding of 
medical improvement.
    (v) Prior file cannot be located. If the prior file cannot be 
located, we will first determine whether you are able to now engage in 
substantial gainful activity based on all your current impairments. (In 
this way, we will be able to determine that your disability continues at 
the earliest point without addressing the often lengthy process of 
reconstructing prior evidence.) If you cannot engage in substantial 
gainful activity currently, your benefits will continue unless one of 
the second group of exceptions applies (see paragraph (e) of this 
section). If you are able to engage in substantial gainful activity, we 
will determine whether an attempt should be made to reconstruct those 
portions of the missing file that were relevant to our most recent 
favorable medical decision (e.g., work history, medical evidence from 
treating sources and the results of consultative examinations). This 
determination will consider the potential availability of old records in 
light of their age, whether the source of the evidence is still in 
operation; and whether reconstruction efforts will yield a complete 
record of the basis for the most recent favorable medical decision. If 
relevant parts of the prior record are not reconstructed either because 
it is determined not to attempt reconstruction or because such efforts 
fail, medical improvement cannot be found. The documentation of your 
current impairments will provide a basis for any future reviews. If the 
missing file is later found, it may serve as a basis for reopening any 
decision under this section in accordance with the rules in Sec. 
404.988.
    (d) First group of exceptions to medical improvement. The law 
provides for certain limited situations when your disability can be 
found to have ended even though medical improvement has not occurred, if 
you can engage in substantial gainful activity. These exceptions to 
medical improvement are intended to provide a way of finding that a 
person is no longer disabled in those limited situations where, even 
though there has been no decrease in severity of the impairment(s), 
evidence shows that the person should no longer be considered disabled 
or never should have been considered disabled. If one of these 
exceptions applies, we must also show that, taking all your current 
impairment(s) into account, not just those that existed at the time of 
our most recent favorable medical decision, you are now able to engage 
in substantial gainful activity before your disability can be found to 
have ended. As part of the review process, you will

[[Page 425]]

be asked about any medical or vocational therapy you received or are 
receiving. Your answers and the evidence gathered as a result as well as 
all other evidence, will serve as the basis for the finding that an 
exception applies.
    (1) Substantial evidence shows that you are the beneficiary of 
advances in medical or vocational therapy or technology (related to your 
ability to work). Advances in medical or vocational therapy or 
technology are improvements in treatment or rehabilitative methods which 
have increased your ability to do basic work activities. We will apply 
this exception when substantial evidence shows that you have been the 
beneficiary of services which reflect these advances and they have 
favorably affected the severity of your impairment or your ability to do 
basic work activities. This decision will be based on new medical 
evidence and a new residual functional capacity assessment. (See Sec. 
404.1545.) In many instances, an advanced medical therapy or technology 
will result in a decrease in severity as shown by symptoms, signs and 
laboratory findings which will meet the definition of medical 
improvement. This exception will, therefore, see very limited 
application.
    (2) Substantial evidence shows that you have undergone vocational 
therapy (related to your ability to work). Vocational therapy (related 
to your ability to work) may include, but is not limited to, additional 
education, training, or work experience that improves your ability to 
meet the vocational requirements of more jobs. This decision will be 
based on substantial evidence which includes new medical evidence and a 
new residual functional capacity assessment. (See Sec. 404.1545.) If, 
at the time of our review you have not completed vocational therapy 
which could affect the continuance of your disability, we will review 
your claim upon completion of the therapy.

    Example 1: You were found to be disabled because the limitations 
imposed on you by your impairment allowed you to only do work that was 
at a sedentary level of exertion. Your prior work experience was work 
that required a medium level of exertion. Your age and education at the 
time would not have qualified you for work that was below this medium 
level of exertion. You enrolled in and completed a specialized training 
course which qualifies you for a job in data processing as a computer 
programmer in the period since you were awarded benefits. On review of 
your claim, current evidence shows that there is no medical improvement 
and that you can still do only sedentary work. As the work of a computer 
programmer is sedentary in nature, you are now able to engage in 
substantial gainful activity when your new skills are considered.
    Example 2: You were previously entitled to benefits because the 
medical evidence and assessment of your residual functional capacity 
showed you could only do light work. Your prior work was considered to 
be heavy in nature and your age, education and the nature of your prior 
work qualified you for work which was no less than medium in exertion. 
The current evidence and residual functional capacity show there has 
been no medical improvement and that you can still do only light work. 
Since you were originally entitled to benefits, your vocational 
rehabilitation agency enrolled you in and you successfully completed a 
trade school course so that you are now qualified to do small appliance 
repair. This work is light in nature, so when your new skills are 
considered, you are now able to engage in substantial gainful activity 
even though there has been no change in your residual functional 
capacity.

    (3) Substantial evidence shows that based on new or improved 
diagnostic or evaluative techniques your impairment(s) is not as 
disabling as it was considered to be at the time of the most recent 
favorable decision. Changing methodologies and advances in medical and 
other diagnostic or evaluative techniques have given, and will continue 
to give, rise to improved methods for measuring and documenting the 
effect of various impairments on the ability to do work. Where, by such 
new or improved methods, substantial evidence shows that your 
impairment(s) is not as severe as was determined at the time of our most 
recent favorable medical decision, such evidence may serve as a basis 
for finding that you are no longer disabled, if you can currently engage 
in substantial gainful activity. In order to be used under this 
exception, however, the new or improved techniques must have become 
generally available after the date of our most recent favorable medical 
decision.
    (i) How we will determine which methods are new or improved 
techniques and when they become generally available. New or improved 
diagnostic techniques

[[Page 426]]

or evaluations will come to our attention by several methods. In 
reviewing cases, we often become aware of new techniques when their 
results are presented as evidence. Such techniques and evaluations are 
also discussed and acknowledged in medical literature by medical 
professional groups and other governmental entities. Through these 
sources, we develop listings of new techniques and when they become 
generally available. For example, we will consult the Health Care 
Financing Administration for its experience regarding when a technique 
is recognized for payment under Medicare and when they began paying for 
the technique.
    (ii) How you will know which methods are new or improved techniques 
and when they become generally available. We will let you know which 
methods we consider to be new or improved techniques and when they 
become available through two vehicles.
    (A) Some of the future changes in the Listing of Impairments in 
appendix 1 of this subpart will be based on new or improved diagnostic 
or evaluative techniques. Such listings changes will clearly state this 
fact as they are published as Notices of Proposed Rulemaking and the new 
or improved technique will be considered generally available as of the 
date of the final publication of that particular listing in the Federal 
Register.
    (B) A cumulative list since 1970 of new or improved diagnostic 
techniques or evaluations, how they changed the evaluation of the 
applicable impairment and the month and year they became generally 
available, will be published in the Notices section of the Federal 
Register. Included will be any changes in the Listing of Impairments 
published in the Code of Federal Regulations since 1970 which are 
reflective of new or improved techniques. No cases will be processed 
under this exception until this cumulative listing is so published. 
Subsequent changes to the list will be published periodically. The 
period will be determined by the volume of changes needed.

    Example: The electrocardiographic exercise test has replaced the 
Master's 2-step test as a measurement of heart function since the time 
of your last favorable medical decision. Current evidence could show 
that your condition, which was previously evaluated based on the 
Master's 2-step test, is not now as disabling as was previously thought. 
If, taking all your current impairments into account, you are now able 
to engage in substantial gainful activity, this exception would be used 
to find that you are no longer disabled even if medical improvement has 
not occurred.

    (4) Substantial evidence demonstrates that any prior disability 
decision was in error. We will apply the exception to medical 
improvement based on error if substantial evidence (which may be 
evidence on the record at the time any prior determination of the 
entitlement to benefits based on disability was made, or newly obtained 
evidence which relates to that determination) demonstrates that a prior 
determination was in error. A prior determination will be found in error 
only if:
    (i) Substantial evidence shows on its face that the decision in 
question should not have been made (e.g., the evidence in your file such 
as pulmonary function study values was misread or an adjudicative 
standard such as a listing in appendix 1 or a medical/vocational rule in 
appendix 2 of this subpart was misapplied).

    Example 1: You were granted benefits when it was determined that 
your epilepsy met Listing 11.02. This listing calls for a finding of 
major motor seizures more frequently than once a month as documented by 
EEG evidence and by a detailed description of a typical seizure pattern. 
A history of either diurnal episodes or nocturnal episodes with 
residuals interfering with daily activities is also required. On review, 
it is found that a history of the frequency of your seizures showed that 
they occurred only once or twice a year. The prior decision would be 
found to be in error, and whether you were still considered to be 
disabled would be based on whether you could currently engage in 
substantial gainful activity.
    Example 2: Your prior award of benefits was based on vocational rule 
201.12 in appendix 2 of this subpart. This rule applies to a person age 
50-54 who has at least a high school education, whose previous work was 
entirely at a semiskilled level, and who can do only sedentary work. On 
review, it is found that at the time of the prior determination you were 
actually only age 46 and vocational rule 201.21 should have been used. 
This rule would have called for a denial of your claim and the prior 
decision is found to have been in error. Continuation of your disability 
would depend on a finding of your current ability to engage in 
substantial gainful activity.


[[Page 427]]


    (ii) At the time of the prior evaluation, required and material 
evidence of the severity of your impairment(s) was missing. That 
evidence becomes available upon review, and substantial evidence 
demonstrates that had such evidence been present at the time of the 
prior determination, disability would not have been found.

    Example: You were found disabled on the basis of chronic obstructive 
pulmonary disease. The severity of your impairment was documented 
primarily by pulmonary function testing results. The evidence showed 
that you could do only light work. Spirometric tracings of this testing, 
although required, were not obtained, however. On review, the original 
report is resubmitted by the consultative examining physician along with 
the corresponding spirometric tracings. A review of the tracings shows 
that the test was invalid. Current pulmonary function testing supported 
by spirometric tracings reveals that your impairment does not limit your 
ability to perform basic work activities in any way. Error is found 
based on the fact that required, material evidence which was originally 
missing now becomes available and shows that if it had been available at 
the time of the prior determination, disability would not have been 
found.

    (iii) Substantial evidence which is new evidence which relates to 
the prior determination (of allowance or continuance) refutes the 
conclusions that were based upon the prior evidence (e.g., a tumor 
thought to be malignant was later shown to have actually been benign). 
Substantial evidence must show that had the new evidence (which relates 
to the prior determination) been considered at the time of the prior 
decision, the claim would not have been allowed or continued. A 
substitution of current judgment for that used in the prior favorable 
decision will not be the basis for applying this exception.

    Example: You were previously found entitled to benefits on the basis 
of diabetes mellitus which the prior adjudicator believed was equivalent 
to the level of severity contemplated in the Listing of Impairments. The 
prior record shows that you had ``brittle'' diabetes for which you were 
taking insulin. Your urine was 3+ for sugar, and you alleged occasional 
hypoglycemic attacks caused by exertion. On review, symptoms, signs and 
laboratory findings are unchanged. The current adjudicator feels, 
however, that your impairment clearly does not equal the severity 
contemplated by the listings. Error cannot be found because it would 
represent a substitution of current judgment for that of the prior 
adjudicator that your impairment equaled a listing.

    (iv) The exception for error will not be applied retroactively under 
the conditions set out above unless the conditions for reopening the 
prior decision (see Sec. 404.988) are met.
    (5) You are currently engaging in substantial gainful activity. If 
you are currently engaging in substantial gainful activity before we 
determine whether you are no longer disabled because of your work 
activity, we will consider whether you are entitled to a trial work 
period as set out in Sec. 404.1592. We will find that your disability 
has ended in the month in which you demonstrated your ability to engage 
in substantial gainful activity (following completion of a trial work 
period, where it applies). This exception does not apply in determining 
whether you continue to have a disabling impairment(s) (Sec. 404.1511) 
for purposes of deciding your eligibility for a reentitlement period 
(Sec. 404.1592a).
    (e) Second group of exceptions to medical improvement. In addition 
to the first group of exceptions to medical improvement, the following 
exceptions may result in a determination that you are no longer 
disabled. In these situations the decision will be made without a 
determination that you have medically improved or can engage in 
substantial gainful activity.
    (1) A prior determination or decision was fraudulently obtained. If 
we find that any prior favorable determination or decision was obtained 
by fraud, we may find that you are not disabled. In addition, we may 
reopen your claim under the rules in Sec. 404.988. In determining 
whether a prior favorable determination or decision was fraudulently 
obtained, we will take into account any physical, mental, educational, 
or linguistic limitations (including any lack of facility with the 
English language) which you may have had at the time.
    (2) You do not cooperate with us. If there is a question about 
whether you continue to be disabled and we ask you to give us medical or 
other evidence or to go for a physical or mental examination by a 
certain date, we will find that

[[Page 428]]

your disability has ended if you fail, without good cause, to do what we 
ask. Section 404.911 explains the factors we consider and how we will 
determine generally whether you have good cause for failure to 
cooperate. In addition, Sec. 404.1518 discusses how we determine 
whether you have good cause for failing to attend a consultative 
examination. The month in which your disability ends will be the first 
month in which you failed to do what we asked.
    (3) We are unable to find you. If there is a question about whether 
you continue to be disabled and we are unable to find you to resolve the 
question, we will determine that your disability has ended. The month 
your disability ends will be the first month in which the question arose 
and we could not find you.
    (4) You fail to follow prescribed treatment which would be expected 
to restore your ability to engage in substantial gainful activity. If 
treatment has been prescribed for you which would be expected to restore 
your ability to work, you must follow that treatment in order to be paid 
benefits. If you are not following that treatment and you do not have 
good cause for failing to follow that treatment, we will find that your 
disability has ended (see Sec. 404.1530(c)). The month your disability 
ends will be the first month in which you failed to follow the 
prescribed treatment.
    (f) Evaluation steps. To assure that disability reviews are carried 
out in a uniform manner, that decisions of continuing disability can be 
made in the most expeditious and administratively efficient way, and 
that any decisions to stop disability benefits are made objectively, 
neutrally and are fully documented, we will follow specific steps in 
reviewing the question of whether your disability continues. Our review 
may cease and benefits may be continued at any point if we determine 
there is sufficient evidence to find that you are still unable to engage 
in substantial gainful activity. The steps are:
    (1) Are you engaging in substantial gainful activity? If you are 
(and any applicable trial work period has been completed), we will find 
disability to have ended (see paragraph (d)(5) of this section).
    (2) If you are not, do you have an impairment or combination of 
impairments which meets or equals the severity of an impairment listed 
in appendix 1 of this subpart? If you do, your disability will be found 
to continue.
    (3) If you do not, has there been medical improvement as defined in 
paragraph (b)(1) of this section? If there has been medical improvement 
as shown by a decrease in medical severity, see step (4). If there has 
been no decrease in medical severity, there has been no medical 
improvement. (See step (5).)
    (4) If there has been medical improvement, we must determine whether 
it is related to your ability to do work in accordance with paragraphs 
(b) (1) through (4) of this section; i.e., whether or not there has been 
an increase in the residual functional capacity based on the 
impairment(s) that was present at the time of the most recent favorable 
medical determination. If medical improvement is not related to your 
ability to do work, see step (5). If medical improvement is related to 
your ability to do work, see step (6).
    (5) If we found at step (3) that there has been no medical 
improvement or if we found at step (4) that the medical improvement is 
not related to your ability to work, we consider whether any of the 
exceptions in paragraphs (d) and (e) of this section apply. If none of 
them apply, your disability will be found to continue. If one of the 
first group of exceptions to medical improvement applies, see step (6). 
If an exception from the second group of exceptions to medical 
improvement applies, your disability will be found to have ended. The 
second group of exceptions to medical improvement may be considered at 
any point in this process.
    (6) If medical improvement is shown to be related to your ability to 
do work or if one of the first group of exceptions to medical 
improvement applies, we will determine whether all your current 
impairments in combination are severe (see Sec. 404.1521). This 
determination will consider all your current impairments and the impact 
of the combination of those impairments on your ability to function. If 
the residual functional capacity assessment in step (4) above shows 
significant limitation

[[Page 429]]

of your ability to do basic work activities, see step (7). When the 
evidence shows that all your current impairments in combination do not 
significantly limit your physical or mental abilities to do basic work 
activities, these impairments will not be considered severe in nature. 
If so, you will no longer be considered to be disabled.
    (7) If your impairment(s) is severe, we will assess your current 
ability to do substantial gainful activity in accordance with Sec. 
404.1560. That is, we will assess your residual functional capacity 
based on all your current impairments and consider whether you can still 
do work you have done in the past. If you can do such work, disability 
will be found to have ended.
    (8) If you are not able to do work you have done in the past, we 
will consider one final step. Given the residual functional capacity 
assessment and considering your age, education and past work experience, 
can you do other work? If you can, disability will be found to have 
ended. If you cannot, disability will be found to continue.
    (g) The month in which we will find you are no longer disabled. If 
the evidence shows that you are no longer disabled, we will find that 
your disability ended in the earliest of the following months.
    (1) The month the evidence shows you are no longer disabled under 
the rules set out in this section, and you were disabled only for a 
specified period of time in the past;
    (2) The month the evidence shows you are no longer disabled under 
the rules set out in this section, but not earlier than the month in 
which we mail you a notice saying that the information we have shows 
that you are not disabled;
    (3) The month in which you demonstrated your ability to engage in 
substantial gainful activity (following completion of a trial work 
period); however, we may pay you benefits for certain months in and 
after the reentitlement period which follows the trial work period. (See 
Sec. 404.1592a for a discussion of the reentitlement period. If you are 
receiving benefits on your own earnings record, see Sec. 404.316 for 
when your benefits will end. See Sec. 404.352 if you are receiving 
benefits on a parent's earnings as a disabled adult child.);
    (4) The month in which you actually do substantial gainful activity 
(where you are not entitled to a trial work period);
    (5) The month in which you return to full-time work, with no 
significant medical restrictions and acknowledge that medical 
improvement has occurred, and we expected your impairment(s) to improve 
(see Sec. 404.1591);
    (6) The first month in which you failed without good cause to do 
what we asked, when the rule set out in paragraph (e)(2) of this section 
applies;
    (7) The first month in which the question of continuing disability 
arose and we could not find you, when the rule set out in paragraph 
(e)(3) of this section applies;
    (8) The first month in which you failed without good cause to follow 
prescribed treatment, when the rule set out in paragraph (e)(4) of this 
section applies; or
    (9) The first month you were told by your physician that you could 
return to work, provided there is no substantial conflict between your 
physician's and your statements regarding your awareness of your 
capacity for work and the earlier date is supported by substantial 
evidence.
    (h) Before we stop your benefits. Before we stop your benefits or a 
period of disability, we will give you a chance to explain why we should 
not do so. Sections 404.1595 and 404.1597 describe your rights 
(including appeal rights) and the procedures we will follow.

[50 FR 50130, Dec. 6, 1985; 51 FR 7063, Feb. 28, 1986; 51 FR 16015, Apr. 
30, 1986, as amended at 52 FR 44971, Nov. 24, 1987; 57 FR 30121, July 8, 
1992; 59 FR 1635, Jan. 12, 1994; 65 FR 42788, July 11, 2000; 68 FR 
51163, Aug. 26, 2003]



Sec. 404.1595  When we determine that you are not now disabled.

    (a) When we will give you advance notice. Except in those 
circumstances described in paragraph (d) of this section, we will give 
you advance notice when we have determined that you are not now disabled 
because the information we have conflicts with what you have told us 
about your disability. If your dependents are receiving benefits on your 
Social Security number and do

[[Page 430]]

not live with you, we will also give them advance notice. To give you 
advance notice, we will contact you by mail, telephone or in person.
    (b) What the advance notice will tell you. We will give you a 
summary of the information we have. We will also tell you why we have 
determined that you are not now disabled, and will give you a chance to 
reply. If it is because of--
    (1) Medical reasons. The advance notice will tell you what the 
medical information in your file shows;
    (2) Your work activity. The advance notice will tell you what 
information we have about the work you are doing or have done, and why 
this work shows that you are not disabled; or
    (3) Your failure to give us information we need or do what we ask. 
The advance notice will tell you what information we need and why we 
need it or what you have to do and why.
    (c) What you should do if you receive an advance notice. If you 
agree with the advance notice, you do not need to take any action. If 
you desire further information or disagree with what we have told you, 
you should immediately write or telephone the State agency or the social 
security office that gave you the advance notice or you may visit any 
social security office. If you believe you are now disabled, you should 
tell us why. You may give us any additional or new information, 
including reports from your doctors, hospitals, employers or others, 
that you believe we should have. You should send these as soon as 
possible to the local social security office or to the office that gave 
you the advance notice. We consider 10 days to be enough time for you to 
tell us, although we will allow you more time if you need it. You will 
have to ask for additional time beyond 10 days if you need it.
    (d) When we will not give you advance notice. We will not give you 
advance notice when we determine that you are not disabled if--
    (1) We recently told you that the information we have shows that you 
are not now disabled, that we were gathering more information, and that 
your benefits will stop; or
    (2) We are stopping your benefits because you told us you are not 
now disabled; or
    (3) We recently told you that continuing your benefits would 
probably cause us to overpay you and you asked us to stop your benefits.



Sec. 404.1596  Circumstances under which we may suspend your benefits 
before we make a determination.

    (a) General. Under some circumstances, we may stop your benefits 
before we make a determination. Generally, we do this when the 
information we have clearly shows you are not now disabled but we cannot 
determine when your disability ended. These situations are described in 
paragraph (b)(1) and other reasons are given in paragraph (b)(2) of this 
section. We refer to this as a suspension of benefits. Your benefits, as 
well as those of your dependents (regardless of where they receive their 
benefits), may be suspended. When we do this we will give you advance 
notice. (See Sec. 404.1595.) We will contact your spouse and children 
if they are receiving benefits on your Social Security number, and the 
benefits are being mailed to an address different from your own.
    (b) When we will suspend your benefits--(1) You are not now 
disabled. We will suspend your benefits if the information we have 
clearly shows that you are not disabled and we will be unable to 
complete a determination soon enough to prevent us from paying you more 
monthly benefits than you are entitled to. This may occur when--
    (i) New medical or other information clearly shows that you are able 
to do substantial gainful activity and your benefits should have stopped 
more than 2 months ago;
    (ii) You completed a 9-month period of trial work more than 2 months 
ago and you are still working;
    (iii) At the time you filed for benefits your condition was expected 
to improve and you were expected to be able to return to work. You 
subsequently did return to work more than 2 months ago with no 
significant medical restrictions; or
    (iv) You are not entitled to a trial work period and you are 
working.
    (2) Other reasons. We will also suspend your benefits if--
    (i) You have failed to respond to our request for additional medical 
or other

[[Page 431]]

evidence and we are satisfied that you received our request and our 
records show that you should be able to respond; or
    (ii) We are unable to locate you and your checks have been returned 
by the Post Office as undeliverable.
    (c) When we will not suspend your cash benefits. We will not suspend 
your cash benefits if--
    (1) The evidence in your file does not clearly show that you are not 
disabled;
    (2) We have asked you to furnish additional information;
    (3) You have become disabled by another impairment; or
    (4) After November 1980, even though your impairment is no longer 
disabling,
    (i) You are participating in an appropriate vocational 
rehabilitation program (that is, one that has been approved under a 
State plan approved under title I of the Rehabilitation Act of 1973 and 
which meets the requirements outlined in 34 CFR part 361) which you 
began during your disability,
    (ii) Your disability did not end before December 1, 1980, and
    (iii) We have determined that your completion of the program, or 
your continuation in the program for a specified period of time, will 
significantly increase the likelihood that you will not have to return 
to the disability benefit rolls.

[45 FR 55584, Aug. 20, 1980, as amended at 47 FR 31543, July 21, 1982; 
47 FR 52693, Nov. 23, 1982; 51 FR 17617, May 14, 1986; 68 FR 40123, July 
7, 2003]



Sec. 404.1597  After we make a determination that you are not now disabled.

    (a) General. If we determine that you do not meet the disability 
requirements of the law, your benefits generally will stop. We will send 
you a formal written notice telling you why we believe you are not 
disabled and when your benefits should stop. If your spouse and children 
are receiving benefits on your Social Security number, we will also stop 
their benefits and tell them why. The notices will explain your right to 
reconsideration if you disagree with our determination. However, your 
benefits may continue after November 1980 even though your impairment is 
no longer disabling, if your disability did not end before December 
1980, and you are particpating in an appropriate vocational 
rehabilitation program as described in Sec. 404.1596 which you began 
before your disability ended. In addition, we must have determined that 
your completion of the program, or your continuation in the program for 
a specified period of time, will significantly increase the likelihood 
that you will not have to return to the disability benefit rolls. You 
may still appeal our determination that you are not disabled even though 
your benefits are continuing because of your participation in an 
appropriate vocational rehabilitation program. You may also appeal a 
determination that your completion or of continuation for a specified 
period of time in an appropriate vocational rehabilitation program will 
not significantly increase the likelihood that you will not have to 
return to the disability benefit rolls and, therefore, you are not 
entitled to continue to receive benefits.
    (b) If we make a determination that your physical or mental 
impairment(s) has ceased, did not exist, or is no longer disabling 
(Medical Cessation Determination). If we make a determination that the 
physical or mental impairment(s) on the basis of which benefits were 
payable has ceased, did not exist, or is no longer disabling (a medical 
cessation determination), your benefits will stop. As described in 
paragraph (a) of this section, you will receive a written notice 
explaining this determination and the month your benefits will stop. The 
written notice will also explain your right to appeal if you disagree 
with our determination and your right to request that your benefits and 
the benefits, if any, of your spouse or children, be continued under 
Sec. 404.1597a. For the purpose of this section, benefits means 
disability cash payments and/or Medicare, if applicable. The continued 
benefit provisions of this section do not apply to an initial 
determination on an application for disability benefits, or to a 
determination that you were disabled only for a specified period of 
time.

[47 FR 31544, July 21, 1982, as amended at 51 FR 17618, May 14, 1986; 53 
FR 29020, Aug. 2, 1988; 53 FR 39015, Oct. 4, 1988]

[[Page 432]]



Sec. 404.1597a  Continued benefits pending appeal of a medical cessation 
determination.

    (a) General. If we determine that you are not entitled to benefits 
because the physical or mental impairment(s) on the basis of which such 
benefits were payable is found to have ceased, not to have existed, or 
to no longer be disabling, and you appeal that determination, you may 
choose to have your benefits continued pending reconsideration and/or a 
hearing before an administrative law judge on the disability cessation 
determination. For the purpose of this entire section, the election of 
continued benefits means the election of disability cash payments and/or 
Medicare, if applicable. You can also choose to have the benefits 
continued for anyone else receiving benefits based on your wages and 
self-employment income (and anyone else receiving benefits because of 
your entitlement to benefits based on disability). If you appeal a 
medical cessation under both title II and title XVI (a concurrent case), 
the title II claim will be handled in accordance with title II 
regulations while the title XVI claim will be handled in accordance with 
the title XVI regulations.
    (b) When the provisions of this section are available. (1) Benefits 
may be continued under this section only if the determination that your 
physical or mental impairment(s) has ceased, has never existed, or is no 
longer disabling is made on or after January 12, 1983 (or before January 
12, 1983, and a timely request for reconsideration or a hearing before 
an administrative law judge is pending on that date).
    (2) Benefits may be continued under this section only for months 
beginning with January 1983, or the first month for which benefits are 
no longer otherwise payable following our determination that your 
physical or mental impairment(s) has ceased, has never existed, or is no 
longer disabling, whichever is later.
    (3) Continued payment of benefits under this section will stop 
effective with the earlier of:
    (i) The month before the month in which an administrative law 
judge's hearing decision finds that your physical or mental 
impairment(s) has ceased, has never existed, or is no longer disabling 
or the month before the month of a new administrative law judge decision 
(or final action by the Appeals Council on the administrative law 
judge's recommended decision) if your case was sent back to an 
administrative law judge for further action; or
    (ii) The month before the month no timely request for a 
reconsideration or a hearing before an administrative law judge is 
pending. These continued benefits may be stopped or adjusted because of 
certain events (such as work and earnings or receipt of worker's 
compensation) which occur while you are receiving these continued 
benefits and affect your right to receive continued benefits.
    (c) Continuation of benefits for anyone else pending your appeal. 
(1) When you file a request for reconsideration or hearing before an 
administrative law judge on our determination that your physical or 
mental impairment(s) has ceased, has never existed, or is no longer 
disabling, or your case has been sent back (remanded) to an 
administrative law judge for further action, you may also choose to have 
benefits continue for anyone else who is receiving benefits based on 
your wages and self-employment income (and for anyone else receiving 
benefits because of your entitlement to benefits based on disability), 
pending the outcome of your appeal.
    (2) If anyone else is receiving benefits based on your wages and 
self-employment income, we will notify him or her of the right to choose 
to have his or her benefits continue pending the outcome of your appeal. 
Such benefits can be continued for the time period in paragraph (b) of 
this section only if he or she chooses to have benefits continued and 
you also choose to have his or her benefits continued.
    (d) Statement of choice. When you or another party request 
reconsideration under Sec. 404.908(a) or a hearing before an 
administrative law judge under Sec. 404.932(a) on our determination 
that your physical or mental impairment(s) has ceased, has never 
existed, or is no longer disabling, or if your case is sent back 
(remanded) to an administrative law judge for further action, we will 
explain your right to receive continued

[[Page 433]]

benefits and ask you to complete a statement specifying which benefits 
you wish to have continued pending the outcome of the reconsideration or 
hearing before an administrative law judge. You may elect to receive 
only Medicare benefits during appeal even if you do not want to receive 
continued disability benefits. If anyone else is receiving benefits 
based on your wages and self-employment income (or because of your 
entitlement to benefits based on disability), we will ask you to 
complete a statement specifying which benefits you wish to have 
continued for them, pending the outcome of the request for 
reconsideration or hearing before an administrative law judge. If you 
request appeal but you do not want to receive continued benefits, we 
will ask you to complete a statement declining continued benefits 
indicating that you do not want to have your benefits and those of your 
family, if any, continued during the appeal.
    (e) Your spouse's or children's statement of choice. If you request, 
in accordance with paragraph (d) of this section, that benefits also be 
continued for anyone who had been receiving benefits based on your wages 
and self-employment, we will send them a written notice. The notice will 
explain their rights and ask them to complete a statement either 
declining continued benefits, or specifying which benefits they wish to 
have continued, pending the outcome of the request for reconsideration 
or a hearing before an administrative law judge.
    (f) What you must do to receive continued benefits pending notice of 
our reconsideration determination. (1) If you want to receive continued 
benefits pending the outcome of your request for reconsideration, you 
must request reconsideration and continuation of benefits no later than 
10 days after the date you receive the notice of our initial 
determination that your physical or mental impairment(s) has ceased, has 
never existed, or is no longer disabling. Reconsideration must be 
requested as provided in Sec. 404.909, and you must request continued 
benefits using a statement in accordance with paragraph (d) of this 
section.
    (2) If you fail to request reconsideration and continued benefits 
within the 10-day period required by paragraph (f)(1) of this section, 
but later ask that we continue your benefits pending a reconsidered 
determination, we will use the rules in Sec. 404.911 to determine 
whether good cause exists for your failing to request benefit 
continuation within 10 days after receipt of the notice of the initial 
cessation determination. If you request continued benefits after the 10-
day period, we will consider the request to be timely and will pay 
continued benefits only if good cause for delay is established.
    (g) What you must do to receive continued benefits pending an 
administrative law judge's decision. (1) To receive continued benefits 
pending an administrative law judge's decision on our reconsideration 
determination, you must request a hearing and continuation of benefits 
no later than 10 days after the date you receive the notice of our 
reconsideration determination that your physical or mental impairment(s) 
has ceased, has never existed, or is no longer disabling. A hearing must 
be requested as provided in Sec. 404.933, and you must request 
continued benefits using a statement in accordance with paragraph (d) of 
this section.
    (2) If you request continued benefits pending an administrative law 
judge's decision but did not request continued benefits while we were 
reconsidering the initial cessation determination, your benefits will 
begin effective the month of the reconsideration determination.
    (3) If you fail to request continued payment of benefits within the 
10-day period required by paragraph (g)(1) of this section, but you 
later ask that we continue your benefits pending an administrative law 
judge's decision on our reconsidered determination, we will use the 
rules as provided in Sec. 404.911 to determine whether good cause 
exists for your failing to request benefit continuation within 10 days 
after receipt of the reconsideration determination. If you request 
continued benefits after the 10-day period, we will consider the request 
to be timely and will pay continued benefits only if good cause for 
delay is established.

[[Page 434]]

    (h) What anyone else must do to receive continued benefits pending 
our reconsideration determination or an administrative law judge's 
decision. (1) When you or another party (see Sec. Sec. 404.908(a) and 
404.932(a)) request a reconsideration or a hearing before an 
administrative law judge on our medical cessation determination or when 
your case is sent back (remanded) to an administrative law judge for 
further action, you may choose to have benefits continue for anyone else 
who is receiving benefits based on your wages and self-employment 
income. An eligible individual must also choose whether or not to have 
his or her benefits continue pending your appeal by completing a 
separate statement of election as described in paragraph (e) of this 
section.
    (2) He or she must request continuation of benefits no later than 10 
days after the date he or she receives notice of termination of 
benefits. He or she will then receive continued benefits beginning with 
the later of January 1983, or the first month for which benefits are no 
longer otherwise payable following our initial or reconsideration 
determination that your physical or mental impairment(s) has ceased, has 
never existed, or is no longer disabling. Continued benefits will 
continue until the earlier of:
    (i) The month before the month in which an administrative law 
judge's hearing decision finds that your physical or mental 
impairment(s) has ceased, has never existed, or is no longer disabling 
or the month before the month of the new administrative law judge 
decision (or final action is taken by the Appeals Council on the 
administrative law judge's recommended decision) if your case was sent 
back to an administrative law judge for further action; or
    (ii) The month before the month no timely request for a 
reconsideration or a hearing before an administrative law judge is 
pending. These continued benefits may be stopped or adjusted because of 
certain events (such as work and earnings or payment of worker's 
compensation) which occur while an eligible individual is receiving 
continued benefits and affect his or her right to receive continued 
benefits.
    (3) If he or she fails to request continuation of benefits within 
the 10-day period required by this paragraph, but requests continuation 
of benefits at a later date, we will use the rules as provided in Sec. 
404.911 to determine whether good cause exists for his or her failure to 
request continuation of benefits within 10 days after receipt of the 
notice of termination of his or her benefits. His or her late request 
will be considered to be timely and we will pay him or her continued 
benefits only if good cause for delay is established.
    (4) If you choose not to have benefits continued for anyone else who 
is receiving benefits based on your wages and self-employment income, 
pending the appeal on our determination, we will not continue benefits 
to him or her.
    (i) What you must do when your case is remanded to an administrative 
law judge. If we send back (remand) your case to an administrative law 
judge for further action under the rules provided in Sec. 404.977, and 
the administrative law judge's decision or dismissal order issued on 
your medical cessation appeal is vacated and is no longer in effect, 
continued benefits are payable pending a new decision by the 
administrative law judge or final action is taken by the Appeals Council 
on the administrative law judge's recommended decision.
    (1) If you (and anyone else receiving benefits based on your wages 
and self-employment income or because of your disability) previously 
elected to receive continued benefits pending the administrative law 
judge's decision, we will automatically start these same continued 
benefits again. We will send you a notice telling you this, and that you 
do not have to do anything to have these same benefits continued until 
the month before the month the new decision of order of dismissal is 
issued by the administrative law judge or until the month before the 
month the Appeals Council takes final action on the administrative law 
judge's recommended decision. These benefits will begin again with the 
first month of nonpayment based on the prior administrative law judge 
hearing decision or dismissal order. Our notice explaining reinstatement 
of continued benefits

[[Page 435]]

will also tell you to report to us any changes or events that affect 
your receipt of benefits.
    (2) After we automatically reinstate your continued benefits as 
described in paragraph (h)(1) of this section, we will contact you to 
determine if any adjustment is required to the amount of continued 
benefits payable due to events that affect the right to receive benefits 
involving you, your spouse and/or children. If you have returned to 
work, we will request additional information about this work activity. 
If you are working, your continued benefits will not be stopped while 
your appeal of the medical cessation of disability is still pending 
unless you have completed a trial work period and are engaging in 
substantial gainful activity. In this event, we will suspend your 
continued benefits. If any other changes have occurred which would 
require a reduction in benefit amounts, or nonpayment of benefits, we 
will send an advance notice to advise of any adverse change before the 
adjustment action is taken. The notice will also advise you of the right 
to explain why these benefits should not be adjusted or stopped. You 
will also receive a written notice of our determination. The notice will 
also explain your right to reconsideration if you disagree with this 
determination.
    (3) If the final decision on your appeal of your medical cessation 
is a favorable one, we will send you a written notice in which we will 
advise you of your right to benefits, if any, before you engaged in 
substantial gainful activity and to reentitlement should you stop 
performing substantial gainful activity. If you disagree with our 
determination, you will have the right to appeal this decision.
    (4) If the final decision on your appeal of your medical cessation 
is an unfavorable one (the cessation is affirmed), you will also be sent 
a written notice advising you of our determination, and your right to 
appeal if you think we are wrong.
    (5) If you (or the others receiving benefits based on your wages and 
self-employment income or because of your disability) did not previously 
elect to have benefits continued pending an administrative law judge 
decision, and you now want to elect continued benefits, you must request 
to do so no later than 10 days after you receive our notice telling you 
about continued benefits. If you fail to request continued benefits 
within the 10-day period required by paragraph (f)(1) of this section, 
but later ask that we continue your benefits pending an administrative 
law judge remand decision, we will use the rules in Sec. 404.911 to 
determine whether good cause exists for your failing to request benefit 
continuation within 10 days after receipt of the notice telling you 
about benefit continuation. We will consider the request to be timely 
and will pay continued benefits only if good cause for delay is 
established. If you make this new election, benefits may begin with the 
month of the order sending (remanding) your case back to the 
administrative law judge. Before we begin to pay you continued benefits 
as described in paragraph (h)(1) of this section we will contact you to 
determine if any adjustment is required to the amount of continued 
benefits payable due to events which may affect your right to benefits. 
If you have returned to work, we will request additional information 
about this work activity. If you are working, continued benefits may be 
started and will not be stopped because of your work while your appeal 
of the medical cessation of your disability is still pending unless you 
have completed a trial work period and are engaging in substantial 
gainful activity. If any changes have occurred which establish a basis 
for not paying continued benefits or a reduction in benefit amount, we 
will send you a notice explaining the adjustment or the reason why we 
cannot pay continued benefits. The notice will also explain your right 
to reconsideration if you disagree with this determination. If the final 
decision on your appeal of your medical cessation is a favorable one, we 
will send you a written notice in which we will advise you of your right 
to benefits, if any, before you engaged in substantial gainful activity 
and to reentitlement should you stop performing substantial gainful 
activity. If you disagree with our determination, you will have the 
right to appeal this decision. If the final decision on your appeal of

[[Page 436]]

your medical cessation is an unfavorable one (the cessation is 
affirmed), you will also be sent a written notice advising you of our 
determination, and your right to appeal if you think we are wrong.
    (6) If a court orders that your case be sent back to us (remanded) 
and your case is sent to an administrative law judge for further action 
under the rules provided in Sec. 404.983, the administrative law 
judge's decision or dismissal order on your medical cessation appeal is 
vacated and is no longer in effect. Continued benefits are payable to 
you and anyone else receiving benefits based on your wages and self-
employment income or because of your disability pending a new decision 
by the administrative law judge or final action is taken by the Appeals 
Council on the administrative law judge's recommended decision. In these 
court-remanded cases reaching the administrative law judge, we will 
follow the same rules provided in paragraphs (i) (1), (2), (3), (4) and 
(5) of this section.
    (j) Responsibility to pay back continued benefits. (1) If the final 
decision of the Commissioner affirms the determination that you are not 
entitled to benefits, you will be asked to pay back any continued 
benefits you receive. However, as described in the overpayment recovery 
and waiver provisions of subpart F of this part, you will have the right 
to ask that you not be required to pay back the benefits. You will not 
be asked to pay back any Medicare benefits you received during the 
appeal.
    (2) Anyone else receiving benefits based on your wages and self-
employment income (or because of your disability) will be asked to pay 
back any continued benefits he or she received if the determination that 
your physical or mental impairment(s) has ceased, has never existed, or 
is no longer disabling, is not changed by the final decision of the 
Commissioner. However, he or she will have the right to ask that he or 
she not be required to pay them back, as described in the overpayment 
recovery and waiver provisions of subpart F of this part. He or she will 
not be asked to pay back any Medicare benefits he or she received during 
the appeal.
    (3) Waiver of recovery of an overpayment resulting from the 
continued benefits paid to you or anyone else receiving benefits based 
on your wages and self-employment income (or because of your disability) 
may be considered as long as the determination was appealed in good 
faith. It will be assumed that such appeal is made in good faith and, 
therefore, any overpaid individual has the right to waiver consideration 
unless such individual fails to cooperate in connection with the appeal, 
e.g., if the individual fails (without good reason) to give us medical 
or other evidence we request, or to go for a physical or mental 
examination when requested by us, in connection with the appeal. In 
determining whether an individual has good cause for failure to 
cooperate and, thus, whether an appeal was made in good faith, we will 
take into account any physical, mental, educational, or linguistic 
limitations (including any lack of facility with the English language) 
the individual may have which may have caused the individual's failure 
to cooperate.

[53 FR 29020, Aug. 2, 1988; 53 FR 39015, Oct. 4, 1988, as amended at 57 
FR 1383, Jan. 14, 1992; 59 FR 1635, Jan. 12, 1994; 62 FR 38451, July 18, 
1997; 65 FR 16814, Mar. 30, 2000]



Sec. 404.1598  If you become disabled by another impairment(s).

    If a new severe impairment(s) begins in or before the month in which 
your last impairment(s) ends, we will find that your disability is 
continuing. The new impairment(s) need not be expected to last 12 months 
or to result in death, but it must be severe enough to keep you from 
doing substantial gainful activity, or severe enough so that you are 
still disabled under Sec. 404.1594.

[50 FR 50136, Dec. 6, 1985]



Sec. 404.1599  Work incentive experiments and rehabilitation demonstration 
projects in the disability program.

    (a) Authority and purpose. Section 505(a) of the Social Security 
Disability Amendments of 1980, Pub. L. 96-265, directs the Commissioner 
to develop and conduct experiments and demonstration projects designed 
to provide more cost-effective ways of encouraging disabled 
beneficiaries to return to work

[[Page 437]]

and leave benefit rolls. These experiments and demonstration projects 
will test the advantages and disadvantages of altering certain 
limitations and conditions that apply to title II disabled 
beneficiaries. The objective of all work incentive experiments or 
rehabilitation demonstrations is to determine whether the alternative 
requirements will save Trust Fund monies or otherwise improve the 
administration of the disability program established under title II of 
the Act.
    (b) Altering benefit requirements, limitations or conditions. 
Notwithstanding any other provision of this part, the Commissioner may 
waive compliance with the entitlement and payment requirements for 
disabled beneficiaries to carry our experiments and demonstration 
projects in the title II disability program. The projects involve 
altering certain limitations and conditions that currently apply to 
applicants and beneficiaries to test their effect on the program.
    (c) Applicability and scope--(1) Participants and nonparticipants. 
If you are selected to participate in an experiment or demonstration 
project, we may temporarily set aside one or more of the current benefit 
entitlement or payment requirements, limitations or conditions and apply 
alternative provisions to you. We may also modify current methods of 
administering the Act as part of a project and apply alternative 
procedures or policies to you. The alternative provisions or methods of 
administration used in the projects will not disadvantage you in 
contrast to current provisions, procedures or policies. If you are not 
selected to participate in the experiments or demonstration projects (or 
if you are placed in a control group which is not subject to alternative 
requirements and methods) we will continue to apply to you the current 
benefit entitlement and payment requirements, limitations and conditions 
and methods of administration in the title II disability program.
    (2) Alternative provisions or methods of administration. The 
alternative provisions or methods of administration that apply to you in 
an experiment or demonstration project may include (but are not limited 
to) one or more of the following:
    (i) Reducing your benefits (instead of not paying) on the basis of 
the amount of your earnings in excess of the SGA amount;
    (ii) Extending your benefit eligibility period that follows 9 months 
of trial work, perhaps coupled with benefit reductions related to your 
earnings;
    (iii) Extending your Medicare benefits if you are severely impaired 
and return to work even though you may not be entitled to monthly cash 
benefits;
    (iv) Altering the 24-month waiting period for Medicare entitlement; 
and
    (v) Stimulating new forms of rehabilitation.
    (d) Selection of participants. We will select a probability sample 
of participants for the work incentive experiments and demonstration 
projects from newly awarded beneficiaries who meet certain pre-selection 
criteria (for example, individuals who are likely to be able to do 
substantial work despite continuing severe impairments). These criteria 
are designed to provide larger subsamples of beneficiaries who are not 
likely either to recover medically or die. Participants may also be 
selected from persons who have been receiving DI benefits for 6 months 
or more at the time of selection.
    (e) Duration of experiments and demonstration projects. A notice 
describing each experiment or demonstration project will be published in 
the Federal Register before each experiment or project is placed in 
operation. The work incentive experiments and rehabilitation 
demonstrations will be activated in 1982. A final report on the results 
of the experiments and projects is to be completed and transmitted to 
Congress by June 9, 1993. However, the authority for the experiments and 
demonstration projects will not terminate at that time. Some of the 
alternative provisions or methods of administration may continue to 
apply to participants in an experiment or demonstration project beyond 
that date in order to assure the validity of the research. Each 
experiment and demonstration project will have a termination date

[[Page 438]]

(up to 10 years from the start of the experiment or demonstration 
project).

[48 FR 7575, Feb. 23, 1983, as amended at 52 FR 37605, Oct. 8, 1987; 55 
FR 51687, Dec. 17, 1990; 62 FR 38451, July 18, 1997]

       Appendix 1 to Subpart P of Part 404--Listing of Impairments

    The body system listings in parts A and B of the Listing of 
Impairments will no longer be effective on the following dates unless 
extended by the Commissioner or revised and promulgated again.
1. Growth Impairment (100.00): July 1, 2005.
2. Musculoskeletal System (1.00 and 101.00): February 19, 2009.
3. Special Senses and Speech (2.00 and 102.00): July 1, 2005.
4. Respiratory System (3.00 and 103.00): July 1, 2005.
5. Cardiovascular System (4.00 and 104.00): July 1, 2005.
6. Digestive System (5.00 and 105.00): July 1, 2005.
7. Genito-Urinary System (6.00 and 106.00): July 1, 2005.
8. Hemic and Lymphatic System (7.00 and 107.00): July 1, 2005.
9. Skin (8.00): July 1, 2005.
10. Endocrine System (9.00 and 109.00): July 1, 2005.
11. Multiple Body Systems (10.00): June 19, 2008 and (110.00): July 1, 
          2005.
12. Neurological (11.00 and 111.00): July 1, 2005.
13. Mental Disorders (12.00 and 112.00): July 1, 2005.
14. Neoplastic Diseases, Malignant (13.00 and 113.00): July 1, 2005.
15. Immune System (14.00 and 114.00): July 1, 2005.

                                 Part A

    Criteria applicable to individuals age 18 and over and to children 
under age 18 where criteria are appropriate.

Sec.
1.00 Musculoskeletal System.
2.00 Special Senses and Speech.
3.00 Respiratory System.
4.00 Cardiovascular System.
5.00 Digestive System.
6.00 Genito-Urinary System.
7.00 Hemic and Lymphatic System.
8.00 Skin.
9.00 Endocrine System.
10.00 Multiple Body Systems.
11.00 Neurological.
12.00 Mental Disorders.
13.00 Neoplastic Diseases, Malignant.
14.00 Immune System.

                       1.00 Musculoskeletal System

    A. Disorders of the musculoskeletal system may result from 
hereditary, congenital, or acquired pathologic processes. Impairments 
may result from infectious, inflammatory, or degenerative processes, 
traumatic or developmental events, or neoplastic, vascular, or toxic/
metabolic diseases.
    B. Loss of function.
    1. General. Under this section, loss of function may be due to bone 
or joint deformity or destruction from any cause; miscellaneous 
disorders of the spine with or without radiculopathy or other 
neurological deficits; amputation; or fractures or soft tissue injuries, 
including burns, requiring prolonged periods of immobility or 
convalescence. For inflammatory arthritides that may result in loss of 
function because of inflammatory peripheral joint or axial arthritis or 
sequelae, or because of extra-articular features, see 14.00B6. 
Impairments with neurological causes are to be evaluated under 11.00ff.

           2. How We Define Loss of Function in These Listings

    a. General. Regardless of the cause(s) of a musculoskeletal 
impairment, functional loss for purposes of these listings is defined as 
the inability to ambulate effectively on a sustained basis for any 
reason, including pain associated with the underlying musculoskeletal 
impairment, or the inability to perform fine and gross movements 
effectively on a sustained basis for any reason, including pain 
associated with the underlying musculoskeletal impairment. The inability 
to ambulate effectively or the inability to perform fine and gross 
movements effectively must have lasted, or be expected to last, for at 
least 12 months. For the purposes of these criteria, consideration of 
the ability to perform these activities must be from a physical 
standpoint alone. When there is an inability to perform these activities 
due to a mental impairment, the criteria in 12.00ff are to be used. We 
will determine whether an individual can ambulate effectively or can 
perform fine and gross movements effectively based on the medical and 
other evidence in the case record, generally without developing 
additional evidence about the individual's ability to perform the 
specific activities listed as examples in 1.00B2b(2) and 1.00B2c.

          b. What We Mean by Inability to Ambulate Effectively

    (1) Definition. Inability to ambulate effectively means an extreme 
limitation of the ability to walk; i.e., an impairment(s) that 
interferes very seriously with the individual's ability to independently 
initiate, sustain, or complete activities. Ineffective ambulation is 
defined generally as having insufficient lower extremity functioning 
(see

[[Page 439]]

1.00J) to permit independent ambulation without the use of a hand-held 
assistive device(s) that limits the functioning of both upper 
extremities. (Listing 1.05C is an exception to this general definition 
because the individual has the use of only one upper extremity due to 
amputation of a hand.)
    (2) To ambulate effectively, individuals must be capable of 
sustaining a reasonable walking pace over a sufficient distance to be 
able to carry out activities of daily living. They must have the ability 
to travel without companion assistance to and from a place of employment 
or school. Therefore, examples of ineffective ambulation include, but 
are not limited to, the inability to walk without the use of a walker, 
two crutches or two canes, the inability to walk a block at a reasonable 
pace on rough or uneven surfaces, the inability to use standard public 
transportation, the inability to carry out routine ambulatory 
activities, such as shopping and banking, and the inability to climb a 
few steps at a reasonable pace with the use of a single hand rail. The 
ability to walk independently about one's home without the use of 
assistive devices does not, in and of itself, constitute effective 
ambulation.
    c. What we mean by inability to perform fine and gross movements 
effectively. Inability to perform fine and gross movements effectively 
means an extreme loss of function of both upper extremities; i.e., an 
impairment(s) that interferes very seriously with the individual's 
ability to independently initiate, sustain, or complete activities. To 
use their upper extremities effectively, individuals must be capable of 
sustaining such functions as reaching, pushing, pulling, grasping, and 
fingering to be able to carry out activities of daily living. Therefore, 
examples of inability to perform fine and gross movements effectively 
include, but are not limited to, the inability to prepare a simple meal 
and feed oneself, the inability to take care of personal hygiene, the 
inability to sort and handle papers or files, and the inability to place 
files in a file cabinet at or above waist level.
    d. Pain or other symptoms. Pain or other symptoms may be an 
important factor contributing to functional loss. In order for pain or 
other symptoms to be found to affect an individual's ability to perform 
basic work activities, medical signs or laboratory findings must show 
the existence of a medically determinable impairment(s) that could 
reasonably be expected to produce the pain or other symptoms. The 
musculoskeletal listings that include pain or other symptoms among their 
criteria also include criteria for limitations in functioning as a 
result of the listed impairment, including limitations caused by pain. 
It is, therefore, important to evaluate the intensity and persistence of 
such pain or other symptoms carefully in order to determine their impact 
on the individual's functioning under these listings. See also 
Sec. Sec. 404.1525(f) and 404.1529 of this part, and Sec. Sec. 
416.925(f) and 416.929 of part 416 of this chapter.

                       C. Diagnosis and Evaluation

    1. General. Diagnosis and evaluation of musculoskeletal impairments 
should be supported, as applicable, by detailed descriptions of the 
joints, including ranges of motion, condition of the musculature (e.g., 
weakness, atrophy), sensory or reflex changes, circulatory deficits, and 
laboratory findings, including findings on x-ray or other appropriate 
medically acceptable imaging. Medically acceptable imaging includes, but 
is not limited to, x-ray imaging, computerized axial tomography (CAT 
scan) or magnetic resonance imaging (MRI), with or without contrast 
material, myelography, and radionuclear bone scans. ``Appropriate'' 
means that the technique used is the proper one to support the 
evaluation and diagnosis of the impairment.
    2. Purchase of certain medically acceptable imaging. While any 
appropriate medically acceptable imaging is useful in establishing the 
diagnosis of musculoskeletal impairments, some tests, such as CAT scans 
and MRIs, are quite expensive, and we will not routinely purchase them. 
Some, such as myelograms, are invasive and may involve significant risk. 
We will not order such tests. However, when the results of any of these 
tests are part of the existing evidence in the case record we will 
consider them together with the other relevant evidence.
    3. Consideration of electrodiagnostic procedures. Electrodiagnostic 
procedures may be useful in establishing the clinical diagnosis, but do 
not constitute alternative criteria to the requirements of 1.04.
    D. The physical examination must include a detailed description of 
the rheumatological, orthopedic, neurological, and other findings 
appropriate to the specific impairment being evaluated. These physical 
findings must be determined on the basis of objective observation during 
the examination and not simply a report of the individual's allegation; 
e.g., ``He says his leg is weak, numb.'' Alternative testing methods 
should be used to verify the abnormal findings; e.g., a seated straight-
leg raising test in addition to a supine straight-leg raising test. 
Because abnormal physical findings may be intermittent, their presence 
over a period of time must be established by a record of ongoing 
management and evaluation. Care must be taken to ascertain that the 
reported examination findings are consistent with the individual's daily 
activities.

                       E. Examination of the Spine

    1. General. Examination of the spine should include a detailed 
description of gait, range of motion of the spine given quantitatively

[[Page 440]]

in degrees from the vertical position (zero degrees) or, for straight-
leg raising from the sitting and supine position (zero degrees), any 
other appropriate tension signs, motor and sensory abnormalities, muscle 
spasm, when present, and deep tendon reflexes. Observations of the 
individual during the examination should be reported; e.g., how he or 
she gets on and off the examination table. Inability to walk on the 
heels or toes, to squat, or to arise from a squatting position, when 
appropriate, may be considered evidence of significant motor loss. 
However, a report of atrophy is not acceptable as evidence of 
significant motor loss without circumferential measurements of both 
thighs and lower legs, or both upper and lower arms, as appropriate, at 
a stated point above and below the knee or elbow given in inches or 
centimeters. Additionally, a report of atrophy should be accompanied by 
measurement of the strength of the muscle(s) in question generally based 
on a grading system of 0 to 5, with 0 being complete loss of strength 
and 5 being maximum strength. A specific description of atrophy of hand 
muscles is acceptable without measurements of atrophy but should include 
measurements of grip and pinch strength.
    2. When neurological abnormalities persist. Neurological 
abnormalities may not completely subside after treatment or with the 
passage of time. Therefore, residual neurological abnormalities that 
persist after it has been determined clinically or by direct surgical or 
other observation that the ongoing or progressive condition is no longer 
present will not satisfy the required findings in 1.04. More serious 
neurological deficits (paraparesis, paraplegia) are to be evaluated 
under the criteria in 11.00ff.
    F. Major joints refers to the major peripheral joints, which are the 
hip, knee, shoulder, elbow, wrist-hand, and ankle-foot, as opposed to 
other peripheral joints (e.g., the joints of the hand or forefoot) or 
axial joints (i.e., the joints of the spine.) The wrist and hand are 
considered together as one major joint, as are the ankle and foot. Since 
only the ankle joint, which consists of the juncture of the bones of the 
lower leg (tibia and fibula) with the hindfoot (tarsal bones), but not 
the forefoot, is crucial to weight bearing, the ankle and foot are 
considered separately in evaluating weight bearing.
    G. Measurements of joint motion are based on the techniques 
described in the chapter on the extremities, spine, and pelvis in the 
current edition of the ``Guides to the Evaluation of Permanent 
Impairment'' published by the American Medical Association.

                            H. Documentation

    1. General. Musculoskeletal impairments frequently improve with time 
or respond to treatment. Therefore, a longitudinal clinical record is 
generally important for the assessment of severity and expected duration 
of an impairment unless the claim can be decided favorably on the basis 
of the current evidence.
    2. Documentation of medically prescribed treatment and response. 
Many individuals, especially those who have listing-level impairments, 
will have received the benefit of medically prescribed treatment. 
Whenever evidence of such treatment is available it must be considered.
    3. When there is no record of ongoing treatment. Some individuals 
will not have received ongoing treatment or have an ongoing relationship 
with the medical community despite the existence of a severe 
impairment(s). In such cases, evaluation will be made on the basis of 
the current objective medical evidence and other available evidence, 
taking into consideration the individual's medical history, symptoms, 
and medical source opinions. Even though an individual who does not 
receive treatment may not be able to show an impairment that meets the 
criteria of one of the musculoskeletal listings, the individual may have 
an impairment(s) equivalent in severity to one of the listed impairments 
or be disabled based on consideration of his or her residual functional 
capacity (RFC) and age, education and work experience.
    4. Evaluation when the criteria of a musculoskeletal listing are not 
met. These listings are only examples of common musculoskeletal 
disorders that are severe enough to prevent a person from engaging in 
gainful activity. Therefore, in any case in which an individual has a 
medically determinable impairment that is not listed, an impairment that 
does not meet the requirements of a listing, or a combination of 
impairments no one of which meets the requirements of a listing, we will 
consider medical equivalence. (See Sec. Sec. 404.1526 and 416.926.) 
Individuals who have an impairment(s) with a level of severity that does 
not meet or equal the criteria of the musculoskeletal listings may or 
may not have the RFC that would enable them to engage in substantial 
gainful activity. Evaluation of the impairment(s) of these individuals 
should proceed through the final steps of the sequential evaluation 
process in Sec. Sec. 404.1520 and 416.920 (or, as appropriate, the 
steps in the medical improvement review standard in Sec. Sec. 404.1594 
and 416.994).

                         I. Effects of Treatment

    1. General. Treatments for musculoskeletal disorders may have 
beneficial effects or adverse side effects. Therefore, medical treatment 
(including surgical treatment) must be considered in terms of its 
effectiveness in ameliorating the signs, symptoms, and laboratory 
abnormalities of the disorder, and in terms of any side effects that may 
further limit the individual.

[[Page 441]]

    2. Response to treatment. Response to treatment and adverse 
consequences of treatment may vary widely. For example, a pain 
medication may relieve an individual's pain completely, partially, or 
not at all. It may also result in adverse effects, e.g., drowsiness, 
dizziness, or disorientation, that compromise the individual's ability 
to function. Therefore, each case must be considered on an individual 
basis, and include consideration of the effects of treatment on the 
individual's ability to function.
    3. Documentation. A specific description of the drugs or treatment 
given (including surgery), dosage, frequency of administration, and a 
description of the complications or response to treatment should be 
obtained. The effects of treatment may be temporary or long-term. As 
such, the finding regarding the impact of treatment must be based on a 
sufficient period of treatment to permit proper consideration or 
judgment about future functioning.

              J. Orthotic, Prosthetic, or Assistive Devices

    1. General. Consistent with clinical practice, individuals with 
musculoskeletal impairments may be examined with and without the use of 
any orthotic, prosthetic, or assistive devices as explained in this 
section.
    2. Orthotic devices. Examination should be with the orthotic device 
in place and should include an evaluation of the individual's maximum 
ability to function effectively with the orthosis. It is unnecessary to 
routinely evaluate the individual's ability to function without the 
orthosis in place. If the individual has difficulty with, or is unable 
to use, the orthotic device, the medical basis for the difficulty should 
be documented. In such cases, if the impairment involves a lower 
extremity or extremities, the examination should include information on 
the individual's ability to ambulate effectively without the device in 
place unless contraindicated by the medical judgment of a physician who 
has treated or examined the individual.
    3. Prosthetic devices. Examination should be with the prosthetic 
device in place. In amputations involving a lower extremity or 
extremities, it is unnecessary to evaluate the individual's ability to 
walk without the prosthesis in place. However, the individual's medical 
ability to use a prosthesis to ambulate effectively, as defined in 
1.00B2b, should be evaluated. The condition of the stump should be 
evaluated without the prosthesis in place.
    4. Hand-held assistive devices. When an individual with an 
impairment involving a lower extremity or extremities uses a hand-held 
assistive device, such as a cane, crutch or walker, examination should 
be with and without the use of the assistive device unless 
contraindicated by the medical judgment of a physician who has treated 
or examined the individual. The individual's ability to ambulate with 
and without the device provides information as to whether, or the extent 
to which, the individual is able to ambulate without assistance. The 
medical basis for the use of any assistive device (e.g., instability, 
weakness) should be documented. The requirement to use a hand-held 
assistive device may also impact on the individual's functional capacity 
by virtue of the fact that one or both upper extremities are not 
available for such activities as lifting, carrying, pushing, and 
pulling.
    K. Disorders of the spine, listed in 1.04, result in limitations 
because of distortion of the bony and ligamentous architecture of the 
spine and associated impingement on nerve roots (including the cauda 
equina) or spinal cord. Such impingement on nerve tissue may result from 
a herniated nucleus pulposus, spinal stenosis, arachnoiditis, or other 
miscellaneous conditions. Neurological abnormalities resulting from 
these disorders are to be evaluated by referral to the neurological 
listings in 11.00ff, as appropriate. (See also 1.00B and E.)
    1. Herniated nucleus pulposus is a disorder frequently associated 
with the impingement of a nerve root. Nerve root compression results in 
a specific neuro-anatomic distribution of symptoms and signs depending 
upon the nerve root(s) compromised.

                         2. Spinal Arachnoiditis

    a. General. Spinal arachnoiditis is a condition characterized by 
adhesive thickening of the arachnoid which may cause intermittent ill-
defined burning pain and sensory dysesthesia, and may cause neurogenic 
bladder or bowel incontinence when the cauda equina is involved.
    b. Documentation. Although the cause of spinal arachnoiditis is not 
always clear, it may be associated with chronic compression or 
irritation of nerve roots (including the cauda equina) or the spinal 
cord. For example, there may be evidence of spinal stenosis, or a 
history of spinal trauma or meningitis. Diagnosis must be confirmed at 
the time of surgery by gross description, microscopic examination of 
biopsied tissue, or by findings on appropriate medically acceptable 
imaging. Arachnoiditis is sometimes used as a diagnosis when such a 
diagnosis is unsupported by clinical or laboratory findings. Therefore, 
care must be taken to ensure that the diagnosis is documented as 
described in 1.04B. Individuals with arachnoiditis, particularly when it 
involves the lumbosacral spine, are generally unable to sustain any 
given position or posture for more than a short period of time due to 
pain.
    3. Lumbar spinal stenosis is a condition that may occur in 
association with degenerative processes, or as a result of a congenital 
anomaly or trauma, or in association with Paget's disease of the bone.

[[Page 442]]

Pseudoclaudication, which may result from lumbar spinal stenosis, is 
manifested as pain and weakness, and may impair ambulation. Symptoms are 
usually bilateral, in the low back, buttocks, or thighs, although some 
individuals may experience only leg pain and, in a few cases, the leg 
pain may be unilateral. The pain generally does not follow a particular 
neuro-anatomical distribution, i.e., it is distinctly different from the 
radicular type of pain seen with a herniated intervertebral disc, is 
often of a dull, aching quality, which may be described as 
``discomfort'' or an ``unpleasant sensation,'' or may be of even greater 
severity, usually in the low back and radiating into the buttocks region 
bilaterally. The pain is provoked by extension of the spine, as in 
walking or merely standing, but is reduced by leaning forward. The 
distance the individual has to walk before the pain comes on may vary. 
Pseudoclaudication differs from peripheral vascular claudication in 
several ways. Pedal pulses and Doppler examinations are unaffected by 
pseudoclaudication. Leg pain resulting from peripheral vascular 
claudication involves the calves, and the leg pain in vascular 
claudication is ordinarily more severe than any back pain that may also 
be present. An individual with vascular claudication will experience 
pain after walking the same distance time after time, and the pain will 
be relieved quickly when walking stops.
    4. Other miscellaneous conditions that may cause weakness of the 
lower extremities, sensory changes, areflexia, trophic ulceration, 
bladder or bowel incontinence, and that should be evaluated under 1.04 
include, but are not limited to, osteoarthritis, degenerative disc 
disease, facet arthritis, and vertebral fracture. Disorders such as 
spinal dysrhaphism (e.g., spina bifida), diastematomyelia, and tethered 
cord syndrome may also cause such abnormalities. In these cases, there 
may be gait difficulty and deformity of the lower extremities based on 
neurological abnormalities, and the neurological effects are to be 
evaluated under the criteria in 11.00ff.
    L. Abnormal curvatures of the spine. Abnormal curvatures of the 
spine (specifically, scoliosis, kyphosis and kyphoscoliosis) can result 
in impaired ambulation, but may also adversely affect functioning in 
body systems other than the musculoskeletal system. For example, an 
individual's ability to breathe may be affected; there may be cardiac 
difficulties (e.g., impaired myocardial function); or there may be 
disfigurement resulting in withdrawal or isolation. When there is 
impaired ambulation, evaluation of equivalence may be made by reference 
to 14.09A. When the abnormal curvature of the spine results in symptoms 
related to fixation of the dorsolumbar or cervical spine, evaluation of 
equivalence may be made by reference to 14.09B. When there is 
respiratory or cardiac involvement or an associated mental disorder, 
evaluation may be made under 3.00ff, 4.00ff, or 12.00ff, as appropriate. 
Other consequences should be evaluated according to the listing for the 
affected body system.
    M. Under continuing surgical management, as used in 1.07 and 1.08, 
refers to surgical procedures and any other associated treatments 
related to the efforts directed toward the salvage or restoration of 
functional use of the affected part. It may include such factors as 
post-surgical procedures, surgical complications, infections, or other 
medical complications, related illnesses, or related treatments that 
delay the individual's attainment of maximum benefit from therapy.
    N. After maximum benefit from therapy has been achieved in 
situations involving fractures of an upper extremity (1.07), or soft 
tissue injuries (1.08), i.e., there have been no significant changes in 
physical findings or on appropriate medically acceptable imaging for any 
6-month period after the last definitive surgical procedure or other 
medical intervention, evaluation must be made on the basis of the 
demonstrable residuals, if any. A finding that 1.07 or 1.08 is met must 
be based on a consideration of the symptoms, signs, and laboratory 
findings associated with recent or anticipated surgical procedures and 
the resulting recuperative periods, including any related medical 
complications, such as infections, illnesses, and therapies which impede 
or delay the efforts toward restoration of function. Generally, when 
there has been no surgical or medical intervention for 6 months after 
the last definitive surgical procedure, it can be concluded that maximum 
therapeutic benefit has been reached. Evaluation at this point must be 
made on the basis of the demonstrable residual limitations, if any, 
considering the individual's impairment-related symptoms, signs, and 
laboratory findings, any residual symptoms, signs, and laboratory 
findings associated with such surgeries, complications, and recuperative 
periods, and other relevant evidence.
    O. Major function of the face and head, for purposes of listing 
1.08, relates to impact on any or all of the activities involving 
vision, hearing, speech, mastication, and the initiation of the 
digestive process.
    P. When surgical procedures have been performed, documentation 
should include a copy of the operative notes and available pathology 
reports.
    Q. Effects of obesity. Obesity is a medically determinable 
impairment that is often associated with disturbance of the 
musculoskeletal system, and disturbance of this system can be a major 
cause of disability in individuals with obesity. The combined effects of 
obesity with musculoskeletal impairments can be greater than the effects 
of each of the impairments considered separately.

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Therefore, when determining whether an individual with obesity has a 
listing-level impairment or combination of impairments, and when 
assessing a claim at other steps of the sequential evaluation process, 
including when assessing an individual's residual functional capacity, 
adjudicators must consider any additional and cumulative effects of 
obesity.

              1.01 Category of Impairments, Musculoskeletal

    1.02 Major dysfunction of a joint(s) (due to any cause): 
Characterized by gross anatomical deformity (e.g., subluxation, 
contracture, bony or fibrous ankylosis, instability) and chronic joint 
pain and stiffness with signs of limitation of motion or other abnormal 
motion of the affected joint(s), and findings on appropriate medically 
acceptable imaging of joint space narrowing, bony destruction, or 
ankylosis of the affected joint(s). With:
    A. Involvement of one major peripheral weight-bearing joint (i.e., 
hip, knee, or ankle), resulting in inability to ambulate effectively, as 
defined in 1.00B2b;

or

    B. Involvement of one major peripheral joint in each upper extremity 
(i.e., shoulder, elbow, or wrist-hand), resulting in inability to 
perform fine and gross movements effectively, as defined in 1.00B2c.
    1.03 Reconstructive surgery or surgical arthrodesis of a major 
weight-bearing joint, with inability to ambulate effectively, as defined 
in 1.00B2b, and return to effective ambulation did not occur, or is not 
expected to occur, within 12 months of onset.
    1.04 Disorders of the spine (e.g., herniated nucleus pulposus, 
spinal arachnoiditis, spinal stenosis, osteoarthritis, degenerative disc 
disease, facet arthritis, vertebral fracture), resulting in compromise 
of a nerve root (including the cauda equina) or the spinal cord. With:
    A. Evidence of nerve root compression characterized by neuro-
anatomic distribution of pain, limitation of motion of the spine, motor 
loss (atrophy with associated muscle weakness or muscle weakness) 
accompanied by sensory or reflex loss and, if there is involvement of 
the lower back, positive straight-leg raising test (sitting and supine);

or

    B. Spinal arachnoiditis, confirmed by an operative note or pathology 
report of tissue biopsy, or by appropriate medically acceptable imaging, 
manifested by severe burning or painful dysesthesia, resulting in the 
need for changes in position or posture more than once every 2 hours;

or

    C. Lumbar spinal stenosis resulting in pseudoclaudication, 
established by findings on appropriate medically acceptable imaging, 
manifested by chronic nonradicular pain and weakness, and resulting in 
inability to ambulate effectively, as defined in 1.00B2b.
    1.05 Amputation (due to any cause).
    A. Both hands; or

or

    B. One or both lower extremities at or above the tarsal region, with 
stump complications resulting in medical inability to use a prosthetic 
device to ambulate effectively, as defined in 1.00B2b, which have lasted 
or are expected to last for at least 12 months;

or

    C. One hand and one lower extremity at or above the tarsal region, 
with inability to ambulate effectively, as defined in 1.00B2b; OR
    D. Hemipelvectomy or hip disarticulation.

    1.06 Fracture of the femur, tibia, pelvis, or one or more of the 
tarsal bones. With:
    A. Solid union not evident on appropriate medically acceptable 
imaging and not clinically solid;
and

    B. Inability to ambulate effectively, as defined in 1.00B2b, and 
return to effective ambulation did not occur or is not expected to occur 
within 12 months of onset.
    1.07 Fracture of an upper extremity with nonunion of a fracture of 
the shaft of the humerus, radius, or ulna, under continuing surgical 
management, as defined in 1.00M, directed toward restoration of 
functional use of the extremity, and such function was not restored or 
expected to be restored within 12 months of onset.
    1.08 Soft tissue injury (e.g., burns) of an upper or lower 
extremity, trunk, or face and head, under continuing surgical 
management, as defined in 1.00M, directed toward the salvage or 
restoration of major function, and such major function was not restored 
or expected to be restored within 12 months of onset. Major function of 
the face and head is described in 1.00O.

                     2.00 Special Senses and Speech

    A. Disorders of Vision
    1. Causes of impairment. Diseases or injury of the eyes may produce 
loss of visual acuity or loss of the peripheral field. Loss of visual 
acuity results in inability to distinguish detail and prevents reading 
and fine work. Loss of the peripheral field restricts the ability of an 
individual to move about freely. The extent of impairment of sight 
should be determined by visual acuity and peripheral field testing.
    2. Visual acuity. Loss of visual acuity may result in impaired 
distant vision or near vision, or both. However, for you to meet the

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level of severity described in 2.02 and 2.04, only the remaining visual 
acuity for distance of the better eye with best correction based on the 
Snellen test chart measurement may be used. Correction obtained by 
special visual aids (e.g., contact lenses) will be considered if the 
individual has the ability to wear such aids.
    3. Field of vision. Impairment of peripheral vision may result if 
there is contraction of the visual fields. The contraction may be either 
symmetrical or irregular. The extent of the remaining peripheral visual 
field will be determined by usual perimetric methods at a distance of 
330 mm. under illumination of not less than 7-foot candles. For the 
phakic eye (the eye with a lens), a 3 mm. white disc target will be 
used, and for the aphakic eye (the eye without the lens), a 6 mm. white 
disc target will be used. In neither instance should corrective 
spectacle lenses be worn during the examination but if they have been 
used, this fact must be stated.
    Measurements obtained on comparable perimetric devices may be used; 
this does not include the use of tangent screen measurements. For 
measurements obtained using the Goldmann perimeter, the object size 
designation III and the illumination designation 4 should be used for 
the phakic eye, and the object size designation IV and illumination 
designation 4 for the aphakic eye.
    Field measurements must be accompanied by notated field charts, a 
description of the type and size of the target and the test distance. 
Tangent screen visual fields are not acceptable as a measurement of 
peripheral field loss.
    Where the loss is predominantly in the lower visual fields, a system 
such as the weighted grid scale for perimetric fields described by B. 
Esterman (see Grid for Scoring Visual Fields, II. Perimeter, Archives of 
Ophthalmology, 79:400, 1968) may be used for determining whether the 
visual field loss is comparable to that described in table 2.
    4. Muscle function. Paralysis of the third cranial nerve producing 
ptosis, paralysis of accommodation, and dilation and immobility of the 
pupil may cause significant visual impairment. When all the muscle of 
the eye are paralyzed including the iris and ciliary body (total 
ophthalmoplegia), the condition is considered a severe impairment 
provided it is bilateral. A finding of severe impairment based primarily 
on impaired muscle function must be supported by a report of an actual 
measurement of ocular motility.
    5. Visual efficiency. Loss of visual efficiency may be caused by 
disease or injury resulting in reduction of visual acuity or visual 
field. The visual efficiency of one eye is the product of the percentage 
of visual acuity efficiency and the percentage of visual field 
efficiency. (See tables no. 1 and 2, following 2.09.)
    6. Special situations. Aphakia represents a visual handicap in 
addition to the loss of visual acuity. The term monocular aphakia would 
apply to an individual who has had the lens removed from one eye, and 
who still retains the lens in his other eye, or to an individual who has 
only one eye which is aphakic. The term binocular aphakia would apply to 
an individual who has had both lenses removed. In cases of binocular 
aphakia, the efficiency of the better eye will be accepted as 75 percent 
of its value. In cases of monocular aphakia, where the better eye is 
aphakic, the visual efficiency will be accepted as 50 percent of the 
value. (If an individual has binocular aphakia, and the visual acuity in 
the poorer eye can be corrected only to 20/200, or less, the visual 
efficiency of the better eye will be accepted as 50 percent of its 
value.)
    Ocular symptoms of systemic disease may or may not produce a 
disabling visual impairement. These manifestations should be evaluated 
as part of the underlying disease entity by reference to the particular 
body system involved.
    7. Statutory blindness. The term ``statutory blindness'' refers to 
the degree of visual impairment which defines the term ``blindness'' in 
the Social Security Act. Both 2.02 and 2.03 A and B denote statutory 
blindness.
    B. Otolaryngology
    1. Hearing impairment. Hearing ability should be evaluated in terms 
of the person's ability to hear and distinguish speech.
    Loss of hearing can be quantitatively determined by an audiometer 
which meets the standards of the American National Standards Institute 
(ANSI) for air and bone conducted stimuli (i.e., ANSI S 3.6-1969 and 
ANSI S 3.13-1972, or subsequent comparable revisions) and performing all 
hearing measurements in an environment which meets the ANSI standard for 
maximal permissible background sound (ANSI S 3.1-1977).
    Speech discrimination should be determined using a standardized 
measure of speech discrimination ability in quiet at a test presentation 
level sufficient to ascertain maximum discrimination ability. The speech 
discrimination measure (test) used, and the level at which testing was 
done, must be reported.
    Hearing tests should be preceded by an otolaryngologic examination 
and should be performed by or under the supervision of an 
otolaryngologist or audiologist qualified to perform such tests.
    In order to establish an independent medical judgment as to the 
level of impairment in a claimant alleging deafness, the following 
examinations should be reported: Otolaryngologic examination, pure tone 
air and bone audiometry, speech reception threshold (SRT), and speech 
discrimination

[[Page 445]]

testing. A copy of reports of medical examination and audiologic 
evaluations must be submitted.
    Cases of alleged ``deaf mutism'' should be documented by a hearing 
evaluation. Records obtained from a speech and hearing rehabilitation 
center or a special school for the deaf may be acceptable, but if these 
reports are not available, or are found to be inadequate, a current 
hearing evaluation should be submitted as outlined in the preceding 
paragraph.
    2. Vertigo associated with disturbances of labyrinthine-vestibular 
function, including Meniere's disease. These disturbances of balance are 
characterized by an hallucination of motion or loss of position sense 
and a sensation of dizziness which may be constant or may occur in 
paroxysmal attacks. Nausea, vomiting, ataxia, and incapacitation are 
frequently observed, particularly during the acute attack. It is 
important to differentiate the report of rotary vertigo from that of 
``dizziness'' which is described as lightheadedness, unsteadiness, 
confusion, or syncope.
    Meniere's disease is characterized by paroxysmal attacks of vertigo, 
tinnitus, and fluctuating hearing loss. Remissions are unpredictable and 
irregular, but may be longlasting; hence, the severity of impairment is 
best determined after prolonged observation and serial reexaminations.
    The diagnosis of a vestibular disorder requires a comprehensive 
neuro-otolaryngologic examination with a detailed description of the 
vertiginous episodes, including notation of frequency, severity, and 
duration of the attacks. Pure tone and speech audiometry with the 
appropriate special examinations, such as Bekesy audiometry, are 
necessary. Vestibular functions is assessed by positional and caloric 
testing, preferably by electronystagmography. When polytomograms, 
contrast radiography, or other special tests have been performed, copies 
of the reports of these tests should be obtained in addition to 
appropriate medically acceptable imaging reports of the skull and 
temporal bone. Medically acceptable imaging includes, but is not limited 
to, x-ray imaging, computerized axial tomography (CAT scan) or magnetic 
resonance imaging (MRI), with or without contrast material, myelography, 
and radionuclear bone scans. ``Appropriate'' means that the technique 
used is the proper one to support the evaluation and diagnosis of the 
impairment.
    3. Loss of speech. In evaluating the loss of speech, the ability to 
produce speech by any means includes the use of mechanical or electronic 
devices that improve voice or articulation. Impairments of speech may 
also be evaluated under the body system for the underlying disorder, 
such as neurological disorders, 11.00ff.
    2.01 Category of Impairments, Special Senses and Speech
    2.02 Impairment of visual acuity. Remaining vision in the better eye 
after best correction is 20/200 or less.
    2.03 Contraction of peripheral visual fields in the better eye.
    A. To 10[deg] or less from the point of fixation; or
    B. So the widest diameter subtends an angle no greater than 20[deg]; 
or
    C. To 20 percent or less visual field efficiency.
    2.04 Loss of visual efficiency. The visual efficiency of the better 
eye after best correction is 20 percent or less. (The percent of 
remaining visual efficiency is equal to the product of the percent of 
remaining visual acuity efficiency and the percent of remaining visual 
field efficiency.)
    2.05 [Reserved]
    2.06 Total bilateral ophthalmoplegia.
    2.07 Disturbance of labyrinthine-vestibular function (including 
Meniere's disease), characterized by a history of frequent attacks of 
balance disturbance, tinnitus, and progressive loss of hearing. With 
both A and B:
    A. Disturbed function of vestibular labyrinth demonstrated by 
caloric or other vestibular tests; and
    B. Hearing loss established by audiometry.
    2.08 Hearing impairments (hearing not restorable by a hearing aid) 
manifested by:
    A. Average hearing threshold sensitivity for air conduction of 90 
decibels or greater and for bone conduction to corresponding maximal 
levels, in the better ear, determined by the simple average of hearing 
threshold levels at 500, 1000 and 2000 hz. (see 2.00B1); or
    B. Speech discrimination scores of 40 percent or less in the better 
ear;
    2.09 Loss of speech due to any cause, with inability to produce by 
any means speech that can be heard, understood, or sustained.

  Table No. 1--Percentage of Visual Acuity Efficiency Corresponding to
   Visual Acuity Notations for Distance in the Phakic and Aphakic Eye
                              (Better Eye)
------------------------------------------------------------------------
           Snellen                 Percent visual acuity efficiency
------------------------------------------------------------------------
                                               Aphakic        Aphakic
   English         Metric      Phakic \1\   monocular \2\  binocular \3\
------------------------------------------------------------------------
      20/16            6/5           100             50             75
      20/20            6/6           100             50             75
      20/25          6/7.5            95             47             71
      20/32           6/10            90             45             67
      20/40           6/12            85             42             64
      20/50           6/15            75             37             56
      20/64           6/20            65             32             49
      20/80           6/24            60             30             45
     20/100           6/30            50             25             37
     20/125           6/38            40             20             30
     20/160           6/48            30    .............           22

[[Page 446]]

 
     20/200           6/60            20    .............  .............
------------------------------------------------------------------------
Column and Use.
\1\ Phakic.--1. A lens is present in both eyes. 2. A lens is present in
  the better eye and absent in the poorer eye. 3. A lens is present in
  one eye and the other eye is enucleated.
\2\ Monocular.--1. A lens is absent in the better eye and present in the
  poorer eye. 2. The lenses are absent in both eyes; however, the visual
  acuity in the poorer eye after best correction in 20/200 or less. 3. A
  lens is absent from one eye and the other eye is enucleated.
\3\ Binocular.--1. The lenses are absent from both eyes and the visual
  acuity in the poorer eye after best correction is greater than 20/200.

  [GRAPHIC] [TIFF OMITTED] TR01FE93.040
  
 Table No. 2--Chart of Visual Field Showing Extent of Normal Field and 
         Method of Computing Percent of Visual Field Efficiency
    1. Diagram of right eye illustrates extent of normal visual field as 
tested on standard perimeter at 3/330 (3 mm. white disc at a distance of 
330 mm.) under 7 foot-candles illumination. The sum of the eight 
principal meridians of this field total 500[deg].
    2. The percent of visual field efficiency is obtained by adding the 
number of degrees of the eight principal meridians of the contracted 
field and dividing by 500. Diagram of left eye illustrates visual field 
contracted to 30[deg] in the temporal and down and out meridians and to 
20[deg] in the remaining six meridians. The percent of visual field 
efficiency of this field is: 6x20+2x30 =180/500=0.36 or 36 percent 
remaining visual field efficiency, or 64 percent loss.

                         3.00 Respiratory System

    A. Introduction. The listings in this section describe impairments 
resulting from respiratory disorders based on symptoms, physical signs, 
laboratory test abnormalities, and response to a regimen of treatment 
prescribed by a treating source. Respiratory disorders along with any 
associated impairment(s) must be established by medical evidence. 
Evidence must be provided in sufficient detail to permit an independent 
reviewer to evaluate the severity of the impairment.
    Many individuals, especially those who have listing-level 
impairments, will have received the benefit of medically prescribed 
treatment. Whenever there is evidence of such treatment, the 
longitudinal clinical

[[Page 447]]

record must include a description of the treatment prescribed by the 
treating source and response in addition to information about the nature 
and severity of the impairment. It is important to document any 
prescribed treatment and response, because this medical management may 
have improved the individual's functional status. The longitudinal 
record should provide information regarding functional recovery, if any.
    Some individuals will not have received ongoing treatment or have an 
ongoing relationship with the medical community, despite the existence 
of a severe impairment(s). An individual who does not receive treatment 
may or may not be able to show the existence of an impairment that meets 
the criteria of these listings. Even if an individual does not show that 
his or her impairment meets the criteria of these listings, the 
individual may have an impairment(s) equivalent in severity to one of 
the listed impairments or be disabled because of a limited residual 
functional capacity. Unless the claim can be decided favorably on the 
basis of the current evidence, a longitudinal record is still important 
because it will provide information about such things as the ongoing 
medical severity of the impairment, the level of the individual's 
functioning, and the frequency, severity, and duration of symptoms. 
Also, the asthma listing specifically includes a requirement for 
continuing signs and symptoms despite a regimen of prescribed treatment.
    Impairments caused by chronic disorders of the respiratory system 
generally produce irreversible loss of pulmonary function due to 
ventilatory impairments, gas exchange abnormalities, or a combination of 
both. The most common symptoms attributable to these disorders are 
dyspnea on exertion, cough, wheezing, sputum production, hemoptysis, and 
chest pain. Because these symptoms are common to many other diseases, a 
thorough medical history, physical examination, and chest x-ray or other 
appropriate imaging technique are required to establish chronic 
pulmonary disease. Pulmonary function testing is required to assess the 
severity of the respiratory impairment once a disease process is 
established by appropriate clinical and laboratory findings.
    Alterations of pulmonary function can be due to obstructive airway 
disease (e.g., emphysema, chronic bronchitis, asthma), restrictive 
pulmonary disorders with primary loss of lung volume (e.g., pulmonary 
resection, thoracoplasty, chest cage deformity as in kyphoscoliosis or 
obesity), or infiltrative interstitial disorders (e.g., diffuse 
pulmonary fibrosis). Gas exchange abnormalities without significant 
airway obstruction can be produced by interstitial disorders. Disorders 
involving the pulmonary circulation (e.g., primary pulmonary 
hypertension, recurrent thromboembolic disease, primary or secondary 
pulmonary vasculitis) can produce pulmonary vascular hypertension and, 
eventually, pulmonary heart disease (cor pulmonale) and right heart 
failure. Persistent hypoxemia produced by any chronic pulmonary disorder 
also can result in chronic pulmonary hypertension and right heart 
failure. Chronic infection, caused most frequently by mycobacterial or 
mycotic organisms, can produce extensive and progressive lung 
destruction resulting in marked loss of pulmonary function. Some 
disorders, such as bronchiectasis, cystic fibrosis, and asthma, can be 
associated with intermittent exacerbations of such frequency and 
intensity that they produce a disabling impairment, even when pulmonary 
function during periods of relative clinical stability is relatively 
well-maintained.
    Respiratory impairments usually can be evaluated under these 
listings on the basis of a complete medical history, physical 
examination, a chest x-ray or other appropriate imaging techniques, and 
spirometric pulmonary function tests. In some situations, most typically 
with a diagnosis of diffuse interstitial fibrosis or clinical findings 
suggesting cor pulmonale, such as cyanosis or secondary polycythemia, an 
impairment may be underestimated on the basis of spirometry alone. More 
sophisticated pulmonary function testing may then be necessary to 
determine if gas exchange abnormalities contribute to the severity of a 
respiratory impairment. Additional testing might include measurement of 
diffusing capacity of the lungs for carbon monoxide or resting arterial 
blood gases. Measurement of arterial blood gases during exercise is 
required infrequently. In disorders of the pulmonary circulation, right 
heart catheterization with angiography and/or direct measurement of 
pulmonary artery pressure may have been done to establish a diagnosis 
and evaluate severity. When performed, the results of the procedure 
should be obtained. Cardiac catheterization will not be purchased.
    These listings are examples of common respiratory disorders that are 
severe enough to prevent a person from engaging in any gainful activity. 
When an individual has a medically determinable impairment that is not 
listed, an impairment which does not meet a listing, or a combination of 
impairments no one of which meets a listing, we will consider whether 
the individual's impairment or combination of impairments is medically 
equivalent in severity to a listed impairment. Individuals who have an 
impairment(s) with a level of severity which does not meet or equal the 
criteria of the listings may or may not have the residual functional 
capacity (RFC) which would enable them to

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engage in substantial gainful activity. Evaluation of the impairment(s) 
of these individuals will proceed through the final steps of the 
sequential evaluation process.
    B. Mycobacterial, mycotic, and other chronic persistent infections 
of the lung. These disorders are evaluated on the basis of the resulting 
limitations in pulmonary function. Evidence of chronic infections, such 
as active mycobacterial diseases or mycoses with positive cultures, drug 
resistance, enlarging parenchymal lesions, or cavitation, is not, by 
itself, a basis for determining that an individual has a disabling 
impairment expected to last 12 months. In those unusual cases of 
pulmonary infection that persist for a period approaching 12 consecutive 
months, the clinical findings, complications, therapeutic 
considerations, and prognosis must be carefully assessed to determine 
whether, despite relatively well-maintained pulmonary function, the 
individual nevertheless has an impairment that is expected to last for 
at least 12 consecutive months and prevent gainful activity.
    C. Episodic respiratory disease. When a respiratory impairment is 
episodic in nature, as can occur with exacerbations of asthma, cystic 
fibrosis, bronchiectasis, or chronic asthmatic bronchitis, the frequency 
and intensity of episodes that occur despite prescribed treatment are 
often the major criteria for determining the level of impairment. 
Documentation for these exacerbations should include available hospital, 
emergency facility and/or physician records indicating the dates of 
treatment; clinical and laboratory findings on presentation, such as the 
results of spirometry and arterial blood gas studies (ABGS); the 
treatment administered; the time period required for treatment; and the 
clinical response. Attacks of asthma, episodes of bronchitis or 
pneumonia or hemoptysis (more than blood-streaked sputum), or 
respiratory failure as referred to in paragraph B of 3.03, 3.04, and 
3.07, are defined as prolonged symptomatic episodes lasting one or more 
days and requiring intensive treatment, such as intravenous 
bronchodilator or antibiotic administration or prolonged inhalational 
bronchodilator therapy in a hospital, emergency room or equivalent 
setting. Hospital admissions are defined as inpatient hospitalizations 
for longer than 24 hours. The medical evidence must also include 
information documenting adherence to a prescribed regimen of treatment 
as well as a description of physical signs. For asthma, the medical 
evidence should include spirometric results obtained between attacks 
that document the presence of baseline airflow obstruction.
    D. Cystic fibrosis is a disorder that affects either the respiratory 
or digestive body systems or both and is responsible for a wide and 
variable spectrum of clinical manifestations and complications. 
Confirmation of the diagnosis is based upon an elevated sweat sodium 
concentration or chloride concentration accompanied by one or more of 
the following: the presence of chronic obstructive pulmonary disease, 
insufficiency of exocrine pancreatic function, meconium ileus, or a 
positive family history. The quantitative pilocarpine iontophoresis 
procedure for collection of sweat content must be utilized. Two methods 
are acceptable: the ``Procedure for the Quantitative Iontophoretic Sweat 
Test for Cystic Fibrosis'' published by the Cystic Fibrosis Foundation 
and contained in, ``A Test for Concentration of Electrolytes in Sweat in 
Cystic Fibrosis of the Pancreas Utilizing Pilocarpine Iontophoresis,'' 
Gibson, I.E., and Cooke, R.E., Pediatrics, Vol. 23: 545, 1959; or the 
``Wescor Macroduct System.'' To establish the diagnosis of cystic 
fibrosis, the sweat sodium or chloride content must be analyzed 
quantitatively using an acceptable laboratory technique. Another 
diagnostic test is the ``CF gene mutation analysis'' for homozygosity of 
the cystic fibrosis gene. The pulmonary manifestations of this disorder 
should be evaluated under 3.04. The nonpulmonary aspects of cystic 
fibrosis should be evaluated under the digestive body system (5.00). 
Because cystic fibrosis may involve the respiratory and digestive body 
systems, the combined effects of the involvement of these body systems 
must be considered in case adjudication.
    E. Documentation of pulmonary function testing. The results of 
spirometry that are used for adjudication under paragraphs A and B of 
3.02 and paragraph A of 3.04 should be expressed in liters (L), body 
temperature and pressure saturated with water vapor (BTPS). The reported 
one-second forced expiratory volume (FEV1) and forced vital 
capacity (FVC) should represent the largest of at least three 
satisfactory forced expiratory maneuvers. Two of the satisfactory 
spirograms should be reproducible for both pre-bronchodilator tests and, 
if indicated, post-bronchodilator tests. A value is considered 
reproducible if it does not differ from the largest value by more than 5 
percent or 0.1 L, whichever is greater. The highest values of the 
FEV1 and FVC, whether from the same or different tracings, 
should be used to assess the severity of the respiratory impairment. 
Peak flow should be achieved early in expiration, and the spirogram 
should have a smooth contour with gradually decreasing flow throughout 
expiration. The zero time for measurement of the FEV1 and 
FVC, if not distinct, should be derived by linear back-extrapolation of 
peak flow to zero volume. A spirogram is satisfactory for measurement of 
the FEV1 if the expiratory volume at the back-extrapolated 
zero time is less than 5 percent of the FVC or 0.1 L, whichever is 
greater. The spirogram is satisfactory for measurement of the FVC if 
maximal expiratory effort continues for at least 6 seconds,

[[Page 449]]

or if there is a plateau in the volume-time curve with no detectable 
change in expired volume (VE) during the last 2 seconds of maximal 
expiratory effort.
    Spirometry should be repeated after administration of an aerosolized 
bronchodilator under supervision of the testing personnel if the pre-
bronchodilator FEV1 value is less than 70 percent of the 
predicted normal value. Pulmonary function studies should not be 
performed unless the clinical status is stable (e.g., the individual is 
not having an asthmatic attack or suffering from an acute respiratory 
infection or other chronic illness). Wheezing is common in asthma, 
chronic bronchitis, or chronic obstructive pulmonary disease and does 
not preclude testing. The effect of the administered bronchodilator in 
relieving bronchospasm and improving ventilatory function is assessed by 
spirometry. If a bronchodilator is not administered, the reason should 
be clearly stated in the report. Pulmonary function studies performed to 
assess airflow obstruction without testing after bronchodilators cannot 
be used to assess levels of impairment in the range that prevents any 
gainful work activity, unless the use of bronchodilators is 
contraindicated. Post-bronchodilator testing should be performed 10 
minutes after bronchodilator administration. The dose and name of the 
bronchodilator administered should be specified. The values in 
paragraphs A and B of 3.02 must only be used as criteria for the level 
of ventilatory impairment that exists during the individual's most 
stable state of health (i.e., any period in time except during or 
shortly after an exacerbation).
    The appropriately labeled spirometric tracing, showing the 
claimant's name, date of testing, distance per second on the abscissa 
and distance per liter (L) on the ordinate, must be incorporated into 
the file. The manufacturer and model number of the device used to 
measure and record the spirogram should be stated. The testing device 
must accurately measure both time and volume, the latter to within 1 
percent of a 3 L calibrating volume. If the spirogram was generated by 
any means other than direct pen linkage to a mechanical displacement-
type spirometer, the testing device must have had a recorded calibration 
performed previously on the day of the spirometric measurement.
    If the spirometer directly measures flow, and volume is derived by 
electronic integration, the linearity of the device must be documented 
by recording volume calibrations at three different flow rates of 
approximately 30 L/min (3 L/6 sec), 60 L/min (3 L/3 sec), and 180 L/min 
(3 L/sec). The volume calibrations should agree to within 1 percent of a 
3 L calibrating volume. The proximity of the flow sensor to the 
individual should be noted, and it should be stated whether or not a 
BTPS correction factor was used for the calibration recordings and for 
the individual's actual spirograms.
    The spirogram must be recorded at a speed of at least 20 mm/sec, and 
the recording device must provide a volume excursion of at least 10 mm/
L. If reproductions of the original spirometric tracings are submitted, 
they must be legible and have a time scale of at least 20 mm/sec and a 
volume scale of at least 10 mm/L to permit independent measurements. 
Calculation of FEV1 from a flow-volume tracing is not 
acceptable, i.e., the spirogram and calibrations must be presented in a 
volume-time format at a speed of at least 20 mm/sec and a volume 
excursion of at least 10 mm/L to permit independent evaluation.
    A statement should be made in the pulmonary function test report of 
the individual's ability to understand directions as well as his or her 
effort and cooperation in performing the pulmonary function tests.
    The pulmonary function tables in 3.02 and 3.04 are based on 
measurement of standing height without shoes. If an individual has 
marked spinal deformities (e.g., kyphoscoliosis), the measured span 
between the fingertips with the upper extremities abducted 90 degrees 
should be substituted for height when this measurement is greater than 
the standing height without shoes.
    F. Documentation of chronic impairment of gas exchange.
    1. Diffusing capacity of the lungs for carbon monoxide (DLCO). A 
diffusing capacity of the lungs for carbon monoxide study should be 
purchased in cases in which there is documentation of chronic pulmonary 
disease, but the existing evidence, including properly performed 
spirometry, is not adequate to establish the level of functional 
impairment. Before purchasing DLCO measurements, the medical history, 
physical examination, reports of chest x-ray or other appropriate 
imaging techniques, and spirometric test results must be obtained and 
reviewed because favorable decisions can often be made based on 
available evidence without the need for DLCO studies. Purchase of a DLCO 
study may be appropriate when there is a question of whether an 
impairment meets or is equivalent in severity to a listing, and the 
claim cannot otherwise be favorably decided.
    The DLCO should be measured by the single breath technique with the 
individual relaxed and seated. At sea level, the inspired gas mixture 
should contain approximately 0.3 percent carbon monoxide (CO), 10 
percent helium (He), 21 percent oxygen (O2), and the balance 
nitrogen. At altitudes above sea level, the inspired O2 
concentration may be raised to provide an inspired O2 tension 
of approximately 150 mm Hg. Alternatively, the sea level mixture may be 
employed at altitude and the measured DLCO corrected for ambient 
barometric pressure. Helium may be

[[Page 450]]

replaced by another inert gas at an appropriate concentration. The 
inspired volume (VI) during the DLCO maneuver should be at least 90 
percent of the previously determined vital capacity (VC). The 
inspiratory time for the VI should be less than 2 seconds, and the 
breath-hold time should be between 9 and 11 seconds. The washout volume 
should be between 0.75 and 1.00 L, unless the VC is less than 2 L. In 
this case, the washout volume may be reduced to 0.50 L; any such change 
should be noted in the report. The alveolar sample volume should be 
between 0.5 and 1.0 L and be collected in less than 3 seconds. At least 
4 minutes should be allowed for gas washout between repeat studies.
    A DLCO should be reported in units of ml CO, standard temperature, 
pressure, dry (STPD)/min/mm Hg uncorrected for hemoglobin concentration 
and be based on a single-breath alveolar volume determination. Abnormal 
hemoglobin or hematocrit values, and/or carboxyhemoglobin levels should 
be reported along with diffusing capacity.
    The DLCO value used for adjudication should represent the mean of at 
least two acceptable measurements, as defined above. In addition, two 
acceptable tests should be within 10 percent of each other or 3 ml 
CO(STPD)/min/mm Hg, whichever is larger. The percent difference should 
be calculated as 100x(test 1-test 2)/average DLCO.
    The ability of the individual to follow directions and perform the 
test properly should be described in the written report. The report 
should include tracings of the VI, breath-hold maneuver, and VE 
appropriately labeled with the name of the individual and the date of 
the test. The time axis should be at least 20 mm/sec and the volume axis 
at least 10 mm/L. The percentage concentrations of inspired 
O2 and inspired and expired CO and He for each of the 
maneuvers should be provided. Sufficient data must be provided, 
including documentation of the source of the predicted equation, to 
permit verification that the test was performed adequately, and that, if 
necessary, corrections for anemia or carboxyhemoglobin were made 
appropriately.
    2. Arterial blood gas studies (ABGS). An ABGS performed at rest 
(while breathing room air, awake and sitting or standing) or during 
exercise should be analyzed in a laboratory certified by a State or 
Federal agency. If the laboratory is not certified, it must submit 
evidence of participation in a national proficiency testing program as 
well as acceptable quality control at the time of testing. The report 
should include the altitude of the facility and the barometric pressure 
on the date of analysis.
    Purchase of resting ABGS may be appropriate when there is a question 
of whether an impairment meets or is equivalent in severity to a 
listing, and the claim cannot otherwise be favorably decided. If the 
results of a DLCO study are greater than 40 percent of predicted normal 
but less than 60 percent of predicted normal, purchase of resting ABGS 
should be considered. Before purchasing resting ABGS, a program 
physician, preferably one experienced in the care of patients with 
pulmonary disease, must review all clinical and laboratory data short of 
this procedure, including spirometry, to determine whether obtaining the 
test would present a significant risk to the individual.
    3. Exercise testing. Exercise testing with measurement of arterial 
blood gases during exercise may be appropriate in cases in which there 
is documentation of chronic pulmonary disease, but full development, 
short of exercise testing, is not adequate to establish if the 
impairment meets or is equivalent in severity to a listing, and the 
claim cannot otherwise be favorably decided. In this context, ``full 
development'' means that results from spirometry and measurement of DLCO 
and resting ABGS have been obtained from treating sources or through 
purchase. Exercise arterial blood gas measurements will be required 
infrequently and should be purchased only after careful review of the 
medical history, physical examination, chest x-ray or other appropriate 
imaging techniques, spirometry, DLCO, electrocardiogram (ECG), 
hematocrit or hemoglobin, and resting blood gas results by a program 
physician, preferably one experienced in the care of patients with 
pulmonary disease, to determine whether obtaining the test would 
presents a significant risk to the individual. Oximetry and capillary 
blood gas analysis are not acceptable substitutes for the measurement of 
arterial blood gases. Arterial blood gas samples obtained after the 
completion of exercise are not acceptable for establishing an 
individual's functional capacity.
    Generally, individuals with a DLCO greater than 60 percent of 
predicted normal would not be considered for exercise testing with 
measurement of blood gas studies. The exercise test facility must be 
provided with the claimant's clinical records, reports of chest x-ray or 
other appropriate imaging techniques, and any spirometry, DLCO, and 
resting blood gas results obtained as evidence of record. The testing 
facility must determine whether exercise testing present a significant 
risk to the individual; if it does, the reason for not performing the 
test must be reported in writing.
    4. Methodology. Individuals considered for exercise testing first 
should have resting arterial blood partial pressure of oxygen 
(PO2), resting arterial blood partial pressure of carbon 
dioxide (PCO2) and negative log of hydrogen ion concentration 
(pH) determinations by the testing facility. The sample should be 
obtained in either the sitting or standing position. The individual 
should then perform exercise under steady state conditions, preferably 
on a treadmill, breathing room air,

[[Page 451]]

for a period of 4 to 6 minutes at a speed and grade providing an oxygen 
consumption of approximately 17.5 ml/kg/min (5 METs). If a bicycle 
ergometer is used, an exercise equivalent of 5 METs (e.g., 450 kpm/min, 
or 75 watts, for a 176 pound (80 kilogram) person) should be used. If 
the individual is able to complete this level of exercise without 
achieving listing-level hypoxemia, then he or she should be exercised at 
higher workloads to determine exercise capacity. A warm-up period of 
treadmill walking or cycling may be performed to acquaint the individual 
with the exercise procedure. If during the warm-up period the individual 
cannot achieve an exercise level of 5 METs, a lower workload may be 
selected in keeping with the estimate of exercise capacity. The 
individual should be monitored by ECG throughout the exercise and in the 
immediate post-exercise period. Blood pressure and an ECG should be 
recorded during each minute of exercise. During the final 2 minutes of a 
specific level of steady state exercise, an arterial blood sample should 
be drawn and analyzed for oxygen pressure (or tension) (PO2), 
carbon dioxide pressure (or tension) (PCO2), and pH. At the 
discretion of the testing facility, the sample may be obtained either 
from an indwelling arterial catheter or by direct arterial puncture. If 
possible, in order to evaluate exercise capacity more accurately, a test 
site should be selected that has the capability to measure minute 
ventilation, O2 consumption, and carbon dioxide 
(CO2) production. If the claimant fails to complete 4 to 6 
minutes of steady state exercise, the testing laboratory should comment 
on the reason and report the actual duration and levels of exercise 
performed. This comment is necessary to determine if the individual's 
test performance was limited by lack of effort or other impairment 
(e.g., cardiac, peripheral vascular, musculoskeletal, neurological).
    The exercise test report should contain representative ECG strips 
taken before, during and after exercise; resting and exercise arterial 
blood gas values; treadmill speed and grade settings, or, if a bicycle 
ergometer was used, exercise levels expressed in watts or kpm/min; and 
the duration of exercise. Body weight also should be recorded. If 
measured, O2 consumption (STPD), minute ventilation (BTPS), 
and CO2 production (STPD) also should be reported. The 
altitude of the test site, its normal range of blood gas values, and the 
barometric pressure on the test date must be noted.
    G. Chronic cor pulmonale and pulmonary vascular disease. The 
establishment of an impairment attributable to irreversible cor 
pulmonale secondary to chronic pulmonary hypertension requires 
documentation by signs and laboratory findings of right ventricular 
overload or failure (e.g., an early diastolic right-sided gallop on 
auscultation, neck vein distension, hepatomegaly, peripheral edema, 
right ventricular outflow tract enlargement on x-ray or other 
appropriate imaging techniques, right ventricular hypertrophy on ECG, 
and increased pulmonary artery pressure measured by right heart 
catheterization available from treating sources). Cardiac 
catheterization will not be purchased. Because hypoxemia may accompany 
heart failure and is also a cause of pulmonary hypertension, and may be 
associated with hypoventilation and respiratory acidosis, arterial blood 
gases may demonstrate hypoxemia (decreased PO2), 
CO2 retention (increased PCO2), and acidosis 
(decreased pH). Polycythemia with an elevated red blood cell count and 
hematocrit may be found in the presence of chronic hypoxemia.
    P-pulmonale on the ECG does not establish chronic pulmonary 
hypertension or chronic cor pulmonale. Evidence of florid right heart 
failure need not be present at the time of adjudication for a listing 
(e.g., 3.09) to be satisfied, but the medical evidence of record should 
establish that cor pulmonale is chronic and irreversible.
    H. Sleep-related breathing disorders. Sleep-related breathing 
disorders (sleep apneas) are caused by periodic cessation of respiration 
associated with hypoxemia and frequent arousals from sleep. Although 
many individuals with one of these disorders will respond to prescribed 
treatment, in some, the disturbed sleep pattern and associated chronic 
nocturnal hypoxemia cause daytime sleepiness with chronic pulmonary 
hypertension and/or disturbances in cognitive function. Because daytime 
sleepiness can affect memory, orientation, and personality, a 
longitudinal treatment record may be needed to evaluate mental 
functioning. Not all individuals with sleep apnea develop a functional 
impairment that affects work activity. When any gainful work is 
precluded, the physiologic basis for the impairment may be chronic cor 
pulmonale. Chronic hypoxemia due to episodic apnea may cause pulmonary 
hypertension (see 3.00G and 3.09). Daytime somnolence may be associated 
with disturbance in cognitive vigilance. Impairment of cognitive 
function may be evaluated under organic mental disorders (12.02).
    I. Effects of obesity. Obesity is a medically determinable 
impairment that is often associated with disturbance of the respiratory 
system, and disturbance of this system can be a major cause of 
disability in individuals with obesity. The combined effects of obesity 
with respiratory impairments can be greater than the effects of each of 
the impairments considered separately. Therefore, when determining 
whether an individual with obesity has a listing-level impairment or 
combination of impairments, and when assessing a claim at other steps of 
the sequential evaluation process, including when assessing an

[[Page 452]]

individual's residual functional capacity, adjudicators must consider 
any additional and cumulative effects of obesity.

            3.01 Category of Impairments, Respiratory System.

    3.02 Chronic pulmonary insufficiency.
    A. Chronic obstructive pulmonary disease, due to any cause, with the 
FEV1 equal to or less than the values specified in table I 
corresponding to the person's height without shoes. (In cases of marked 
spinal deformity, see 3.00E.);

                                 Table I
------------------------------------------------------------------------
                                                                  FEV1
                                                                equal to
 Height without shoes (centimeters)     Height without shoes    or less
                                              (inches)          than (L,
                                                                 BTPS)
------------------------------------------------------------------------
154 or less.........................  60 or less.............       1.05
155-160.............................  61-63..................       1.15
161-165.............................  64-65..................       1.25
166-170.............................  66-67..................       1.35
171-175.............................  68-69..................       1.45
176-180.............................  70-71..................       1.55
181 or more.........................  72 or more.............       1.65
------------------------------------------------------------------------

Or

    B. Chronic restrictive ventilatory disease, due to any cause, with 
the FVC equal to or less than the values specified in table II 
corresponding to the person's height without shoes. (In cases of marked 
spinal deformity, see 3.00E.);

                                Table II
------------------------------------------------------------------------
                                                               FVC equal
                                        Height without shoes     to or
 Height without shoes (centimeters)           (inches)         less than
                                                               (L, BTPS)
------------------------------------------------------------------------
154 or less.........................  60 or less.............       1.25
155-160.............................  61-63..................       1.35
161-165.............................  64-65..................       1.45
166-170.............................  66-67..................       1.55
171-175.............................  68-69..................       1.65
176-180.............................  70-71..................       1.75
181 or more.........................  72 or more.............       1.85
------------------------------------------------------------------------

Or

    C. Chronic impairment of gas exchange due to clinically documented 
pulmonary disease. With:
    1. Single breath DLCO (see 3.00F1) less than 10.5 ml/min/mm Hg or 
less than 40 percent of the predicted normal value. (Predicted values 
must either be based on data obtained at the test site or published 
values from a laboratory using the same technique as the test site. The 
source of the predicted values should be reported. If they are not 
published, they should be submitted in the form of a table or nomogram); 
or
    2. Arterial blood gas values of PO2 and simultaneously 
determined PCO2 measured while at rest (breathing room air, 
awake and sitting or standing) in a clinically stable condition on at 
least two occasions, three or more weeks apart within a 6-month period, 
equal to or less than the values specified in the applicable table III-A 
or III-B or III-C:

                              Table III--A
     [Applicable at test sites less than 3,000 feet above sea level]
------------------------------------------------------------------------
                                                           Arterial PO2
                                                            equal to or
               Arterial PCO2 (mm. Hg) and                 less than (mm.
                                                                Hg)
------------------------------------------------------------------------
30 or below.............................................              65
31......................................................              64
32......................................................              63
33......................................................              62
34......................................................              61
35......................................................              60
36......................................................              59
37......................................................              58
38......................................................              57
39......................................................              56
40 or above.............................................              55
------------------------------------------------------------------------


                              Table III--B
   [Applicable at test sites 3,000 through 6,000 feet above sea level]
------------------------------------------------------------------------
                                                           Arterial PO2
                                                            equal to or
               Arterial PCO2 (mm. Hg) and                 less than (mm.
                                                                Hg)
------------------------------------------------------------------------
30 or below.............................................              60
31......................................................              59
32......................................................              58
33......................................................              57
34......................................................              56
35......................................................              55
36......................................................              54
37......................................................              53
38......................................................              52
39......................................................              51
40 or above.............................................              50
------------------------------------------------------------------------


                              Table III--C
       [Applicable at test sites over 6,000 feet above sea level]
------------------------------------------------------------------------
                                                           Arterial PO2
                                                          or equal to or
               Arterial PCO2 (mm. Hg) and                 less than (mm.
                                                                Hg)
------------------------------------------------------------------------
30 or below.............................................              55
31......................................................              54
32......................................................              53
33......................................................              52
34......................................................              51
35......................................................              50
36......................................................              49
37......................................................              48
38......................................................              47
39......................................................              46
40 or above.............................................              45
------------------------------------------------------------------------

Or

    3. Arterial blood gas values of PO2 and simultaneously 
determined PCO2 during steady state exercise breathing room 
air (level of exercise equivalent to or less than 17.5 ml O2 
consumption/kg/min or 5 METs) equal to or less than the values specified 
in

[[Page 453]]

the applicable table III-A or III-B or III-C in 3.02C2.
    3.03 Asthma. With:
    A. Chronic asthmatic bronchitis. Evaluate under the criteria for 
chronic obstructive pulmonary disease in 3.02A;

Or

    B. Attacks (as defined in 3.00C), in spite of prescribed treatment 
and requiring physician intervention, occurring at least once every 2 
months or at least six times a year. Each in-patient hospitalization for 
longer than 24 hours for control of asthma counts as two attacks, and an 
evaluation period of at least 12 consecutive months must be used to 
determine the frequency of attacks.
    3.04 Cystic fibrosis. With:
    A. An FEV1 equal to or less than the appropriate value 
specified in table IV corresponding to the individual's height without 
shoes. (In cases of marked spinal deformity, see 3.00E.);

Or

    B. Episodes of bronchitis or pneumonia or hemoptysis (more than 
blood-streaked sputum) or respiratory failure (documented according to 
3.00C), requiring physician intervention, occurring at least once every 
2 months or at least six times a year. Each inpatient hospitalization 
for longer than 24 hours for treatment counts as two episodes, and an 
evaluation period of at least 12 consecutive months must be used to 
determine the frequency of episodes;

Or

    C. Persistent pulmonary infection accompanied by superimposed, 
recurrent, symptomatic episodes of increased bacterial infection 
occurring at least once every 6 months and requiring intravenous or 
nebulization antimicrobial therapy.

                                Table IV
      [Applicable only for evaluation under 3.04A--cystic fibrosis]
------------------------------------------------------------------------
                                                                  FEV1
                                                                equal to
 Height without shoes (centimeters)     Height without shoes    or less
                                              (inches)          than (L,
                                                                 BTPS)
------------------------------------------------------------------------
154 or less.........................  60 or less.............       1.45
155-159.............................  61-62..................       1.55
160-164.............................  63-64..................       1.65
165-169.............................  65-66..................       1.75
170-174.............................  67-68..................       1.85
175-179.............................  69-70..................       1.95
180 or more.........................  71 or more.............       2.05
------------------------------------------------------------------------

    3.05 [Reserved]
    3.06 Pneumoconiosis (demonstrated by appropriate imaging 
techniques). Evaluate under the appropriate criteria in 3.02.
    3.07 Bronchiectasis (demonstrated by appropriate imaging 
techniques). With:
    A. Impairment of pulmonary function due to extensive disease. 
Evaluate under the appropriate criteria in 3.02;

Or

    B. Episodes of bronchitis or pneumonia or hemoptysis (more than 
blood-streaked sputum) or respiratory failure (documented according to 
3.00C), requiring physician intervention, occurring at least once every 
2 months or at least six times a year. Each in-patient hospitalization 
for longer than 24 hours for treatment counts as two episodes, and an 
evaluation of at least 12 consecutive months must be used to determine 
the frequency of episodes.
    3.08 Mycobacterial, mycotic, and other chronic persistent infections 
of the lung (see 3.00B). Evaluate under the appropriate criteria in 
3.02.
    3.09 Cor pulmonale secondary to chronic pulmonary vascular 
hypertension. Clinical evidence of cor pulmonale (documented according 
to 3.00G) with:
    A. Mean pulmonary artery pressure greater than 40 mm Hg;

Or

    B. Arterial hypoxemia. Evaluate under the criteria in 3.02C2;

Or

    C. Evaluate under the applicable criteria in 4.02.
    3.10 Sleep-related breathing disorders. Evaluate under 3.09 (chronic 
cor pulmonale) or 12.02 (organic mental disorders).
    3.11 Lung transplant. Consider under a disability for 12 months 
following the date of surgery; thereafter, evaluate the residual 
impairment.

                       4.00 Cardiovascular System

    A. Introduction. The listings in this section describe impairments 
resulting from cardiovascular disease based on symptoms, physical signs, 
laboratory test abnormalities, and response to a regimen of therapy 
prescribed by a treating source. A longitudinal clinical record covering 
a period of not less than 3 months of observations and therapy is 
usually necessary for the assessment of severity and expected duration 
of cardiovascular impairment, unless the claim can be decided favorably 
on the basis of the current evidence. All relevant evidence must be 
considered in assessing disability.
    Many individuals, especially those who have listing-level 
impairments, will have received the benefit of medically prescribed 
treatment. Whenever there is evidence of such treatment, the 
longitudinal clinical record must include a description of the therapy 
prescribed by the treating source and response, in addition to 
information about the nature and severity of the impairment. It is 
important to document any prescribed therapy and response because this 
medical management may have improved

[[Page 454]]

the individual's functional status. The longitudinal record should 
provide information regarding functional recovery, if any.
    Some individuals will not have received ongoing treatment or have an 
ongoing relationship with the medical community despite the existence of 
a severe impairment(s). Unless the claim can be decided favorably on the 
basis of the current evidence, a longitudinal record is still important 
because it will provide information about such things as the ongoing 
medical severity of the impairment, the degree of recovery from cardiac 
insult, the level of the individual's functioning, and the frequency, 
severity, and duration of symptoms. Also, several listings include a 
requirement for continuing signs and symptoms despite a regimen of 
prescribed treatment. Even though an individual who does not receive 
treatment may not be able to show an impairment that meets the criteria 
of these listings, the individual may have an impairment(s) equivalent 
in severity to one of the listed impairments or be disabled because of a 
limited residual functional capacity.
    Indeed, it must be remembered that these listings are only examples 
of common cardiovascular disorders that are severe enough to prevent a 
person from engaging in gainful activity. Therefore, in any case in 
which you have a medically determinable impairment that is not listed, 
or a combination of impairments no one of which meets a listing, we will 
consider a medical equivalence determination. Individuals who have an 
impairment(s) with a level of severity which does not meet or equal the 
criteria of the cardiovascular listings may or may not have the residual 
functional capacity (RFC) which would enable them to engage in 
substantial gainful activity. Evaluation of the impairment(s) of these 
individuals should proceed through the final steps of the sequential 
evaluation process (or, as appropriate, the steps in the medical 
improvement review standard).
    B. Cardiovascular impairment results from one or more of four 
consequences of heart disease:
    1. Chronic heart failure or ventricular dysfunction.
    2. Discomfort or pain due to myocardial ischemia, with or without 
necrosis of heart muscle.
    3. Syncope, or near syncope, due to inadequate cerebral perfusion 
from any cardiac cause such as obstruction of flow or disturbance in 
rhythm or conduction resulting in inadequate cardiac output.
    4. Central cyanosis due to right-to-left shunt, arterial 
desaturation, or pulmonary vascular disease.
    Impairment from diseases of arteries and veins may result from 
disorders of the vasculature in the central nervous system (11.04A, B), 
eyes (2.02-2.04), kidney (6.02), and other organs.
    C. Documentation. Each individual's file must include sufficiently 
detailed reports on history, physical examinations, laboratory studies, 
and any prescribed therapy and response to allow an independent reviewer 
to assess the severity and duration of the cardiovascular impairment.

                         1. Electrocardiography

    a. An original or legible copy of the 12-lead electrocardiogram 
(ECG) obtained at rest must be submitted, appropriately dated and 
labeled, with the standardization inscribed on the tracing. Alteration 
in standardization of specific leads (such as to accommodate large QRS 
amplitudes) must be identified on those leads.
    (1) Detailed descriptions or computer-averaged signals without 
original or legible copies of the ECG as described in subsection 4.00Cla 
are not acceptable.
    (2) The effects of drugs or electrolyte abnormalities must be 
considered as possible noncoronary causes of ECG abnormalities of 
ventricular repolarization, i.e., those involving the ST segment and T 
wave. If available, the predrug (especially digitalis glycoside) ECG 
should be submitted.
    (3) The term ``ischemic'' is used in 4.04A to describe an abnormal 
ST segment deviation. Nonspecific repolarization abnormalities should 
not be confused with ``ischemic'' changes.
    b. ECGs obtained in conjunction with treadmill, bicycle, or arm 
exercise tests should meet the following specifications:
    (1) ECGs must include the original calibrated ECG tracings or a 
legible copy.
    (2) A 12-lead baseline ECG must be recorded in the upright position 
before exercise.
    (3) A 12-lead ECG should be recorded at the end of each minute of 
exercise, including at the time the ST segment abnormalities reach or 
exceed the criteria for abnormality described in 4.04A or the individual 
experiences chest discomfort or other abnormalities, and also when the 
exercise test is terminated.
    (4) If ECG documentation of the effects of hyperventilation is 
obtained, the exercise test should be deferred for at least 10 minutes 
because metabolic changes of hyperventilation may alter the physiologic 
and ECG response to exercise.
    (5) Post-exercise ECGs should be recorded using a generally accepted 
protocol consistent with the prevailing state of medical knowledge and 
clinical practice.
    (6) All resting, exercise, and recovery ECG strips must have a 
standardization inscribed on the tracing. The ECG strips should be 
labeled to indicate the times recorded and the relationship to the stage 
of the exercise protocol. The speed and grade (treadmill test) or

[[Page 455]]

work rate (bicycle or arm ergometric test) should be recorded. The 
highest level of exercise achieved, blood pressure levels during 
testing, and the reason(s) for terminating the test (including limiting 
signs or symptoms) must be recorded.

                      2. Purchasing Exercise Tests

    a. It is well recognized by medical experts that exercise testing is 
the best tool currently available for estimating maximal aerobic 
capacity in individuals with cardiovascular impairments. Purchase of an 
exercise test may be appropriate when there is a question whether an 
impairment meets or is equivalent in severity to one of the listings, or 
when there is insufficient evidence in the record to evaluate aerobic 
capacity, and the claim cannot otherwise be favorably decided. Before 
purchasing an exercise test, a program physician, preferably one with 
experience in the care of patients with cardiovascular disease, must 
review the pertinent history, physical examinations, and laboratory 
tests to determine whether obtaining the test would present a 
significant risk to the individual (see 4.00C2c). Purchase may be 
indicated when there is no significant risk to exercise testing and 
there is no timely test of record. An exercise test is generally 
considered timely for 12 months after the date performed, provided there 
has been no change in clinical status that may alter the severity of the 
cardiac impairment.
    b. Methodology.
    (1) When an exercise test is purchased, it should be a ``sign-or 
symptom-limited'' test characterized by a progressive multistage 
regimen. A purchased exercise test must be performed using a generally 
accepted protocol consistent with the prevailing state of medical 
knowledge and clinical practice. A description of the protocol that was 
followed must be provided, and the test must meet the requirements of 
4.00C1b and this section. A pre-exercise posthyperventilation tracing 
may be essential for the proper evaluation of an ``abnormal'' test in 
certain circumstances, such as in women with evidence of mitral valve 
prolapse.
    (2) The exercise test should be paced to the capabilities of the 
individual and be supervised by a physician. With a treadmill test, the 
speed, grade (incline) and duration of exercise must be recorded for 
each exercise test stage performed. Other exercise test protocols or 
techniques that are used should utilize similar workloads.
    (3) Levels of exercise should be described in terms of workload and 
duration of each stage, e.g., treadmill speed and grade, or bicycle 
ergometer work rate in kpm/min or watts.
    (4) Normally, systolic blood pressure and heart rate increase 
gradually with exercise. A decrease in systolic blood pressure during 
exercise below the usual resting level is often associated with 
ischemia-induced left ventricular dysfunction resulting in decreased 
cardiac output. Some individuals (because of deconditioning or 
apprehension) with increased sympathetic responses may increase their 
systolic blood pressure and heart rate above their usual resting level 
just before and early into exercise. This occurrence may limit the 
ability to assess the significance of an early decrease in systolic 
blood pressure and heart rate if exercise is discontinued shortly after 
initiation. In addition, isolated systolic hypertension may be a 
manifestation of arteriosclerosis.
    (5) The exercise laboratory's physical environment, staffing, and 
equipment should meet the generally accepted standards for adult 
exercise test laboratories.
    c. Risk factors in exercise testing. The following are examples of 
situations in which exercise testing will not be purchased: unstable 
progressive angina pectoris, a history of acute myocardial infarction 
within the past 3 months, New York Heart Association (NYHA) class IV 
heart failure, cardiac drug toxicity, uncontrolled serious arrhythmia 
(including uncontrolled atrial fibrillation, Mobitz II, and third-degree 
block), Wolff-Parkinson-White syndrome, uncontrolled severe systemic 
arterial hypertension, marked pulmonary hypertension, unrepaired aortic 
dissection, left main stenosis of 50 percent or greater, marked aortic 
stenosis, chronic or dissecting aortic aneurysm, recent pulmonary 
embolism, hypertrophic cardiomyopathy, limiting neurological or 
musculoskeletal impairments, or an acute illness. In addition, an 
exercise test should not be purchased for individuals for whom the 
performance of the test is considered to constitute a significant risk 
by a program physician, preferably one experienced in the care of 
patients with cardiovascular disease, even in the absence of any of the 
above risk factors. In defining risk, the program physician, in 
accordance with the regulations and other instructions on consultative 
examinations, will generally give great weight to the treating 
physicians' opinions and will generally not override them. In the rare 
situation in which the program physician does override the treating 
source's opinion, a written rationale must be prepared documenting the 
reasons for overriding the opinion.
    d. In order to permit maximal, attainable restoration of functional 
capacity, exercise testing should not be purchased until 3 months after 
an acute myocardial infarction, surgical myocardial revascularization, 
or other open-heart surgical procedures. Purchase of an exercise test 
should also be deferred for 3 months after percutaneous transluminal 
coronary angioplasty because restenosis with ischemic symptoms may occur 
within a few months of angioplasty (see 4.00D). Also, individuals who 
have had a period of bedrest or inactivity (e.g., 2 weeks)

[[Page 456]]

that results in a reversible deconditioned state may do poorly if 
exercise testing is performed at that time.
    e. Evaluation.
    (1) Exercise testing is evaluated on the basis of the work level at 
which the test becomes abnormal, as documented by onset of signs or 
symptoms and any ECG abnormalities listed in 4.04A. The ability or 
inability to complete an exercise test is not, by itself, evidence that 
a person is free from ischemic heart disease. The results of an exercise 
test must be considered in the context of all of the other evidence in 
the individual's case record. If the individual is under the care of a 
treating physician for a cardiac impairment, and this physician has not 
performed an exercise test and there are no reported significant risks 
to testing (see 4.00C2c), a statement should be requested from the 
treating physician explaining why it was not done or should not be done 
before deciding whether an exercise test should be purchased. In those 
rare situations in which the treating source's opinion is overridden, 
follow 4.00C2c. If there is no treating physician, the program physician 
will be responsible for assessing the risk to exercise testing.
    (2) Limitations to exercise test interpretation include the presence 
of noncoronary or nonischemic factors that may influence the hemodynamic 
and ECG response to exercise, such as hypokalemia or other electrolyte 
abnormality, hyperventilation, vasoregulatory deconditioning, prolonged 
periods of physical inactivity (e.g., 2 weeks of bedrest), significant 
anemia, left bundle branch block pattern on the ECG (and other 
conduction abnormalities that do not preclude the purchase of exercise 
testing), and other heart diseases or abnormalities (particularly 
valvular heart disease). Digitalis glycosides may cause ST segment 
abnormalities at rest, during, and after exercise. Digitalis or other 
drug-related ST segment displacement, present at rest, may become 
accentuated with exercise and make ECG interpretation difficult, but 
such drugs do not invalidate an otherwise normal exercise test. 
Diuretic-induced hypokalemia and left ventricular hypertrophy may also 
be associated with repolarization changes and behave similarly. Finally, 
treatment with beta blockers slows the heart rate more at near-maximal 
exertion than at rest; this limits apparent chronotropic capacity.

                            3. Other Studies

    Information from two-dimensional and Doppler echocardiographic 
studies of ventricular size and function as well as radionuclide 
(thallium 201) myocardial ``perfusion'' or radionuclide 
(technetium 99m) ventriculograms (RVG or MUGA) may be useful. These 
techniques can provide a reliable estimate of ejection fraction. In 
selected cases, these tests may be purchased after a medical history and 
physical examination, report of appropriate medically acceptable 
imaging, ECGs, and other appropriate tests have been evaluated, 
preferably by a program physician with experience in the care of 
patients with cardiovascular disease. Medically acceptable imaging 
includes, but is not limited to, x-ray imaging, computerized axial 
tomography (CAT scan) or magnetic resonance imaging (MRI), with or 
without contrast material, myelography, and radionuclear bone scans. 
``Appropriate'' means that the technique used is the proper one to 
support the evaluation and diagnosis of the impairment. Purchase should 
be considered when other information available is not adequate to assess 
whether the individual may have severe ventricular dysfunction or 
myocardial ischemia and there is no significant risk involved (follow 
4.00C2a guides), and the claim cannot be favorably decided on any other 
basis.
    Exercise testing with measurement of maximal oxygen uptake (VO 
2) provides an accurate determination of aerobic capacity. An 
exercise test without measurement of oxygen uptake provides an estimate 
of aerobic capacity. When the results of tests with measurement of 
oxygen uptake are available, every reasonable effort should be made to 
obtain them.
    The recording of properly calibrated ambulatory ECGs for analysis of 
ST segment signals with a concomitantly recorded symptom and treatment 
log may permit more adequate evaluation of chest discomfort during 
activities of daily living, but the significance of these data for 
disability evaluation has not been established in the absence of 
symptoms (e.g., silent ischemia). This information (including selected 
segments of both the ECG recording and summary report of the patient 
diary) may be submitted for the record.
    4. Cardiac catheterization will not be purchased by the Social 
Security Administration.
    a. Coronary arteriography. If results of such testing are available, 
the report should be obtained and considered as to the quality and type 
of data provided and its relevance to the evaluation of the impairment. 
A copy of the report of the cardiac catheterization and ancillary 
studies should also be obtained. The report should provide information 
citing the method of assessing coronary arterial lumen diameter and the 
nature and location of obstructive lesions. Drug treatment at baseline 
and during the procedure should be reported. Coronary artery spasm 
induced by intracoronary catheterization is not to be considered 
evidence of ischemic disease. Some individuals with significant coronary 
atherosclerotic obstruction have collateral vessels that supply the 
myocardium distal to the arterial obstruction so

[[Page 457]]

that there is no evidence of myocardial damage or ischemia, even with 
exercise. When available, quantitative computer measurements and 
analyses should be considered in the interpretation of severity of 
stenotic lesions.
    b. Left ventriculography (by angiography). The report should 
describe the wall motion of the myocardium with regard to any areas of 
hypokinesis, akinesis, or dyskinesis, and the overall contraction of the 
ventricle as measured by the ejection fraction. Measurement of chamber 
volumes and pressures may be useful. When available, quantitative 
computer analysis provides precise measurement of segmental left 
ventricular wall thickness and motion. There is often a poor correlation 
between left ventricular function at rest and functional capacity for 
physical activity.
    D. Treatment and relationship to functional status.
    1. In general, conclusions about the severity of a cardiovascular 
impairment cannot be made on the basis of type of treatment rendered or 
anticipated. The overall clinical and laboratory evidence, including the 
treatment plan(s) or results, should be persuasive that a listing-level 
impairment exists. The amount of function restored and the time required 
for improvement after treatment (medical, surgical, or a prescribed 
program of progressive physical activity) vary with the nature and 
extent of the disorder, the type of treatment, and other factors. 
Depending upon the timing of this treatment in relation to the alleged 
onset date of disability, impairment evaluation may need to be deferred 
for a period of up to 3 months from the date of treatment to permit 
consideration of treatment effects. Evaluation should not be deferred if 
the claim can be favorably decided based upon the available evidence.
    2. The usual time after myocardial infarction, valvular and/or 
revascularization surgery for adequate assessment of the results of 
treatment is considered to be 3 months. If an exercise test is performed 
by a treating source within a week or two after angioplasty, and there 
is no significant change in clinical status during the 3-month period 
after the angioplasty that would invalidate the implications of the 
exercise test results, the exercise test results may be used to reflect 
functional capacity during the period in question. However, if the test 
was done immediately following an acute myocardial infarction or during 
a period of protracted inactivity, the results should not be projected 
to 3 months even if there is no change in clinical status.
    3. An individual who has undergone cardiac transplantation will be 
considered under a disability for 1 year following the surgery because, 
during the first year, there is a greater likelihood of rejection of the 
organ and recurrent infection. After the first year posttransplantation, 
continuing disability evaluation will be based upon residual impairment 
as shown by symptoms, signs, and laboratory findings. Absence of 
symptoms, signs, and laboratory findings indicative of cardiac 
dysfunction will be included in the consideration of whether medical 
improvement (as defined in Sec. Sec. 404.1579 (b)(1) and (c)(1), 
404.1594 (b)(1) and (c)(1), or 416.994 (b)(1)(i) and (b)(2)(i), as 
appropriate) has occurred.
    E. Clinical syndromes.
    1. Chronic heart failure (ventricular dysfunction) is considered in 
these listings as one category whatever its etiology, i.e., 
atherosclerotic, hypertensive, rheumatic, pulmonary, congenital or other 
organic heart disease. Chronic heart failure may manifest itself by:
    a. Pulmonary or systemic congestion, or both; or
    b. Symptoms of limited cardiac output, such as weakness, fatigue, or 
intolerance of physical activity.
    For the purpose of 4.02A, pulmonary and systemic congestion are not 
considered to have been established unless there is or has been evidence 
of fluid retention, such as hepatomegaly or ascites, or peripheral or 
pulmonary edema of cardiac origin. The findings of fluid retention need 
not be present at the time of adjudication because congestion may be 
controlled with medication. Chronic heart failure due to limited cardiac 
output is not considered to have been established for the purpose of 
4.02B unless symptoms occur with ordinary daily activities, i.e., 
activity restriction as manifested by a need to decrease activity or 
pace, or to rest intermittently, and are associated with one or more 
physical signs or abnormal laboratory studies listed in 4.02B. These 
studies include exercise testing with ECG and blood pressure recording 
and/or appropriate imaging techniques, such as two-dimensional 
echocardiography or radionuclide or contrast ventriculography. The 
exercise criteria are outlined in 4.02B1. In addition, other abnormal 
symptoms, signs, or laboratory test results that lend credence to the 
impression of ventricular dysfunction should be considered.
    2. For the purposes of 4.03, hypertensive cardiovascular disease is 
evaluated by reference to the specific organ system involved (heart, 
brain, kidneys, or eyes). The presence of organic impairment must be 
established by appropriate physical signs and laboratory test 
abnormalities as specified in 4.02 or 4.04, or for the body system 
involved.
    3. Ischemic (coronary) heart disease may result in an impairment due 
to myocardial ischemia and/or ventricular dysfunction or infarction. For 
the purposes of 4.04, the clinical determination that discomfort of 
myocardial ischemic origin (angina pectoris) is present must be 
supported by objective evidence as described under 4.00Cl, 2, 3, or 4.

[[Page 458]]

    a. Discomfort of myocardial ischemic origin (angina pectoris) is 
discomfort that is precipitated by effort and/or emotion and promptly 
relieved by sublingual nitroglycerin, other rapidly acting nitrates, or 
rest. Typically the discomfort is located in the chest (usually 
substernal) and described as crushing, squeezing, burning, aching, or 
oppressive. Sharp, sticking, or cramping discomfort is considered less 
common or atypical. Discomfort occurring with activity or emotion should 
be described specifically as to timing and usual inciting factors (type 
and intensity), character, location, radiation, duration, and response 
to nitrate therapy or rest.
    b. So-called anginal equivalent may be localized to the neck, 
jaw(s), or hand(s) and has the same precipitating and relieving factors 
as typical chest discomfort. Isolated shortness of breath (dyspnea) is 
not considered an anginal equivalent for purposes of adjudication.
    c. Variant angina of the Prinzmetal type, i.e., rest angina with 
transitory ST segment elevation on ECG, may have the same significance 
as typical angina, described in 4.00E3a.
    d. If there is documented evidence of silent ischemia or restricted 
activity to prevent chest discomfort, this information must be 
considered along with all available evidence to determine if an 
equivalence decision is appropriate.
    e. Chest discomfort of myocardial ischemic origin is usually caused 
by coronary artery disease. However, ischemic discomfort may be caused 
by noncoronary artery conditions, such as critical aortic stenosis, 
hypertrophic cardiomyopathy, pulmonary hypertension, or anemia. These 
conditions should be distinguished from coronary artery disease, because 
the evaluation criteria, management, and prognosis (duration) may differ 
from that of coronary artery disease.
    f. Chest discomfort of nonischemic origin may result from other 
cardiac conditions such as pericarditis and mitral valve prolapse. 
Noncardiac conditions may also produce symptoms mimicking that of 
myocardial ischemia. These conditions include gastrointestinal tract 
disorders, such as esophageal spasm, esophagitis, hiatal hernia, biliary 
tract disease, gastritis, peptic ulcer, and pancreatitis, and 
musculoskeletal syndromes, such as chest wall muscle spasm, chest wall 
syndrome (especially after coronary bypass surgery), costochondritis, 
and cervical or dorsal arthritis. Hyperventilation may also mimic 
ischemic discomfort. Such disorders should be considered before 
concluding that chest discomfort is of myocardial ischemic origin.

                     4. Peripheral Arterial Disease

    The level of impairment is based on the symptomatology, physical 
findings, Doppler studies before and after a standard exercise test, or 
angiographic findings.
    The requirements for evaluating peripheral arterial disease in 4.12B 
are based on the ratio of the systolic blood pressure at the ankle to 
the systolic blood pressure at the brachial artery, determined in the 
supine position at the same time. Techniques for obtaining ankle 
systolic blood pressures include Doppler, plethysmographic studies, or 
other techniques.
    Listing 4.12B1 is met when the resting ankle/brachial systolic blood 
pressure ratio is less than 0.50. Listing 4.12B2 provides additional 
criteria for evaluating peripheral arterial impairment on the basis of 
exercise studies when the resting ankle/brachial systolic blood pressure 
ratio is 0.50 or above. The decision to obtain exercise studies should 
be based on an evaluation of the existing clinical evidence, but 
exercise studies are rarely warranted when the resting ankle-over-
brachial systolic blood pressure ratio is 0.80 or above. The results of 
exercise studies should describe the level of exercise, e.g., speed and 
grade of the treadmill settings, the duration of exercise, symptoms 
during exercise, the reasons for stopping exercise if the expected level 
of exercise was not attained, blood pressures at the ankle and other 
pertinent sites measured after exercise, and the time required to return 
the systolic blood pressure toward or to the pre-exercise level. When an 
exercise Doppler study is purchased by the Social Security 
Administration, the requested exercise must be on a treadmill at 2 mph 
on a 10 or 12 percent grade for 5 minutes. Exercise studies should not 
be performed on individuals for whom exercise poses a significant risk.
    Application of the criteria in 4.12B may be limited in individuals 
who have marked calcific (Monckeberg's) sclerosis of the peripheral 
arteries or marked small vessel disease associated with diabetes 
mellitus.
    F. Effects of obesity. Obesity is a medically determinable 
impairment that is often associated with disturbance of the 
cardiovascular system, and disturbance of this system can be a major 
cause of disability in individuals with obesity. The combined effects of 
obesity with cardiovascular impairments can be greater than the effects 
of each of the impairments considered separately. Therefore, when 
determining whether an individual with obesity has a listing-level 
impairment or combination of impairments, and when assessing a claim at 
other steps of the sequential evaluation process, including when 
assessing an individual's residual functional capacity, adjudicators 
must consider any additional and cumulative effects of obesity.

           4.01 Category of Impairments, Cardiovascular System

    4.02 Chronic heart failure while on a regimen of prescribed 
treatment (see 4.00A if

[[Page 459]]

there is no regimen of prescribed treatment). With one of the following:
    A. Documented cardiac enlargement by appropriate imaging techniques 
(e.g., a cardiothoracic ratio of greater than 0.50 on a PA chest x-ray 
with good inspiratory effort or left ventricular diastolic diameter of 
greater than 5.5 cm on two-dimensional echocardiography), resulting in 
inability to carry on any physical activity, and with symptoms of 
inadequate cardiac output, pulmonary congestion, systemic congestion, or 
anginal syndrome at rest (e.g., recurrent or persistent fatigue, 
dyspnea, orthopnea, anginal discomfort);

OR

    B. Documented cardiac enlargement by appropriate imaging techniques 
(see 4.02A) or ventricular dysfunction manifested by S3, abnormal wall 
motion, or left ventricular ejection fraction of 30 percent or less by 
appropriate imaging techniques; and
    1. Inability to perform on an exercise test at a workload equivalent 
to 5 METs or less due to symptoms of chronic heart failure, or, in rare 
instances, a need to stop exercise testing at less than this level of 
work because of:
    a. Three or more consecutive ventricular premature beats or three or 
more multiform beats; or
    b. Failure to increase systolic blood pressure by 10 mmHg, or 
decrease in systolic pressure below the usual resting level (see 
4.00C2b); or
    c. Signs attributable to inadequate cerebral perfusion, such as 
ataxic gait or mental confusion; and
    2. Resulting in marked limitation of physical activity, as 
demonstrated by fatigue, palpitation, dyspnea, or anginal discomfort on 
ordinary physical activity, even though the individual is comfortable at 
rest;

OR

    C. Cor pulmonale fulfilling the criteria in 4.02A or B.
    4.03 Hypertensive cardiovascular disease. Evaluate under 4.02 or 
4.04, or under the criteria for the affected body system (2.02 through 
2.04, 6.02, or 11.04A or B).
    4.04 Ischemic heart disease, with chest discomfort associated with 
myocardial ischemia, as described in 4.00E3, while on a regimen of 
prescribed treatment (see 4.00A if there is no regimen of prescribed 
treatment). With one of the following:
    A. Sign- or symptom-limited exercise test demonstrating at least one 
of the following manifestations at a workload equivalent to 5 METs or 
less:
    1. Horizontal or downsloping depression, in the absence of digitalis 
glycoside therapy and/or hypokalemia, of the ST segment of at least -
0.10 millivolts (-1.0 mm) in at least 3 consecutive complexes that are 
on a level baseline in any lead (other than aVR) and that have a typical 
ischemic time course of development and resolution (progression of 
horizontal or downsloping ST depression with exercise, and persistence 
of depression of at least -0.10 millivolts for at least 1 minute of 
recovery); or
    2. An upsloping ST junction depression, in the absence of digitalis 
glycoside therapy and/or hypokalemia, in any lead (except aVR) of at 
least -0.2 millivolts or more for at least 0.08 seconds after the J 
junction and persisting for at least 1 minute of recovery; or
    3. At least 0.1 millivolt (1 mm) ST elevation above resting baseline 
during both exercise and 3 or more minutes of recovery in ECG leads with 
low R and T waves in the leads demonstrating the ST segment 
displacement; or
    4. Failure to increase systolic pressure by 10 mmHg, or decrease in 
systolic pressure below usual clinical resting level (see 4.00C2b); or
    5. Documented reversible radionuclide ``perfusion'' (thallium\201\) 
defect at an exercise level equivalent to 5 METs or less;

OR

    B. Impaired myocardial function, documented by evidence (as outlined 
under 4.00C3 or 4.00C4b) of hypokinetic, akinetic, or dyskinetic 
myocardial free wall or septal wall motion with left ventricular 
ejection fraction of 30 percent or less, and an evaluating program 
physician, preferably one experienced in the care of patients with 
cardiovascular disease, has concluded that performance of exercise 
testing would present a significant risk to the individual, and 
resulting in marked limitation of physical activity, as demonstrated by 
fatigue, palpitation, dyspnea, or anginal discomfort on ordinary 
physical activity, even though the individual is comfortable at rest;

OR

    C. Coronary artery disease, demonstrated by angiography (obtained 
independent of Social Security disability evaluation), and an evaluating 
program physician, preferably one experienced in the care of patients 
with cardiovascular disease, has concluded that performance of exercise 
testing would present a significant risk to the individual, with both 1 
and 2:
    1. Angiographic evidence revealing:
    a. 50 percent or more narrowing of a nonbypassed left main coronary 
artery; or
    b. 70 percent or more narrowing of another nonbypassed coronary 
artery; or
    c. 50 percent or more narrowing involving a long (greater than 1 cm) 
segment of a nonbypassed coronary artery; or
    d. 50 percent or more narrowing of at least 2 nonbypassed coronary 
arteries; or
    e. Total obstruction of a bypass graft vessel; and

[[Page 460]]

    2. Resulting in marked limitation of physical activity, as 
demonstrated by fatigue, palpitation, dyspnea, or anginal discomfort on 
ordinary physical activity, even though the individual is comfortable at 
rest.
    4.05 Recurrent arrhythmias, not related to reversible causes such as 
electrolyte abnormalities or digitalis glycoside or antiarrhythmic drug 
toxicity, resulting in uncontrolled repeated episodes of cardiac syncope 
or near syncope and arrhythmia despite prescribed treatment (see 4.00A 
if there is no prescribed treatment), documented by resting or 
ambulatory (Holter) electrocardiography coincident with the occurrence 
of syncope or near syncope.
    4.06 Symptomatic congenital heart disease (cyanotic or acyanotic), 
documented by appropriate imaging techniques (as outlined under 4.00C3) 
or cardiac catheterization. With one of the following:
    A. Cyanosis at rest, and:
    1. Hematocrit of 55 percent or greater, or
    2. Arterial O2 saturation of less than 90 percent in room 
air, or resting arterial PO2 of 60 Torr or less;

OR

    B. Intermittent right-to-left shunting resulting in cyanosis on 
exertion (e.g., Eisenmenger's physiology) and with arterial 
PO2 of 60 Torr or less at a workload equivalent to 5 METs or 
less;

OR

    C. Chronic heart failure with evidence of ventricular dysfunction, 
as described in 4.02;

OR

    D. Recurrent arrhythmias as described in 4.05;

OR

    E. Secondary pulmonary vascular obstructive disease with a mean 
pulmonary arterial pressure elevated to at least 70 percent of the mean 
systemic arterial pressure.
    4.07 Valvular heart disease or other stenotic defects, or valvular 
regurgitation, documented by appropriate imaging techniques or cardiac 
catheterization. Evaluate under the criteria in 4.02, 4.04, 4.05, or 
11.04.
    4.08 Cardiomyopathies, documented by appropriate imaging techniques 
or cardiac catheterization. Evaluate under the criteria in 4.02, 4.04, 
4.05, or 11.04.
    4.09 Cardiac transplantation. Consider under a disability for 1 year 
following surgery; thereafter, reevaluate residual impairment under 4.02 
to 4.08.
    4.10 Aneurysm of aorta or major branches, due to any cause (e.g., 
atherosclerosis, cystic medial necrosis, Marfan syndrome, trauma), 
demonstrated by an appropriate imaging technique. With one of the 
following:
    A. Acute or chronic dissection not controlled by prescribed medical 
or surgical treatment;

OR

    B. Chronic heart failure as described under 4.02;

OR

    C. Renal failure as described under 6.02;

OR

    D. Neurological complications as described under 11.04.
    4.11 Chronic venous insufficiency of a lower extremity. With 
incompetency or obstruction of the deep venous system and one of the 
following:
    A. Extensive brawny edema;

OR

    B. Superficial varicosities, stasis dermatitis, and recurrent or 
persistent ulceration which has not healed following at least 3 months 
of prescribed medical or surgical therapy.
    4.12 Peripheral arterial disease. With one of the following:
    A. Intermittent claudication with failure to visualize (on 
arteriogram obtained independent of Social Security disability 
evaluation) the common femoral or deep femoral artery in one extremity;

or

    B. Intermittent claudication with marked impairment of peripheral 
arterial circulation as determined by Doppler studies showing:
    1. Resting ankle/brachial systolic blood pressure ratio of less than 
0.50; or
    2. Decrease in systolic blood pressure at the ankle on exercise (see 
4.00E4) of 50 percent or more of pre-exercise level at the ankle, and 
requiring 10 minutes or more to return to pre-exercise level.

                          5.00 Digestive System

    A. Disorders of the digestive system which result in a marked 
impairment usually do so because of interference with nutrition, 
multiple recurrent inflammatory lesions, or complications of disease, 
such as fistulae, abscesses, or recurrent obstruction. Such 
complications usually respond to treatment. These complications must be 
shown to persist on repeated examinations despite therapy for a 
reasonable presumption to be made that a marked impairment will last for 
a continuous period of at least 12 months.
    B. Malnutrition or weight loss from gastrointestinal disorders. When 
the primary disorder of the digestive tract has been established (e.g. 
enterocolitis, chronic pancreatitis, postgastrointestinal resection, or 
esophageal stricture, stenosis, or obstruction), the resultant 
interference with nutrition will be considered under the criteria in 
5.08. This will apply whether the weight loss is due to primary or 
secondary disorders of malabsorption, malassimilation or obstruction.
    C. Surgical diversion of the intestinal tract, including colostomy 
or ileostomy, are not

[[Page 461]]

listed since they do not represent impairments which preclude all work 
activity if the individual is able to maintain adequate nutrition and 
function of the stoma. Dumping syndrome which may follow gastric 
resection rarely represents a marked impairment which would continue for 
12 months. Peptic ulcer disease with recurrent ulceration after 
definitive surgery ordinarily responds to treatment. To be considered a 
severe impairment which will last for at least 12 months, a recurrent 
ulcer after definitive surgery must be demonstrated, despite therapy, by 
repeated appropriate medically acceptable imaging of the upper 
gastrointestinal tract or by gastroscopic examinations. Medically 
acceptable imaging includes, but is not limited to, x-ray imaging, 
computerized axial tomography (CAT scan) or magnetic resonance imaging 
(MRI), with or without contrast material, myelography, and radionuclear 
bone scans. ``Appropriate'' means that the technique used is the proper 
one to support the evaluation and diagnosis of the impairment. 
Definitive surgical procedures are those designed to control the ulcer 
disease process (i.e., vagotomy and pyloroplasty, subtotal gastrectomy, 
etc.). Simple closure of a perforated ulcer does not constitute 
definitive surgical therapy for peptic ulcer disease.

             5.01 Category of Impairments, Digestive System

    5.02 Recurrent upper gastrointestinal hemorrhage from undetermined 
cause with anemia manifested by hematocrit of 30 percent or less on 
repeated examinations.
    5.03 Stricture, stenosis, or obstruction of the esophagus 
(demonstrated by endoscopy or other appropriate medically acceptable 
imaging) with weight loss as described under listing 5.08.
    5.04 Peptic ulcer disease (demonstrated by endoscopy or other 
appropriate medically acceptable imaging). With:
    A. Recurrent ulceration after definitive surgery persistent despite 
therapy; or
    B. Inoperable fistula formation; or
    C. Recurrent obstruction demonstrated by endoscopy or other 
appropriate medically acceptable imaging; or,
    D. Weight loss as described under Sec. 5.08.
    5.05 Chronic liver disease (e.g., portal, postnecrotic, or biliary 
cirrhosis; chronic active hepatitis; Wilson's disease). With:
    A. Esophageal varices (demonstrated by endoscopy or other 
appropriate medically acceptable imaging) with a documented history of 
massive hemorrhage attributable to these varices. Consider under a 
disability for 3 years following the last massive hemorrhage; 
thereafter, evaluate the residual impairment; or
    B. Performance of a shunt operation for esophageal varices. Consider 
under a disability for 3 years following surgery; thereafter, evaluate 
the residual impairment; or
    C. Serum bilirubin of 2.5 mg. per deciliter (100 ml.) or greater 
persisting on repeated examinations for at least 5 months; or
    D. Ascites, not attributable to other causes, recurrent or 
persisting for at least 5 months, demonstrated by abdominal paracentesis 
or associated with persistent hypoalbuminemia of 3.0 gm. per deciliter 
(100 ml.) or less; or
    E. Hepatic encephalopathy. Evaluate under the criteria in listing 
12.02; or
    F. Confirmation of chronic liver disease by liver biopsy (obtained 
independent of Social Security disability evaluation) and one of the 
following:
    1. Ascites not attributable to other causes, recurrent or persisting 
for at least 3 months, demonstrated by abdominal paracentesis or 
associated with persistent hypoalbuminemia of 3.0 gm. per deciliter (100 
ml.) or less; or
    2. Serum bilirubin of 2.5 mg. per deciliter (100 ml) or greater on 
repeated examinations for at least 3 months; or
    3. Hepatic cell necrosis or inflammation, persisting for at least 3 
months, documented by repeated abnormalities of prothrombin time and 
enzymes indicative of hepatic dysfunction.
    5.06 Chronic ulcerative or granulomatous colitis (demonstrated by 
endoscopy, barium enema, biopsy, or operative findings). With:
    A. Recurrent bloody stools documented on repeated examinations and 
anemia manifested by hematocrit of 30 percent or less on repeated 
examinations; or
    B. Persistent or recurrent systemic manifestations, such as 
arthritis, iritis, fever, or liver dysfunction, not attributable to 
other causes; or
    C. Intermittent obstruction due to intractable abscess, fistula 
formation, or stenosis; or
    D. Recurrence of findings of A, B, or C above after total colectomy; 
or
    E. Weight loss as described under Sec. 5.08.
    5.07 Regional enteritis (demonstrated by operative findings, barium 
studies, biopsy, or endoscopy). With:
    A. Persistent or recurrent intestinal obstruction evidenced by 
abdominal pain, distention, nausea, and vomiting and accompanied by 
stenotic areas of small bowel with proximal intestinal dilation; or
    B. Persistent or recurrent systemic manifestations such as 
arthritis, iritis, fever, or liver dysfunction, not attributable to 
other causes; or
    C. Intermittent obstruction due to intractable abscess or fistula 
formation; or
    D. Weight loss as described under Sec. 5.08.
    5.08 Weight loss due to any persisting gastrointestinal disorder: 
(The following weights are to be demonstrated to have persisted for at 
least 3 months despite prescribed therapy and expected to persist at 
this level for at least 12 months.) With:

[[Page 462]]

    A. Weight equal to or less than the values specified in table I or 
II; or
    B. Weight equal to or less than the values specified in table III or 
IV and one of the following abnormal findings on repeated examinations:
    1. Serum albumin of 3.0 gm. per deciliter (100 ml.) or less; or
    2. Hematocrit of 30 percent or less; or
    3. Serum calcium of 8.0 mg. per deciliter (100 ml.) (4.0 mEq./L) or 
less; or
    4. Uncontrolled diabetes mellitus due to pancreatic dysfunction with 
repeated hyperglycemia, hypoglycemia, or ketosis; or
    5. Fat in stool of 7 gm. or greater per 24-hour stool specimen; or
    6. Nitrogen in stool of 3 gm, or greater per 24-hour specimen; or
    7. Persistent or recurrent ascites or edema not attributable to 
other causes.
    Tables of weight reflecting malnutrition scaled according to height 
and sex--To be used only in connection with 5.08.

                              Table I--Men
------------------------------------------------------------------------
                                                                 Weight
                      Height (inches) \1\                       (pounds)
------------------------------------------------------------------------
61............................................................        90
62............................................................        92
63............................................................        94
64............................................................        97
65............................................................        99
66............................................................       102
67............................................................       106
68............................................................       109
69............................................................       112
70............................................................       115
71............................................................       118
72............................................................       122
73............................................................       125
74............................................................       128
75............................................................       131
76............................................................       134
------------------------------------------------------------------------
\1\ Height measured without shoes.


                             Table II--Women
------------------------------------------------------------------------
                                                                 Weight
                      Height (inches) \1\                       (pounds)
------------------------------------------------------------------------
58............................................................        77
59............................................................        79
60............................................................        82
61............................................................        84
62............................................................        86
63............................................................        89
64............................................................        91
65............................................................        94
66............................................................        98
67............................................................       101
68............................................................       104
69............................................................       107
70............................................................       110
71............................................................       114
72............................................................       117
73............................................................       120
------------------------------------------------------------------------
\1\ Height measured without shoes.


                             Table III--Men
------------------------------------------------------------------------
                                                                 Weight
                      Height (inches) \1\                       (pounds)
------------------------------------------------------------------------
61............................................................        95
62............................................................        98
63............................................................       100
64............................................................       103
65............................................................       106
66............................................................       109
67............................................................       112
68............................................................       116
69............................................................       119
70............................................................       122
71............................................................       126
72............................................................       129
73............................................................       133
74............................................................       136
75............................................................       139
76............................................................       143
------------------------------------------------------------------------
\1\ Height measured without shoes.


                             Table IV--Women
------------------------------------------------------------------------
                                                                 Weight
                      Height (inches) \1\                       (pounds)
------------------------------------------------------------------------
58............................................................        82
59............................................................        84
60............................................................        87
61............................................................        89
62............................................................        92
63............................................................        94
64............................................................        97
65............................................................       100
66............................................................       104
67............................................................       107
68............................................................       111
69............................................................       114
70............................................................       117
71............................................................       121
72............................................................       124
73............................................................       128
------------------------------------------------------------------------
\1\ Height measured without shoes.

    5.09 Liver transplant. Consider under a disability for 12 months 
following the date of surgery; thereafter, evaluate the residual 
impairment(s).

                       6.00 Genito-Urinary System

    A. Determination of the presence of chronic renal disease will be 
based upon (1) a history, physical examination, and laboratory evidence 
of renal disease, and (2) indications of its progressive nature or 
laboratory evidence of deterioration of renal function. Medically 
acceptable imaging includes, but is not limited to, x-ray imaging, 
computerized axial tomography (CAT scan) or magnetic resonance imaging 
(MRI), with or without contrast material, myelography, and radionuclear 
bone scans. ``Appropriate'' means that the technique used is the proper 
one to support the evaluation and diagnosis of the impairment.
    B. Nephrotic Syndrome. The medical evidence establishing the 
clinical diagnosis must include the description of extent of tissue 
edema, including pretibial, periorbital, or presacral edema. The 
presence of ascites,

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pleural effusion, pericardial effusion, and hydroarthrosis should be 
described if present. Results of pertinent laboratory tests must be 
provided. If a renal biopsy has been performed, the evidence should 
include a copy of the report of microscopic examination of the specimen. 
Complications such as severe orthostatic hypotension, recurrent 
infections or venous thromboses should be evaluated on the basis of 
resultant impairment.
    C. Hemodialysis, peritioneal dialysis, and kidney transplantation. 
When an individual is undergoing periodic dialysis because of chronic 
renal disease, severity of impairment is reflected by the renal function 
prior to the institution of dialysis.
    The amount of function restored and the time required to effect 
improvement in an individual treated by renal transplant depend upon 
various factors, including adequacy of post transplant renal function, 
incidence and severity of renal infection, occurrence of rejection 
crisis, the presence of systemic complications (anemia, neunropathy, 
etc.) and side effects of corticosteroids or immuno-suppressive agents. 
A convalesent period of at least 12 months is required before it can be 
reasonably determined whether the individual has reached a point of 
stable medical improvement.
    D. Evaluate associated disorders and complications according to the 
appropriate body system Listing.

           6.01 Category of Impairments, Genito-Urinary System

    6.02 Impairment of renal function, due to any chronic renal disease 
expected to last 12 months (e.g., hypertensive vascular disease, chronic 
nephritis, nephrolithiasis, polycystic disease, bilateral 
hydronephrosis, etc.) With:
    A. Chronic hemodialysis or peritoneal dialysis necessitated by 
irreversible renal failure; or
    B. Kidney transplant. Consider under a disability for 12 months 
following surgery; thereafter, evaluate the residual impairment (see 
6.00C); or
    C. Persistent elevation of serum creatine in to 4 mg. per deciliter 
(100 ml.) or greater or reduction of creatinine clearance to 20 ml. per 
minute (29 liters/24 hours) or less, over at least 3 months, with one of 
the following:
    1. Renal osteodystrophy manifested by severe bone pain and 
abnormalities shown by appropriate medically acceptable imaging (e.g., 
osteitis fibrosa, marked osteoporosis, pathologic fractures); or
    2. A clinical episode of pericarditis; or
    3. Persistent motor or sensory neuropathy; or
    4. Intractable pruritus; or
    5. Persistent fluid overload syndrome resulting in diastolic 
hypertension (110 mm. or above) or signs of vascular congestion; or
    6. Persistent anorexia with recent weight loss and current weight 
meeting the values in 5.08, table III or IV; or
    7. Persistent hematocrits of 30 percent or less.
    6.06 Nephrotic syndrome, with significant anasarca, persistent for 
at least 3 months despite prescribed therapy. With:
    A. Serum albumin of 3.0 gm. per deciler (100 ml.) or less and 
protenuria of 3.5 gm. per 24 hours or greater; or
    B. Proteinuria of 10.0 gm. per 24 hours or greater.

                     7.00 Hemic and Lymphatic System

    A. Impairment caused by anemia should be evaluated according to the 
ability of the individual to adjust to the reduced oxygen carrying 
capacity of the blood. A gradual reduction in red cell mass, even to 
very low values, is often well tolerated in individuals with a healthy 
cardiovascular system.
    B. Chronicity is indicated by persistence of the condition for at 
least 3 months. The laboratory findings cited must reflect the values 
reported on more than one examination over that 3-month period. 
Medically acceptable imaging includes, but is not limited to, x-ray 
imaging, computerized axial tomography (CAT scan) or magnetic resonance 
imaging (MRI), with or without contrast material, myelography, and 
radionuclear bone scans. ``Appropriate'' means that the technique used 
is the proper one to support the evaluation and diagnosis of the 
impairment.
    C. Sickle cell disease refers to a chronic hemolytic anemia 
associated with sickle cell hemoglobin, either homozygous or in 
combination with thalassemia or with another abnormal hemoglobin (such 
as C or F).
    Appropriate hematologic evidence for sickle cell disease, such as 
hemoglobin electrophoresis, must be included. Vasoocclusive or aplastic 
episodes should be documented by description of severity, frequency, and 
duration.
    Major visceral episodes include meningitis, osteomyelitis, pulmonary 
infections or infarctions, cerebrovascular accidents, congestive heart 
failure, genito-urinary involvement, etc.
    D. Coagulation defects. Chronic inherited coagulation disorders must 
be documented by appropriate laboratory evidence. Prophylactic therapy 
such as with antihemophilic globulin (AHG) concentrate does not in 
itself imply severity.
    E. Acute leukemia (including T-cell lymphoblastic lymphoma). Initial 
diagnosis of acute leukemia or T-cell lymphoblastic lymphoma must be 
based upon definitive bone marrow pathologic evidence. Recurrent disease 
may be documented by peripheral blood, bone marrow, or cerebrospinal 
fluid examination. The pathology report must be included.

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    The acute phase of chronic myelocytic (granulocytic) leukemia should 
be considered under the requirements for acute leukemia.
    The criteria in 7.11 contain the designated duration of disability 
implicit in the finding of a listed impairment. Following the designated 
time period, a documented diagnosis itself is no longer sufficient to 
establish a marked impairment. The level of any remaining impairment 
must be evaluated on the basis of the medical evidence.
    7.01 Category of Impairments, Hemic and Lymphatic System
    7.02 Chronic anemia (hematocrit persisting at 30 percent or less due 
to any cause). With:
    A. Requirement of one or more blood transfusions on an average of at 
least once every 2 months; or
    B. Evaluation of the resulting impairment under criteria for the 
affected body system.
    7.05 Sickle cell disease, or one of its variants. With:
    A. Documented painful (thrombotic) crises occurring at least three 
times during the 5 months prior to adjudication; or
    B. Requiring extended hospitalization (beyond emergency care) at 
least three times during the 12 months prior to adjudication; or
    C. Chronic, severe anemia with persistence of hematocrit of 26 
percent or less; or
    D. Evaluate the resulting impairment under the criteria for the 
affected body system.
    7.06 Chronic thrombocytopenia (due to any cause) with platelet 
counts repeatedly below 40,000/cubic millimeter. With:
    A. At least one spontaneous hemorrhage, requiring transfusion, 
within 5 months prior to adjudication; or
    B. Intracranial bleeding within 12 months prior to adjudication.
    7.07 Hereditary telangiectasia with hemorrhage requiring transfusion 
at least three times during the 5 months prior to adjudication.
    7.08 Coagulation defects (hemophilia or a similar disorder) with 
spontaneous hemorrhage requiring transfusion at least three times during 
the 5 months prior to adjudication.
    7.09 Polycythemia vera (with erythrocytosis, splenomegaly, and 
leukocytosis or thrombocytosis). Evaluate the resulting impairment under 
the criteria for the affected body system.
    7.10 Myelofibrosis (myeloproliferative syndrome). With:
    A. Chronic anemia. Evaluate according to the criteria of Sec. 7.02; 
or
    B. Documented recurrent systemic bacterial infections occurring at 
least 3 times during the 5 months prior to adjudication; or
    C. Intractable bone pain with radiologic evidence of osteosclerosis.
    7.11 Acute leukemia (including T-cell lymphoblastic lymphoma). 
Consider under a disability for 2\1/2\ years from the time of initial 
diagnosis.
    7.12 Chronic leukemia. Evaluate according to the criteria of 7.02, 
7.06, 7.10B, 7.11, 7.17, or 13.06A.
    7.13 Lymphomas. Evaluate under the criteria in 13.06A.
    7.14 Macroglobulinemia or heavy chain disease, confirmed by serum or 
urine protein electrophoresis or immunoelectrophoresias. Evaluate 
impairment under criteria for affected body system or under 7.02, 7.06, 
or 7.08.
    7.15 Chronic granulocytopenia (due to any cause). With both A and B:
    A. Absolute neutrophil counts repeatedly below 1,000 cells/cubic 
millimeter; and
    B. Documented recurrent systemic bacterial infections occurring at 
least 3 times during the 5 months prior to adjudication.
    7.16 Multiple myeloma (confirmed by appropriate serum or urine 
protein electrophoresis and bone marrow findings). With:
    A. Appropriate medically acceptable imaging evidence of bony 
involvement with intractable bone pain; or
    B. Evidence of renal impairment as described in 6.02; or
    C. Hypercalcemia with serum calcium levels persistently greater than 
11 mg. per deciliter (100 ml.) for at least 1 month despite prescribed 
therapy; or
    D. Plasma cells (100 or more cells/cubic millimeter) in the 
peripheral blood.
    7.17 Aplastic anemias or hematologic malignancies (excluding acute 
leukemia and T-cell lymphoblastic lymphoma): With bone marrow or stem 
cell transplantation. Consider under a disability for 12 months 
following transplantation; thereafter, evaluate according to the primary 
characteristics of the residual impairment.

                                8.00 Skin

    A. Skin lesions may result in a marked, long-lasting impairment if 
they involve extensive body areas or critical areas such as the hands or 
feet and become resistant to treatment. These lesions must be shown to 
have persisted for a sufficient period of time despite therapy for a 
reasonable presumption to be made that a marked impairment will last for 
a continuous period of at least 12 months. The treatment for some of the 
skin diseases listed in this section may require the use of high dosage 
of drugs with possible serious side effects; these side effects should 
be considered in the overall evaluation of impairment.
    B. When skin lesions are associated with systemic disease and where 
that is the predominant problems, evaluation should occur according to 
the criteria in the appropriate section. Disseminated (systemic) lupus 
erythematosus and scleroderma usually involve more than one body system 
and should

[[Page 465]]

be evaluated under 14.02 and 14.04. Neoplastic skin lesions should be 
evaluated under 13.00ff. When skin lesions (including burns) are 
associated with contractures or limitation of joint motion, that 
impairment should be evaluated under 1.00ff.
    8.01 Category of Impairments, Skin
    8.02 Exfoliative dermatitis, ichthyosis, ichthyosiform erythroderma. 
With extensive lesions not responding to prescribed treatment.
    8.03 Pemphigus, erythema multiforme bullosum, bullous pemphigoid, 
dermatitis herpetiformis. With extensive lesions not responding to 
prescribed treatment.
    8.04 Deep mycotic infections. With extensive fungating, ulcerating 
lesions not responding to prescribed treatment.
    8.05 Psoriasis, atopic dermatitis, dyshidrosis. With extensive 
lesions, including involvement of the hands or feet which impose a 
marked limitation of function and which are not responding to prescribed 
treatment.
    8.06 Hidradenitis suppurativa, acne conglobata. With extensive 
lesions involving the axillae or perineum not responding to prescribed 
medical treatment and not amendable to surgical treatment.

                          9.00 Endocrine System

    Cause of impairment. Impairment is caused by overproduction or 
underproduction of hormones, resulting in structural or functional 
changes in the body. Where involvement of other organ systems has 
occurred as a result of a primary endocrine disorder, these impairments 
should be evaluated according to the criteria under the appropriate 
sections. Medically acceptable imaging includes, but is not limited to, 
x-ray imaging, computerized axial tomography (CAT scan) or magnetic 
resonance imaging (MRI), with or without contrast material, myelography, 
and radionuclear bone scans. ``Appropriate'' means that the technique 
used is the proper one to support the evaluation and diagnosis of the 
impairment.

             9.01 Category of Impairments, Endocrine System

    9.02 Thyroid Disorders.
    Evaluate the resulting impairment under the criteria for the 
affected body system.
    9.03 Hyperparathyroidism. With:
    A. Generalized decalcification of bone on appropriate medically 
acceptable imaging study and elevation of plasma calcium to 11 mg. per 
deciliter (100 ml.) or greater; or
    B. A resulting impairment. Evaluate according to the criteria in the 
affected body system.
    9.04 Hypoparathyroidism. With:
    A. Severe recurrent tetany; or
    B. Recurrent generalized convulsions; or
    C. Lenticular cataracts. Evaluate under the criteria in 2.00ff.
    9.05 Neurohypophyseal insufficiency (diabetes insipidus). With urine 
specific gravity of 1.005 or below, persistent for at least 3 months and 
recurrent dehydration.
    9.06 Hyperfunction of the adrenal cortex. Evaluate the resulting 
impairment under the criteria for the affected body system.
    9.08 Diabetes mellitus. With:
    A. Neuropathy demonstrated by significant and persistent 
disorganization of motor function in two extremities resulting in 
sustained disturbance of gross and dexterous movements, or gait and 
station (see 11.00C); or
    B. Acidosis occurring at least on the average of once every 2 months 
documented by appropriate blood chemical tests (pH or PCO2 or 
bicarbonate levels); or
    C. Retinitis proliferans; evaluate the visual impairment under the 
criteria in 2.02, 2.03, or 2.04.

                       10.00 Multiple Body Systems

    A. Down syndrome (except for mosaic Down syndrome (see 10.00C)) 
established by clinical findings, including the characteristic physical 
features, and laboratory evidence is considered to meet the requirement 
of listing 10.06, commencing at birth.
    B. Documentation must include confirmation of a positive diagnosis 
by a clinical description of the usual abnormal physical findings 
associated with the condition and definitive laboratory tests, including 
chromosomal analysis. Medical evidence that is persuasive that a 
positive diagnosis has been confirmed by appropriate laboratory testing, 
at some time prior to evaluation, is acceptable in lieu of a copy of the 
actual laboratory report.
    C. Other chromosomal abnormalities, e.g., mosaic Down syndrome, 
fragile X syndrome, phenylketonuria, and fetal alcohol syndrome, produce 
a pattern of multiple impairments but manifest in a wide range of 
impairment severity. Therefore, the effects of these impairments should 
be evaluated under the affected body system.

          10.01 Category of Impairments, Multiple Body Systems

    10.06 Down syndrome (excluding mosaic Down syndrome) established by 
clinical and laboratory findings, as described in 10.00B. Consider the 
individual disabled from birth.

                           11.00 Neurological

    A. Epilepsy. In epilepsy, regardless of etiology, degree of 
impairment will be determined according to type, frequency, duration, 
and sequelae of seizures. At least one

[[Page 466]]

detailed description of a typical seizure is required. Such description 
includes the presence or absence of aura, tongue bites, sphincter 
control, injuries associated with the attack, and postictal phenomena. 
The reporting physician should indicate the extent to which description 
of seizures reflects his own observations and the source of ancillary 
information. Testimony of persons other than the claimant is essential 
for description of type and frequency of seizures if professional 
observation is not available.
    Under 11.02 and 11.03, the criteria can be applied only if the 
impairment persists despite the fact that the individual is following 
prescribed antiepileptic treatment. Adherence to prescribed 
antiepileptic therapy can ordinarily be determined from objective 
clinical findings in the report of the physician currently providing 
treatment for epilepsy. Determination of blood levels of phenytoin 
sodium or other antiepileptic drugs may serve to indicate whether the 
prescribed medication is being taken. When seizures are occurrring at 
the frequency stated in 11.02 or 11.03, evalution of the severity of the 
impairment must include consideration of the serum drug levels. Should 
serum drug levels appear therapeutically inadequate, consideration 
should be given as to whether this is caused by individual idiosyncrasy 
in absorption of metabolism of the drug. Blood drug levels should be 
evaluated in conjunction with all the other evidence to determine the 
extent of compliance. When the reported blood drug levels are low, 
therefore, the information obtained from the treating source should 
include the physician's statement as to why the levels are low and the 
results of any relevant diagnostic studies concerning the blood levels. 
Where adequate seizure control is obtained only with unusually large 
doses, the possibility of impairment resulting from the side effects of 
this medication must be also assessed. Where documentation shows that 
use of alcohol or drugs affects adherence to prescribed therapy or may 
play a part in the precipitation of seizures, this must also be 
considered in the overall assessment of impairment level.
    B. Brain tumors. The diagnosis of malignant brain tumors must be 
established, and the persistence of the tumor should be evaluated, under 
the criteria described in 13.00B and C for neoplastic disease.
    In histologically malignant tumors, the pathological diagnosis alone 
will be the decisive criterion for severity and expected duration (see 
11.05A). For other tumors of the brain, the severity and duration of the 
impairment will be determined on the basis of symptoms, signs, and 
pertinent laboratory findings (11.05B).
    C. Persistent disorganization of motor function in the form of 
paresis or paralysis, tremor or other involuntary movements, ataxia and 
sensory distrubances (any or all of which may be due to cerebral 
cerbellar, brain stem, spinal cord, or peripheral nerve dysfunction) 
which occur singly or in various combination, frequently provides the 
sole or partial basis for decision in cases of neurological impairment. 
The assessment of impairment depends on the degree of interference with 
locomotion and/or interference with the use of fingers, hands, and arms.
    D. In conditions which are episodic in character, such as multiple 
sclerosis or myasthenia gravis, consideration should be given to 
frequency and duration of exacerbations, length of remissions, and 
permanent residuals.
    E. Multiple sclerosis. The major criteria for evaluating impairment 
caused by multiple sclerosis are discussed in listing 11.09. Paragraph A 
provides criteria for evaluating disorganization of motor function and 
gives reference to 11.04B (11.04B then refers to 11.00C). Paragraph B 
provides references to other listings for evaluating visual or mental 
impairments caused by multiple sclerosis. Paragraph C provides criteria 
for evaluating the impairment of individuals who do not have muscle 
weakness or other significant disorganization of motor function at rest, 
but who do develop muscle weakness on activity as a result of fatigue.
    Use of the criteria in 11.09C is dependent upon (1) documenting a 
diagnosis of multiple sclerosis, (2) obtaining a description of fatigue 
considered to be characteristic of multiple sclerosis, and (3) obtaining 
evidence that the system has actually become fatigued. The evaluation of 
the magnitude of the impairment must consider the degree of exercise and 
the severity of the resulting muscle weakness.
    The criteria in 11.09C deals with motor abnormalities which occur on 
activity. If the disorganization of motor function is present at rest, 
paragraph A must be used, taking into account any further increase in 
muscle weakness resulting from activity.
    Sensory abnormalities may occur, particularly involving central 
visual acuity. The decrease in visual acuity may occur after brief 
attempts at activity involving near vision, such as reading. This 
decrease in visual acuity may not persist when the specific activity is 
terminated, as with rest, but is predictably reproduced with resumption 
of the activity. The impairment of central visual acuity in these cases 
should be evaluated under the criteria in listing 2.02, taking into 
account the fact that the decrease in visual acuity will wax and wane.
    Clarification of the evidence regarding central nervous system 
dysfunction responsible for the symptoms may require supporting 
technical evidence of functional impairment such as evoked response 
tests during exercise.
    F. Traumatic brain injury (TBI). The guidelines for evaluating 
impairments caused by

[[Page 467]]

cerebral trauma are contained in 11.18. Listing 11.18 states that 
cerebral trauma is to be evaluated under 11.02, 11.03, 11.04, and 12.02, 
as applicable.
    TBI may result in neurological and mental impairments with a wide 
variety of posttraumatic symptoms and signs. The rate and extent of 
recovery can be highly variable and the long-term outcome may be 
difficult to predict in the first few months post-injury. Generally, the 
neurological impairment(s) will stabilize more rapidly than any mental 
impairment(s). Sometimes a mental impairment may appear to improve 
immediately following TBI and then worsen, or, conversely, it may appear 
much worse initially but improve after a few months. Therefore, the 
mental findings immediately following TBI may not reflect the actual 
severity of your mental impairment(s). The actual severity of a mental 
impairment may not become apparent until 6 months post-injury.
    In some cases, evidence of a profound neurological impairment is 
sufficient to permit a finding of disability within 3 months post-
injury. If a finding of disability within 3 months post-injury is not 
possible based on any neurological impairment(s), we will defer 
adjudication of the claim until we obtain evidence of your neurological 
or mental impairments at least 3 months post-injury. If a finding of 
disability still is not possible at that time, we will again defer 
adjudication of the claim until we obtain evidence at least 6 months 
post-injury. At that time, we will fully evaluate any neurological and 
mental impairments and adjudicate the claim.
    G. Amyotrophic Lateral Sclerosis (ALS). 1. Amyotrophic lateral 
sclerosis (ALS), sometimes called Lou Gehrig's disease, is a 
progressive, invariably fatal neurological disease that attacks the 
nerve cells (motor neurons) responsible for controlling voluntary 
muscles. Eventually, all muscles under voluntary control are affected, 
and individuals with ALS ultimately lose their ability to move their 
arms and legs, and their capacity to swallow, speak, and breath. Most 
people with ALS die from respiratory failure. There is currently no cure 
for ALS, and most treatments are designed only to relieve symptoms and 
improve the quality of life.
    2. Diagnosis of ALS is based on history, neurological findings 
consistent with the diagnosis of ALS, and electrophysiological and 
neuroimaging testing to rule out other impairments that may cause 
similar signs and symptoms. The diagnosis may also be supported by 
electrophysiological studies (electromyography or nerve conduction 
studies), but these tests may be negative or only suggestive of the 
diagnosis. There is no single test that establishes the existence of 
ALS.
    3. For purposes of 11.10, documentation of the diagnosis must be by 
generally accepted methods consistent with the prevailing state of 
medical knowledge and clinical practice. The evidence should include 
documentation of a clinically appropriate medical history, neurological 
findings consistent with the diagnosis of ALS, and the results of any 
electrophysiological and neuroimaging testing.

               11.01 Category of Impairments, Neurological

    11.02 Epilepsy--convulsive epilepsy, (grand mal or psychomotor), 
documented by detailed description of a typical seizure pattern, 
including all associated phenomena; occurring more frequently than once 
a month in spite of at least 3 months of prescribed treatment. With:
    A. Daytime episodes (loss of consciousness and convulsive seizures) 
or
    B. Nocturnal episodes manifesting residuals which interfere 
significantly with activity during the day.
    11.03 Epilepsy--nonconvulsive epilepsy (petit mal, psychomotor, or 
focal), documented by detailed description of a typical seizure pattern, 
including all associated phenomena; occurring more frequently than once 
weekly in spite of at least 3 months of prescribed treatment. With 
alteration of awareness or loss of consciousness and transient postictal 
manifestations of unconventional behavior or significant interference 
with activity during the day.
    11.04 Central nervous system vascular accident. With one of the 
following more than 3 months post-vascular accident:
    A. Sensory or motor aphasia resulting in ineffective speech or 
communication; or
    B. Significant and persistent disorganization of motor function in 
two extremities, resulting in sustained disturbance of gross and 
dexterous movements, or gait and station (see 11.00C).
    11.05 Brain tumors.
    A. Malignant gliomas (astrocytoma--grades III and IV, glioblastoma 
multiforme), medulloblastoma, ependymoblastoma, or primary sarcoma; or
    B. Astrocytoma (grades I and II), meningioma, pituitary tumors, 
oligodendroglioma, ependymoma, clivus chordoma, and benign tumors. 
Evaluate under 11.02, 11.03, 11.04 A, or B, or 12.02.
    11.06 Parkinsonian syndrome with the following signs: Significant 
rigidity, brady kinesia, or tremor in two extremities, which, singly or 
in combination, result in sustained disturbance of gross and dexterous 
movements, or gait and station.
    11.07 Cerebral palsy. With:
    A. IQ of 70 or less; or
    B. Abnormal behavior patterns, such as destructiveness or emotional 
instability: or
    C. Significant interference in communication due to speech, hearing, 
or visual defect; or
    D. Disorganization of motor function as described in 11.04B.

[[Page 468]]

    11.08 Spinal cord or nerve root lesions, due to any cause with 
disorganization of motor function as described in 11.04B.
    11.09 Multiple sclerosis. With:
    A. Disorganization of motor function as described in 11.04B; or
    B. Visual or mental impairment as described under the criteria in 
2.02, 2.03, 2.04, or 12.02; or
    C. Significant, reproducible fatigue of motor function with 
substantial muscle weakness on repetitive activity, demonstrated on 
physical examination, resulting from neurological dysfunction in areas 
of the central nervous system known to be pathologically involved by the 
multiple sclerosis process.
    11.10 Amyotrophic lateral sclerosis established by clinical and 
laboratory findings, as described in 11.00G.
    11.11 Anterior poliomyelitis. With:
    A. Persistent difficulty with swallowing or breathing; or
    B. Unintelligible speech; or
    C. Disorganization of motor function as described in 11.04B.
    11.12 Myasthenia gravis. With:
    A. Significant difficulty with speaking, swallowing, or breathing 
while on prescribed therapy; or
    B. Significant motor weakness of muscles of extremities on 
repetitive activity against resistance while on prescribed therapy.
    11.13 Muscular dystrophy with disorganization of motor function as 
described in 11.04B.
    11.14 Peripheral neuropathies.
    With disorganization of motor function as described in 11.04B, in 
spite of prescribed treatment.
    11.15 [Reserved]
    11.16 Subacute combined cord degeneration (pernicious anemia) with 
disorganization of motor function as decribed in 11.04B or 11.15B, not 
significantly improved by prescribed treatment.
    11.17 Degenerative disease not listed elsewhere, such as 
Huntington's chorea, Friedreich's ataxia, and spino-cerebellar 
degeneration. With:
    A. Disorganization of motor function as described in 11.04B; or
    B. Chronic brain syndrome. Evaluate under 12.02.
    11.18 Cerebral trauma:
    Evaluate under the provisions of 11.02, 11.03, 11.04 and 12.02, as 
applicable.
    11.19 Syringomyelia.
    With:
    A. Significant bulbar signs; or
    B. Disorganization of motor function as described in 11.04B.

                         12.00 Mental Disorders

    A. Introduction. The evaluation of disability on the basis of mental 
disorders requires documentation of a medically determinable 
impairment(s), consideration of the degree of limitation such 
impairment(s) may impose on your ability to work, and consideration of 
whether these limitations have lasted or are expected to last for a 
continuous period of at least 12 months. The listings for mental 
disorders are arranged in nine diagnostic categories: Organic mental 
disorders (12.02); schizophrenic, paranoid and other psychotic disorders 
(12.03); affective disorders (12.04); mental retardation (12.05); 
anxiety-related disorders (12.06); somatoform disorders (12.07); 
personality disorders (12.08); substance addiction disorders (12.09); 
and autistic disorder and other pervasive developmental disorders 
(12.10). Each listing, except 12.05 and 12.09, consists of a statement 
describing the disorder(s) addressed by the listing, paragraph A 
criteria (a set of medical findings), and paragraph B criteria (a set of 
impairment-related functional limitations). There are additional 
functional criteria (paragraph C criteria) in 12.02, 12.03, 12.04, and 
12.06, discussed herein. We will assess the paragraph B criteria before 
we apply the paragraph C criteria. We will assess the paragraph C 
criteria only if we find that the paragraph B criteria are not 
satisfied. We will find that you have a listed impairment if the 
diagnostic description in the introductory paragraph and the criteria of 
both paragraphs A and B (or A and C, when appropriate) of the listed 
impairment are satisfied.
    The criteria in paragraph A substantiate medically the presence of a 
particular mental disorder. Specific symptoms, signs, and laboratory 
findings in the paragraph A criteria of any of the listings in this 
section cannot be considered in isolation from the description of the 
mental disorder contained at the beginning of each listing category. 
Impairments should be analyzed or reviewed under the mental 
category(ies) indicated by the medical findings. However, we may also 
consider mental impairments under physical body system listings, using 
the concept of medical equivalence, when the mental disorder results in 
physical dysfunction. (See, for instance, 12.00D12 regarding the 
evaluation of anorexia nervosa and other eating disorders.)
    The criteria in paragraphs B and C describe impairment-related 
functional limitations that are incompatible with the ability to do any 
gainful activity. The functional limitations in paragraphs B and C must 
be the result of the mental disorder described in the diagnostic 
description, that is manifested by the medical findings in paragraph A.
    The structure of the listing for mental retardation (12.05) is 
different from that of the other mental disorders listings. Listing 
12.05 contains an introductory paragraph with the diagnostic description 
for mental retardation. It also contains four sets of criteria 
(paragraphs A through D). If your impairment satisfies the diagnostic 
description in

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the introductory paragraph and any one of the four sets of criteria, we 
will find that your impairment meets the listing. Paragraphs A and B 
contain criteria that describe disorders we consider severe enough to 
prevent your doing any gainful activity without any additional 
assessment of functional limitations. For paragraph C, we will assess 
the degree of functional limitation the additional impairment(s) imposes 
to determine if it significantly limits your physical or mental ability 
to do basic work activities, i.e., is a ``severe'' impairment(s), as 
defined in Sec. Sec. 404.1520(c) and 416.920(c). If the additional 
impairment(s) does not cause limitations that are ``severe'' as defined 
in Sec. Sec. 404.1520(c) and 416.920(c), we will not find that the 
additional impairment(s) imposes ``an additional and significant work-
related limitation of function,'' even if you are unable to do your past 
work because of the unique features of that work. Paragraph D contains 
the same functional criteria that are required under paragraph B of the 
other mental disorders listings.
    The structure of the listing for substance addiction disorders, 
12.09, is also different from that for the other mental disorder 
listings. Listing 12.09 is structured as a reference listing; that is, 
it will only serve to indicate which of the other listed mental or 
physical impairments must be used to evaluate the behavioral or physical 
changes resulting from regular use of addictive substances.
    The listings are so constructed that an individual with an 
impairment(s) that meets or is equivalent in severity to the criteria of 
a listing could not reasonably be expected to do any gainful activity. 
These listings are only examples of common mental disorders that are 
considered severe enough to prevent an individual from doing any gainful 
activity. When you have a medically determinable severe mental 
impairment that does not satisfy the diagnostic description or the 
requirements of the paragraph A criteria of the relevant listing, the 
assessment of the paragraph B and C criteria is critical to a 
determination of equivalence.
    If your impairment(s) does not meet or is not equivalent in severity 
to the criteria of any listing, you may or may not have the residual 
functional capacity (RFC) to do substantial gainful activity (SGA). The 
determination of mental RFC is crucial to the evaluation of your 
capacity to do SGA when your impairment(s) does not meet or equal the 
criteria of the listings, but is nevertheless severe.
    RFC is a multidimensional description of the work-related abilities 
you retain in spite of your medical impairments. An assessment of your 
RFC complements the functional evaluation necessary for paragraphs B and 
C of the listings by requiring consideration of an expanded list of 
work-related capacities that may be affected by mental disorders when 
your impairment(s) is severe but neither meets nor is equivalent in 
severity to a listed mental disorder.
    B. Need for medical evidence. We must establish the existence of a 
medically determinable impairment(s) of the required duration by medical 
evidence consisting of symptoms, signs, and laboratory findings 
(including psychological test findings). Symptoms are your own 
description of your physical or mental impairment(s). Psychiatric signs 
are medically demonstrable phenomena that indicate specific 
psychological abnormalities, e.g., abnormalities of behavior, mood, 
thought, memory, orientation, development, or perception, as described 
by an appropriate medical source. Symptoms and signs generally cluster 
together to constitute recognizable mental disorders described in the 
listings. The symptoms and signs may be intermittent or continuous 
depending on the nature of the disorder.
    C. Assessment of severity. We measure severity according to the 
functional limitations imposed by your medically determinable mental 
impairment(s). We assess functional limitations using the four criteria 
in paragraph B of the listings: Activities of daily living; social 
functioning; concentration, persistence, or pace; and episodes of 
decompensation. Where we use ``marked'' as a standard for measuring the 
degree of limitation, it means more than moderate but less than extreme. 
A marked limitation may arise when several activities or functions are 
impaired, or even when only one is impaired, as long as the degree of 
limitation is such as to interfere seriously with your ability to 
function independently, appropriately, effectively, and on a sustained 
basis. See Sec. Sec. 404.1520a and 416.920a.
    1. Activities of daily living include adaptive activities such as 
cleaning, shopping, cooking, taking public transportation, paying bills, 
maintaining a residence, caring appropriately for your grooming and 
hygiene, using telephones and directories, and using a post office. In 
the context of your overall situation, we assess the quality of these 
activities by their independence, appropriateness, effectiveness, and 
sustainability. We will determine the extent to which you are capable of 
initiating and participating in activities independent of supervision or 
direction.
    We do not define ``marked'' by a specific number of different 
activities of daily living in which functioning is impaired, but by the 
nature and overall degree of interference with function. For example, if 
you do a wide range of activities of daily living, we may still find 
that you have a marked limitation in your daily activities if you have 
serious difficulty performing them without direct supervision, or in a 
suitable manner, or on a consistent, useful, routine basis, or without 
undue interruptions or distractions.

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    2. Social functioning refers to your capacity to interact 
independently, appropriately, effectively, and on a sustained basis with 
other individuals. Social functioning includes the ability to get along 
with others, such as family members, friends, neighbors, grocery clerks, 
landlords, or bus drivers. You may demonstrate impaired social 
functioning by, for example, a history of altercations, evictions, 
firings, fear of strangers, avoidance of interpersonal relationships, or 
social isolation. You may exhibit strength in social functioning by such 
things as your ability to initiate social contacts with others, 
communicate clearly with others, or interact and actively participate in 
group activities. We also need to consider cooperative behaviors, 
consideration for others, awareness of others' feelings, and social 
maturity. Social functioning in work situations may involve interactions 
with the public, responding appropriately to persons in authority (e.g., 
supervisors), or cooperative behaviors involving coworkers.
    We do not define ``marked'' by a specific number of different 
behaviors in which social functioning is impaired, but by the nature and 
overall degree of interference with function. For example, if you are 
highly antagonistic, uncooperative, or hostile but are tolerated by 
local storekeepers, we may nevertheless find that you have a marked 
limitation in social functioning because that behavior is not acceptable 
in other social contexts.
    3. Concentration, persistence, or pace refers to the ability to 
sustain focused attention and concentration sufficiently long to permit 
the timely and appropriate completion of tasks commonly found in work 
settings. Limitations in concentration, persistence, or pace are best 
observed in work settings, but may also be reflected by limitations in 
other settings. In addition, major limitations in this area can often be 
assessed through clinical examination or psychological testing. Wherever 
possible, however, a mental status examination or psychological test 
data should be supplemented by other available evidence.
    On mental status examinations, concentration is assessed by tasks 
such as having you subtract serial sevens or serial threes from 100. In 
psychological tests of intelligence or memory, concentration is assessed 
through tasks requiring short-term memory or through tasks that must be 
completed within established time limits.
    In work evaluations, concentration, persistence, or pace is assessed 
by testing your ability to sustain work using appropriate production 
standards, in either real or simulated work tasks (e.g., filing index 
cards, locating telephone numbers, or disassembling and reassembling 
objects). Strengths and weaknesses in areas of concentration and 
attention can be discussed in terms of your ability to work at a 
consistent pace for acceptable periods of time and until a task is 
completed, and your ability to repeat sequences of action to achieve a 
goal or an objective.
    We must exercise great care in reaching conclusions about your 
ability or inability to complete tasks under the stresses of employment 
during a normal workday or work week based on a time-limited mental 
status examination or psychological testing by a clinician, or based on 
your ability to complete tasks in other settings that are less 
demanding, highly structured, or more supportive. We must assess your 
ability to complete tasks by evaluating all the evidence, with an 
emphasis on how independently, appropriately, and effectively you are 
able to complete tasks on a sustained basis.
    We do not define ``marked'' by a specific number of tasks that you 
are unable to complete, but by the nature and overall degree of 
interference with function. You may be able to sustain attention and 
persist at simple tasks but may still have difficulty with complicated 
tasks. Deficiencies that are apparent only in performing complex 
procedures or tasks would not satisfy the intent of this paragraph B 
criterion. However, if you can complete many simple tasks, we may 
nevertheless find that you have a marked limitation in concentration, 
persistence, or pace if you cannot complete these tasks without extra 
supervision or assistance, or in accordance with quality and accuracy 
standards, or at a consistent pace without an unreasonable number and 
length of rest periods, or without undue interruptions or distractions.
    4. Episodes of decompensation are exacerbations or temporary 
increases in symptoms or signs accompanied by a loss of adaptive 
functioning, as manifested by difficulties in performing activities of 
daily living, maintaining social relationships, or maintaining 
concentration, persistence, or pace. Episodes of decompensation may be 
demonstrated by an exacerbation in symptoms or signs that would 
ordinarily require increased treatment or a less stressful situation (or 
a combination of the two). Episodes of decompensation may be inferred 
from medical records showing significant alteration in medication; or 
documentation of the need for a more structured psychological support 
system (e.g., hospitalizations, placement in a halfway house, or a 
highly structured and directing household); or other relevant 
information in the record about the existence, severity, and duration of 
the episode.
    The term repeated episodes of decompensation, each of extended 
duration in these listings means three episodes within 1 year, or an 
average of once every 4 months, each lasting for at least 2 weeks. If 
you have experienced more frequent episodes of shorter duration or less 
frequent episodes of longer duration, we must use judgment to determine

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if the duration and functional effects of the episodes are of equal 
severity and may be used to substitute for the listed finding in a 
determination of equivalence.
    D. Documentation. The evaluation of disability on the basis of a 
mental disorder requires sufficient evidence to (1) establish the 
presence of a medically determinable mental impairment(s), (2) assess 
the degree of functional limitation the impairment(s) imposes, and (3) 
project the probable duration of the impairment(s). See Sec. Sec. 
404.1512 and 416.912 for a discussion of what we mean by ``evidence'' 
and how we will assist you in developing your claim. Medical evidence 
must be sufficiently complete and detailed as to symptoms, signs, and 
laboratory findings to permit an independent determination. In addition, 
we will consider information you provide from other sources when we 
determine how the established impairment(s) affects your ability to 
function. We will consider all relevant evidence in your case record.
    1. Sources of evidence.
    a. Medical evidence. There must be evidence from an acceptable 
medical source showing that you have a medically determinable mental 
impairment. See Sec. Sec. 404.1508, 404.1513, 416.908, and 416.913. We 
will make every reasonable effort to obtain all relevant and available 
medical evidence about your mental impairment(s), including its history, 
and any records of mental status examinations, psychological testing, 
and hospitalizations and treatment. Whenever possible, and appropriate, 
medical source evidence should reflect the medical source's 
considerations of information from you and other concerned persons who 
are aware of your activities of daily living; social functioning; 
concentration, persistence, or pace; or episodes of decompensation. 
Also, in accordance with standard clinical practice, any medical source 
assessment of your mental functioning should take into account any 
sensory, motor, or communication abnormalities, as well as your cultural 
and ethnic background.
    b. Information from the individual. Individuals with mental 
impairments can often provide accurate descriptions of their 
limitations. The presence of a mental impairment does not automatically 
rule you out as a reliable source of information about your own 
functional limitations. When you have a mental impairment and are 
willing and able to describe your limitations, we will try to obtain 
such information from you. However, you may not be willing or able to 
fully or accurately describe the limitations resulting from your 
impairment(s). Thus, we will carefully examine the statements you 
provide to determine if they are consistent with the information about, 
or general pattern of, the impairment as described by the medical and 
other evidence, and to determine whether additional information about 
your functioning is needed from you or other sources.
    c. Other information. Other professional health care providers 
(e.g., psychiatric nurse, psychiatric social worker) can normally 
provide valuable functional information, which should be obtained when 
available and needed. If necessary, information should also be obtained 
from nonmedical sources, such as family members and others who know you, 
to supplement the record of your functioning in order to establish the 
consistency of the medical evidence and longitudinality of impairment 
severity, as discussed in 12.00D2. Other sources of information about 
functioning include, but are not limited to, records from work 
evaluations and rehabilitation progress notes.
    2. Need for longitudinal evidence. Your level of functioning may 
vary considerably over time. The level of your functioning at a specific 
time may seem relatively adequate or, conversely, rather poor. Proper 
evaluation of your impairment(s) must take into account any variations 
in the level of your functioning in arriving at a determination of 
severity over time. Thus, it is vital to obtain evidence from relevant 
sources over a sufficiently long period prior to the date of 
adjudication to establish your impairment severity.
    3. Work attempts. You may have attempted to work or may actually 
have worked during the period of time pertinent to the determination of 
disability. This may have been an independent attempt at work or it may 
have been in conjunction with a community mental health or sheltered 
program, and it may have been of either short or long duration. 
Information concerning your behavior during any attempt to work and the 
circumstances surrounding termination of your work effort are 
particularly useful in determining your ability or inability to function 
in a work setting. In addition, we should also examine the degree to 
which you require special supports (such as those provided through 
supported employment or transitional employment programs) in order to 
work.
    4. Mental status examination. The mental status examination is 
performed in the course of a clinical interview and is often partly 
assessed while the history is being obtained. A comprehensive mental 
status examination generally includes a narrative description of your 
appearance, behavior, and speech; thought process (e.g., loosening of 
associations); thought content (e.g., delusions); perceptual 
abnormalities (e.g., hallucinations); mood and affect (e.g., depression, 
mania); sensorium and cognition (e.g., orientation, recall, memory, 
concentration, fund of information, and intelligence); and judgment and 
insight. The individual case facts determine the specific areas of 
mental status that need to be emphasized during the examination.

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    5. Psychological testing.
    a. Reference to a ``standardized psychological test'' indicates the 
use of a psychological test measure that has appropriate validity, 
reliability, and norms, and is individually administered by a qualified 
specialist. By ``qualified,'' we mean the specialist must be currently 
licensed or certified in the State to administer, score, and interpret 
psychological tests and have the training and experience to perform the 
test.
    b. Psychological tests are best considered as standardized sets of 
tasks or questions designed to elicit a range of responses. 
Psychological testing can also provide other useful data, such as the 
specialist's observations regarding your ability to sustain attention 
and concentration, relate appropriately to the specialist, and perform 
tasks independently (without prompts or reminders). Therefore, a report 
of test results should include both the objective data and any clinical 
observations.
    c. The salient characteristics of a good test are: (1) Validity, 
i.e., the test measures what it is supposed to measure; (2) reliability, 
i.e., the consistency of results obtained over time with the same test 
and the same individual; (3) appropriate normative data, i.e., 
individual test scores can be compared to test data from other 
individuals or groups of a similar nature, representative of that 
population; and (4) wide scope of measurement, i.e., the test should 
measure a broad range of facets/aspects of the domain being assessed. In 
considering the validity of a test result, we should note and resolve 
any discrepancies between formal test results and the individual's 
customary behavior and daily activities.
    6. Intelligence tests.
    a. The results of standardized intelligence tests may provide data 
that help verify the presence of mental retardation or organic mental 
disorder, as well as the extent of any compromise in cognitive 
functioning. However, since the results of intelligence tests are only 
part of the overall assessment, the narrative report that accompanies 
the test results should comment on whether the IQ scores are considered 
valid and consistent with the developmental history and the degree of 
functional limitation.
    b. Standardized intelligence test results are essential to the 
adjudication of all cases of mental retardation that are not covered 
under the provisions of 12.05A. Listing 12.05A may be the basis for 
adjudicating cases where the results of standardized intelligence tests 
are unavailable, e.g., where your condition precludes formal 
standardized testing.
    c. Due to such factors as differing means and standard deviations, 
identical IQ scores obtained from different tests do not always reflect 
a similar degree of intellectual functioning. The IQ scores in 12.05 
reflect values from tests of general intelligence that have a mean of 
100 and a standard deviation of 15; e.g., the Wechsler series. IQs 
obtained from standardized tests that deviate from a mean of 100 and a 
standard deviation of 15 require conversion to a percentile rank so that 
we can determine the actual degree of limitation reflected by the IQ 
scores. In cases where more than one IQ is customarily derived from the 
test administered, e.g., where verbal, performance, and full scale IQs 
are provided in the Wechsler series, we use the lowest of these in 
conjunction with 12.05.
    d. Generally, it is preferable to use IQ measures that are wide in 
scope and include items that test both verbal and performance abilities. 
However, in special circumstances, such as the assessment of individuals 
with sensory, motor, or communication abnormalities, or those whose 
culture and background are not principally English-speaking, measures 
such as the Test of Nonverbal Intelligence, Third Edition (TONI-3), 
Leiter International Performance Scale-Revised (Leiter-R), or Peabody 
Picture Vocabulary Test--Third Edition (PPVT-III) may be used.
    e. We may consider exceptions to formal standardized psychological 
testing when an individual qualified by training and experience to 
perform such an evaluation is not available, or in cases where 
appropriate standardized measures for your social, linguistic, and 
cultural background are not available. In these cases, the best 
indicator of severity is often the level of adaptive functioning and how 
you perform activities of daily living and social functioning.
    7. Personality measures and projective testing techniques. Results 
from standardized personality measures, such as the Minnesota 
Multiphasic Personality Inventory-Revised (MMPI-II), or from projective 
types of techniques, such as the Rorschach and the Thematic Apperception 
Test (TAT), may provide useful data for evaluating several types of 
mental disorders. Such test results may be useful for disability 
evaluation when corroborated by other evidence, including results from 
other psychological tests and information obtained in the course of the 
clinical evaluation, from treating and other medical sources, other 
professional health care providers, and nonmedical sources. Any 
inconsistency between test results and clinical history and observation 
should be explained in the narrative description.
    8. Neuropsychological assessments. Comprehensive neuropsychological 
examinations may be used to establish the existence and extent of 
compromise of brain function, particularly in cases involving organic 
mental disorders. Normally, these examinations include assessment of 
cerebral dominance, basic sensation and perception, motor speed and 
coordination, attention and concentration, visual-motor function, memory 
across verbal and visual modalities, receptive and

[[Page 473]]

expressive speech, higher-order linguistic operations, problem-solving, 
abstraction ability, and general intelligence. In addition, there should 
be a clinical interview geared toward evaluating pathological features 
known to occur frequently in neurological disease and trauma, e.g., 
emotional lability, abnormality of mood, impaired impulse control, 
passivity and apathy, or inappropriate social behavior. The specialist 
performing the examination may administer one of the commercially 
available comprehensive neuropsychological batteries, such as the Luria-
Nebraska or the Halstead-Reitan, or a battery of tests selected as 
relevant to the suspected brain dysfunction. The specialist performing 
the examination must be properly trained in this area of neuroscience.
    9. Screening tests. In conjunction with clinical examinations, 
sources may report the results of screening tests; i.e., tests used for 
gross determination of level of functioning. Screening instruments may 
be useful in uncovering potentially serious impairments, but often must 
be supplemented by other data. However, in some cases the results of 
screening tests may show such obvious abnormalities that further testing 
will clearly be unnecessary.
    10. Traumatic brain injury (TBI). In cases involving TBI, follow the 
documentation and evaluation guidelines in 11.00F.
    11. Anxiety disorders. In cases involving agoraphobia and other 
phobic disorders, panic disorders, and posttraumatic stress disorders, 
documentation of the anxiety reaction is essential. At least one 
detailed description of your typical reaction is required. The 
description should include the nature, frequency, and duration of any 
panic attacks or other reactions, the precipitating and exacerbating 
factors, and the functional effects. If the description is provided by a 
medical source, the reporting physician or psychologist should indicate 
the extent to which the description reflects his or her own observations 
and the source of any ancillary information. Statements of other persons 
who have observed you may be used for this description if professional 
observation is not available.
    12. Eating disorders. In cases involving anorexia nervosa and other 
eating disorders, the primary manifestations may be mental or physical, 
depending upon the nature and extent of the disorder. When the primary 
functional limitation is physical, e.g., when severe weight loss and 
associated clinical findings are the chief cause of inability to work, 
we may evaluate the impairment under the appropriate physical body 
system listing. Of course, we must also consider any mental aspects of 
the impairment, unless we can make a fully favorable determination or 
decision based on the physical impairment(s) alone.
    E. Chronic mental impairments. Particular problems are often 
involved in evaluating mental impairments in individuals who have long 
histories of repeated hospitalizations or prolonged outpatient care with 
supportive therapy and medication. For instance, if you have chronic 
organic, psychotic, and affective disorders, you may commonly have your 
life structured in such a way as to minimize your stress and reduce your 
symptoms and signs. In such a case, you may be much more impaired for 
work than your symptoms and signs would indicate. The results of a 
single examination may not adequately describe your sustained ability to 
function. It is, therefore, vital that we review all pertinent 
information relative to your condition, especially at times of increased 
stress. We will attempt to obtain adequate descriptive information from 
all sources that have treated you in the time period relevant to the 
determination or decision.
    F. Effects of structured settings. Particularly in cases involving 
chronic mental disorders, overt symptomatology may be controlled or 
attenuated by psychosocial factors such as placement in a hospital, 
halfway house, board and care facility, or other environment that 
provides similar structure. Highly structured and supportive settings 
may also be found in your home. Such settings may greatly reduce the 
mental demands placed on you. With lowered mental demands, overt 
symptoms and signs of the underlying mental disorder may be minimized. 
At the same time, however, your ability to function outside of such a 
structured or supportive setting may not have changed. If your 
symptomatology is controlled or attenuated by psychosocial factors, we 
must consider your ability to function outside of such highly structured 
settings. For these reasons, identical paragraph C criteria are included 
in 12.02, 12.03, and 12.04. The paragraph C criterion of 12.06 reflects 
the uniqueness of agoraphobia, an anxiety disorder manifested by an 
overwhelming fear of leaving the home.
    G. Effects of medication. We must give attention to the effects of 
medication on your symptoms, signs, and ability to function. While drugs 
used to modify psychological functions and mental states may control 
certain primary manifestations of a mental disorder, e.g., 
hallucinations, impaired attention, restlessness, or hyperactivity, such 
treatment may not affect all functional limitations imposed by the 
mental disorder. In cases where overt symptomatology is attenuated by 
the use of such drugs, particular attention must be focused on the 
functional limitations that may persist. We will consider these 
functional limitations in assessing the severity of your impairment. See 
the paragraph C criteria in 12.02, 12.03, 12.04, and 12.06.
    Drugs used in the treatment of some mental illnesses may cause 
drowsiness, blunted effect, or other side effects involving other

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body systems. We will consider such side effects when we evaluate the 
overall severity of your impairment. Where adverse effects of 
medications contribute to the impairment severity and the impairment(s) 
neither meets nor is equivalent in severity to any listing but is 
nonetheless severe, we will consider such adverse effects in the RFC 
assessment.
    H. Effects of treatment. With adequate treatment some individuals 
with chronic mental disorders not only have their symptoms and signs 
ameliorated, but they also return to a level of function close to the 
level of function they had before they developed symptoms or signs of 
their mental disorders. Treatment may or may not assist in the 
achievement of a level of adaptation adequate to perform sustained SGA. 
See the paragraph C criteria in 12.02, 12.03, 12.04, and 12.06.
    I. Technique for reviewing evidence in mental disorders claims to 
determine the level of impairment severity. We have developed a special 
technique to ensure that we obtain, consider, and properly evaluate all 
the evidence we need to evaluate impairment severity in claims involving 
mental impairment(s). We explain this technique in Sec. Sec. 404.1520a 
and 416.920a.

                  12.01 Category of Impairments--Mental

    12.02 Organic Mental Disorders: Psychological or behaviorial 
abnormalities associated with a dysfunction of the brain. History and 
physical examination or laboratory tests demonstrate the presence of a 
specific organic factor judged to be etiologically related to the 
abnormal mental state and loss of previously acquired functional 
abilities.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied, or when the requirements in 
C are satisfied.
    A. Demonstration of a loss of specific cognitive abilities or 
affective changes and the medically documented persistence of at least 
one of the following:
    1. Disorientation to time and place; or
    2. Memory impairment, either short-term (inability to learn new 
information), intermediate, or long-term (inability to remember 
information that was known sometime in the past); or
    3. Perceptual or thinking disturbances (e.g., hallucinations, 
delusions); or
    4. Change in personality; or
    5. Disturbance in mood; or
    6. Emotional lability (e.g., explosive temper outbursts, sudden 
crying, etc.) and impairment in impulse control; or
    7. Loss of measured intellectual ability of at least 15 I.Q. points 
from premorbid levels or overall impairment index clearly within the 
severely impaired range on neuropsychological testing, e.g., the Luria-
Nebraska, Halstead-Reitan, etc.;

AND

    B. Resulting in at least two of the following:
    1. Marked restriction of activities of daily living; or
    2. Marked difficulties in maintaining social functioning; or
    3. Marked difficulties in maintaining concentration, persistence, or 
pace; or
    4. Repeated episodes of decompensation, each of extended duration;

OR

    C. Medically documented history of a chronic organic mental disorder 
of at least 2 years' duration that has caused more than a minimal 
limitation of ability to do basic work activities, with symptoms or 
signs currently attenuated by medication or psychosocial support, and 
one of the following:
    1. Repeated episodes of decompensation, each of extended duration; 
or
    2. A residual disease process that has resulted in such marginal 
adjustment that even a minimal increase in mental demands or change in 
the environment would be predicted to cause the individual to 
decompensate; or
    3. Current history of 1 or more years' inability to function outside 
a highly supportive living arrangement, with an indication of continued 
need for such an arrangement.
    12.03 Schizophrenic, Paranoid and Other Psychotic Disorders: 
Characterized by the onset of psychotic features with deterioration from 
a previous level of functioning.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied, or when the requirements in 
C are satisfied.
    A. Medically documented persistence, either continuous or 
intermittent, of one or more of the following:
    1. Delusions or hallucinations; or
    2. Catatonic or other grossly disorganized behavior; or
    3. Incoherence, loosening of associations, illogical thinking, or 
poverty of content of speech if associated with one of the following:
    a. Blunt affect; or
    b. Flat affect; or
    c. Inappropriate affect;

or

    4. Emotional withdrawal and/or isolation;

AND

    B. Resulting in at least two of the following:
    1. Marked restriction of activities of daily living; or
    2. Marked difficulties in maintaining social functioning; or
    3. Marked difficulties in maintaining concentration, persistence, or 
pace; or

[[Page 475]]

    4. Repeated episodes of decompensation, each of extended duration;

OR
    C. Medically documented history of a chronic schizophrenic, 
paranoid, or other psychotic disorder of at least 2 years' duration that 
has caused more than a minimal limitation of ability to do basic work 
activities, with symptoms or signs currently attenuated by medication or 
psychosocial support, and one of the following:
    1. Repeated episodes of decompensation, each of extended duration; 
or
    2. A residual disease process that has resulted in such marginal 
adjustment that even a minimal increase in mental demands or change in 
the environment would be predicted to cause the individual to 
decompensate; or
    3. Current history of 1 or more years' inability to function outside 
a highly supportive living arrangement, with an indication of continued 
need for such an arrangement.
    12.04 Affective Disorders: Characterized by a disturbance of mood, 
accompanied by a full or partial manic or depressive syndrome. Mood 
refers to a prolonged emotion that colors the whole psychic life; it 
generally involves either depression or elation.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied, or when the requirements in 
C are satisfied.
    A. Medically documented persistence, either continuous or 
intermittent, of one of the following:
    1. Depressive syndrome characterized by at least four of the 
following:
    a. Anhedonia or pervasive loss of interest in almost all activites; 
or
    b. Appetite disturbance with change in weight; or
    c. Sleep disturbance; or
    d. Psychomotor agitation or retardation; or
    e. Decreased energy; or
    f. Feelings of guilt or worthlessness; or
    g. Difficulty concentrating or thinking; or
    h. Thoughts of suicide; or
    i. Hallucinations, delusions, or paranoid thinking; or
    2. Manic syndrome characterized by at least three of the following:
    a. Hyperactivity; or
    b. Pressure of speech; or
    c. Flight of ideas; or
    d. Inflated self-esteem; or
    e. Decreased need for sleep; or
    f. Easy distractability; or
    g. Involvement in activities that have a high probability of painful 
consequences which are not recognized; or
    h. Hallucinations, delusions or paranoid thinking;

or

    3. Bipolar syndrome with a history of episodic periods manifested by 
the full symptomatic picture of both manic and depressive syndromes (and 
currently characterized by either or both syndromes);

AND

    B. Resulting in at least two of the following:
    1. Marked restriction of activities of daily living; or
    2. Marked difficulties in maintaining social functioning; or
    3. Marked difficulties in maintaining concentration, persistence, or 
pace; or
    4. Repeated episodes of decompensation, each of extended duration;

OR

    C. Medically documented history of a chronic affective disorder of 
at least 2 years' duration that has caused more than a minimal 
limitation of ability to do basic work activities, with symptoms or 
signs currently attenuated by medication or psychosocial support, and 
one of the following:
    1. Repeated episodes of decompensation, each of extended duration; 
or
    2. A residual disease process that has resulted in such marginal 
adjustment that even a minimal increase in mental demands or change in 
the environment would be predicted to cause the individual to 
decompensate; or
    3. Current history of 1 or more years' inability to function outside 
a highly supportive living arrangement, with an indication of continued 
need for such an arrangement.
    12.05 Mental retardation: Mental retardation refers to significantly 
subaverage general intellectual functioning with deficits in adaptive 
functioning initially manifested during the developmental period; i.e., 
the evidence demonstrates or supports onset of the impairment before age 
22.
    The required level of severity for this disorder is met when the 
requirements in A, B, C, or D are satisfied.
    A. Mental incapacity evidenced by dependence upon others for 
personal needs (e.g., toileting, eating, dressing, or bathing) and 
inability to follow directions, such that the use of standardized 
measures of intellectual functioning is precluded;

OR

    B. A valid verbal, performance, or full scale IQ of 59 or less;

OR

    C. A valid verbal, performance, or full scale IQ of 60 through 70 
and a physical or other mental impairment imposing an additional and 
significant work-related limitation of function;

OR


[[Page 476]]


    D. A valid verbal, performance, or full scale IQ of 60 through 70, 
resulting in at least two of the following:
    1. Marked restriction of activities of daily living; or
    2. Marked difficulties in maintaining social functioning; or
    3. Marked difficulties in maintaining concentration, persistence, or 
pace; or
    4. Repeated episodes of decompensation, each of extended duration.
    12.06 Anxiety Related Disorders: In these disorders anxiety is 
either the predominant disturbance or it is experienced if the 
individual attempts to master symptoms; for example, confronting the 
dreaded object or situation in a phobic disorder or resisting the 
obsessions or compulsions in obsessive compulsive disorders.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied, or when the requirements in 
both A and C are satisfied.
    A. Medically documented findings of at least one of the following:
    1. Generalized persistent anxiety accompanied by three out of four 
of the following signs or symptoms:
    a. Motor tension; or
    b. Autonomic hyperactivity; or
    c. Apprehensive expectation; or
    d. Vigilance and scanning;

or

    2. A persistent irrational fear of a specific object, activity, or 
situation which results in a compelling desire to avoid the dreaded 
object, activity, or situation; or
    3. Recurrent severe panic attacks manifested by a sudden 
unpredictable onset of intense apprehension, fear, terror and sense of 
impending doom occurring on the average of at least once a week; or
    4. Recurrent obsessions or compulsions which are a source of marked 
distress; or
    5. Recurrent and intrusive recollections of a traumatic experience, 
which are a source of marked distress;

AND

    B. Resulting in at least two of the following:
    1. Marked restriction of activities of daily living; or
    2. Marked difficulties in maintaining social functioning; or
    3. Marked difficulties in maintaining concentration, persistence, or 
pace; or
    4. Repeated episodes of decompensation, each of extended duration.

OR

    C. Resulting in complete inability to function independently outside 
the area of one's home.
    12.07 Somatoform Disorders: Physical symptoms for which there are no 
demonstrable organic findings or known physiological mechanisms.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Medically documented by evidence of one of the following:
    1. A history of multiple physical symptoms of several years 
duration, beginning before age 30, that have caused the individual to 
take medicine frequently, see a physician often and alter life patterns 
significantly; or
    2. Persistent nonorganic disturbance of one of the following:
    a. Vision; or
    b. Speech; or
    c. Hearing; or
    d. Use of a limb; or
    e. Movement and its control (e.g., coordination disturbance, 
psychogenic seizures, akinesia, dyskinesia; or
    f. Sensation (e.g., diminished or heightened).
    3. Unrealistic interpretation of physical signs or sensations 
associated with the preoccupation or belief that one has a serious 
disease or injury;

AND

    B. Resulting in at least two of the following:
    1. Marked restriction of activities of daily living; or
    2. Marked difficulties in maintaining social functioning; or
    3. Marked difficulties in maintaining concentration, persistence, or 
pace; or
    4. Repeated episodes of decompensation, each of extended duration.
    12.08 Personality Disorders: A personality disorder exists when 
personality traits are inflexible and maladaptive and cause either 
significant impairment in social or occupational functioning or 
subjective distress. Characteristic features are typical of the 
individual's long-term functioning and are not limited to discrete 
episodes of illness.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Deeply ingrained, maladaptive patterns of behavior associated 
with one of the following:
    1. Seclusiveness or autistic thinking; or
    2. Pathologically inappropriate suspiciousness or hostility; or
    3. Oddities of thought, perception, speech and behavior; or
    4. Persistent disturbances of mood or affect; or
    5. Pathological dependence, passivity, or aggressivity; or
    6. Intense and unstable interpersonal relationships and impulsive 
and damaging behavior;

AND

    B. Resulting in at least two of the following:

[[Page 477]]

    1. Marked restriction of activities of daily living; or
    2. Marked difficulties in maintaining social functioning; or
    3. Marked difficulties in maintaining concentration, persistence, or 
pace; or
    4. Repeated episodes of decompensation, each of extended duration.
    12.09 Substance Addiction Disorders: Behavioral changes or physical 
changes associated with the regular use of substances that affect the 
central nervous system.
    The required level of severity for these disorders is met when the 
requirements in any of the following (A through I) are satisfied.
    A. Organic mental disorders. Evaluate under 12.02.
    B. Depressive syndrome. Evaluate under 12.04.
    C. Anxiety disorders. Evaluate under 12.06.
    D. Personality disorders. Evaluate under 12.08.
    E. Peripheral neuropathies. Evaluate under 11.14.
    F. Liver damage. Evaluate under 5.05.
    G. Gastritis. Evaluate under 5.04.
    H. Pancreatitis. Evaluate under 5.08.
    I. Seizures. Evaluate under 11.02 or 11.03.
    12.10 Autistic disorder and other pervasive developmental disorders: 
Characterized by qualitative deficits in the development of reciprocal 
social interaction, in the development of verbal and nonverbal 
communication skills, and in imaginative activity. Often, there is a 
markedly restricted repertoire of activities and interests, which 
frequently are stereotyped and repetitive.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Medically documented findings of the following:
    1. For autistic disorder, all of the following:
    a. Qualitative deficits in reciprocal social interaction; and
    b. Qualitative deficits in verbal and nonverbal communication and in 
imaginative activity; and
    c. Markedly restricted repertoire of activities and interests;

OR
    2. For other pervasive developmental disorders, both of the 
following:
    a. Qualitative deficits in reciprocal social interaction; and
    b. Qualitative deficits in verbal and nonverbal communication and in 
imaginative activity;

AND

    B. Resulting in at least two of the following:
    1. Marked restriction of activities of daily living; or
    2. Marked difficulties in maintaining social functioning; or
    3. Marked difficulties in maintaining concentration, persistence, or 
pace; or
    4. Repeated episodes of decompensation, each of extended duration.

                  13.00 Neoplastic Diseases, Malignant

    A. Introduction: The determination of the level of impairment 
resulting from malignant tumors is made from a consideration of the site 
of the lesion, the histogenesis of the tumor, the extent of involvement, 
the apparent adequacy and response to therapy (surgery, irradiation, 
hormones, chemotherapy, etc.), and the magnitude of the post therapeutic 
residuals.
    B. Documentation: The diagnosis of malignant tumors should be 
established on the basis of symptoms, signs, and laboratory findings. 
The site of the primary, recurrent, and metastatic lesion must be 
specified in all cases of malignant neoplastic diseases. If an operative 
procedure has been performed, the evidence should include a copy of the 
operative note and the report of the gross and microscopic examination 
of the surgical specimen. If these documents are not obtainable, then 
the summary of hospitalization or a report from the treating physician 
must include details of the findings at surgery and the results of the 
pathologist's gross and microscopic examination of the tissues.
    For those cases in which a disabling impairment was not established 
when therapy was begun but progression of the disease is likely, current 
medical evidence should include a report of a recent examination 
directed especially at local or regional recurrence, soft part or 
skeletal metastases, and significant posttherapeutic residuals.
    C. Evaluation. Usually, when the malignant tumor consists of a local 
lesion with metastases to the regional lymph nodes which apparently has 
been completely excised, imminent recurrence or metastases is not 
anticipated. A number of exceptions are noted in the specific Listings. 
For adjudicative purposes, ``distant metastases'' or ``metastases beyond 
the regional lymph nodes'' refers to metastasis beyond the lines of the 
usual radical en bloc resection.
    Local or regional recurrence after radical surgery or pathological 
evidence of incomplete excision by radical surgery is to be equated with 
unresectable lesions (except for carcinoma of the breast, 13.09C) and, 
for the purposes of our program, may be evaluated as ``inoperable.''
    Local or regional recurrence after incomplete excision of a 
localized and still completely resectable tumor is not to be equated 
with recurrence after radical surgery. In the evaluation of lymphomas, 
the tissue type and site of involvement are not necessarily indicators 
of the degree of impairment.
    When a malignant tumor has metastasized beyond the regional lymph 
nodes, the impairment will usually be found to meet the

[[Page 478]]

requirements of a specific listing. Exceptions are hormone-dependent 
tumors, isotope-sensitive metastases, and metastases from seminoma of 
the testicles which are controlled by definitive therapy.
    When the original tumor and any metastases have apparently 
disappeared and have not been evident for 3 or more years, the 
impairment does not meet the criteria under this body system.
    D. Effects of therapy. Significant posttherapeutic residuals, not 
specifically included in the category of impairments for malignant 
neoplasms, should be evaluated according to the affected body system.
    Where the impairment is not listed in the Listing of Impairments and 
is not medically equivalent to a listed impairment, the impact of any 
residual impairment including that caused by therapy must be considered. 
The therapeutic regimen and consequent adverse response to therapy may 
vary widely; therefore, each case must be considered on an individual 
basis. It is essential to obtain a specific description of the 
therapeutic regimen, including the drugs given, dosage, frequency of 
drug administration, and plans for continued drug administration. It is 
necessary to obtain a description of the complications or any other 
adverse response to therapy such as nausea, vomiting, diarrhea, 
weakness, dermatologic disorders, or reactive mental disorders. Since 
the severity of the adverse effects of anticancer chemotherapy may 
change during the period of drug administration, the decision regarding 
the impact of drug therapy should be based on a sufficient period of 
therapy to permit proper consideration.
    E. Onset. To establish onset of disability prior to the time a 
malignancy is first demonstrated to be inoperable or beyond control by 
other modes of therapy (and prior evidence is nonexistent) requires 
medical judgment based on medically reported symptoms, the type of the 
specific malignancy, its location, and extent of involvement when first 
demonstrated.

      13.01 Category of Impairments, Neoplastic Diseases--Malignant

    13.02 Head and neck (except salivary glands--13.07, thyroid gland--
13.08, and mandible, maxilla, orbit, or temporal fossa--13.11):
    A. Inoperable; or
    B. Not controlled by prescribed therapy; or
    C. Recurrent after radical surgery or irradiation; or
    D. With distant metastases; or
    E. Epidermoid carcinoma occurring in the pyriform sinus or posterior 
third of the tongue.
    13.03 Sarcoma of skin:
    A. Angiosarcoma with metastases to regional lymph nodes or beyond; 
or
    B. Mycosis fungoides with metastases to regional lymph nodes, or 
with visceral involvement.
    13.04 Sarcoma of soft parts: Not controlled by prescribed therapy.
    13.05 Malignant melanoma:
    A. Recurrent after wide excision; or
    B. With metastases to adjacent skin (satellite lesions) or 
elsewhere.
    13.06 Lymph nodes:
    A. Hodgkin's disease or non-Hodgkin's lymphoma with progressive 
disease not controlled by prescribed therapy; or
    B. Metastatic carcinoma in a lymph node (except for epidermoid 
carcinoma in a lymph node in the neck) where the primary site is not 
determined after adequate search; or
    C. Epidermoid carcinoma in a lymph node in the neck not responding 
to prescribed therapy.
    13.07 Salivary glands-- carcinoma or sarcoma with metastases beyond 
the regional lymph nodes.
    13.08 Thyroid gland:
    A. Anaplastic (undifferentiated) carcinoma of the thyroid; or
    B. Carcinoma with metastases beyond the regional lymph nodes, not 
controlled by prescribed therapy.
    13.09 Breast:
    A. Inoperable carcinoma; or
    B. Inflammatory carcinoma; or
    C. Recurrent carcinoma, except local recurrence controlled by 
prescribed therapy; or
    D. Distant metastases from breast carcinoma (bilateral breast 
carcinoma, synchronous or metachronous is usually primary in each 
breast); or
    E. Sarcoma with metastases anywhere.
    13.10 Skeletal system (exclusive of the jaw):
    A. Malignant primary tumors with evidence of metastases and not 
controlled by prescribed therapy; or
    B. Metastatic carcinoma to bone where the primary site is not 
determined after adequate search.
    13.11 Mandible, maxilla, orbit, or temporal fossa:
    A. Sarcoma of any type with metastases; or
    B. Carcinoma of the antrum with extension into the orbit or ethmoid 
or sphenoid sinus, or with regional or distant metastases; or
    C. Orbital tumors with intracranial extension; or
    D. Tumors of the temporal fossa with perforation of skull and 
meningeal involvement; or
    E. Adamantinoma with orbital or intracranial infiltration; or
    F. Tumors of Rathke's pouch with infiltration of the base of the 
skull or metastases.
    13.12 Brain or spinal cord:
    A. Metastatic carcinoma to brain or spinal cord.
    B. Evaluate other tumors under the criteria described in 11.05 and 
11.08.

[[Page 479]]

    13.13 Lungs.
    A. Unresectable or with incomplete excision; or
    B. Recurrence or metastases after resection; or
    C. Oat cell (small cell) carcinoma; or
    D. Squamous cell carcinoma, with metastases beyond the hilar lymph 
nodes; or
    E. Other histologic types of carcinoma, including undifferentiated 
and mixed-cell types (but excluding oat cell carcinoma, 13.13C, and 
squamous cell carcinoma, 13.13D), with metastases to the hilar lymph 
nodes.
    13.14 Pleura or mediastinum:
    A. Malignant mesothelioma of pleura; or
    B. Malignant tumors, metastatic to pleura; or
    C. Malignant primary tumor of the mediastinum not controlled by 
prescribed therapy.
    13.15 Abdomen:
    A. Generalized carcinomatosis; or
    B. Retroperitoneal cellular sarcoma not controlled by prescribed 
therapy; or
    C. Ascites with demonstrated malignant cells.
    13.16 Esophagus or stomach:
    A. Carcinoma or sarcoma of the esophagus; or
    B. Carcinoma of the stomach with metastases to the regional lymph 
nodes or extension to surrounding structure; or
    C. Sarcoma of stomach not controlled by prescribed therapy; or
    D. Inoperable carcinoma; or
    E. Recurrence or metastases after resection.
    13.17 Small intestine:
    A. Carcinoma, sarcoma, or carcinoid tumor with metastases beyond the 
regional lymph nodes; or
    B. Recurrence of carcinoma, sarcoma, or carcinoid tumor after 
resection; or
    C. Sarcoma, not controlled by prescribed therapy.
    13.18 Large intestine (from ileocecal valve to and including anal 
canal)--carcinoma or sarcoma.
    A. Unresectable; or
    B. Metastases beyond the regional lymph nodes; or
    C. Recurrence or metastases after resection.
    13.19 Liver or gallbladder:
    A. Primary or metastatic malignant tumors of the liver; or
    B. Carcinoma of the gallbladder; or
    C. Carcinoma of the bile ducts.
    13.20 Pancreas:
    A. Carcinoma except islet cell carcinoma; or
    B. Islet cell carcinoma which is unresectable and physiologically 
active.
    13.21 Kidneys, adrenal glands, or ureters--carcinoma:
    A. Unresectable; or
    B. With hematogenous spread to distant sites; or
    C. With metastases to regional lymph nodes.
    13.22 Urinary bladder--carcinoma. With:
    A. Infiltration beyond the bladder wall; or
    B. Metastases to regional lymph nodes; or
    C. Unresectable; or
    D. Recurrence after total cystectomy; or
    E. Evaluate renal impairment after total cystectomy under the 
criteria in 6.02.
    13.23 Prostate gland--carcinoma not controlled by prescribed 
therapy.
    13.24 Testicles:
    A. Choriocarcinoma; or
    B. Other malignant primary tumors with progressive disease not 
controlled by prescribed therapy.
    13.25 Uterus--carcinoma or sarcoma (corpus or cervix).
    A. Inoperable and not controlled by prescribed therapy; or
    B. Recurrent after total hysterectomy; or
    C. Total pelvic exenteration
    13.26 Ovaries--all malignant, primary or recurrent tumors. With:
    A. Ascites with demonstrated malignant cells; or
    B. Unresectable infiltration; or
    C. Unresectable metastases to omentum or elsewhere in the peritoneal 
cavity; or
    D. Distant metastases.
    13.27 Leukemia: Evaluate under the criteria of 7.00ff, Hemic and 
Lymphatic Sytem.
    13.28 Uterine (Fallopian) tubes--carcinoma or sarcoma:
    A. Unresectable, or
    B. Metastases to regional lymph nodes.
    13.29 Penis--carcinoma with metastases to regional lymph nodes.
    13.30 Vulva--carcinoma, with distant metastases.

                           14.00 Immune System

    A. Listed disorders include impairments involving deficiency of one 
or more components of the immune system (i.e., antibody-producing B 
cells; a number of different types of cells associated with cell-
mediated immunity including T-lymphocytes, macrophages and monocytes; 
and components of the complement system).
    B. Dysregulation of the immune system may result in the development 
of a connective tissue disorder. Connective tissue disorders include 
several chronic multisystem disorders that differ in their clinical 
manifestation, course, and outcome. They generally evolve and persist 
for months or years, may result in loss of functional abilities, and may 
require long-term, repeated evaluation and management.
    The documentation needed to establish the existence of a connective 
tissue disorder is

[[Page 480]]

medical history, physical examination, selected laboratory studies, 
appropriate medically acceptable imaging, and, in some instances, tissue 
biopsy. Medically acceptable imaging includes, but is not limited to, x-
ray imaging, computerized axial tomography (CAT scan) or magnetic 
resonance imaging (MRI), with or without contrast material, myelography, 
and radionuclear bone scans. ``Appropriate'' means that the technique 
used is the proper one to support the evaluation and diagnosis of the 
impairment. However, the Social Security Administration will not 
purchase diagnostic tests or procedures that may involve significant 
risk, such as biopsies or angiograms. Generally, the existing medical 
evidence will contain this information.
    A longitudinal clinical record of at least 3 months demonstrating 
active disease despite prescribed treatment during this period with the 
expectation that the disease will remain active for 12 months is 
necessary for assessment of severity and duration of impairment.
    To permit appropriate application of a listing, the specific 
diagnostic features that should be documented in the clinical record for 
each of the disorders are summarized for systemic lupus erythematosus 
(SLE), systemic vasculitis, systemic sclerosis and scleroderma, 
polymyositis or dermatomyositis, undifferentiated connective tissue 
disorders, and the inflammatory arthritides.
    In addition to the limitations caused by the connective tissue 
disorder per se, the chronic adverse effects of treatment (e.g., 
corticosteroid-related ischemic necrosis of bone) may result in 
functional loss.
    These disorders may preclude performance of any gainful activity by 
reason of serious loss of function because of disease affecting a single 
organ or body system, or lesser degrees of functional loss because of 
disease affecting two or more organs/body systems associated with 
significant constitutional symptoms and signs of severe fatigue, fever, 
malaise, weight loss, and joint pain and stiffness. We use the term 
``severe'' in these listings to describe medical severity; the term does 
not have the same meaning as it does when we use it in connection with a 
finding at the second step of the sequential evaluation processes in 
Sec. Sec. 404.1520, 416.920, and 416.924.
    1. Systemic lupus erythematosus (14.02)--This disease is 
characterized clinically by constitutional symptoms and signs (e.g., 
fever, fatigability, malaise, weight loss), multisystem involvement and, 
frequently, anemia, leukopenia, or thrombocytopenia. Immunologically, an 
array of circulating serum auto-antibodies can occur, but are highly 
variable in pattern. Generally the medical evidence will show that 
patients with this disease will fulfill The 1982 Revised Criteria for 
the Classification of Systemic Lupus Erythematosus of the American 
College of Rheumatology. (Tan, E.M., et al., Arthritis Rheum. 25: 11271-
1277, 1982).
    2. Systemic vasculitis (14.03)--This disease occurs acutely in 
association with adverse drug reactions, certain chronic infections and, 
occasionally, malignancies. More often it is idiopathic and chronic. 
There are several clinical patterns, including classical polyarteritis 
nodosa, aortic arch arteritis, giant cell arteritis, Wegener's 
granulomatosis, and vasculitis associated with other connective tissue 
disorders (e.g., rheumatoid arthritis, SLE, Sj[ouml]gren's syndrome, 
cryoglobulinemia). Cutaneous vasculitis may or may not be associated 
with systemic involvement and the patterns of vascular and ischemic 
involvement are highly variable. The diagnosis is confirmed by 
angiography or tissue biopsy when the disease is suspected clinically. 
Most patients who are stated to have this disease will have the results 
of the confirmatory angiogram or biopsy in their medical records.
    3. Systemic sclerosis and scleroderma (14.04)--These disorders 
constitute a spectrum of disease in which thickening of the skin is the 
clinical hallmark. Raynaud's phenomena, often severe and progressive, 
are especially frequent and may be the peripheral manifestation of a 
generalized vasospastic abnormality in the heart, lungs, and kidneys. 
The CREST syndrome (calcinosis, Raynaud's phenomena, esophageal 
dysmotility, sclerodactyly, telangiectasia) is a variant that may slowly 
progress to the generalized process, systemic sclerosis, over years. In 
addition to skin and blood vessels, the major organ/body system 
involvement includes the gastrointestinal tract, lungs, heart, kidneys, 
and muscle. Although arthritis can occur, joint dysfunction results 
primarily from soft tissue/cutaneous thickening, fibrosis, and 
contractures.
    4. Polymyositis or dermatomyositis (14.05)--This disorder is 
primarily an inflammatory process in striated muscle, which can occur 
alone or in association with other connective tissue disorders or 
malignancy. Weakness and, less frequently, pain and tenderness of the 
proximal limb-girdle musculature are the cardinal manifestations. 
Involvement of the cervical muscles, the cricopharyngeals, the 
intercostals, and diaphragm may occur in those with listing-level 
disease. Weakness of the pelvic girdle, as contemplated in Listing 
14.05A, may result in significant difficulty climbing stairs or rising 
from a chair without use of the arms. Proximal limb weakness in the 
upper extremities may result in inability to lift objects, and 
interference with dressing and combing hair. Weakness of anterior neck 
flexors may impair the ability to lift the head from the pillow in bed. 
The diagnosis is supported by elevated serum muscle enzymes (creatine 
phosphokinase (CPK),

[[Page 481]]

aminotransferases, aldolase), characteristic abnormalities on 
electromyography, and myositis on muscle biopsy.
    5. Undifferentiated connective tissue disorder (14.06)--This listing 
includes syndromes with clinical and immunologic features of several 
connective tissue disorders, but that do not satisfy the criteria for 
any of the disorders described; for instance, the individual may have 
clinical features of systemic lupus erythematosus and systemic 
vasculitis and the serologic findings of rheumatoid arthritis. It also 
includes overlap syndromes with clinical features of more than one 
established connective tissue disorder. For example, the individual may 
have features of both rheumatoid arthritis and scleroderma. The correct 
designation of this disorder is important for assessment of prognosis.
    6. Inflammatory arthritis (14.09) includes a vast array of disorders 
that differ in cause, course, and outcome. For example, inflammatory 
spondyloarthropathies include ankylosing spondylitis, Reiter's syndrome 
and other reactive arthropathies, psoriatic arthropathy, Beh[ccedil]et's 
disease, and Whipple's disease, as well as undifferentiated spondylitis. 
Inflammatory arthritis of peripheral joints likewise comprises many 
disorders, including rheumatoid arthritis, Sj[ouml]gren's syndrome, 
psoriatic arthritis, crystal deposition disorders, and Lyme disease. 
Clinically, inflammation of major joints may be the dominant problem 
causing difficulties with ambulation or fine and gross movements, or the 
arthritis may involve other joints or cause less restriction of 
ambulation or other movements but be complicated by extra-articular 
features that cumulatively result in serious functional deficit. When 
persistent deformity without ongoing inflammation is the dominant 
feature of the impairment, it should be evaluated under 1.02, or, if 
there has been surgical reconstruction, 1.03.
    a. In 14.09A, the term major joints refers to the major peripheral 
joints, which are the hip, knee, shoulder, elbow, wrist-hand, and ankle-
foot, as opposed to other peripheral joints (e.g., the joints of the 
hand or forefoot) or axial joints (i.e., the joints of the spine.) The 
wrist and hand are considered together as one major joint, as are the 
ankle and foot. Since only the ankle joint, which consists of the 
juncture of the bones of the lower leg (tibia and fibula) with the 
hindfoot (tarsal bones), but not the forefoot, is crucial to weight 
bearing, the ankle and foot are considered separately in evaluating 
weight bearing.
    b. The terms inability to ambulate effectively and inability to 
perform fine and gross movements effectively in 14.09A have the same 
meaning as in 1.00B2b and 1.00B2c and must have lasted, or be expected 
to last, for at least 12 months.
    c. Inability to ambulate effectively is implicit in 14.09B. Even 
though individuals who demonstrate the findings of 14.09B will not 
ordinarily require bilateral upper limb assistance, the required 
ankylosis of the cervical or dorsolumbar spine will result in an extreme 
loss of the ability to see ahead, above, and to the side.
    d. As in 14.02 through 14.06, extra-articular features of an 
inflammatory arthritis may satisfy the criteria for a listing in an 
involved extra-articular body system. Such impairments may be found to 
meet a criterion of 14.09C. Extra-articular impairments of lesser 
severity should be evaluated under 14.09D and 14.09E. Commonly occurring 
extra-articular impairments include keratoconjunctivitis sicca, uveitis, 
iridocyclitis, pleuritis, pulmonary fibrosis or nodules, restrictive 
lung disease, pericarditis, myocarditis, cardiac arrhythmias, aortic 
valve insufficiency, coronary arteritis, Raynaud's phenomena, systemic 
vasculitis, amyloidosis of the kidney, chronic anemia, thrombocytopenia, 
hypersplenism with compromised immune competence (Felty's syndrome), 
peripheral neuropathy, radiculopathy, spinal cord or cauda equina 
compression with sensory and motor loss, and heel enthesopathy with 
functionally limiting pain.
    e. The fact that an individual is dependent on steroids, or any 
other drug, for the control of inflammatory arthritis is, in and of 
itself, insufficient to find disability. Advances in the treatment of 
inflammatory connective tissue disease and in the administration of 
steroids for its treatment have corrected some of the previously 
disabling consequences of continuous steroid use. Therefore, each case 
must be evaluated on its own merits, taking into consideration the 
severity of the underlying impairment and any adverse effects of 
treatment.
    C. Allergic disorders (e.g., asthma or atopic dermatitis) are 
discussed and evaluated under the appropriate listing of the affected 
body system.
    D. Human immunodeficiency virus (HIV) infection.
    1. HIV infection is caused by a specific retrovirus and may be 
characterized by susceptibility to one or more opportunistic diseases, 
cancers, or other conditions, as described in 14.08. Any individual with 
HIV infection, including one with a diagnosis of acquired 
immunodeficiency syndrome (AIDS), may be found disabled under this 
listing if his or her impairment meets any of the criteria in 14.08 or 
is of equivalent severity to any impairment in 14.08.
    2. Definitions. In 14.08, the terms ``resistant to treatment,'' 
``recurrent,'' and ``disseminated'' have the same general meaning as 
used by the medical community. The precise meaning of any of these terms 
will depend upon the specific disease or condition

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in question, the body system affected, the usual course of the disorder 
and its treatment, and the other circumstances of the case.
    ``Resistant to treatment'' means that a condition did not respond 
adequately to an appropriate course of treatment. Whether a response is 
adequate, or a course of treatment appropriate, will depend on the facts 
of the particular case.
    ``Recurrent'' means that a condition that responded adequately to an 
appropriate course of treatment has returned after a period of remission 
or regression. The extent of response (or remission) and the time 
periods involved will depend on the facts of the particular case.
    ``Disseminated'' means that a condition is spread widely over a 
considerable area or body system(s). The type and extent of the spread 
will depend on the specific disease.
    As used in 14.08I, ``significant involuntary weight loss'' does not 
correspond to a specific minimum amount or percentage of weight loss. 
Although, for purposes of this listing, an involuntary weight loss of at 
least 10 percent of baseline is always considered significant, loss of 
less than 10 percent may or may not be significant, depending on the 
individual's baseline weight and body habitus. (For example, a 7-pound 
weight loss in a 100-pound female who is 63 inches tall might be 
considered significant; but a 14-pound weight loss in a 200-pound female 
who is the same height might not be significant.)
    3. Documentation of HIV infection. The medical evidence must include 
documentation of HIV infection. Documentation may be by laboratory 
evidence or by other generally acceptable methods consistent with the 
prevailing state of medical knowledge and clinical practice.
    a. Documentation of HIV infection by definitive diagnosis. A 
definitive diagnosis of HIV infection is documented by one or more of 
the following laboratory tests:
    i. A serum specimen that contains HIV antibodies. HIV antibodies are 
usually detected by a screening test. The most commonly used screening 
test is the ELISA. Although this test is highly sensitive, it may yield 
false positive results. Therefore, positive results from an ELISA must 
be confirmed by a more definitive test (e.g., Western blot, 
immunofluorescence assay).
    ii. A specimen that contains HIV antigen (e.g., serum specimen, 
lymphocyte culture, or cerebrospinal fluid (CSF) specimen).
    iii. Other test(s) that are highly specific for detection of HIV 
(e.g., polymerase chain reaction (PCR)), or that are acceptable methods 
of detection consistent with the prevailing state of medical knowledge.
    When laboratory testing for HIV infection has been performed, every 
reasonable effort must be made to obtain reports of the results of that 
testing.
    Individuals who have HIV infection or other disorders of the immune 
system may undergo tests to determine T-helper lymphocyte (CD4) counts. 
The extent of immune depression correlates with the level or rate of 
decline of the CD4 count. In general, when the CD4 count is 200/mm\3\ or 
less (14 percent or less), the susceptibility to opportunistic disease 
is considerably increased. However, a reduced CD4 count alone does not 
establish a definitive diagnosis of HIV infection, or document the 
severity or functional effects of HIV infection.
    b. Other acceptable documentation of HIV infection.
    HIV infection may also be documented without the definitive 
laboratory evidence described in paragraph a, provided that such 
documentation is consistent with the prevailing state of medical 
knowledge and clinical practice and is consistent with the other 
evidence. If no definitive laboratory evidence is available, HIV 
infection may be documented by the medical history, clinical and 
laboratory findings, and diagnosis(es) indicated in the medical 
evidence. For example, a diagnosis of HIV infection will be accepted 
without definitive laboratory evidence if the individual has an 
opportunistic disease (e.g., toxoplasmosis of the brain, pneumocystis 
carinii pneumonia (PCP)) predictive of a defect in cell-mediated 
immunity, and there is no other known cause of diminished resistance to 
that disease (e.g., long-term steroid treatment, lymphoma). In such 
cases, every reasonable effort must be made to obtain full details of 
the history, medical findings, and results of testing.
    4. Documentation of the manifestations of HIV infection. The medical 
evidence must also include documentation of the manifestations of HIV 
infection. Documentation may be by laboratory evidence or by other 
generally acceptable methods consistent with the prevailing state of 
medical knowledge and clinical practice.
    a. Documentation of the manifestations of HIV infection by 
definitive diagnosis.
    The definitive method of diagnosing opportunistic diseases or 
conditions that are manifestations of HIV infection is by culture, 
serological test, or microscopic examination of biopsied tissue or other 
material (e.g., bronchial washings). Therefore, every reasonable effort 
must be made to obtain specific laboratory evidence of an opportunistic 
disease or other condition whenever this information is available. If a 
histological or other test has been performed, the evidence should 
include a copy of the appropriate report. If the report is not 
obtainable, the summary of hospitalization or a report from the treating 
source should include details of the findings and results of the 
diagnostic studies (including radiographic studies) or microscopic 
examination of the appropriate tissues or body fluids.

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    Although a reduced CD4 lymphocyte count may show that there is an 
increased susceptibility to opportunistic infections and diseases (see 
14.00D3a, above), that alone does not establish the presence, severity, 
or functional effects of a manifestation of HIV infection.
    b. Other acceptable documentation of the manifestations of HIV 
infection.
    Manifestations of HIV infection may also be documented without the 
definitive laboratory evidence described in paragraph a, provided that 
such documentation is consistent with the prevailing state of medical 
knowledge and clinical practice and is consistent with the other 
evidence. If no definitive laboratory evidence is available, 
manifestations of HIV infection may be documented by medical history, 
clinical and laboratory findings, and diagnosis(es) indicated in the 
medical evidence. In such cases, every reasonable effort must be made to 
obtain full details of the history, medical findings, and results of 
testing.
    Documentation of cytomegalovirus (CMV) disease (14.08D) presents 
special problems because diagnosis requires identification of viral 
inclusion bodies or a positive culture from the affected organ, and the 
absence of any other infectious agent. A positive serology test 
identifies infection with the virus, but does not confirm a disease 
process. With the exception of chorioretinitis (which may be diagnosed 
by an ophthalmologist), documentation of CMV disease requires 
confirmation by biopsy or other generally acceptable methods consistent 
with the prevailing state of medical knowledge and clinical practice.
    5. Manifestations specific to women. Most women with severe 
immunosuppression secondary to HIV infection exhibit the typical 
opportunistic infections and other conditions, such as pneumocystis 
carinii pneumonia (PCP), candida esophagitis, wasting syndrome, 
cryptococcosis, and toxoplasmosis. However, HIV infection may have 
different manifestations in women than in men. Adjudicators must 
carefully scrutinize the medical evidence and be alert to the variety of 
medical conditions specific to or common in women with HIV infection 
that may affect their ability to function in the workplace.
    Many of these manifestations (e.g. vulvovaginal candidiasis, pelvic 
inflammatory disease) occur in women with or without HIV infection, but 
can be more severe or resistant to treatment, or occur more frequently 
in a woman whose immune system is suppressed. Therefore, when evaluating 
the claim of a woman with HIV infection, it is important to consider 
gynecologic and other problems specific to women, including any 
associated symptoms (e.g., pelvic pain), in assessing the severity of 
the impairment and resulting functional limitations. Manifestations of 
HIV infection in women may be evaluated under the specific criteria 
(e.g., cervical cancer under 14.08E), under an applicable general 
category (e.g., pelvic inflammatory disease under 14.08A5) or, in 
appropriate cases, under 14.08N.
    6. Evaluation. The criteria in 14.08 do not describe the full 
spectrum of diseases or conditions manifested by individuals with HIV 
infection. As in any case, consideration must be given to whether an 
individual's impairment(s) meets or equals in severity any other listing 
in appendix 1 of subpart P (e.g., a neoplastic disorder listed in 
13.00ff). Although 14.08 includes cross-references to other listings for 
the more common manifestations of HIV infection, other listings may 
apply.
    In addition, the impact of all impairments, whether or not related 
to HIV infection, must be considered. For example, individuals with HIV 
infection may manifest signs and symptoms of a mental impairment (e.g., 
anxiety, depression), or of another physical impairment. Medical 
evidence should include documentation of all physical and mental 
impairments, and the impairment(s) should be evaluated not only under 
the relevant listing(s) in 14.08, but under any other appropriate 
listing(s).
    It is also important to remember that individuals with HIV 
infection, like all other individuals, are evaluated under the full 
five-step sequential evaluation process described in Sec. 404.1520 and 
Sec. 416.920. If an individual with HIV infection is working and 
engaging in substantial gainful activity (SGA), or does not have a 
severe impairment, the case will be decided at the first or second step 
of the sequential evaluation process, and does not require evaluation 
under these listings. For an individual with HIV infection who is not 
engaging in SGA and has a severe impairment, but whose impairment(s) 
does not meet or equal in severity the criteria of a listing, evaluation 
must proceed through the final steps of the sequential evaluation 
process (or, as appropriate, the steps in the medical improvement review 
standard) before any conclusion can be reached on the issue of 
disability.
    7. Effect of treatment. Medical treatment must be considered in 
terms of its effectiveness in ameliorating the signs, symptoms, and 
laboratory abnormalities of the specific disorder, or of the HIV 
infection itself (e.g., antiretroviral agents) and in terms of any side 
effects of treatment that may further impair the individual.
    Response to treatment and adverse or beneficial consequences of 
treatment may vary widely. For example, an individual with HIV infection 
who develops pneumonia or tuberculosis may respond to the same 
antibiotic regimen used in treating individuals without HIV infection, 
but another individual with HIV infection may not respond to the same 
regimen. Therefore, each case must be considered on an individual basis, 
along with the

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effects of treatment on the individual's ability to function.
    A specific description of the drugs or treatment given (including 
surgery), dosage, frequency of administration, and a description of the 
complications or response to treatment should be obtained. The effects 
of treatment may be temporary or long term. As such, the decision 
regarding the impact of treatment should be based on a sufficient period 
of treatment to permit proper consideration.
    8. Functional criteria. Paragraph N of 14.08 establishes standards 
for evaluating manifestations of HIV infection that do not meet the 
requirements listed in 14.08A-M. Paragraph N is applicable for 
manifestations that are not listed in 14.08A-M, as well as those listed 
in 14.08A-M that do not meet the criteria of any of the rules in 14.08A-
M.
    For individuals with HIV infection evaluated under 14.08N, listing-
level severity will be assessed in terms of the functional limitations 
imposed by the impairment. The full impact of signs, symptoms, and 
laboratory findings on the claimant's ability to function must be 
considered. Important factors to be considered in evaluating the 
functioning of individuals with HIV infection include, but are not 
limited to: symptoms, such as fatigue and pain; characteristics of the 
illness, such as the frequency and duration of manifestations or periods 
of exacerbation and remission in the disease course; and the functional 
impact of treatment for the disease, including the side effects of 
medication.
    As used in 14.08N, ``repeated'' means that the conditions occur on 
an average of 3 times a year, or once every 4 months, each lasting 2 
weeks or more; or the conditions do not last for 2 weeks but occur 
substantially more frequently than 3 times in a year or once every 4 
months; or they occur less often than an average of 3 times a year or 
once every 4 months but last substantially longer than 2 weeks.
    To meet the criteria in 14.08N, an individual with HIV infection 
must demonstrate a marked level of restriction in one of three general 
areas of functioning: activities of daily living; social functioning; 
and difficulties in completing tasks due to deficiencies in 
concentration, persistence, or pace. Functional restrictions may result 
from the impact of the disease process itself on mental or physical 
functioning, or both. This could result from extended or intermittent 
symptoms, such as depression, fatigue, or pain, resulting in a 
limitation of the ability to concentrate, to persevere at a task, or to 
perform the task at an acceptable rate of speed. Limitations may also 
result from the side effects of medication.
    When ``marked'' is used as a standard for measuring the degree of 
functional limitation, it means more than moderate, but less than 
extreme. A marked limitation does not represent a quantitative measure 
of the individual's ability to do an activity for a certain percentage 
of the time. A marked limitation may be present when several activities 
or functions are impaired or even when only one is impaired. However, an 
individual need not be totally precluded from performing an activity to 
have a marked limitation, as long as the degree of limitation is such as 
to seriously interfere with the ability to function independently, 
appropriately, and effectively. The term ``marked'' does not imply that 
the impaired individual is confined to bed, hospitalized, or in a 
nursing home.
    Activities of daily living include, but are not limited to, such 
activities as doing household chores, grooming and hygiene, using a post 
office, taking public transportation, and paying bills. An individual 
with HIV infection who, because of symptoms such as pain imposed by the 
illness or its treatment, is not able to maintain a household or take 
public transportation on a sustained basis or without assistance (even 
though he or she is able to perform some self-care activities) would 
have marked limitation of activities of daily living.
    Social functioning includes the capacity to interact appropriately 
and communicate effectively with others. An individual with HIV 
infection who, because of symptoms or a pattern of exacerbation and 
remission caused by the illness or its treatment, cannot engage in 
social interaction on a sustained basis (even though he or she is able 
to communicate with close friends or relatives) would have marked 
difficulty maintaining social functioning.
    Completing tasks in a timely manner involves the ability to sustain 
concentration, persistence, or pace to permit timely completion of tasks 
commonly found in work settings. An individual with HIV infection who, 
because of HIV-related fatigue or other symptoms, is unable to sustain 
concentration or pace adequate to complete simple work-related tasks 
(even though he or she is able to do routine activities of daily living) 
would have marked difficulty completing tasks.

              14.01 Category of Impairments, Immune System

    14.02 Systemic lupus erythematosus. Documented as described in 
14.00B1, with:
    A. One of the following:
    1. Joint involvement, as described under the criteria in 1.00; or
    2. Muscle involvement, as described under the criteria in 14.05; or
    3. Ocular involvement, as described under the criteria in 2.00ff; or
    4. Respiratory involvement, as described under the criteria in 
3.00ff; or
    5. Cardiovascular involvement, as described under the criteria in 
4.00ff or 14.04D; or

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    6. Digestive involvement, as described under the criteria in 5.00ff; 
or
    7. Renal involvement, as described under the criteria in 6.00ff; or
    8. Hematologic involvement, as described under the criteria in 
7.00ff; or
    9. Skin involvement, as described under the criteria in 8.00ff; or
    10. Neurological involvement, as described under the criteria in 
11.00ff; or
    11. Mental involvement, as described under the criteria in 12.00ff.

or

    B. Lesser involvement of two or more organs/body systems listed in 
paragraph A, with significant, documented, constitutional symptoms and 
signs of severe fatigue, fever, malaise, and weight loss. At least one 
of the organs/body systems must be involved to at least a moderate level 
of severity.
    14.03 Systemic vasculitis. Documented as described in 14.00B2, 
including documentation by angiography or tissue biopsy, with:
    A. Involvement of a single organ or body system, as described under 
the criteria in 14.02A.

or

    B. Lesser involvement of two or more organs/body systems listed in 
14.02A, with significant, documented, constitutional symptoms and signs 
of severe fatigue, fever, malaise, and weight loss. At least one of the 
organs/body systems must be involved to at least a moderate level of 
severity.
    14.04 Systemic sclerosis and scleroderma. Documented as described in 
14.00B3, with:
    A. One of the following:
    1. Muscle involvement, as described under the criteria in 14.05; or
    2. Respiratory involvement, as described under the criteria in 
3.00ff; or
    3. Cardiovascular involvement, as described under the criteria in 
4.00ff; or
    4. Digestive involvement, as described under the criteria in 5.00ff; 
or
    5. Renal involvement, as described under the criteria in 6.00ff.

or

    B. Lesser involvement of two or more organs/body systems listed in 
paragraph A, with significant, documented, constitutional symptoms and 
signs of severe fatigue, fever, malaise, and weight loss. At least one 
of the organs/body systems must be involved to at least a moderate level 
of severity.

or

    C. Generalized scleroderma with digital contractures.

or

    D. Severe Raynaud's phenomena, characterized by digital ulcerations, 
ischemia, or gangrene.
    14.05 Polymyositis or dermatomyositis. Documented as described in 
14.00B4, with:
    A. Severe proximal limb-girdle (shoulder and/or pelvic) muscle 
weakness, as described in 14.00B4.

or

    B. Less severe limb-girdle muscle weakness than in 14.05A, 
associated with cervical muscle weakness and one of the following to at 
least a moderate level of severity:
    1. Impaired swallowing with dysphagia and episodes of aspiration due 
to cricopharyngeal weakness, or
    2. Impaired respiration due to intercostal and diaphragmatic muscle 
weakness.

or

    C. If associated with malignant tumor, as described under the 
criteria in 13.00ff.

or

    D. If associated with generalized connective tissue disease, 
described under the criteria in 14.02, 14.03, 14.04, or 14.06.
    14.06 Undifferentiated connective tissue disorder. Documented as 
described in 14.00B5, and with impairment as described under the 
criteria in 14.02A, 14.02B, or 14.04.
    14.07 Immunoglobulin deficiency syndromes or deficiencies of cell-
mediated immunity, excepting HIV infection. Associated with documented, 
recurrent severe infection occurring 3 or more times within a 5-month 
period.
    14.08 Human immunodeficiency virus (HIV) infection. With 
documentation as described in 14.00D3 and one of the following:
    A. Bacterial infections:
    1. Mycobacterial infection (e.g., caused by M. avium-intracellulare, 
M. kansasii, or M. tuberculosis) at a site other than the lungs, skin, 
or cervical or hilar lymph nodes; or pulmonary tuberculosis resistant to 
treatment; or
    2. Nocardiosis; or
    3. Salmonella bacteremia, recurrent non-typhoid; or
    4. Syphilis or neurosyphilis--evaluate sequelae under the criteria 
for the affected body system (e.g., 2.00 Special Senses and Speech, 4.00 
Cardiovascular System, 11.00 Neurological); or
    5. Multiple or recurrent bacterial infection(s), including pelvic 
inflammatory disease, requiring hospitalization or intravenous 
antibiotic treatment 3 or more times in 1 year.

or

    B. Fungal infections:
    1. Aspergillosis; or
    2. Candidiasis, at a site other than the skin, urinary tract, 
intestinal tract, or oral or vulvovaginal mucous membranes; or 
candidiasis involving the esophagus, trachea, bronchi, or lungs; or
    3. Coccidioidomycosis, at a site other than the lungs or lymph 
nodes; or
    4. Cryptococcosis, at a site other than the lungs (e.g., 
cryptococcal meningitis); or

[[Page 486]]

    5. Histoplasmosis, at a site other than the lungs or lymph nodes; or
    6. Mucormycosis.

or

    C. Protozoan or helminthic infections:
    1. Cryptosporidiosis, isosporiasis, or microsporidiosis, with 
diarrhea lasting for 1 month or longer; or
    2. Pneumocystis carinii pneumonia or extrapulmonary pneumocystis 
carinii infection; or
    3. Strongyloidiasis, extra-intestinal; or
    4. Toxoplasmosis of an organ other than the liver, spleen, or lymph 
nodes.

or

    D. Viral infections:
    1. Cytomegalovirus disease (documented as described in 14.00D4b) at 
a site other than the liver, spleen, or lymph nodes; or
    2. Herpes simplex virus causing:
    a. Mucocutaneous infection (e.g., oral, genital, perianal) lasting 
for 1 month or longer; or
    b. Infection at a site other than the skin or mucous membranes 
(e.g., bronchitis, pneumonitis, esophagitis, or encephalitis); or
    c. Disseminated infection; or
    3. Herpes zoster, either disseminated or with multidermatomal 
eruptions that are resistant to treatment; or
    4. Progressive multifocal leukoencephalopathy; or
    5. Hepatitis, as described under the criteria in 5.05.

or

    E. Malignant neoplasms:
    1. Carcinoma of the cervix, invasive, FIGO stage II and beyond; or
    2. Kaposi's sarcoma with:
    a. Extensive oral lesions; or
    b. Involvement of the gastrointestinal tract, lungs, or other 
visceral organs; or
    c. Involvement of the skin or mucous membranes, as described under 
the criteria in 14.08F; or
    3. Lymphoma (e.g., primary lymphoma of the brain, Burkitt's 
lymphoma, immunoblastic sarcoma, other non-Hodgkins lymphoma, Hodgkin's 
disease); or
    4. Squamous cell carcinoma of the anus.

or

    F. Conditions of the skin or mucous membranes (other than described 
in B2, D2, or D3, above) with extensive fungating or ulcerating lesions 
not responding to treatment (e.g., dermatological conditions such as 
eczema or psoriasis, vulvovaginal or other mucosal candida, condyloma 
caused by human papillomavirus, genital ulcerative disease), or evaluate 
under the criteria in 8.00ff.

or

    G. Hematologic abnormalities:
    1. Anemia, as described under the criteria in 7.02; or
    2. Granulocytopenia, as described under the criteria in 7.15; or
    3. Thrombocytopenia, as described under the criteria in 7.06.

or

    H. Neurological abnormalities:
    1. HIV encephalopathy, characterized by cognitive or motor 
dysfunction that limits function and progresses; or
    2. Other neurological manifestations of HIV infection (e.g., 
peripheral neuropathy) as described under the criteria in 11.00ff.

or

    I. HIV wasting syndrome, characterized by involuntary weight loss of 
10 percent or more of baseline (or other significant involuntary weight 
loss, as described in 14.00D2) and, in the absence of a concurrent 
illness that could explain the findings, either:
    1. Chronic diarrhea with two or more loose stools daily lasting for 
1 month or longer; or
    2. Chronic weakness and documented fever greater than 38 [deg]C 
(100.4 [deg]F) for the majority of 1 month or longer.

or

    J. Diarrhea, lasting for 1 month or longer, resistant to treatment, 
and requiring intravenous hydration, intravenous alimentation, or tube 
feeding.

or

    K. Cardiomyopathy, as described under the criteria in 4.00ff or 
11.04.

or

    L. Nephropathy, as described under the criteria in 6.00ff.

or

    M. One or more of the following infections (other than described in 
A-L, above), resistant to treatment or requiring hospitalization or 
intravenous treatment 3 or more times in 1 year (or evaluate sequelae 
under the criteria for the affected body system).
    1. Sepsis; or
    2. Meningitis; or
    3. Pneumonia; or
    4. Septic arthritis; or
    5. Endocarditis; or
    6. Sinusitis documented by appropriate medically acceptable imaging.

or

    N. Repeated (as defined in 14.00D8) manifestations of HIV infection 
(including those listed in 14.08A-M, but without the requisite findings, 
e.g., carcinoma of the cervix not meeting the criteria in 14.08E, 
diarrhea not meeting the criteria in 14.08J, or other manifestations, 
e.g., oral hairy leukoplakia, myositis) resulting in significant, 
documented symptoms or signs (e.g., fatigue, fever, malaise, weight 
loss, pain, night sweats) and one of the following at the marked level 
(as defined in 14.00D8):

[[Page 487]]

    1. Restriction of activities of daily living; or
    2. Difficulties in maintaining social functioning; or
    3. Difficulties in completing tasks in a timely manner due to 
deficiencies in concentration, persistence, or pace.
    14.09 Inflammatory arthritis. Documented as described in 14.00B6, 
with one of the following:
    A. History of joint pain, swelling, and tenderness, and signs on 
current physical examination of joint inflammation or deformity in two 
or more major joints resulting in inability to ambulate effectively or 
inability to perform fine and gross movements effectively, as defined in 
14.00B6b and 1.00B2b and B2c;

or

    B. Ankylosing spondylitis or other spondyloarthropathy, with 
diagnosis established by findings of unilateral or bilateral 
sacroiliitis (e.g., erosions or fusions), shown by appropriate medically 
acceptable imaging, with both:
    1. History of back pain, tenderness, and stiffness, and
    2. Findings on physical examination of ankylosis (fixation) of the 
dorsolumbar or cervical spine at 45[deg] or more of flexion measured 
from the vertical position (zero degrees);

or

    C. An impairment as described under the criteria in 14.02A.

or

    D. Inflammatory arthritis, with signs of peripheral joint 
inflammation on current examination, but with lesser joint involvement 
than in A and lesser extra-articular features than in C, and:
    1. Significant, documented constitutional symptoms and signs (e.g., 
fatigue, fever, malaise, weight loss), and
    2. Involvement of two or more organs/body systems (see 14.00B6d). At 
least one of the organs/body systems must be involved to at least a 
moderate level of severity.

or

    E. Inflammatory spondylitis or other inflammatory 
spondyloarthropathies, with lesser deformity than in B and lesser extra-
articular features than in C, with signs of unilateral or bilateral 
sacroiliitis on appropriate medically acceptable imaging; and with the 
extra-articular features described in 14.09D.

                                 Part B

    Medical criteria for the evaluation of impairments of children under 
age 18 (where criteria in part A do not give appropriate consideration 
to the particular disease process in childhood).
Sec.
100.00 Growth Impairment.
101.00 Musculoskeletal System.
102.00 Special Senses and Speech.
103.00 Respiratory System.
104.00 Cardiovascular System.
105.00 Digestive System.
106.00 Genito-Urinary System.
107.00 Hemic and Lymphatic System.
108.00 [Reserved]
109.00 Endocrine System.
110.00 Multiple Body Systems.
111.00 Neurological.
112.00 Mental Disorders.
113.00 Neoplastic Diseases, Malignant.
114.00 Immune System.

                        100.00 Growth Impairment

    A. Impairment of growth may be disabling in itself or it may be an 
indicator of the severity of the impairment due to a specific disease 
process.
    Determinations of growth impairment should be based upon the 
comparison of current height with at least three previous 
determinations, including length at birth, if available. Heights (or 
lengths) should be plotted on a standard growth chart, such as derived 
from the National Center for Health Statistics: NCHS Growth Charts. 
Height should be measured without shoes. Body weight corresponding to 
the ages represented by the heights should be furnished. The adult 
heights of the child's natural parents and the heights and ages of 
siblings should also be furnished. This will provide a basis upon which 
to identify those children whose short stature represents a familial 
characteristic rather than a result of disease. This is particularly 
true for adjudication under 100.02B.
    B. Bone age determinations should include a full descriptive report 
of medically acceptable imaging specifically obtained to determine bone 
age and must cite the standardization method used. Where appropriate 
medically acceptable imaging must be obtained currently as a basis for 
adjudication under 100.03, views or scans of the left hand and wrist 
should be ordered. In addition appropriate medically acceptable imaging 
of the knee and ankle should be obtained when cessation of growth is 
being evaluated in an older child at, or past, puberty. Medically 
acceptable imaging includes, but is not limited to, x-ray imaging, 
computerized axial tomography (CAT scan) or magnetic resonance imaging 
(MRI), with or without contrast material, myeolgraphy, and radionuclear 
bone scans. ``Appropriate'' means that the technique used is the proper 
one to support the evaluation and diagnosis of the impairment.
    C. The criteria in this section are applicable until closure of the 
major epiphyses. The cessation of significant increase in height at that 
point would prevent the application of these criteria.
    100.01 Category of Impairments, Growth
    100.02 Growth impairment, considered to be related to an additional 
specific medically

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determinable impairment, and one of the following:
    A. Fall of greater than 15 percentiles in height which is sustained; 
or
    B. Fall to, or persistence of, height below the third percentile.
    100.03 Growth impairment, not identified as being related to an 
additional, specific medically determinable impairment. With:
    A. Fall of greater than 25 percentiles in height which is sustained; 
and
    B. Bone age greater than two standard deviations (2 SD) below the 
mean for chronological age (see 100.00B).

                      101.00 Musculoskeletal System

    A. Disorders of the musculoskeletal system may result from 
hereditary, congenital, or acquired pathologic processes. Impairments 
may result from infectious, inflammatory, or degenerative processes, 
traumatic or developmental events, or neoplastic, vascular, or toxic/
metabolic diseases.

                           B. Loss of Function

    1. General. Under this section, loss of function may be due to bone 
or joint deformity or destruction from any cause; miscellaneous 
disorders of the spine with or without radiculopathy or other 
neurological deficits; amputation; or fractures or soft tissue injuries, 
including burns, requiring prolonged periods of immobility or 
convalescence. For inflammatory arthritides that result in loss of 
function because of inflammatory peripheral joint or axial arthritis or 
sequelae, or because of extra-articular features, see 114.00E. 
Impairments with neurological causes are to be evaluated under 111.00ff.

           2. How We Define Loss of Function in These Listings

    a. General. Regardless of the cause(s) of a musculoskeletal 
impairment, functional loss for purposes of these listings is defined as 
the inability to ambulate effectively on a sustained basis for any 
reason, including pain associated with the underlying musculoskeletal 
impairment, or the inability to perform fine and gross movements 
effectively on a sustained basis for any reason, including pain 
associated with the underlying musculoskeletal impairment. The inability 
to ambulate effectively or the inability to perform fine and gross 
movements effectively must have lasted, or be expected to last, for at 
least 12 months. For the purposes of these criteria, consideration of 
the ability to perform these activities must be from a physical 
standpoint alone. When there is an inability to perform these activities 
due to a mental impairment, the criteria in 112.00ff are to be used. We 
will determine whether a child can ambulate effectively or can perform 
fine and gross movements effectively based on the medical and other 
evidence in the case record, generally without developing additional 
evidence about the child's ability to perform the specific activities 
listed as examples in 101.00B2b(2) and (3) and 101.00B2c(2) and (3).

          b. What We Mean by Inability to Ambulate Effectively

    (1) Definition. Inability to ambulate effectively means an extreme 
limitation of the ability to walk; i.e., an impairment that interferes 
very seriously with the child's ability to independently initiate, 
sustain, or complete activities. Ineffective ambulation is defined 
generally as having insufficient lower extremity functioning (see 
101.00J) to permit independent ambulation without the use of a hand-held 
assistive device(s) that limits the functioning of both upper 
extremities. (Listing 101.05C is an exception to this general definition 
because the child has the use of only one upper extremity due to 
amputation of a hand.)

  (2) How We Assess inability to ambulate effectively for children too 
  young to be expected to walk independently. For children who are too 
 young to be expected to walk independently, consideration of function 
  must be based on assessment of limitations in the ability to perform 
comparable age-appropriate activities with the lower extremities, given 
 normal developmental expectations. For such children, an extreme level 
of limitation means skills or performance at no greater than one-half of 
     age-appropriate expectations based on an overall developmental 
          assessment rather than on one or two isolated skills.

    (3) How we assess inability to ambulate effectively for older 
children. Older children, who would be expected to be able to walk when 
compared to other children the same age who do not have impairments, 
must be capable of sustaining a reasonable walking pace over a 
sufficient distance to be able to carry out age-appropriate activities. 
They must have the ability to travel age-appropriately without 
extraordinary assistance to and from school or a place of employment. 
Therefore, examples of ineffective ambulation for older children 
include, but are not limited to, the inability to walk without the use 
of a walker, two crutches or two canes, the inability to walk a block at 
a reasonable pace on rough or uneven surfaces, the inability to use 
standard public transportation, the inability to carry out age-
appropriate school activities independently, and the inability to climb 
a few steps at a reasonable pace with the use of a single hand rail. The 
ability to walk independently about the child's home or a short distance 
at school without the use of assistive devices does not, in and of 
itself, constitute effective ambulation.

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    c. What We Mean by Inability To Perform Fine and Gross Movements 
                               Effectively

    (1) Definition. Inability to perform fine and gross movements 
effectively means an extreme loss of function of both upper extremities; 
i.e., an impairment that interferes very seriously with the child's 
ability to independently initiate, sustain, or complete activities. To 
use their upper extremities effectively, a child must be capable of 
sustaining such functions as reaching, pushing, pulling, grasping, and 
fingering in an age-appropriate manner to be able to carry out age-
appropriate activities.
    (2) How we assess inability to perform fine and gross movements in 
very young children. For very young children, the consideration is 
limitations in the ability to perform comparable age-appropriate 
activities involving the upper extremities given normal developmental 
expectations. Determinations of extreme limitation in such children 
should be made by comparison with the limitations for persistent motor 
dysfunction for infants and young children described in 110.07A.
    (3) How we assess inability to perform fine and gross movements in 
older children. For older children, examples of inability to perform 
fine and gross movements effectively include, but are not limited to, 
the inability to prepare a simple meal and feed oneself, the inability 
to take care of personal hygiene, or the inability to sort and handle 
papers or files, depending upon which activities are age-appropriate.
    d. Pain or other symptoms. Pain or other symptoms may be an 
important factor contributing to functional loss. In order for pain or 
other symptoms to be found to affect a child's ability to function in an 
age-appropriate manner or to perform basic work activities, medical 
signs or laboratory findings must show the existence of a medically 
determinable impairment(s) that could reasonably be expected to produce 
the pain or other symptoms. The musculoskeletal listings that include 
pain or other symptoms among their criteria also include criteria for 
limitations in functioning as a result of the listed impairment, 
including limitations caused by pain. It is, therefore, important to 
evaluate the intensity and persistence of such pain or other symptoms 
carefully in order to determine their impact on the child's functioning 
under these listings. See also Sec. Sec. 404.1525(f) and 404.1529 of 
this part, and Sec. Sec. 416.925(f) and 416.929 of part 416 of this 
chapter.

                       C. Diagnosis and Evaluation

    1. General. Diagnosis and evaluation of musculoskeletal impairments 
should be supported, as applicable, by detailed descriptions of the 
joints, including ranges of motion, condition of the musculature (e.g., 
weakness, atrophy), sensory or reflex changes, circulatory deficits, and 
laboratory findings, including findings on x-ray or other appropriate 
medically acceptable imaging. Medically acceptable imaging includes, but 
is not limited to, x-ray imaging, computerized axial tomography (CAT 
scan) or magnetic resonance imaging (MRI), with or without contrast 
material, myelography, and radionuclear bone scans. ``Appropriate'' 
means that the technique used is the proper one to support the 
evaluation and diagnosis of the impairment.
    2. Purchase of certain medically acceptable imaging. While any 
appropriate medically acceptable imaging is useful in establishing the 
diagnosis of musculoskeletal impairments, some tests, such as CAT scans 
and MRIs, are quite expensive, and we will not routinely purchase them. 
Some, such as myelograms, are invasive and may involve significant risk. 
We will not order such tests. However, when the results of any of these 
tests are part of the existing evidence in the case record we will 
consider them together with the other relevant evidence.
    3. Consideration of electrodiagnostic procedures. Electrodiagnostic 
procedures may be useful in establishing the clinical diagnosis, but do 
not constitute alternative criteria to the requirements of 101.04.
    D. The physical examination must include a detailed description of 
the rheumatological, orthopedic, neurological, and other findings 
appropriate to the specific impairment being evaluated. These physical 
findings must be determined on the basis of objective observation during 
the examination and not simply a report of the child's allegation; e.g., 
``He says his leg is weak, numb.'' Alternative testing methods should be 
used to verify the abnormal findings; e.g., a seated straight-leg 
raising test in addition to a supine straight-leg raising test. Because 
abnormal physical findings may be intermittent, their presence over a 
period of time must be established by a record of ongoing management and 
evaluation. Care must be taken to ascertain that the reported 
examination findings are consistent with the child's age and activities.

                       E. Examination of the Spine

    1. General. Examination of the spine should include a detailed 
description of gait, range of motion of the spine given quantitatively 
in degrees from the vertical position (zero degrees) or, for straight-
leg raising from the sitting and supine position (zero degrees), any 
other appropriate tension signs, motor and sensory abnormalities, muscle 
spasm, when present, and deep tendon reflexes. Observations of the child 
during the examination should be reported; e.g., how he or she gets on 
and off the examination table. Inability to walk on the heels or toes, 
to squat, or

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to arise from a squatting position, when appropriate, may be considered 
evidence of significant motor loss. However, a report of atrophy is not 
acceptable as evidence of significant motor loss without circumferential 
measurements of both thighs and lower legs, or both upper and lower 
arms, as appropriate, at a stated point above and below the knee or 
elbow given in inches or centimeters. Additionally, a report of atrophy 
should be accompanied by measurement of the strength of the muscle(s) in 
question generally based on a grading system of 0 to 5, with 0 being 
complete loss of strength and 5 being maximum strength. A specific 
description of atrophy of hand muscles is acceptable without 
measurements of atrophy but should include measurements of grip and 
pinch strength. However, because of the unreliability of such 
measurement in younger children, these data are not applicable to 
children under 5 years of age.
    2. When neurological abnormalities persist. Neurological 
abnormalities may not completely subside after treatment or with the 
passage of time. Therefore, residual neurological abnormalities that 
persist after it has been determined clinically or by direct surgical or 
other observation that the ongoing or progressive condition is no longer 
present will not satisfy the required findings in 101.04. More serious 
neurological deficits (paraparesis, paraplegia) are to be evaluated 
under the criteria in 111.00ff.
    F. Major joints refers to the major peripheral joints, which are the 
hip, knee, shoulder, elbow, wrist-hand, and ankle-foot, as opposed to 
other peripheral joints (e.g., the joints of the hand or forefoot) or 
axial joints (i.e., the joints of the spine.) The wrist and hand are 
considered together as one major joint, as are the ankle and foot. Since 
only the ankle joint, which consists of the juncture of the bones of the 
lower leg (tibia and fibula) with the hindfoot (tarsal bones), but not 
the forefoot, is crucial to weight bearing, the ankle and foot are 
considered separately in evaluating weight bearing.
    G. Measurements of joint motion are based on the techniques 
described in the chapter on the extremities, spine, and pelvis in the 
current edition of the ``Guides to the Evaluation of Permanent 
Impairment'' published by the American Medical Association.

                            H. Documentation.

    1. General. Musculoskeletal impairments frequently improve with time 
or respond to treatment. Therefore, a longitudinal clinical record is 
generally important for the assessment of severity and expected duration 
of an impairment unless the child is a newborn or the claim can be 
decided favorably on the basis of the current evidence.
    2. Documentation of medically prescribed treatment and response. 
Many children, especially those who have listing-level impairments, will 
have received the benefit of medically prescribed treatment. Whenever 
evidence of such treatment is available it must be considered.
    3. When there is no record of ongoing treatment. Some children will 
not have received ongoing treatment or have an ongoing relationship with 
the medical community despite the existence of a severe impairment(s). 
In such cases, evaluation will be made on the basis of the current 
objective medical evidence and other available evidence, taking into 
consideration the child's medical history, symptoms, and medical source 
opinions. Even though a child who does not receive treatment may not be 
able to show an impairment that meets the criteria of one of the 
musculoskeletal listings, the child may have an impairment(s) that is 
either medically or, in the case of a claim for benefits under part 416 
of this chapter, functionally equivalent in severity to one of the 
listed impairments.
    4. Evaluation when the criteria of a musculoskeletal listing are not 
met. These listings are only examples of common musculoskeletal 
disorders that are severe enough to find a child disabled. Therefore, in 
any case in which a child has a medically determinable impairment that 
is not listed, an impairment that does not meet the requirements of a 
listing, or a combination of impairments no one of which meets the 
requirements of a listing, we will consider whether the child's 
impairment(s) is medically or, in the case of a claim for benefits under 
part 416 of this chapter, functionally equivalent in severity to the 
criteria of a listing. (See Sec. Sec. 404.1526, 416.926, and 416.926a.) 
Individuals with claims for benefits under part 404, who have an 
impairment(s) with a level of severity that does not meet or equal the 
criteria of the musculoskeletal listings may or may not have the RFC 
that would enable them to engage in substantial gainful activity. 
Evaluation of the impairment(s) of these individuals should proceed 
through the final steps of the sequential evaluation process in Sec. 
404.1520 (or, as appropriate, the steps in the medical improvement 
review standard in Sec. 404.1594).

                         I. Effects of Treatment

    1. General. Treatments for musculoskeletal disorders may have 
beneficial effects or adverse side effects. Therefore, medical treatment 
(including surgical treatment) must be considered in terms of its 
effectiveness in ameliorating the signs, symptoms, and laboratory 
abnormalities of the disorder, and in terms of any side effects that may 
further limit the child.
    2. Response to treatment. Response to treatment and adverse 
consequences of treatment may vary widely. For example, a pain 
medication may relieve a child's pain completely, partially, or not at 
all. It may also result in adverse effects, e.g., drowsiness, dizziness, 
or

[[Page 491]]

disorientation, that compromise the child's ability to function. 
Therefore, each case must be considered on an individual basis, and 
include consideration of the effects of treatment on the child's ability 
to function.
    3. Documentation. A specific description of the drugs or treatment 
given (including surgery), dosage, frequency of administration, and a 
description of the complications or response to treatment should be 
obtained. The effects of treatment may be temporary or long-term. As 
such, the finding regarding the impact of treatment must be based on a 
sufficient period of treatment to permit proper consideration or 
judgment about future functioning.

              J. Orthotic, Prosthetic, or Assistive Devices

    1. General. Consistent with clinical practice, children with 
musculoskeletal impairments may be examined with and without the use of 
any orthotic, prosthetic, or assistive devices as explained in this 
section.
    2. Orthotic devices. Examination should be with the orthotic device 
in place and should include an evaluation of the child's maximum ability 
to function effectively with the orthosis. It is unnecessary to 
routinely evaluate the child's ability to function without the orthosis 
in place. If the child has difficulty with, or is unable to use, the 
orthotic device, the medical basis for the difficulty should be 
documented. In such cases, if the impairment involves a lower extremity 
or extremities, the examination should include information on the 
child's ability to ambulate effectively without the device in place 
unless contraindicated by the medical judgment of a physician who has 
treated or examined the child.
    3. Prosthetic devices. Examination should be with the prosthetic 
device in place. In amputations involving a lower extremity or 
extremities, it is unnecessary to evaluate the child's ability to walk 
without the prosthesis in place. However, the child's medical ability to 
use a prosthesis to ambulate effectively, as defined in 101.00B2b, 
should be evaluated. The condition of the stump should be evaluated 
without the prosthesis in place.
    4. Hand-held assistive devices. When a child with an impairment 
involving a lower extremity or extremities uses a hand-held assistive 
device, such as a cane, crutch or walker, examination should be with and 
without the use of the assistive device unless contraindicated by the 
medical judgment of a physician who has treated or examined the child. 
The child's ability to ambulate with and without the device provides 
information as to whether, or the extent to which, the child is able to 
ambulate without assistance. The medical basis for the use of any 
assistive device (e.g., instability, weakness) should be documented. The 
requirement to use a hand-held assistive device may also impact on the 
child's functional capacity by virtue of the fact that one or both upper 
extremities are not available for such activities as lifting, carrying, 
pushing, and pulling.
    K. Disorders of the spine, listed in 101.04, result in limitations 
because of distortion of the bony and ligamentous architecture of the 
spine and associated impingement on nerve roots (including the cauda 
equina) or spinal cord. Such impingement on nerve tissue may result from 
a herniated nucleus pulposus or other miscellaneous conditions. 
Neurological abnormalities resulting from these disorders are to be 
evaluated by referral to the neurological listings in 111.00ff, as 
appropriate. (See also 101.00B and E.)
    1. Herniated nucleus pulposus is a disorder frequently associated 
with the impingement of a nerve root, but occurs infrequently in 
children. Nerve root compression results in a specific neuro-anatomic 
distribution of symptoms and signs depending upon the nerve root(s) 
compromised.
    2. Other miscellaneous conditions that may cause weakness of the 
lower extremities, sensory changes, areflexia, trophic ulceration, 
bladder or bowel incontinence, and that should be evaluated under 101.04 
include, but are not limited to, lysosomal disorders, metabolic 
disorders, vertebral osteomyelitis, vertebral fractures and 
achondroplasia. Disorders such as spinal dysrhaphism, (e.g., spina 
bifida) diastematomyelia, and tethered cord syndrome may also cause such 
abnormalities. In these cases, there may be gait difficulty and 
deformity of the lower extremities based on neurological abnormalities, 
and the neurological effects are to be evaluated under the criteria in 
111.00ff.
    L. Abnormal curvatures of the spine. Abnormal curvatures of the 
spine (specifically, scoliosis, kyphosis and kyphoscoliosis) can result 
in impaired ambulation, but may also adversely affect functioning in 
body systems other than the musculoskeletal system. For example, a 
child's ability to breathe may be affected; there may be cardiac 
difficulties (e.g., impaired myocardial function); or there may be 
disfigurement resulting in withdrawal or isolation. When there is 
impaired ambulation, evaluation of equivalence may be made by reference 
to 114.09A. When the abnormal curvature of the spine results in symptoms 
related to fixation of the dorsolumbar or cervical spine, evaluation of 
equivalence may be made by reference to 114.09B. When there is 
respiratory or cardiac involvement or an associated mental disorder, 
evaluation may be made under 103.00ff, 104.00ff, or 112.00ff, as 
appropriate. Other consequences should be evaluated according to the 
listing for the affected body system.
    M. Under continuing surgical management, as used in 101.07 and 
101.08, refers to surgical procedures and any other associated 
treatments related to the efforts directed toward the salvage or 
restoration of functional use

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of the affected part. It may include such factors as post-surgical 
procedures, surgical complications, infections, or other medical 
complications, related illnesses, or related treatments that delay the 
child's attainment of maximum benefit from therapy.
    N. After maximum benefit from therapy has been achieved in 
situations involving fractures of an upper extremity (101.07), or soft 
tissue injuries (101.08), i.e., there have been no significant changes 
in physical findings or on appropriate medically acceptable imaging for 
any 6-month period after the last definitive surgical procedure or other 
medical intervention, evaluation must be made on the basis of the 
demonstrable residuals, if any. A finding that 101.07 or 101.08 is met 
must be based on a consideration of the symptoms, signs, and laboratory 
findings associated with recent or anticipated surgical procedures and 
the resulting recuperative periods, including any related medical 
complications, such as infections, illnesses, and therapies which impede 
or delay the efforts toward restoration of function. Generally, when 
there has been no surgical or medical intervention for 6 months after 
the last definitive surgical procedure, it can be concluded that maximum 
therapeutic benefit has been reached. Evaluation at this point must be 
made on the basis of the demonstrable residual limitations, if any, 
considering the child's impairment-related symptoms, signs, and 
laboratory findings, any residual symptoms, signs, and laboratory 
findings associated with such surgeries, complications, and recuperative 
periods, and other relevant evidence.
    O. Major function of the face and head, for purposes of listing 
101.08, relates to impact on any or all of the activities involving 
vision, hearing, speech, mastication, and the initiation of the 
digestive process.
    P. When surgical procedures have been performed, documentation 
should include a copy of the operative notes and available pathology 
reports.

             101.01 Category of Impairments, Musculoskeletal

    101.02  Major dysfunction of a joint(s) (due to any cause): 
Characterized by gross anatomical deformity (e.g., subluxation, 
contracture, bony or fibrous ankylosis, instability) and chronic joint 
pain and stiffness with signs of limitation of motion or other abnormal 
motion of the affected joint(s), and findings on appropriate medically 
acceptable imaging of joint space narrowing, bony destruction, or 
ankylosis of the affected joint(s). With:
    A. Involvement of one major peripheral weight-bearing joint (i.e., 
hip, knee, or ankle), resulting in inability to ambulate effectively, as 
defined in 101.00B2b;

or

    B. Involvement of one major peripheral joint in each upper extremity 
(i.e., shoulder, elbow, or wrist-hand), resulting in inability to 
perform fine and gross movements effectively, as defined in 101.00B2c.
    101.03  Reconstructive surgery or surgical arthrodesis of a major 
weight-bearing joint, with inability to ambulate effectively, as defined 
in 101.00B2b, and return to effective ambulation did not occur, or is 
not expected to occur, within 12 months of onset.
    101.04  Disorders of the spine (e.g., lysosomal disorders, metabolic 
disorders, vertebral osteomyelitis, vertebral fracture, achondroplasia) 
resulting in compromise of a nerve root (including the cauda equina) or 
the spinal cord, with evidence of nerve root compression characterized 
by neuro-anatomic distribution of pain, limitation of motion of the 
spine, motor loss (atrophy with associated muscle weakness or muscle 
weakness) accompanied by sensory or reflex loss and, if there is 
involvement of the lower back, positive straight-leg raising test 
(sitting and supine).
    101.05  Amputation (due to any cause).
    A. Both hands;

or

    B. One or both lower extremities at or above the tarsal region, with 
stump complications resulting in medical inability to use a prosthetic 
device to ambulate effectively, as defined in 101.00B2b, which have 
lasted or are expected to last for at least 12 months;

or

    C. One hand and one lower extremity at or above the tarsal region, 
with inability to ambulate effectively, as defined in 101.00B2b;

or

    D. Hemipelvectomy or hip disarticulation.
    101.06  Fracture of the femur, tibia, pelvis, or one or more of the 
tarsal bones. With:
    A. Solid union not evident on appropriate medically acceptable 
imaging, and not clinically solid;

and

    B. Inability to ambulate effectively, as defined in 101.00B2b, and 
return to effective ambulation did not occur or is not expected to occur 
within 12 months of onset.
    101.07  Fracture of an upper extremity with nonunion of a fracture 
of the shaft of the humerus, radius, or ulna, under continuing surgical 
management, as defined in 101.00M, directed toward restoration of 
functional use of the extremity, and such function was not restored or 
expected to be restored within 12 months of onset.
    101.08 Soft tissue injury (e.g., burns) of an upper or lower 
extremity, trunk, or face and head, under continuing surgical 
management, as defined in 101.00M, directed toward the salvage or 
restoration of major function, and such major function was not restored 
or

[[Page 493]]

expected to be restored within 12 months of onset. Major function of the 
face and head is described in 101.00O.

                    102.00 Special Senses and Speech

    A. Visual impairments in children. Impairment of visual acuity 
should be determined with use of the standard Snellen test chart. Where 
this cannot be used, as in very young children, a complete description 
of the findings should be provided, using other appropriate methods of 
examination, along with a description of the techniques used for 
determining the visual acuity for distance.
    The accommodative reflex is generally not present in children under 
6 months of age. In premature infants, it may not be present until 6 
months plus the number of months the child is premature. Therefore 
absence of accommodative reflex will be considered as indicating a 
visual impairment only in children above this age (6 months).
    Documentation of a visual disorder must include description of the 
ocular pathology.
    B. Hearing impairments in children. The criteria for hearing 
impairments in children take into account that a lesser impairment in 
hearing which occurs at an early age may result in a severe speech and 
language disorder.
    Improvement by a hearing aid, as predicted by the testing procedure, 
must be demonstrated to be feasible in that child, since younger 
children may be unable to use a hearing aid effectively.
    The type of audiometric testing performed must be described and a 
copy of the results must be included. The pure tone air conduction 
hearing levels in 102.08 are based on American National Standard 
Institute Specifications for Audiometers, S3.6-1969 (ANSI-1969). The 
report should indicate the specifications used to calibrate the 
audiometer.
    The finding of a severe impairment will be based on the average 
hearing levels at 500, 1000, 2000, and 3000 Hertz (Hz) in the better 
ear, and on speech discrimination, as specified in Sec. 102.08.

          102.01 Category of Impairments, Special Sense Organs

    102.02 Impairments of visual acuity.
    A. Remaining vision in the better eye after best correction is 20/
200 or less; or
    B. For children below 3 years of age at time of adjudication:
    1. Absence of accommodative reflex (see 102.00A for exclusion of 
children under 6 months of age); or
    2. Retrolental fibroplasia with macular scarring or 
neovascularization; or
    3. Bilateral congenital cataracts with visualization of retinal red 
reflex only or when associated with other ocular pathology.
    102.08 Hearing impairments.
    A. For children below 5 years of age at time of adjudication, 
inability to hear air conduction thresholds at an average of 40 decibels 
(db) hearing level or greater in the better ear; or
    B. For children 5 years of age and above at time of adjudication:
    1. Inability to hear air conduction thresholds at an average of 70 
decibels (db) or greater in the better ear; or
    2. Speech discrimination scores at 40 percent or less in the better 
ear; or
    3. Inability to hear air conduction thresholds at an average of 40 
decibels (db) or greater in the better ear, and a speech and language 
disorder which significantly affects the clarity and content of the 
speech and is attributable to the hearing impairment.

                        103.00 Respiratory System

    A. Introduction. The listings in this section describe impairments 
resulting from respiratory disorder based on symptoms, physical signs, 
laboratory test abnormalities, and response to a regimen of treatment 
prescribed by a treating source. Respiratory disorders, along with any 
associated impairment(s) must be established by medical evidence. 
Evidence must be provided in sufficient detail to permit an independent 
reviewer to evaluate the severity of the impairment. Reasonable efforts 
should be made to ensure evaluation by a program physician specializing 
in childhood respiratory impairments or a qualified pediatrician.
    Many children, especially those who have listing-level impairments, 
will have received the benefit of medically prescribed treatment. 
Whenever there is such evidence, the longitudinal clinical record must 
include a description of the treatment prescribed by the treating source 
and response, in addition to information about the nature and severity 
of the impairment. It is important to document any prescribed treatment 
and response because this medical management may have improved the 
child's functional status. The longitudinal record should provide 
information regarding functional recovery, if any.
    Some children will not have received ongoing treatment or have an 
ongoing relationship with the medical community, despite the existence 
of a severe impairment(s). A child who does not receive treatment may or 
may not be able to show an impairment that meets the criteria of these 
listings. Even if a child does not show that his or her impairment meets 
the criteria of these listings, the child may have an impairment(s) that 
medically or functionally equals the listings. Unless the claim can be 
decided favorably on the basis of the current evidence, a longitudinal 
record is still important because it will provide information about such 
things as the ongoing medical severity of the impairment, the level of 
the child's functioning, and the

[[Page 494]]

frequency, severity, and duration of symptoms. Also, the asthma listing 
specifically includes a requirement for continuing signs and symptoms 
despite a regimen of prescribed treatment.
    Evaluation should include consideration of adverse effects of 
respiratory impairment in all relevant body systems, and especially on 
the child's growth and development or mental functioning, as described 
under the growth impairment (100.00), neurological (111.00), and mental 
disorders (112.00) listings.
    It must be remembered that these listings are only examples of 
common respiratory disorders that are severe enough to find a child 
disabled. When a child has a medically determinable impairment that is 
not listed, an impairment that does not meet the requirements of a 
listing, or a combination of impairments no one of which meets the 
requirements of a listing, we will make a determination whether the 
child's impairment(s) medically or functionally equals the listings. 
(See Sec. Sec. 404.1526, 416.926, and 416.926a.)
    B. Documentation of Pulmonary Function Testing. The results of 
spirometry that are used for adjudication, under the 103.02 A and B, 
103.03, and 103.04 of these listings should be expressed in liters (L), 
body temperature and pressure saturated with water vapor (BTPS). The 
reported one-second forced expiratory volume (FEV1) and 
forced vital capacity (FVC) should represent the largest of at least 
three satisfactory forced expiratory maneuvers. Two of the satisfactory 
spirograms should be reproducible for both pre-bronchodilator tests and, 
if indicated, post-bronchodilator tests. A value is considered 
reproducible if it does not differ from the largest value by more than 5 
percent or 0.1 L, whichever is greater. The highest values of the 
FEV1 and FVC, whether from the same or different tracings, 
should be used to assess the severity of the respiratory impairment. 
Peak flow should be achieved early in expiration, and the spirogram 
should have a smooth contour with gradually decreasing flow throughout 
expiration. The zero time for measurement of the FEV1 and 
FVC, if not distinct, should be derived by linear back-extrapolation of 
peak flow to zero volume. A spirogram is satisfactory for measurement of 
the FEV1 if the expiratory volume at the back-extrapolated 
zero time is less than 5 percent of the FVC or 0.1 L, whichever is 
greater. The spirogram is satisfactory for measurement of the FVC if 
maximal expiratory effort continues for at least 6 seconds, or if there 
is a plateau in the volume-time curve with no detectable change in 
expired volume (VE) during the last 2 seconds of maximal expiratory 
effort.
    Spirometry should be repeated after administration of an aerosolized 
bronchodilator under supervision of the testing personnel if the pre-
bronchodilator FEV1 value is less than the appropriate 
reference value in table I or III, as appropriate. If a bronchodilator 
is not administered, the reason should be clearly stated in the report. 
Pulmonary function studies should not be performed unless the clinical 
status is stable (e.g., the child is not having an asthmatic attack or 
suffering from an acute respiratory infection or other chronic illness). 
Wheezing is common in asthma, chronic bronchitis, or chronic obstructive 
pulmonary disease and does not preclude testing. Pulmonary function 
studies performed to assess airflow obstruction without testing after 
bronchodilators cannot be used to assess levels of impairment in the 
range that prevents a child from performing age-appropriate activities, 
unless the use of bronchodilators is contraindicated. Post-
bronchodilator testing should be performed 10 minutes after 
bronchodilator administration. The dose and name of the bronchodilator 
administered should be specified. The values in 103.02 and 103.04 must 
only be used as criteria for the level of ventilatory impairment that 
exists during the child's most stable state of health (i.e., any period 
in time except during or shortly after an exacerbation).
    The appropriately labeled spirometric tracing, showing the child's 
name, date of testing, distance per second on the abscissa and distance 
per liter (L) on the ordinate, must be incorporated into the file. The 
manufacturer and model number of the device used to measure and record 
the spirogram should be stated. The testing device must accurately 
measure both time and volume, the latter to within 1 percent of a 3 L 
calibrating volume. If the spirogram was generated by any means other 
than direct pen linkage to a mechanical displacement-type spirometer, 
the testing device must have had a recorded calibration performed 
previously on the day of the spirometric measurement.
    If the spirometer directly measures flow, and volume is derived by 
electronic integration, the linearity of the device must be documented 
by recording volume calibrations at three different flow rates of 
approximately 30 L/min (3 L/6 sec), 60 L/min (3 L/3 sec), and 180 L/min 
(3 L/sec). The volume calibrations should agree to within 1 percent of a 
3 L calibrating volume. The proximity of the flow sensor to the child 
should be noted, and it should be stated whether or not a BTPS 
correction factor was used for the calibration recordings and for the 
child's actual spirograms.
    The spirogram must be recorded at a speed of at least 20 mm/sec and 
the recording device must provide a volume excursion of at least 10 mm/
L. If reproductions of the original spirometric tracings are submitted, 
they must be legible and have a time scale of at least 20 mm/sec and a 
volume scale of at least 10 mm/L to permit independent measurements. 
Calculation of FEV1 from a flow volume tracing is not 
acceptable, i.e., the

[[Page 495]]

spirogram and calibrations must be presented in a volume-time format at 
a speed of at least 20 mm/sec and a volume excursion of at least 10 mm/L 
to permit independent evaluation.
    A statement should be made in the pulmonary function test report of 
the child's ability to understand directions, as well as his or her 
efforts and cooperation in performing the pulmonary function tests.
    Purchase of a pulmonary function test is appropriate only when the 
child is capable of performing reproducible forced expiratory maneuvers. 
This capability usually occurs around age 6. Purchase of a pulmonary 
function test may be appropriate when there is a question of whether an 
impairment meets or is equivalent in severity to a listing, and the 
claim cannot otherwise be favorably decided.
    The pulmonary function tables in 103.02 and 103.04 are based on 
measurement of standing height without shoes. If a child has marked 
spinal deformities (e.g., kyphoscoliosis), the measured span between the 
fingertips with the upper extremities abducted 90 degrees should be 
substituted for height when this measurement is greater than the 
standing height without shoes.
    C. Documentation of chronic impairment of gas exchange.
    1. Arterial blood gas studies (ABGS). An ABGS performed at rest 
(while breathing room air, awake and sitting or standing) should be 
analyzed in a laboratory certified by a State or Federal agency. If the 
laboratory is not certified, it must submit evidence of participation in 
a national proficiency testing program as well as acceptable quality 
control at the time of testing. The report should include the altitude 
of the facility and the barometric pressure on the date of analysis.
    Purchase of resting ABGS may be appropriate when there is a question 
of whether an impairment meets or is equivalent in severity to a 
listing, and the claim cannot otherwise be favorably decided. Before 
purchasing resting ABGS, a program physician, preferably one experienced 
in the care of children with pulmonary disease, must review the clinical 
and laboratory data short of this procedure, including spirometry, to 
determine whether obtaining the test would present a significant risk to 
the child.
    2. Oximetry. Pulse oximetry may be substituted for arterial blood 
gases in children under 12 years of age. The oximetry unit should employ 
the basic technology of spectrophotometric plethysmography as described 
in Taylor, M.B., and Whitwain, J.G., ``Current Status of Pulse 
Oximetry,'' ``Anesthesia,'' Vol. 41, No. 9, pp. 943-949, 1986. The unit 
should provide a visual display of the pulse signal and the 
corresponding oxygen saturation. A hard copy of the readings (heart rate 
and saturation) should be provided. Readings should be obtained for a 
minimum of 5 minutes. The written report should describe patient 
activity during the recording, i.e., sleep rate, feeding, or exercise. 
Correlation between the actual heart rate determined by a trained 
observer and that displayed by the oximeter should be provided. A 
statement should be made in the report of the child's effort and 
cooperation during the test.
    Purchase of oximetry may be appropriate when there is a question of 
whether an impairment meets or is equivalent in severity to a listing, 
and the claim cannot otherwise be favorably decided.
    D. Cystic fibrosis is a disorder that affects either the respiratory 
or digestive body systems or both and may impact on a child's growth and 
development. It is responsible for a wide and variable spectrum of 
clinical manifestations and complications. Confirmation of the diagnosis 
is based upon an elevated sweat sodium concentration or chloride 
concentration accompanied by one or more of the following: the presence 
of chronic obstructive pulmonary disease, insufficiency of exocrine 
pancreatic function, meconium ileus, or a positive family history. The 
quantitative pilocarpine iontophoresis procedure for collection of sweat 
content must be utilized. Two methods are acceptable: the ``Procedure 
for the Quantitative Iontophoretic Sweat Test for Cystic Fibrosis,'' 
published by the Cystic Fibrosis Foundation and contained in, ``A Test 
for Concentration of Electrolytes in Sweat in Cystic Fibrosis of the 
Pancreas Utilizing Pilocarpine Iontophoresis,'' Gibson, I.E., and Cooke, 
R.E., ``Pediatrics,'' Vol 23: 545, 1959; or the ``Wescor Macroduct 
System.'' To establish the diagnosis of cystic fibrosis, the sweat 
sodium or chloride content must be analyzed quantitatively using an 
acceptable laboratory technique. Another diagnostic test is the ``CF 
gene mutation analysis'' for homozygosity of the cystic fibrosis gene. 
The pulmonary manifestations of this disorder should be evaluated under 
103.04. The nonpulmonary aspects of cystic fibrosis should be evaluated 
under the listings for the digestive system (105.00) or growth 
impairments (100.00). Because cystic fibrosis may involve the 
respiratory and digestive body systems, as well as impact on a child's 
growth and development, the combined effects of this involvement must be 
considered in case adjudication.
    Medically acceptable imaging includes, but is not limited to, x-ray 
imaging, computerized axial tomography (CAT scan) or magnetic resonance 
imaging (MRI), with or without contrast material, myelography, and 
radionuclear bone scans. ``Appropriate'' means that the technique used 
is the proper one to support the evaluation and diagnosis of the 
impairment.
    E. Bronchopulmonary dysplasia (BPD). Bronchopulmonary dysplasia is a 
form of

[[Page 496]]

chronic obstructive pulmonary disease that arises as a consequence of 
acute lung injury in the newborn period and treatment of hyaline 
membrane disease, meconium aspiration, neonatal pneumonia and apnea of 
prematurity. The diagnosis is established by the requirement for 
continuous or nocturnal supplemental oxygen for more than 30 days, in 
association with characteristic changes on medically acceptable imaging 
and clinical signs of respiratory dysfunction, including retractions, 
rales, wheezing, and tachypnea.

           103.01 Category of Impairments, Respiratory System

    103.02 Chronic pulmonary insufficiency. With:
    A. Chronic obstructive pulmonary disease, due to any cause, with the 
FEV1 equal to or less than the value specified in table I 
corresponding to the child's height without shoes. (In cases of marked 
spinal deformity, see 103.00B.);

                                 Table I
------------------------------------------------------------------------
                                                                  FEV1
                                                                equal to
 Height without shoes (centimeters)     Height without shoes    or less
                                              (inches)          than (L,
                                                                 BTPS)
------------------------------------------------------------------------
119 or less.........................  46 or less.............       0.65
120-129.............................  47-50..................       0.75
130-139.............................  51-54..................       0.95
140-149.............................  55-58..................       1.15
150-159.............................  59-62..................       1.35
160-164.............................  63-64..................       1.45
165-169.............................  65-66..................       1.55
170 or more.........................  67 or more.............       1.65
------------------------------------------------------------------------

Or

    B. Chronic restrictive ventilatory disease, due to any cause, with 
the FVC equal to or less than the value specified in table II 
corresponding to the child's height without shoes. (In cases of marked 
spinal deformity, see 103.00B.);

                                Table II
------------------------------------------------------------------------
                                                               FVC equal
                                        Height without shoes     to or
 Height without shoes (centimeters)           (inches)         less than
                                                               (L, BTPS)
------------------------------------------------------------------------
119 or less.........................  46 or less.............       0.65
120-129.............................  47-50..................       0.85
130-139.............................  51-54..................       1.05
140-149.............................  55-58..................       1.25
150-159.............................  59-62..................       1.45
160-164.............................  63-64..................       1.65
165-169.............................  65-66..................       1.75
170 or more.........................  67 or more.............       2.05
------------------------------------------------------------------------

Or

    C Frequent need for:
    1. Mechanical ventilation; or
    2. Nocturnal supplemental oxygen as required by persistent or 
recurrent episodes of hypoxemia;

Or

    D. The presence of a tracheostomy in a child under 3 years of age;

Or

    E. Bronchopulmonary dysplasia characterized by two of the following:
    1. Prolonged expirations; or
    2. Intermittent wheezing or increased respiratory effort as 
evidenced by retractions, flaring and tachypnea; or
    3. Hyperinflation and scarring on a chest radiograph or other 
appropriate imaging techniques; or
    4. Bronchodilator or diuretic dependency; or
    5. A frequent requirement for nocturnal supplemental oxygen; or
    6. Weight disturbance with:
    a. An involuntary weight loss (or failure to gain weight at an 
appropriate rate for age) resulting in a fall of 15 percentiles from 
established growth curve (on standard growth charts) which persists for 
2 months or longer; or
    b. An involuntary weight loss (or failure to gain weight at an 
appropriate rate for age) resulting in a fall to below the third 
percentile from established growth curve (on standard growth charts) 
which persists for 2 months or longer;

Or

    F. Two required hospital admissions (each longer than 24 hours) 
within a 6-month period for recurrent lower respiratory tract infections 
or acute respiratory distress associated with:
    1. Chronic wheezing or chronic respiratory distress; or
    2. Weight disturbance with:
    a. An involuntary weight loss (or failure to gain weight at an 
appropriate rate for age) resulting in a fall of 15 percentiles from 
established growth curve (on standard growth charts) which persists for 
2 months or longer; or
    b. An involuntary weight loss (or failure to gain weight at an 
appropriate rate for age) resulting in a fall to below the third 
percentile from established growth curve (on standard growth charts) 
which persists for 2 months or longer;

Or

    G. Chronic hypoventilation (PaCO2 greater than 45 mm Hg) 
or chronic cor pulmonale as described under the appropriate criteria in 
104.02;

Or

    H. Growth impairment as described under the criteria in 100.00.
    103.03 Asthma. With:
    A. FEV1 equal to or less than the value specified in 
table I of 103.02A;

Or


[[Page 497]]


    B. Attacks (as defined in 3.00C), in spite of prescribed treatment 
and requiring physician intervention, occurring at least once every 2 
months or at least six times a year. Each inpatient hospitalization for 
longer than 24 hours for control of asthma counts as two attacks, and an 
evaluation period of at least 12 consecutive months must be used to 
determine the frequency of attacks;

Or

    C. Persistent low-grade wheezing between acute attacks or absence of 
extended symptom-free periods requiring daytime and nocturnal use of 
sympathomimetic bronchodilators with one of the following:
    1. Persistent prolonged expiration with radiographic or other 
appropriate imaging techniques evidence of pulmonary hyperinflation or 
peribronchial disease; or
    2. Short courses of corticosteroids that average more than 5 days 
per month for at least 3 months during a 12-month period;

Or

    D. Growth impairment as described under the criteria in 100.00.
    103.04 Cystic fibrosis. With:
    A. An FEV1 equal to or less than the appropriate value 
specified in table III corresponding to the child's height without 
shoes. (In cases of marked spinal deformity, see 103.00B.);

Or

    B. For children in whom pulmonary function testing cannot be 
performed, the presence of two of the following:
    1. History of dyspnea on exertion or accumulation of secretions as 
manifested by repetitive coughing or cyanosis; or
    2. Persistent bilateral rales and rhonchi or substantial reduction 
of breath sounds related to mucous plugging of the trachea or bronchi; 
or
    3. Appropriate medically acceptable imaging evidence of extensive 
disease, such as thickening of the proximal bronchial airways or 
persistence of bilateral peribronchial infiltrates;

Or

    C. Persistent pulmonary infection accompanied by superimposed, 
recurrent, symptomatic episodes of increased bacterial infection 
occurring at least once every 6 months and requiring intravenous or 
nebulization antimicrobial treatment;

Or

    D. Episodes of bronchitis or pneumonia or hemoptysis (more than 
blood-streaked sputum) or respiratory failure (documented according to 
3.00C), requiring physician intervention, occurring at least once every 
2 months or at least six times a year. Each inpatient hospitalization 
for longer than 24 hours for treatment counts as two episodes, and an 
evaluation period of at least 12 consecutive months must be used to 
determine the frequency of episodes;

Or

    E. Growth impairment as described under the criteria in 100.00.

                                Table III
     [Applicable only for evaluation under 103.04A--cystic fibrosis]
------------------------------------------------------------------------
                                                                 FEV 1
                                                                equal to
 Height without shoes (centimeters)     Height without shoes    or less
                                              (inches)          than (L,
                                                                 BTPS)
------------------------------------------------------------------------
119 or less.........................  46 or less.............       0.75
120-129.............................  47-50..................       0.85
130-139.............................  51-54..................       1.05
140-149.............................  55-58..................       1.35
150-159.............................  59-62..................       1.55
160-164.............................  63-64..................       1.85
165-169.............................  65-66..................       2.05
170 or more.........................  67 or more.............       2.25
------------------------------------------------------------------------

    103.05 Lung transplant. Consider under a disability for 12 months 
following the date of surgery; thereafter, evaluate the residual 
impairment(s).

                      104.00 Cardiovascular System

                             A. Introduction

    The listings in this section describe childhood impairments 
resulting from congenital or acquired cardiovascular disease based on 
symptoms, physical signs, laboratory test abnormalities, and response to 
a regimen of therapy prescribed by a treating source. A longitudinal 
clinical record covering a period of not less than 3 months of 
observations and therapy is usually necessary for the assessment of 
severity and expected duration unless the child is a neonate or the 
claim can be decided favorably on the basis of the current evidence. All 
relevant evidence must be considered in assessing a child's disability. 
Reasonable efforts should be made to ensure evaluation by a program 
physician specializing in childhood cardiovascular impairments or a 
qualified pediatrician.
    Examples of congenital defects include: abnormalities of cardiac 
septation, such as ventricular septal defect or atrioventricular (AV) 
canal; abnormalities resulting in cyanotic heart disease, such as 
tetralogy of Fallot or transposition of the vessels; valvular defects or 
obstructions to ventricular outflow, including pulmonary or aortic 
stenosis and/or coarctation of the aorta; and major abnormalities of 
ventricular development, including hypoplastic left heart syndrome or 
pulmonary tricuspid atresia with hypoplastic right ventricle. Acquired 
heart disease may be due to cardiomyopathy, rheumatic heart disease, 
Kawasaki syndrome, or other etiologies. Recurrent arrhythmias, severe 
enough to cause functional impairment, may be seen with congenital or 
acquired

[[Page 498]]

heart disease or, more rarely, in children with structurally normal 
hearts.
    Cardiovascular impairments, especially chronic heart failure and 
congenital heart disease, may result in impairments in other body 
systems including, but not limited to, growth, neurological, and mental. 
Therefore, evaluation should include consideration of the adverse 
effects of cardiovascular impairment in all relevant body systems, and 
especially on the child's growth and development, or mental functioning, 
as described under the Growth impairment (100.00), Neurological 
(111.00), and Mental retardation (112.05) listings.
    Many children, especially those who have listing-level impairments, 
will have received the benefit of medically prescribed treatment. 
Whenever there is evidence of such treatment, the longitudinal clinical 
record must include a description of the therapy prescribed by the 
treating source and response, in addition to information about the 
nature and severity of the impairment. It is important to document any 
prescribed therapy and response because this medical management may have 
improved the child's functional status. The longitudinal record should 
provide information regarding functional recovery, if any.
    Some children will not have received ongoing treatment or have an 
ongoing relationship with the medical community despite the existence of 
a severe impairment(s). Unless the claim can be decided favorably on the 
basis of the current evidence, a longitudinal record is still important 
because it will provide information about such things as the ongoing 
medical severity of the impairment, the level of the child's 
functioning, and the frequency, severity, and duration of symptoms. 
Also, several listings include a requirement for continuing signs and 
symptoms despite a regimen of prescribed treatment. When you have a 
medically determinable impairment that is not listed, an impairment that 
does not meet the requirements of a listing, or a combination of 
impairments no one of which meets the requirements of a listing, we will 
consider a determination whether your impairment(s) medically equals or, 
as appropriate, functionally equals the listings. (See Sec. Sec. 
404.1526, 416.926, and 416.926a.)
    Indeed, it must be remembered that these listings are only examples 
of common cardiovascular disorders that are severe enough to find a 
child disabled. When a child has a medically determinable impairment 
that is not listed, an impairment that does not meet the requirements of 
a listing, or a combination of impairments no one of which meets the 
requirements of a listing, we will make a determination whether the 
child's impairment(s) medically or functionally equals the listings.(See 
Sec. Sec. 404.1526, 416.926, and 416.926a.)

                            B. Documentation

    Each child's file must include sufficiently detailed reports on 
history, physical examinations, laboratory studies, and any prescribed 
therapy and response to allow an independent reviewer to assess the 
severity and duration of the cardiovascular impairment. Data should be 
obtained preferably from an office or center experienced in pediatric 
cardiac assessment. The actual electrocardiographic tracing (or 
adequately marked photocopy) and echocardiogram report with a copy of 
relevant echocardiographic views should be included (see part A, 
4.00C1).
    Results of additional studies necessary to substantiate the 
diagnosis or to document the severity of the impairment, including two-
dimensional and Doppler echocardiography, and radionuclide 
ventriculograms, should be obtained as appropriate according to part A, 
4.00C3. Ambulatory electrocardiographic monitoring may also be obtained 
if necessary to document the presence or severity of an arrhythmia.
    Exercise testing, though increasingly used, is still less frequently 
indicated in children than in adults, and can rarely be successfully 
performed in children under 6 years of age. It may be of value in the 
assessment of some arrhythmias, in the assessment of the severity of 
chronic heart failure, and in the assessment of recovery of function 
following cardiac surgery or other therapy. It will only be purchased by 
the Social Security Administration if the case cannot be decided based 
on the available evidence and, if purchased, must be performed in a 
specialty center for pediatric cardiology or other facility qualified to 
perform exercise testing for children.
    Purchased exercise tests should be performed using a generally 
accepted protocol consistent with the prevailing state of medical 
knowledge and clinical practice. An exercise test should not be 
purchased for a child for whom the performance of the test is considered 
to constitute a significant risk by a program physician. See 4.00C2c.
    Cardiac catheterization will not be purchased by the Social Security 
Administration. If the results of catheterization are otherwise 
available, they should be obtained.

           C. Treatment and Relationship to Functional Status

    In general, conclusions about the severity of a cardiovascular 
impairment cannot be made on the basis of type of treatment rendered or 
anticipated. The overall clinical and laboratory evidence, including the 
treatment plan(s) or results, should be persuasive that a listing-level 
impairment exists. The amount of function restored and the time required 
for improvement after treatment (medical, surgical, or a prescribed 
program of progressive physical activity) vary with the nature and 
extent of the disorder, the

[[Page 499]]

type of treatment, and other factors. Depending upon the timing of this 
treatment in relation to the alleged onset date of disability, 
impairment evaluation may need to be deferred for a period of up to 3 
months from the date of treatment to permit consideration of treatment 
effects.
    Evaluation should not be deferred if the claim can be favorably 
decided based upon the available evidence.
    The most life-threatening forms of congenital heart disease and 
cardiac impairments, such as those listed in 104.00D, almost always 
require surgical treatment within the first year of life to prevent 
early death. Even with surgery, these impairments are so severe that it 
is likely that the impairment will continue to be disabling long enough 
to meet the duration requirement because of significant residual 
impairment post-surgery, or the recovery time from surgery, or a 
combination of both factors. Therefore, when the impairment is one of 
those named in 104.00D, or is as severe as one of those impairments, the 
presence of a listing-level impairment can usually be found on the basis 
of planned or actual cardiac surgery.
    A child who has undergone surgical treatment for life-threatening 
heart disease will be found under a disability for 12 months following 
the date of surgery under 104.06H (for infants with life-threatening 
cardiac disease) or 104.09 (for a child of any age who undergoes cardiac 
transplantation) because of the uncertainty during that period 
concerning outcome or long-term results. After 12 months, continuing 
disability evaluation will be based upon residual impairment, which will 
consider the clinical course following treatment and comparison of 
symptoms, signs, and laboratory findings preoperatively and after the 
specified period. (See Sec. 404.1594 or Sec. 416.994a, as appropriate, 
for our rules on medical improvement and whether an individual is no 
longer disabled.)

                       D. Congenital Heart Disease

    Some congenital defects usually lead to listing-level impairment in 
the first year of life and require surgery within the first year as a 
life-saving measure. Examples of impairments that in most instances will 
require life-saving surgery before age 1, include, but are not limited 
to, the following: hypoplastic left heart syndrome; critical aortic 
stenosis with neonatal heart failure; critical coarctation of the aorta, 
with or without associated anomalies; complete AV canal defects; 
transposition of the great arteries; tetralogy of Fallot; and pulmonary 
atresia with intact ventricular septum.
    In addition, there are rarer defects which may lead to early 
mortality and that may require multiple surgical interventions or a 
combination of surgery and other major interventional procedures (e.g., 
multiple ``balloon'' catheter procedures). Examples of such defects 
include single ventricle, tricuspid atresia, and multiple ventricular 
septal defects.
    Pulmonary vascular obstructive disease can cause cardiac impairment 
in young children. When a large or nonrestrictive septal defect or 
ductus is present, pulmonary artery mean pressures of at least 70 
percent of mean systemic levels are used as a criterion of listing-level 
impairment. In the absence of such a defect (i.e., with primary 
pulmonary hypertension, or in some connective tissue disorders with 
cardiopulmonary involvement and pulmonary vascular destruction), 
listing-level impairment may be present at lower levels of pulmonary 
artery pressure, in the range of at least 50 percent of mean systemic 
levels.

                        E. Chronic Heart Failure

    Chronic heart failure in infants and children may manifest itself by 
pulmonary or systemic venous congestion, including cardiomegaly, chronic 
dyspnea, tachypnea, orthopnea, or hepatomegaly; or symptoms of limited 
cardiac output, such as weakness or fatigue; or a need for cardiotonic 
drugs. Fatigue or exercise intolerance in an infant may be manifested by 
prolonged feeding time associated with signs of cardiac impairment, 
including excessive respiratory effort and sweating. Other 
manifestations of chronic heart failure during infancy may include 
failure to gain weight or involuntary loss of weight and repeated lower 
respiratory tract infections.
    Findings of cardiomegaly shown by appropriate medically acceptable 
imaging evidence must be accompanied by other evidence of chronic heart 
failure or ventricular dysfunction. ``Appropriate'' means that the 
imaging technique used is the proper one to support the evaluation and 
diagnosis of the impairment. (Reference: Feigenbaum, Harvey, 
``Echocardiography,'' 4th Edition, Lea and Febiger, 1986, Appendix, pp. 
621-639.) Chest x-ray (6 ft. PA film) will be considered indicative of 
cardiomegaly if the cardiothoracic ratio is over 60 percent at age 1 
year or less, or 55 percent at more than 1 year of age.
    Findings of cardiomegaly on chest x-ray must be accompanied by other 
evidence of chronic heart failure or ventricular dysfunction. This 
evidence may include clinical evidence, such as hepatomegaly, edema, or 
pulmonary venous congestion; or echocardiographic evidence, such as 
marked ventricular dilatation above established normals for age, or 
markedly reduced ejection fraction or shortening fraction.

                        F. Valvular Heart Disease

    Valvular heart disease requires documentation by appropriate imaging 
techniques, including Doppler echocardiogram

[[Page 500]]

studies or cardiac catheterization if catheterization results are 
available from a treating source or other source of record. Listing-
level impairment is usually associated with critical aortic stenosis in 
a newborn child, persistent heart failure, arrhythmias, or valve 
replacement and ongoing anticoagulant therapy. The usual time after 
valvular surgery for adequate assessment of the results of treatment is 
considered to be 3 months.

                       G. Rheumatic Heart Disease

    The diagnosis should be made in accordance with the current revised 
Jones criteria for guidance in the diagnosis of rheumatic fever.

          104.01 Category of Impairments, Cardiovascular System

    104.02 Chronic heart failure. Documented by clinical and laboratory 
findings as described in 104.00E, and with one of the following:
    A. Persistent tachycardia at rest (see table I);

OR

    B. Persistent tachypnea at rest (see table II), or markedly 
decreased exercise tolerance (see 104.00E);

OR

    C. Recurrent arrhythmias, as described in 104.05;

OR

    D. Growth disturbance, with:
    1. An involuntary weight loss (or failure to gain weight at an 
appropriate rate for age) resulting in a fall of 15 percentiles from 
established growth curve (on standard growth charts) which persists for 
2 months or longer; or
    2. An involuntary weight loss (or failure to gain weight at an 
appropriate rate for age) resulting in a fall to below the third 
percentile from established growth curve (on standard growth charts) 
which persists for 2 months or longer; or
    3. Growth impairment as described under the criteria in 100.00.

                      Table I--Tachycardia at Rest
------------------------------------------------------------------------
                                                                 Apical
                                                                 heart
                             Age                                 (beats
                                                                  per
                                                                minute)
------------------------------------------------------------------------
Under 1 yr...................................................        150
1 through 3 yrs..............................................        130
4 through 9 yrs..............................................        120
10 through 15 yrs............................................        110
Over 15 yrs..................................................        100
------------------------------------------------------------------------


                       Table II--Tachypnea at Rest
------------------------------------------------------------------------
                                                             Respiratory
                                                              rate over
                            Age                                  (per
                                                               minute)
------------------------------------------------------------------------
Under 1 yr.................................................          40
1 through 5 yrs............................................          35
6 through 9 yrs............................................          30
Over 9 yrs.................................................          25
------------------------------------------------------------------------

    104.03 Hypertensive cardiovascular disease. With persistently 
elevated blood pressure equal to or greater than the 95th percentile for 
age (see table III), and one of the following:
    A. Impaired renal function, as described in 106.02;

OR

    B. Cerebrovascular damage, as described in 111.06;

OR

    C. Chronic heart failure as described in 104.02.

                   Table III--Elevated Blood Pressure
------------------------------------------------------------------------
                                                 Systolic      Diastolic
                      Age                          over    OR     over
                                                  (mmHg)         (mmHg)
------------------------------------------------------------------------
Under 1 month..................................        95  ..        --
1 month through 2 yrs..........................       112  ..        74
3 through 5 yrs................................       116  ..        76
6 through 9 yrs................................       122  ..        78
10 through 12 yrs..............................       126  ..        82
13 through 15 yrs..............................       136  ..        86
16 to 18 yrs...................................       142  ..        92
------------------------------------------------------------------------

    104.05 Recurrent arrhythmias, such as persistent or recurrent heart 
block (A-V dissociation), repeated symptomatic tachyarrhythmias or 
bradyarrhythmias or long QT syndrome arrhythmias, not related to 
reversible causes such as electrolyte abnormalities or digitalis 
glycoside or antiarrhythmic drug toxicity, resulting in uncontrolled 
repeated episodes of cardiac syncope or near syncope and arrhythmia 
despite prescribed treatment, including electronic pacemaker (see 
104.00A if there is no prescribed treatment), and documented by resting 
or ambulatory (Holter) electrocardiography coincident with the 
occurrence of syncope or near syncope.
    104.06 Congenital heart disease. With one of the following:
    A. Cyanotic heart disease, with persistent, chronic hypoxemia as 
manifested by:
    1. Hematocrit of 55 percent or greater on two or more evaluations 
within a 3-month period; or
    2. Arterial O2 saturation of less than 90 percent in room 
air, or resting PO2 of 60 Torr or less; or
    3. Hypercyanotic spells, syncope, characteristic squatting, or other 
incapacitating

[[Page 501]]

symptoms directly related to documented cyanotic heart disease; or
    4. Exercise intolerance with increased hypoxemia on exertion;

OR

    B. Chronic heart failure with evidence of ventricular dysfunction, 
as described in 104.02;

OR

    C. Recurrent arrhythmias as described in 104.05;

OR

    D. Secondary pulmonary vascular obstructive disease with a mean 
pulmonary arterial pressure elevated to at least 70 percent of the mean 
systemic arterial pressure;

OR

    E. Congenital valvular or other stenotic defects, or valvular 
regurgitation, as described in 104.00F and 104.07;

OR

    F. Symptomatic acyanotic heart disease, with ventricular dysfunction 
resulting in significant restriction of age-appropriate activities or 
inability to complete age-appropriate tasks (see 104.00A);

OR

    G. Growth failure, as described in 100.00;

OR

    H. For infants under 12 months of age at the time of filing, with 
life-threatening congenital heart impairment that will or has required 
surgical treatment in the first year of life, consider the infant to be 
under a disability until the attainment of age 1 or for 12 months after 
surgery, whichever is the later event; thereafter, evaluate impairment 
severity with reference to 104.02 to 104.08.
    104.07 Valvular heart disease or other stenotic defects, or valvular 
regurgitation, documented by appropriate imaging techniques or cardiac 
catheterization.
    A. Evaluate according to criteria in 104.02, 104.05, 111.06, or 
11.04;

OR

    B. Critical aortic stenosis in newborn.
    104.08 Cardiomyopathies, documented by appropriate imaging 
techniques, including echocardiography or cardiac catheterization, if 
catheterization results are available from a treating source. Impairment 
must be associated with an ejection fraction of 50 percent or less and 
significant left ventricular dilatation using standardized age-
appropriate echocardiographic ventricular cavity measurements. Evaluate 
under the criteria in 104.02, 104.05, or 111.06.
    104.09 Cardiac transplantation. Consider under a disability for 1 
year following surgery; thereafter, evaluate residual impairment under 
104.02 to 104.08.
    104.13 Chronic rheumatic fever or rheumatic heart disease. Consider 
under a disability for 18 months from the established onset of 
impairment with one of the following:
    A. Persistence of rheumatic fever activity for 6 months or more 
which is manifested by significant murmur(s), cardiac enlargement (see 
104.00E) or ventricular dysfunction, and other abnormal laboratory 
findings, as for example, an elevated sedimentation rate or ECG 
findings;

OR

    B. Evidence of chronic heart failure, as described under 104.02;

OR

    C. Recurrent arrhythmias, as described under 104.05.
    104.14 Hyperlipidemia. Documented Type II homozygous hyperlipidemia 
with repeated plasma cholesterol levels of 500 mg/ml or greater, with 
one of the following:
    A. Myocardial ischemia, as described in 4.04B or 4.04C;

OR

    B. Significant aortic stenosis documented by Doppler 
echocardiographic techniques or cardiac catheterization;

OR

    C. Major disruption of normal life activities by repeated 
hospitalizations for plasmapheresis or other prescribed therapies, 
including liver transplant;

OR

    D. Recurrent pancreatitis complicating hyperlipidemia.
    104.15 Kawasaki syndrome. With one of the following:
    A. Major coronary artery aneurysm;

OR

    B. Chronic heart failure, as described in 104.02.

                         105.00 Digestive System

    A. Disorders of the digestive system which result in disability 
usually do so because of interference with nutrition and growth, 
multiple recurrent inflammatory lesions, or other complications of the 
disease. Such lesions or complications usually respond to treatment. To 
constitute a listed impairment, these must be shown to have persisted or 
be expected to persist despite prescribed therapy for a continuous 
period of at least 12 months.
    B. Documentation of gastrointestinal impairments should include 
pertinent operative findings, appropriate medically acceptable imaging 
studies, endoscopy, and biopsy reports. Medically acceptable imaging 
includes, but is not limited to, x-ray imaging, computerized axial 
tomography (CAT scan) or magnetic resonance imaging (MRI), with or 
without contrast material, myelography, and radionuclear bone scans. 
``Appropriate'' means that the technique used is the proper

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one to support the evaluation and diagnosis of the impairment.
    C. Growth retardation and malnutrition. When the primary disorder of 
the digestive tract has been documented, evaluate resultant malnutrition 
under the criteria described in 105.08. Evaluate resultant growth 
impairment under the criteria described in 100.03. Intestinal disorders, 
including surgical diversions and potentially correctable congenital 
lesions, do not represent a severe impairment if the individual is able 
to maintain adequate nutrition growth and development.
    D. Multiple congenital anomalies. See related criteria, and consider 
as a combination of impairments.

               105.01 Category of Impairments, Digestive.

    105.03 Esophageal obstruction, caused by atresia, stricture, or 
stenosis with malnutrition as described under the criteria in 105.08.
    105.05 Chronic liver disease. With one of the following:
    A. Inoperable biliary atresia demonstrated by appropriate medically 
acceptable imaging or surgery; or
    B. Intractable ascites not attributable to other causes, with serum 
albumin of 3.0 gm./100 ml. or less; or
    C. Esophageal varices (demonstrated by endoscopy or other 
appropriate medically acceptable imaging); or
    D. Hepatic coma, documentated by findings from hospital records; or
    E. Hepatic encephalopathy. Evaluate under the criteria in 112.02; or
    F. Chronic active inflammation or necrosis documented by SGOT 
persistently more than 100 units or serum bilirubin of 2.5 mg. percent 
or greater.
    105.07 Chronic inflammatory bowel disease (such as ulcerative 
colitis, regional enteritis), as documented in 105.00. With one of the 
following:
    A. Intestinal manifestations or complications, such as obstruction, 
abscess, or fistula formation which has lasted or is expected to last 12 
months; or
    B. Malnutrition as described under the criteria in 105.08; or
    C. Growth impairment as described under the criteria in 100.03.
    105.08 Malnutrition, due to demonstrable gastrointestinal disease 
causing either a fall of 15 percentiles of weight which persists or the 
persistence of weight which is less than the third percentile (on 
standard growth charts). And one of the following:
    A. Stool fat excretion per 24 hours:
    1. More than 15 percent in infants less than 6 months.
    2. More than 10 percent in infants 6-18 months.
    3. More than 6 percent in children more than 18 months; or
    B. Persistent hematocrit of 30 percent or less despite prescribed 
therapy; or
    C. Serum carotene of 40 mcg./100 ml. or less; or
    D. Serum albumin of 3.0 gm./100 ml. or less.
    105.09 Liver transplant. Consider under a disability for 12 months 
following the date of surgery; thereafter, evaluate the residual 
impairment.

                      106.00 Genito-Urinary System

    A. Determination of the presence of chronic renal disease will be 
based upon the following factors:
    1. History, physical examination, and laboratory evidence of renal 
disease.
    2. Indications of its progressive nature or laboratory evidence of 
deterioration of renal function.
    B. Renal transplant. The amount of function restored and the time 
required to effect improvement depend upon various factors including 
adequacy of post transplant renal function, incidence of renal 
infection, occurrence of rejection crisis, presence of systemic 
complications (anemia, neuropathy, etc.) and side effects of 
corticosteroid or immuno-suppressive agents. A period of at least 12 
months is required for the individual to reach a point of stable medical 
improvement.
    C. Evaluate associated disorders and complications according to the 
appropriate body system listing.

             106.01 Category of Impairments, Genito-Urinary.

    106.02 Chronic renal disease. With:
    A. Persistent elevation of serum creatinine to 3 mg. per deciliter 
(100 ml.) or greater over at least 3 months; or
    B. Reduction of creatinine clearance to 30 ml. per minute (43 
liters/24 hours) per 1.73 m\2\ of body surface area over at least 3 
months; or
    C. Chronic renal dialysis program for irreversible renal failure; or
    D. Renal transplant. Consider under a disability for 12 months 
following surgery; thereafter, evaluate the residual impairment (see 
106.00B).
    106.06 Nephrotic syndrome, with edema not controlled by prescribed 
therapy. And:
    A. Serum albumin less than 2 gm./100 ml.; or
    B. Proteinuria more than 2.5 gm./1.73m\2\/ day.

                    107.00 Hemic and Lymphatic System

    A. Sickle cell disease. Refers to a chronic hemolytic anemia 
associated with sickle cell hemoglobin, either homozygous or in 
combination with thalassemia or with another abnormal hemoglobin (such 
as C or F).

[[Page 503]]

    Appropriate hematologic evidence for sickle cell disease, such as 
hemoglobin electrophoresis must be included. Vaso-occlusive, hemolytic, 
or aplastic episodes should be documented by description of severity, 
frequency, and duration.
    Disability due to sickle cell disease may be solely the result of a 
severe, persistent anemia or may be due to the combination of chronic 
progressive or episodic manifestations in the presence of a less severe 
anemia.
    Major visceral episodes causing disability include meningitis, 
osteomyelitis, pulmonary infections or infarctions, cerebrovascular 
accidents, congestive heart failure, genitourinary involvement, etc.
    B. Coagulation defects. Chronic inherited coagulation disorders must 
be documented by appropriate laboratory evidence such as abnormal 
thromboplastin generation, coagulation time, or factor assay.
    C. Acute leukemia (including T-cell lymphoblastic lymphoma). Initial 
diagnosis of acute leukemia or T-cell lymphoblastic lymphoma must be 
based upon definitive bone marrow pathologic evidence. Recurrent disease 
may be documented by peripheral blood, bone marrow, or cerebrospinal 
fluid examination. The pathology report must be included.
    The designated duration of disability implicit in the finding of a 
listed impairment is contained in 107.11. Following the designated time 
period, a documented diagnosis itself is no longer sufficient to 
establish a severe impairment. The severity of any remaining impairment 
must be evaluated on the basis of the medical evidence.

          107.01 Category of Impairments, Hemic and Lymphatic.

    107.03 Hemolytic anemia (due to any cause). Manifested by 
persistence of hematocrit of 26 percent or less despite prescribed 
therapy, and reticulocyte count of 4 percent or greater.
    107.05 Sickle cell disease. With:
    A. Recent, recurrent, severe vaso-occlusive crises (musculoskeletal, 
vertebral, abdominal); or
    B. A major visceral complication in the 12 months prior to 
application; or
    C. A hyperhemolytic or aplastic crisis within 12 months prior to 
application; or
    D. Chronic, severe anemia with persistence of hematocrit of 26 
percent or less; or
    E. Congestive heart failure, cerebrovascular damage, or emotional 
disorder as described under the criteria in 104.02, 111.00ff, or 
112.00ff.
    107.06 Chronic idiopathic thrombocytopenic purpura of childhood with 
purpura and thrombocytopenia of 40,000 platelets/cu. mm. or less despite 
prescribed therapy or recurrent upon withdrawal of treatment.
    107.08 Inherited coagulation disorder. With:
    A. Repeated spontaneous or inappropriate bleeding; or
    B. Hemarthrosis with joint deformity.
    107.11 Acute leukemia (including T-cell lymphoblastic lymphoma). 
Consider under a disability:
    A. For 2\1/2\ years from the time of initial diagnosis; or
    B. For 2\1/2\ years from the time of recurrence of active disease.

                            108.00 [Reserved]

                         109.00 Endocrine System

    A. Cause of disability. Disability is caused by a disturbance in the 
regulation of the secretion or metabolism of one or more hormones which 
are not adequately controlled by therapy. Such disturbances or 
abnormalities usually respond to treatment. To constitute a listed 
impairment these must be shown to have persisted or be expected to 
persist despite prescribed therapy for a continuous period of at least 
12 months.
    B. Growth. Normal growth is usually a sensitive indicator of health 
as well as of adequate therapy in children. Impairment of growth may be 
disabling in itself or may be an indicator of a severe disorder 
involving the endocrine system or other body systems. Where involvement 
of other organ systems has occurred as a result of a primary endocrine 
disorder, these impairments should be evaluated according to the 
criteria under the appropriate sections.
    C. Documentation. Description of characteristic history, physical 
findings, and diagnostic laboratory data must be included. Results of 
laboratory tests will be considered abnormal if outside the normal range 
or greater than two standard deviations from the mean of the testing 
laboratory. Reports in the file should contain the information provided 
by the testing laboratory as to their normal values for that test.
    D. Hyperfunction of the adrenal cortex. Evidence of growth 
retardation must be documented as described in 100.00. Elevated blood or 
urinary free cortisol levels are not acceptable in lieu of urinary 17-
hydroxycorticosteroid excretion for the diagnosis of adrenal cortical 
hyperfunction.
    E. Adrenal cortical insufficiency. Documentation must include 
persistent low plasma cortisol or low urinary 17-hydroxycorticosteroids 
or 17-ketogenic steroids and evidence of unresponsiveness to ACTH 
stimulation.

               109.01 Category of Impairments, Endrocrine

    109.02 Thyroid Disorders.
    A. Hyperthyroidism (as documented in 109.00C). With clinical 
manifestations despite prescribed therapy, and one of the following:
    1. Elevated serum thyroxine (T4) and either elevated free 
T4 or resin T3 uptake; or

[[Page 504]]

    2. Elevated thyroid uptake of radioiodine; or
    3. Elevated serum triiodothyronine (T3).
    B. Hypothyroidism. With one of the following, despite prescribed 
therapy:
    1. IQ of 70 or less; or
    2. Growth impairment as described under the criteria in 100.02 A and 
B; or
    3. Precocious puberty.
    109.03 Hyperparathyroidism (as documented in 109.00C). With:
    A. Repeated elevated total or ionized serum calcium; or
    B. Elevated serum parathyroid hormone.
    109.04 Hypoparathyroidism or Pseudohypoparathyroidism. With:
    A. Severe recurrent tetany or convulsions which are unresponsive to 
prescribed therapy; or
    B. Growth retardation as described under criteria in 100.02 A and B.
    109.05 Diabetes insipidus, documented by pathologic hypertonic 
saline or water deprivation test. And one of the following:
    A. Intracranial space-occupying lesion, before or after surgery; or
    B. Unresponsiveness to Pitressin; or
    C. Growth retardation as described under the criteria in 100.02 A 
and B; or
    D. Unresponsive hypothalmic thirst center, with chronic or recurrent 
hypernatremia; or
    E. Decreased visual fields attributable to a pituitary lesion.
    109.06 Hyperfunction of the adrenal cortex (Primary or secondary). 
With:
    A. Elevated urinary 17-hyroxycortico-steroids (or 17-ketogenic 
steroids) as documented in 109.00 C and D; and
    B. Unresponsiveness to low-dose dexamethasone suppression.
    109.07 Adrenal cortical insufficiency (as documented in 109.00 C and 
E) with recent, recurrent episodes of circulatory collapse.
    109.08 Juvenile diabetes mellitus (as documented in 109.00C) 
requiring parenteral insulin. And one of the following, despite 
prescribed therapy:
    A. Recent, recurrent hospitalizations with acidosis; or
    B. Recent, recurrent episodes of hypoglycemia; or
    C. Growth retardation as described under the criteria in 100.02 A or 
B; or
    D. Impaired renal function as described under the criteria in 
106.00ff.
    109.09 Iatrogenic hypercorticoid state.
    With chronic glucocorticoid therapy resulting in one of the 
following:
    A. Osteoporosis; or
    B. Growth retardation as described under the criteria in 100.02 A or 
B; or
    C. Diabetes mellitus as described under the criteria in 109.08; or
    D. Myopathy as described under the criteria in 111.06; or
    E. Emotional disorder as described under the criteria in 112.00ff.
    109.10 Pituitary dwarfism (with documented growth hormone 
deficiency). And growth impairment as described under the criteria in 
100.02B.
    109.11 Adrenogenital syndrome. With:
    A. Recent, recurrent self-losing episodes despite prescribed 
therapy; or
    B. Inadequate replacement therapy manifested by accelerated bone age 
and virilization, or
    C. Growth impairment as described under the criteria in 100.02 A or 
B.
    109.12 Hypoglycemia (as documented in 109.00C). With recent, 
recurrent hypoglycemic episodes producing convulsion or coma.
    109.13 Gonadal Dysgenesis (Turner's Syndrome), chromosomally proven. 
Evaluate the resulting impairment under the criteria for the appropriate 
body system.

                      110.00 Multiple Body Systems

    A. This section refers to those life-threatening catastrophic 
congenital abnormalities and other serious hereditary, congenital, or 
acquired disorders that usually affect two or more body systems and are 
expected to:
    1. Result in early death or developmental attainment of less than 2 
years of age as described in listing 110.08 (e.g., anencephaly or Tay-
Sachs); or
    2. Produce long-term, if not life-long, significant interference 
with age-appropriate major daily or personal care activities as 
described in listings 110.06 and 110.07. (Significant interference with 
age-appropriate activities is considered to exist where the 
developmental milestone age did not exceed two-thirds of the 
chronological age at the time of evaluation and such interference has 
lasted or could be expected to last at least 12 months.) See 112.00C for 
a discussion of developmental milestone criteria and evaluation of age-
appropriate activities.
    Down syndrome (except for mosaic Down syndrome, which is to be 
evaluated under listing 110.07) established by clinical findings, 
including the characteristic physical features, and laboratory evidence 
is considered to meet the requirement of listing 110.06 commencing at 
birth. Examples of disorders that should be evaluated under listing 
110.07 include mosaic Down syndrome and chromosomal abnormalities other 
than Down syndrome, in which a pattern of multiple impairments 
(including mental retardation) is known to occur, phenylketonuria (PKU), 
fetal alcohol syndrome, and severe chronic neonatal infections such as 
toxoplasmosis, rubella syndrome, cytomegalic inclusion disease, and 
herpes encephalitis.
    B. Documentation must include confirmation of a positive diagnosis 
by a clinical description of the usual abnormal physical findings 
associated with the condition and definitive laboratory tests, including 
chromosomal analysis, where appropriate (e.g.,

[[Page 505]]

Down syndrome). Medical evidence that is persuasive that a positive 
diagnosis has been confirmed by appropriate laboratory testing, at some 
time prior to evaluation, is acceptable in lieu of a copy of the actual 
laboratory report.
    C. When multiple body system manifestations do not meet one of the 
established criteria of one of the listings, the combined impairments 
must be evaluated together to determine if they are equal in severity to 
a listed impairment.

          110.01 Category of Impairments, Multiple Body Systems

    110.06 Down syndrome (excluding mosaic Down syndrome) established by 
clinical and laboratory findings, as described in 110.00B. Consider the 
child disabled from birth.
    110.07 Multiple body dysfunction due to any confirmed (see 110.00B) 
hereditary, congenital, or acquired condition with one of the following:
    A. Persistent motor dysfunction as a result of hypotonia and/or 
musculoskeletal weakness, postural reaction deficit, abnormal primitive 
reflexes, or other neurological impairment as described in 111.00C, and 
with significant interference with age-appropriate major daily or 
personal care activities, which in an infant or young child include such 
activities as head control, swallowing, following, reaching, grasping, 
turning, sitting, crawling, walking, taking solids, feeding self; or
    B. Mental impairment as described under the criteria in 112.05 or 
112.12; or
    C. Growth impairment as described under the criteria in 100.02A or 
B; or
    D. Significant interference with communication due to speech, 
hearing, or visual impairments as described under the criteria in 102.00 
and 111.09; or
    E. Cardiovascular impairments as described under the criteria in 
104.00; or
    F. Other impairments such as, but not limited to, malnutrition, 
hypothyroidism, or seizures should be evaluated under the criteria in 
105.08, 109.02 or 111.02 and 111.03, or the criteria for the affected 
body system.
    110.08 Catastrophic congenital abnormalities or disease. With:
    A. A positive diagnosis (such as anencephaly, trisomy D or E, 
cyclopia, etc.), generally regarded as being incompatible with 
extrauterine life; or
    B. A positive diagnosis (such as cri du chat, Tay-Sachs Disease) 
wherein attainment of the growth and development level of 2 years is not 
expected to occur.

                           111.00 Neurological

    A. Convulsive epilepsy must be substantiated by at least one 
detailed description of a typical seizure. Report of recent 
documentation should include a neurological examination with frequency 
of episodes and any associated phenomena substantiated.
    Young children may have convulsions in association with febrile 
illnesses. Proper use of 111.02 and 111.03 requires that epilepsy be 
established. Although this does not exclude consideration of seizures 
occurring during febrile illnesses, it does require documentation of 
seizures during nonfebrile periods.
    There is an expected delay in control of epilepsy when treatment is 
started, particularly when changes in the treatment regimen are 
necessary. Therefore, an epileptic disorder should not be considered to 
meet the requirements of 111.02 or 111.03 unless it is shown that 
convulsive episodes have persisted more than three months after 
prescribed therapy began.
    B. Nonconvulsive epilepsy. Classical petit mal seizures must be 
documented by characteristic EEG pattern, plus information as to age at 
onset and frequency of clinical seizures.
    C. Motor dysfunction. As described in 111.06, motor dysfunction may 
be due to any neurological disorder. It may be due to static or 
progressive conditions involving any area of the nervous system and 
producing any type of neurological impairment. This may include 
weakness, spasticity, lack of coordination, ataxia, tremor, athetosis, 
or sensory loss. Documentation of motor dysfunction must include 
neurologic findings and description of type of neurologic abnormality 
(e.g., spasticity, weakness), as well as a description of the child's 
functional impairment (i.e., what the child is unable to do because of 
the abnormality). Where a diagnosis has been made, evidence should be 
included for substantiation of the diagnosis (e.g., blood chemistries 
and muscle biopsy reports), wherever applicable.
    D. Impairment of communication. The documentation should include a 
description of a recent comprehensive evaluation, including all areas of 
affective and effective communication, performed by a qualified 
professional.

               111.01 Category of Impairment, Neurological

    111.02 Major motor seizure disorder.
    A. Convulsive epilepsy. In a child with an established diagnosis of 
epilepsy, the occurrence of more than one major motor seizure per month 
despite at least three months of prescribed treatment. With:
    1. Daytime episodes (loss of consciousness and convulsive seizures); 
or
    2. Nocturnal episodes manifesting residuals which interfere with 
activity during the day.
    B. Convulsive epilepsy syndrome. In a child with an established 
diagnosis of epilepsy, the occurrence of at least one major motor 
seizure in the year prior to application despite at least three months 
of prescribed treatment. And one of the following:
    1. IQ of 70 or less; or

[[Page 506]]

    2. Significant interference with communication due to speech, 
hearing, or visual defect; or
    3. Significant mental disorder; or
    4. Where significant adverse effects of medication interfere with 
major daily activities.
    111.03 Nonconvulsive epilepsy. In a child with an established 
seizure disorder, the occurrence of more than one minor motor seizure 
per week, with alteration of awareness or loss of consciousness, despite 
at least three months of prescribed treatment.
    111.05 Brain tumors. A. Malignant gliomas (astrocytoma--Grades III 
and IV, glioblastoma multiforme), medulloblastoma, ependymoblastoma, 
primary sarcoma or brain stem gliomas; or
    B. Evaluate other brain tumors under the criteria for the resulting 
neurological impairment.
    111.06 Motor dysfunction (due to any neurological disorder). 
Persistent disorganization or deficit of motor function for age 
involving two extremities, which (despite prescribed therapy) interferes 
with age-appropriate major daily activities and results in disruption 
of:
    A. Fine and gross movements; or
    B. Gait and station.
    111.07 Cerebral Palsy. With:
    A. Motor dysfunction meeting the requirements of 101.02 or 111.06; 
or
    B. Less severe motor dysfunction (but more than slight) and one of 
the following:
    1. IQ of 70 or less; or
    2. Seizure disorder, with at least one major motor seizure in the 
year prior to application; or
    3. Significant interference with communication due to speech, 
hearing or visual defect; or
    4. Significant emotional disorder.
    111.08 Meningomyelocele (and related disorders). With one of the 
following despite prescribed treatment:
    A. Motor dysfunction meeting the requirements of 101.02 or 111.06; 
or
    B. Less severe motor dysfunction (but more than slight), and:
    1. Urinary or fecal incontinence when inappropriate for age; or
    2. IQ of 70 or less; or
    C. Four extremity involvement; or
    D. Noncompensated hydrocephalus producing interference with mental 
or motor developmental progression.
    111.09 Communication impairment, associated with documented 
neurological disorder. And one of the following:
    A. Documented speech deficit which significantly affects the clarity 
and content of the speech; or
    B. Documented comprehension deficit resulting in ineffective verbal 
communication for age; or
    C. Impairment of hearing as described under the criteria in 102.08.

                         112.00 Mental Disorders

    A. Introduction: The structure of the mental disorders listings for 
children under age 18 parallels the structure for the mental disorders 
listings for adults but is modified to reflect the presentation of 
mental disorders in children. The listings for mental disorders in 
children are arranged in 11 diagnostic categories: Organic mental 
disorders (112.02); schizophrenic, delusional (paranoid), 
schizoaffective, and other psychotic disorders (112.03); mood disorders 
(112.04); mental retardation (112.05); anxiety disorders (112.06); 
somatoform, eating, and tic disorders (112.07); personality disorders 
(112.08); psychoactive substance dependence disorders (112.09); autistic 
disorder and other pervasive developmental disorders (112.10); attention 
deficit hyperactivity disorder (112.11); and developmental and emotional 
disorders of newborn and younger infants (112.12).
    There are significant differences between the listings for adults 
and the listings for children. There are disorders found in children 
that have no real analogy in adults; hence, the differences in the 
diagnostic categories for children. The presentation of mental disorders 
in children, particularly the very young child, may be subtle and of a 
character different from the signs and symptoms found in adults. For 
example, findings such as separation anxiety, failure to mold or bond 
with the parents, or withdrawal may serve as findings comparable to 
findings that mark mental disorders in adults. The activities 
appropriate to children, such as learning, growing, playing, maturing, 
and school adjustment, are also different from the activities 
appropriate to the adult and vary widely in the different childhood 
stages.
    Each listing begins with an introductory statement that describes 
the disorder or disorders addressed by the listing. This is followed 
(except in listings 112.05 and 112.12) by paragraph A criteria (a set of 
medical findings) and paragraph B criteria (a set of impairment-related 
functional limitations). An individual will be found to have a listed 
impairment when the criteria of both paragraphs A and B of the listed 
impairment are satisfied.
    The purpose of the criteria in paragraph A is to substantiate 
medically the presence of a particular mental disorder. Specific 
symptoms and signs under any of the listings 112.02 through 112.12 
cannot be considered in isolation from the description of the mental 
disorder contained at the beginning of each listing category. 
Impairments should be analyzed or reviewed under the mental 
category(ies) indicated by the medical findings.
    Paragraph A of the listings is a composite of medical findings which 
are used to substantiate the existence of a disorder and may

[[Page 507]]

or may not be appropriate for children at specific developmental stages. 
However, a range of medical findings is included in the listings so that 
no age group is excluded. For example, in listing 112.02A7, emotional 
lability and crying would be inappropriate criteria to apply to older 
infants and toddlers, age 1 to attainment of age 3; whereas in 112.02A1, 
developmental arrest, delay, or regression are appropriate criteria for 
older infants and toddlers. Whenever the adjudicator decides that the 
requirements of paragraph A of a particular mental listing are 
satisfied, then that listing should be applied regardless of the age of 
the child to be evaluated.
    The purpose of the paragraph B criteria is to describe impairment-
related functional limitations which are applicable to children. 
Standardized tests of social or cognitive function and adaptive behavior 
are frequently available and appropriate for the evaluation of children 
and, thus, such tests are included in the paragraph B functional 
parameters. The functional restrictions in paragraph B must be the 
result of the mental disorder which is manifested by the medical 
findings in paragraph A.
    We did not include separate C criteria for listings 112.02, 112.03, 
112.04, and 112.06, as are found in the adult listings, because for the 
most part we do not believe that the residual disease processes 
described by these listings are commonly found in children. However, in 
unusual cases where these disorders are found in children and are 
comparable to the severity and duration found in adults, we may use the 
adult listings 12.02C, 12.03C, 12.04C, and 12.06C criteria to evaluate 
such cases.
    The structure of the listings for Mental Retardation (112.05) and 
Developmental and Emotional Disorders of Newborn and Younger Infants 
(112.12) is different from that of the other mental disorders. Listing 
112.05 (Mental Retardation) contains six sets of criteria. If an 
impairment satisfies the diagnostic description in the introductory 
paragraph and any one of the six sets of criteria, we will find that the 
child's impairment meets the listing. For listings 112.05D and 112.05F, 
we will assess the degree of functional limitation the additional 
impairment(s) imposes to determine if it causes more than minimal 
functional limitations, i.e., is a ``severe'' impairment(s), as defined 
in Sec. 416.924(c). If the additional impairment(s) does not cause 
limitations that are ``severe'' as defined in Sec. 416.924(c), we will 
not find that the additional impairment(s) imposes an additional and 
significant limitation of function. Listing 112.12 (Developmental and 
Emotional Disorders of Newborn and Younger Infants) contains five 
criteria, any one of which, if satisfied, will result in a finding that 
the infant's impairment meets the listing.
    It must be remembered that these listings are only examples of 
common mental disorders that are severe enough to find a child disabled. 
When a child has a medically determinable impairment that is not listed, 
an impairment that does not meet the requirements of a listing, or a 
combination of impairments no one of which meets the requirements of a 
listing, we will make a determination whether the child's impairment(s) 
medically or functionally equals the listings. (See Sec. Sec. 404.1526, 
416.926, and 416.926a.) This determination can be especially important 
in older infants and toddlers (age 1 to attainment of age 3), who may be 
too young for identification of a specific diagnosis, yet demonstrate 
serious functional limitations. Therefore, the determination of 
equivalency is necessary to the evaluation of any child's case when the 
child does not have an impairment that meets a listing.
    B. Need for Medical Evidence: The existence of a medically 
determinable impairment of the required duration must be established by 
medical evidence consisting of symptoms, signs, and laboratory findings 
(including psychological or developmental test findings). Symptoms are 
complaints presented by the child. Psychiatric signs are medically 
demonstrable phenomena that indicate specific psychological 
abnormalities, e.g., abnormalities of behavior, mood, thought, memory, 
orientation, development, or perception, as described by an appropriate 
medical source. Symptoms and signs generally cluster together to 
constitute recognizable mental disorders described in paragraph A of the 
listings. These findings may be intermittent or continuous depending on 
the nature of the disorder.
    C. Assessment of Severity: In childhood cases, as with adults, 
severity is measured according to the functional limitations imposed by 
the medically determinable mental impairment. However, the range of 
functions used to assess impairment severity for children varies at 
different stages of maturation. The functional areas that we consider 
are: Motor function; cognitive/communicative function; social function; 
personal function; and concentration, persistence, or pace. In most 
functional areas, there are two alternative methods of documenting the 
required level of severity: (1) Use of standardized tests alone, where 
appropriate test instruments are available, and (2) use of other medical 
findings. (See 112.00D for explanation of these documentation 
requirements.) The use of standardized tests is the preferred method of 
documentation if such tests are available.
    Newborn and younger infants (birth to attainment of age 1) have not 
developed sufficient personality differentiation to permit formulation 
of appropriate diagnoses. We have, therefore, assigned listing 112.12 
for Developmental and Emotional Disorders of

[[Page 508]]

Newborn and Younger Infants for the evaluation of mental disorders of 
such children. Severity of these disorders is based on measures of 
development in motor, cognitive/communicative, and social functions. 
When older infants and toddlers (age 1 to attainment of age 3) do not 
clearly satisfy the paragraph A criteria of any listing because of 
insufficient developmental differentiation, they must be evaluated under 
the rules for equivalency. The principles for assessing the severity of 
impairment in such children, described in the following paragraphs, must 
be employed.
    Generally, when we assess the degree of developmental delay imposed 
by a mental impairment, we will use an infant's or toddler's 
chronological age; i.e., the child's age based on birth date. If the 
infant or toddler was born prematurely, however, we will follow the 
rules in Sec. 416.924b(b) to determine whether we should use the 
infant's or toddler's corrected chronological age; i.e., the 
chronological age adjusted by the period of gestational prematurity.
    In defining the severity of functional limitations, two different 
sets of paragraph B criteria corresponding to two separate age groupings 
have been established, in addition to listing 112.12, which is for 
children who have not attained age 1. These age groups are: older 
infants and toddlers (age 1 to attainment of age 3) and children (age 3 
to attainment of age 18). However, the discussion below in 112.00C1, 2, 
3, and 4, on the age-appropriate areas of function, is broken down into 
four age groupings: older infants and toddlers (age 1 to attainment of 
age 3), preschool children (age 3 to attainment of age 6), primary 
school children (age 6 to attainment of age 12), and adolescents (age 12 
to attainment of age 18). This was done to provide specific guidance on 
the age group variances in disease manifestations and methods of 
evaluation.
    Where ``marked'' is used as a standard for measuring the degree of 
limitation it means more than moderate but less than extreme. A marked 
limitation may arise when several activities or functions are impaired, 
or even when only one is impaired, as long as the degree of limitation 
is such as to interfere seriously with the ability to function (based 
upon age-appropriate expectations) independently, appropriately, 
effectively, and on a sustained basis. When standardized tests are used 
as the measure of functional parameters, a valid score that is two 
standard deviations below the norm for the test will be considered a 
marked restriction.
    1. Older infants and toddlers (age 1 to attainment of age 3). In 
this age group, impairment severity is assessed in three areas: (a) 
Motor development, (b) cognitive/communicative function, and (c) social 
function.
    a. Motor development. Much of what we can discern about mental 
function in these children frequently comes from observation of the 
degree of development of fine and gross motor function. Developmental 
delay, as measured by a good developmental milestone history confirmed 
by medical examination, is critical. This information will ordinarily be 
available in the existing medical evidence from the claimant's treating 
sources and other medical sources, supplemented by information from 
nonmedical sources, such as parents, who have observed the child and can 
provide pertinent historical information. It may also be available from 
standardized testing. If the delay is such that the older infant or 
toddler has not achieved motor development generally acquired by 
children no more than one-half the child's chronological age, the 
criteria are satisfied.
    b. Cognitive/communicative function. Cognitive/communicative 
function is measured using one of several standardized infant scales. 
Appropriate tests for the measure of such function are discussed in 
112.00D. Screening instruments may be useful in uncovering potentially 
serious impairments, but often must be supplemented by other data. 
However, in some cases, the results of screening tests may show such 
obvious abnormalities that further testing will clearly be unnecessary.
    For older infants and toddlers, alternative criteria covering 
disruption in communication as measured by their capacity to use simple 
verbal and nonverbal structures to communicate basic needs are provided.
    c. Social function. Social function in older infants and toddlers is 
measured in terms of the development of relatedness to people (e.g., 
bonding and stranger anxiety) and attachment to animate or inanimate 
objects. Criteria are provided that use standard social maturity scales 
or alternative criteria that describe marked impairment in 
socialization.
    2. Preschool children (age 3 to attainment of age 6). For the age 
groups including preschool children through adolescence, the functional 
areas used to measure severity are: (a) Cognitive/communicative 
function, (b) social function, (c) personal function, and (d) 
deficiencies of concentration, persistence, or pace resulting in 
frequent failure to complete tasks in a timely manner. After 36 months, 
motor function is no longer felt to be a primary determinant of mental 
function, although, of course, any motor abnormalities should be 
documented and evaluated.
    a. Cognitive/communicative function. In the preschool years and 
beyond, cognitive function can be measured by standardized tests of 
intelligence, although the appropriate instrument may vary with age. A 
primary criterion for limited cognitive function is a valid verbal, 
performance, or full scale IQ of

[[Page 509]]

70 or less. The listings also provide alternative criteria, consisting 
of tests of language development or bizarre speech patterns.
    b. Social function. Social functioning refers to a child's capacity 
to form and maintain relationships with parents, other adults, and 
peers. Social functioning includes the ability to get along with others 
(e.g., family members, neighborhood friends, classmates, teachers). 
Impaired social functioning may be caused by inappropriate externalized 
actions (e.g., running away, physical aggression--but not self-injurious 
actions, which are evaluated in the personal area of functioning), or 
inappropriate internalized actions (e.g., social isolation, avoidance of 
interpersonal activities, mutism). Its severity must be documented in 
terms of intensity, frequency, and duration, and shown to be beyond what 
might be reasonably expected for age. Strength in social functioning may 
be documented by such things as the child's ability to respond to and 
initiate social interaction with others, to sustain relationships, and 
to participate in group activities. Cooperative behaviors, consideration 
for others, awareness of others' feelings, and social maturity, 
appropriate to a child's age, also need to be considered. Social 
functioning in play and school may involve interactions with adults, 
including responding appropriately to persons in authority (e.g., 
teachers, coaches) or cooperative behaviors involving other children. 
Social functioning is observed not only at home but also in preschool 
programs.
    c. Personal function. Personal functioning in preschool children 
pertains to self-care; i.e., personal needs, health, and safety 
(feeding, dressing, toileting, bathing; maintaining personal hygiene, 
proper nutrition, sleep, health habits; adhering to medication or 
therapy regimens; following safety precautions). Development of self-
care skills is measured in terms of the child's increasing ability to 
help himself/herself and to cooperate with others in taking care of 
these needs. Impaired ability in this area is manifested by failure to 
develop such skills, failure to use them, or self-injurious actions. 
This function may be documented by a standardized test of adaptive 
behavior or by a careful description of the full range of self-care 
activities. These activities are often observed not only at home but 
also in preschool programs.
    d. Concentration, persistence, or pace. This function may be 
measured through observations of the child in the course of standardized 
testing and in the course of play.
    3. Primary school children (age 6 to attainment of age 12). The 
measures of function here are similar to those for preschool-age 
children except that the test instruments may change and the capacity to 
function in the school setting is supplemental information. Standardized 
measures of academic achievement, e.g., Wide Range Achievement Test-
Revised, Peabody Individual Achievement Test, etc., may be helpful in 
assessing cognitive impairment. Problems in social functioning, 
especially in the area of peer relationships, are often observed 
firsthand by teachers and school nurses. As described in 112.00D, 
Documentation, school records are an excellent source of information 
concerning function and standardized testing and should always be sought 
for school-age children.
    As it applies to primary school children, the intent of the 
functional criterion described in paragraph B2d, i.e., deficiencies of 
concentration, persistence, or pace resulting in failure to complete 
tasks in a timely manner, is to identify the child who cannot adequately 
function in primary school because of a mental impairment. Although 
grades and the need for special education placement are relevant factors 
which must be considered in reaching a decision under paragraph B2d, 
they are not conclusive. There is too much variability from school 
district to school district in the expected level of grading and in the 
criteria for special education placement to justify reliance solely on 
these factors.
    4. Adolescents (age 12 to attainment of age 18). Functional criteria 
parallel to those for primary school children (cognitive/communicative; 
social; personal; and concentration, persistence, or pace) are the 
measures of severity for this age group. Testing instruments appropriate 
to adolescents should be used where indicated. Comparable findings of 
disruption of social function must consider the capacity to form 
appropriate, stable, and lasting relationships. If information is 
available about cooperative working relationships in school or at part-
time or full-time work, or about the ability to work as a member of a 
group, it should be considered when assessing the child's social 
functioning. Markedly impoverished social contact, isolation, 
withdrawal, and inappropriate or bizarre behavior under the stress of 
socializing with others also constitute comparable findings. (Note that 
self-injurious actions are evaluated in the personal area of 
functioning.)
    a. Personal functioning in adolescents pertains to self-care. It is 
measured in the same terms as for younger children, the focus, however, 
being on the adolescent's ability to take care of his or her own 
personal needs, health, and safety without assistance. Impaired ability 
in this area is manifested by failure to take care of these needs or by 
self-injurious actions. This function may be documented by a 
standardized test of adaptive behavior or by careful descriptions of the 
full range of self-care activities.
    b. In adolescents, the intent of the functional criterion described 
in paragraph B2d is

[[Page 510]]

the same as in primary school children, However, other evidence of this 
functional impairment may also be available, such as from evidence of 
the child's performance in work or work-like settings.
    D. Documentation: 1. The presence of a mental disorder in a child 
must be documented on the basis of reports from acceptable sources of 
medical evidence. See Sec. Sec. 404.1513 and 416.913. Descriptions of 
functional limitations may be available from these sources, either in 
the form of standardized test results or in other medical findings 
supplied by the sources, or both. (Medical findings consist of symptoms, 
signs, and laboratory findings.) Whenever possible, a medical source's 
findings should reflect the medical source's consideration of 
information from parents or other concerned individuals who are aware of 
the child's activities of daily living, social functioning, and ability 
to adapt to different settings and expectations, as well as the medical 
source's findings and observations on examination, consistent with 
standard clinical practice. As necessary, information from nonmedical 
sources, such as parents, should also be used to supplement the record 
of the child's functioning to establish the consistency of the medical 
evidence and longitudinality of impairment severity.
    2. For some newborn and younger infants, it may be very difficult to 
document the presence or severity of a mental disorder. Therefore, with 
the exception of some genetic diseases and catastrophic congenital 
anomalies, it may be necessary to defer making a disability decision 
until the child attains age 3 months of age in order to obtain adequate 
observation of behavior or affect. See, also, 110.00 of this part. This 
period could be extended in cases of premature infants depending on the 
degree of prematurity and the adequacy of documentation of their 
developmental and emotional status.
    3. For infants and toddlers, programs of early intervention 
involving occupational, physical, and speech therapists, nurses, social 
workers, and special educators, are a rich source of data. They can 
provide the developmental milestone evaluations and records on the fine 
and gross motor functioning of these children. This information is 
valuable and can complement the medical examination by a physician or 
psychologist. A report of an interdisciplinary team that contains the 
evaluation and signature of an acceptable medical source is considered 
acceptable medical evidence rather than supplemental data.
    4. In children with mental disorders, particularly those requiring 
special placement, school records are a rich source of data, and the 
required reevaluations at specified time periods can provide the 
longitudinal data needed to trace impairment progression over time.
    5. In some cases where the treating sources lack expertise in 
dealing with mental disorders of children, it may be necessary to obtain 
evidence from a psychiatrist, psychologist, or pediatrician with 
experience and skill in the diagnosis and treatment of mental disorders 
as they appear in children. In these cases, however, every reasonable 
effort must be made to obtain the records of the treating sources, since 
these records will help establish a longitudinal picture that cannot be 
established through a single purchased examination.
    6. Reference to a ``standardized psychological test'' indicates the 
use of a psychological test measure that has appropriate validity, 
reliability, and norms, and is individually administered by a qualified 
specialist. By ``qualified,'' we mean the specialist must be currently 
licensed or certified in the State to administer, score, and interpret 
psychological tests and have the training and experience to perform the 
test.
    7. Psychological tests are best considered as standardized sets of 
tasks or questions designed to elicit a range of responses. 
Psychological testing can also provide other useful data, such as the 
specialist's observations regarding the child's ability to sustain 
attention and concentration, relate appropriately to the specialist, and 
perform tasks independently (without prompts or reminders). Therefore, a 
report of test results should include both the objective data and any 
clinical observations.
    8. The salient characteristics of a good test are: (1) Validity, 
i.e., the test measures what it is supposed to measure; (2) reliability, 
i.e., the consistency of results obtained over time with the same test 
and the same individual; (3) appropriate normative data, i.e., 
individual test scores can be compared to test data from other 
individuals or groups of a similar nature, representative of that 
population; and (4) wide scope of measurement, i.e., the test should 
measure a broad range of facets/aspects of the domain being assessed. In 
considering the validity of a test result, we should note and resolve 
any discrepancies between formal test results and the child's customary 
behavior and daily activities.
    9. Identical IQ scores obtained from different tests do not always 
reflect a similar degree of intellectual functioning. The IQ scores in 
listing 112.05 reflect values from tests of general intelligence that 
have a mean of 100 and a standard deviation of 15, e.g., the Wechsler 
series. IQs obtained from standardized tests that deviate significantly 
from a mean of 100 and standard deviation of 15 require conversion to a 
percentile rank so that the actual degree of limitation reflected by the 
IQ scores can be determined. In cases where more than one IQ is 
customarily derived from the test administered, e.g., where verbal, 
performance, and full scale IQs are provided in the Wechsler series, the 
lowest of

[[Page 511]]

these is used in conjunction with listing 112.05.
    10. IQ test results must also be sufficiently current for accurate 
assessment under 112.05. Generally, the results of IQ tests tend to 
stabilize by the age of 16. Therefore, IQ test results obtained at age 
16 or older should be viewed as a valid indication of the child's 
current status, provided they are compatible with the child's current 
behavior. IQ test results obtained between ages 7 and 16 should be 
considered current for 4 years when the tested IQ is less than 40, and 
for 2 years when the IQ is 40 or above. IQ test results obtained before 
age 7 are current for 2 years if the tested IQ is less than 40 and 1 
year if at 40 or above.
    11. Standardized intelligence test results are essential to the 
adjudication of all cases of mental retardation that are not covered 
under the provisions of listings 112.05A, 112.05B, and 112.05F. Listings 
112.05A, 112.05B, and 112.05F may be the bases for adjudicating cases 
where the results of standardized intelligence tests are unavailable, 
e.g., where the child's young age or condition precludes formal 
standardized testing.
    12. In conjunction with clinical examinations, sources may report 
the results of screening tests, i.e., tests used for gross determination 
of level of functioning. Screening instruments may be useful in 
uncovering potentially serious impairments, but often must be 
supplemented by other data. However, in some cases the results of 
screening tests may show such obvious abnormalities that further testing 
will clearly be unnecessary.
    13. Where reference is made to developmental milestones, this is 
defined as the attainment of particular mental or motor skills at an 
age-appropriate level, i.e., the skills achieved by an infant or toddler 
sequentially and within a given time period in the motor and 
manipulative areas, in general understanding and social behavior, in 
self-feeding, dressing, and toilet training, and in language. This is 
sometimes expressed as a developmental quotient (DQ), the relation 
between developmental age and chronological age as determined by 
specific standardized measurements and observations. Such tests include, 
but are not limited to, the Cattell Infant Intelligence Scale, the 
Bayley Scales of Infant Development, and the Revised Stanford-Binet. 
Formal tests of the attainment of developmental milestones are generally 
used in the clinical setting for determination of the developmental 
status of infants and toddlers.
    14. Formal psychological tests of cognitive functioning are 
generally in use for preschool children, for primary school children, 
and for adolescents except for those instances noted below.
    15. Generally, it is preferable to use IQ measures that are wide in 
scope and include items that test both verbal and performance abilities. 
However, in special circumstances, such as the assessment of children 
with sensory, motor, or communication abnormalities, or those whose 
culture and background are not principally English-speaking, measures 
such as the Test of Nonverbal Intelligence, Third Edition (TONI-3), 
Leiter International Performance Scale-Revised (Leiter-R), or Peabody 
Picture Vocabulary Test--Third Edition (PPVT-III) may be used.
    16. We may consider exceptions for formal standardized psychological 
testing when an individual qualified by training and experience to 
perform such an evaluation is not available, or in cases where 
appropriate standardized measures for the child's social, linguistic, 
and cultural background are not available. In these cases, the best 
indicator of severity is often the level of adaptive functioning and how 
the child performs activities of daily living and social functioning.
    17. Comprehensive neuropsychological examinations may be used to 
establish the existence and extent of compromise of brain function, 
particularly in cases involving organic mental disorders. Normally these 
examinations include assessment of cerebral dominance, basic sensation 
and perception, motor speed and coordination, attention and 
concentration, visual-motor function, memory across verbal and visual 
modalities, receptive and expressive speech, higher-order linguistic 
operations, problem-solving, abstraction ability, and general 
intelligence. In addition, there should be a clinical interview geared 
toward evaluating pathological features known to occur frequently in 
neurological disease and trauma, e.g., emotional lability, abnormality 
of mood, impaired impulse control, passivity and apathy, or 
inappropriate social behavior. The specialist performing the examination 
may administer one of the commercially available comprehensive 
neuropsychological batteries, such as the Luria-Nebraska or Halstead-
Reitan, or a battery of tests selected as relevant to the suspected 
brain dysfunction. The specialist performing the examination must be 
properly trained in this area of neuroscience.
    E. Effect of Hospitalization or Residential Placement: As with 
adults, children with mental disorders may be placed in a variety of 
structured settings outside the home as part of their treatment. Such 
settings include, but are not limited to, psychiatric hospitals, 
developmental disabilities facilities, residential treatment centers and 
schools, community-based group homes, and workshop facilities. The 
reduced mental demands of such structured settings may attenuate overt 
symptomatology and superficially make the child's level of adaptive 
functioning appear better than it is. Therefore, the capacity of the 
child to function

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outside highly structured settings must be considered in evaluating 
impairment severity. This is done by determining the degree to which the 
child can function (based upon age-appropriate expectations) 
independently, appropriately, effectively, and on a sustained basis 
outside the highly structured setting.
    On the other hand, there may be a variety of causes for placement of 
a child in a structured setting which may or may not be directly related 
to impairment severity and functional ability. Placement in a structured 
setting in and of itself does not equate with a finding of disability. 
The severity of the impairment must be compared with the requirements of 
the appropriate listing.
    F. Effects of Medication: Attention must be given to the effect of 
medication on the child's signs, symptoms, and ability to function. 
While drugs used to modify psychological functions and mental states may 
control certain primary manifestations of a mental disorder, e.g., 
hallucinations, impaired attention, restlessness, or hyperactivity, such 
treatment may not affect all functional limitations imposed by the 
mental disorder. In cases where overt symptomatology is attenuated by 
the use of such drugs, particular attention must be focused on the 
functional limitations that may persist. These functional limitations 
must be considered in assessing impairment severity.
    Psychotropic medicines used in the treatment of some mental 
illnesses may cause drowsiness, blunted affect, or other side effects 
involving other body systems. Such side effects must be considered in 
evaluating overall impairment severity.
    112.01 Category of Impairments, Mental
    112.02 Organic Mental Disorders: Abnormalities in perception, 
cognition, affect, or behavior associated with dysfunction of the brain. 
The history and physical examination or laboratory tests, including 
psychological or neuropsychological tests, demonstrate or support the 
presence of an organic factor judged to be etiologically related to the 
abnormal mental state and associated deficit or loss of specific 
cognitive abilities, or affective changes, or loss of previously 
acquired functional abilities.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Medically documented persistence of at least one of the 
following:
    1. Developmental arrest, delay or regression; or
    2. Disorientation to time and place; or
    3. Memory impairment, either short-term (inability to learn new 
information), intermediate, or long-term (inability to remember 
information that was known sometime in the past); or
    4. Perceptual or thinking disturbance (e.g., hallucinations, 
delusions, illusions, or paranoid thinking); or
    5. Disturbance in personality (e.g., apathy, hostility); or
    6. Disturbance in mood (e.g., mania, depression); or
    7. Emotional lability (e.g., sudden crying); or
    8. Impairment of impulse control (e.g., disinhibited social 
behavior, explosive temper outbursts); or
    9. Impairment of cognitive function, as measured by clinically 
timely standardized psychological testing; or
    10. Disturbance of concentration, attention, or judgment;

AND

    B. Select the appropriate age group to evaluate the severity of the 
impairment:
    1. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in at least one of the following:
    a. Gross or fine motor development at a level generally acquired by 
children no more than one-half the child's chronological age, documented 
by:
    (1) An appropriate standardized test; or
    (2) Other medical findings (see 112.00C); or
    b. Cognitive/communicative function at a level generally acquired by 
children no more than one-half the child's chronological age, documented 
by:
    (1) An appropriate standardized test; or
    (2) Other medical findings of equivalent cognitive/communicative 
abnormality, such as the inability to use simple verbal or nonverbal 
behavior to communicate basic needs or concepts; or
    c. Social function at a level generally acquired by children no more 
than one-half the child's chronological age, documented by:
    (1) An appropriate standardized test; or
    (2) Other medical findings of an equivalent abnormality of social 
functioning, exemplified by serious inability to achieve age-appropriate 
autonomy as manifested by excessive clinging or extreme separation 
anxiety; or
    d. Attainment of development or function generally acquired by 
children no more than two-thirds of the child's chronological age in two 
or more areas covered by a., b., or c., as measured by an appropriate 
standardized test or other appropriate medical findings.
    2. For children (age 3 to attainment of age 18), resulting in at 
least two of the following:
    a. Marked impairment in age-appropriate cognitive/communicative 
function, documented by medical findings (including consideration of 
historical and other information from parents or other individuals who 
have knowledge of the child, when such information is needed and 
available) and including, if necessary, the results of appropriate 
standardized psychlogical tests, or for children under age 6, by 
appropriate tests of language and communication; or

[[Page 513]]

    b. Marked impairment in age-appropriate social functioning, 
documented by history and medical findings (including consideration of 
information from parents or other individuals who have knowledge of the 
child, when such information is needed and available) and including, if 
necessary, the results of appropriate standardized tests; or
    c. Marked impairment in age-appropriate personal functioning, 
documented by history and medical findings (including consideration of 
information from parents or other individuals who have knowledge of the 
child, when such information is needed and available) and including, if 
necessary, appropriate standardized tests; or
    d. Marked difficulties in maintaining concentration, persistence, or 
pace.
    112.03 Schizophrenic, Delusional (Paranoid), Schizoaffective, and 
Other Psychotic Disorders: Onset of psychotic features, characterized by 
a marked disturbance of thinking, feeling, and behavior, with 
deterioration from a previous level of functioning or failure to achieve 
the expected level of social functioning.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Medically documented persistence, for at least 6 months, either 
continuous or intermittent, of one or more of the following:
    1. Delusions or hallucinations; or
    2. Catatonic, bizarre, or other grossly disorganized behavior; or
    3. Incoherence, loosening of associations, illogical thinking, or 
poverty of content of speech; or
    4. Flat, blunt, or inappropriate affect; or
    5. Emotional withdrawal, apathy, or isolation;

AND

    B. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in at least one of the appropriate age-group criteria in 
paragraph B1 of 112.02; or, for children (age 3 to attainment of age 
18), resulting in at least two of the appropriate age-group criteria in 
paragraph B2 of 112.02.
    112.04 Mood Disorders: Characterized by a disturbance of mood 
(referring to a prolonged emotion that colors the whole psychic life, 
generally involving either depression or elation), accompanied by a full 
or partial manic or depressive syndrome.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Medically documented persistence, either continuous or 
intermittent, of one of the following:
    1. Major depressive syndrome, characterized by at least five of the 
following, which must include either depressed or irritable mood or 
markedly diminished interest or pleasure:
    a. Depressed or irritable mood; or
    b. Markedly diminished interest or pleasure in almost all 
activities; or
    c. Appetite or weight increase or decrease, or failure to make 
expected weight gains; or
    d. Sleep disturbance; or
    e. Psychomotor agitation or retardation; or
    f. Fatigue or loss of energy; or
    g. Feelings of worthlessness or guilt; or
    h. Difficulty thinking or concentrating; or
    i. Suicidal thoughts or acts; or
    j. Hallucinations, delusions, or paranoid thinking;

OR

    2. Manic syndrome, characterized by elevated, expansive, or 
irritable mood, and at least three of the following:
    a. Increased activity or psychomotor agitation; or
    b. Increased talkativeness or pressure of speech; or
    c. Flight of ideas or subjectively experienced racing thoughts; or
    d. Inflated self-esteem or grandiosity; or
    e. Decreased need for sleep; or
    f. Easy distractibility; or
    g. Involvement in activities that have a high potential of painful 
consequences which are not recognized; or
    h. Hallucinations, delusions, or paranoid thinking;

OR

    3. Bipolar or cyclothymic syndrome with a history of episodic 
periods manifested by the full symptomatic picture of both manic and 
depressive syndromes (and currently or most recently characterized by 
the full or partial symptomatic picture of either or both syndromes);

AND

    B. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in at least one of the appropriate age-group criteria in 
paragraph B1 of 112.02; or, for children (age 3 to attainment of age 
18), resulting in at least two of the appropriate age-group criteria in 
paragraph B2 of 112.02.
    112.05 Mental Retardation: Characterized by significantly subaverage 
general intellectual functioning with deficits in adaptive functioning.
    The required level of severity for this disorder is met when the 
requirements in A, B, C, D, E, or F are satisfied.
    A. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in at least one of the appropriate age-group criteria in 
paragraph B1 of 112.02; or, for children (age 3 to attainment of age 
18), resulting in at least two of the appropriate age-group criteria in 
paragraph B2 of 112.02;

OR

    B. Mental incapacity evidenced by dependence upon others for 
personal needs (grossly

[[Page 514]]

in excess of age-appropriate dependence) and inability to follow 
directions such that the use of standardized measures of intellectual 
functioning is precluded;

OR

    C. A valid verbal, performance, or full scale IQ of 59 or less;

OR

    D. A valid verbal, performance, or full scale IQ of 60 through 70 
and a physical or other mental impairment imposing an additional and 
significant limitation of function;

OR

    E. A valid verbal, performance, or full scale IQ of 60 through 70 
and:
    1. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in attainment of development or function generally acquired by 
children no more than two-thirds of the child's chronological age in 
either paragraphs B1a or B1c of 112.02; or
    2. For children (age 3 to attainment of age 18), resulting in at 
least one of paragraphs B2b or B2c or B2d of 112.02;

OR

    F. Select the appropriate age group:
    1. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in attainment of development or function generally acquired by 
children no more than two-thirds of the child's chronological age in 
paragraph B1b of 112.02, and a physical or other mental impairment 
imposing an additional and significant limitation of function;
OR
    2. For children (age 3 to attainment of age 18), resulting in the 
satisfaction of 112.02B2a, and a physical or other mental impairment 
imposing an additional and significant limitation of function.
    112.06 Anxiety Disorders: In these disorders, anxiety is either the 
predominant disturbance or is experienced if the individual attempts to 
master symptoms, e.g., confronting the dreaded object or situation in a 
phobic disorder, attempting to go to school in a separation anxiety 
disorder, resisting the obsessions or compulsions in an obsessive 
compulsive disorder, or confronting strangers or peers in avoidant 
disorders.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Medically documented findings of at least one of the following:
    1. Excessive anxiety manifested when the child is separated, or 
separation is threatened, from a parent or parent surrogate; or
    2. Excessive and persistent avoidance of strangers; or
    3. Persistent unrealistic or excessive anxiety and worry 
(apprehensive expectation), accompanied by motor tension, autonomic 
hyperactivity, or vigilance and scanning; or
    4. A persistent irrational fear of a specific object, activity, or 
situation which results in a compelling desire to avoid the dreaded 
object, activity, or situation; or
    5. Recurrent severe panic attacks, manifested by a sudden 
unpredictable onset of intense apprehension, fear, or terror, often with 
a sense of impending doom, occurring on the average of at least once a 
week; or
    6. Recurrent obsessions or compulsions which are a source of marked 
distress; or
    7. Recurrent and intrusive recollections of a traumatic experience, 
including dreams, which are a source of marked distress;

AND

    B. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in at least one of the appropriate age-group criteria in 
paragraph B1 of 112.02; or, for children (age 3 to attainment of age 
18), resulting in at least two of the appropriate age-group criteria in 
paragraph B2 of 112.02.
    112.07 Somatoform, Eating, and Tic Disorders: Manifested by physical 
symptoms for which there are no demonstrable organic findings or known 
physiologic mechanisms; or eating or tic disorders with physical 
manifestations.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Medically documented findings of one of the following:
    1. An unrealistic fear and perception of fatness despite being 
underweight, and persistent refusal to maintain a body weight which is 
greater than 85 percent of the average weight for height and age, as 
shown in the most recent edition of the Nelson Textbook of Pediatrics, 
Richard E. Behrman and Victor C. Vaughan, III, editors, Philadelphia: W. 
B. Saunders Company; or
    2. Persistent and recurrent involuntary, repetitive, rapid, 
purposeless motor movements affecting multiple muscle groups with 
multiple vocal tics; or
    3. Persistent nonorganic disturbance of one of the following:
    a. Vision; or
    b. Speech; or
    c. Hearing; or
    d. Use of a limb; or
    e. Movement and its control (e.g., coordination disturbance, 
psychogenic seizures); or
    f. Sensation (diminished or heightened); or
    g. Digestion or elimination; or
    4. Preoccupation with a belief that one has a serious disease or 
injury;

AND

    B. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in at least one of the appropriate age-group criteria in 
paragraph B1 of 112.02; or, for children (age 3 to attainment of age 
18), resulting in at least two of the appropriate age-group criteria in 
paragraph B2 of 112.02.

[[Page 515]]

    112.08 Personality Disorders: Manifested by pervasive, inflexible, 
and maladaptive personality traits, which are typical of the child's 
long-term functioning and not limited to discrete episodes of illness.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Deeply ingrained, maladaptive patterns of behavior, associated 
with one of the following:
    1. Seclusiveness or autistic thinking; or
    2. Pathologically inappropriate suspiciousness or hostility; or
    3. Oddities of thought, perception, speech, and behavior; or
    4. Persistent disturbances of mood or affect; or
    5. Pathological dependence, passivity, or aggressiveness; or
    6. Intense and unstable interpersonal relationships and impulsive 
and exploitative behavior; or
    7. Pathological perfectionism and inflexibility;

AND

    B. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in at least one of the appropriate age-group criteria in 
paragraph B1 of 112.02; or, for children (age 3 to attainment of age 
18), resulting in at least two of the appropriate age-group criteria in 
paragraph B2 of 112.02.
    112.09 Psychoactive Substance Dependence Disorders: Manifested by a 
cluster of cognitive, behavioral, and physiologic symptoms that indicate 
impaired control of psychoactive substance use with continued use of the 
substance despite adverse consequences.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Medically documented findings of at least four of the following:
    1. Substance taken in larger amounts or over a longer period than 
intended and a great deal of time is spent in recovering from its 
effects; or
    2. Two or more unsuccessful efforts to cut down or control use; or
    3. Frequent intoxication or withdrawal symptoms interfering with 
major role obligations; or
    4. Continued use despite persistent or recurring social, 
psychological, or physical problems; or
    5. Tolerance, as characterized by the requirement for markedly 
increased amounts of substance in order to achieve intoxication; or
    6. Substance taken to relieve or avoid withdrawal symptoms;

AND

    B. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in at least one of the appropriate age-group criteria in 
paragraph B1 of 112.02; or, for children (age 3 to attainment of age 
18), resulting in at least two of the appropriate age-group criteria in 
paragraph B2 of 112.02.
    112.10 Autistic Disorder and Other Pervasive Developmental 
Disorders: Characterized by qualitative deficits in the development of 
reciprocal social interaction, in the development of verbal and 
nonverbal communication skills, and in imaginative activity. Often, 
there is a markedly restricted repertoire of activities and interests, 
which frequently are stereotyped and repetitive.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Medically documented findings of the following:
    1. For autistic disorder, all of the following:
    a. Qualitative deficits in the development of reciprocal social 
interaction; and
    b. Qualitative deficits in verbal and nonverbal communication and in 
imaginative activity; and
    c. Markedly restricted repertoire of activities and interests;

OR

    2. For other pervasive developmental disorders, both of the 
following:
    a. Qualitative deficits in the development of reciprocal social 
interaction; and
    b. Qualitative deficits in verbal and nonverbal communication and in 
imaginative activity;

AND

    B. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in at least one of the appropriate age-group criteria in 
paragraph B1 of 112.02; or, for children (age 3 to attainment of age 
18), resulting in at least two of the appropriate age-group criteria in 
paragraphs B2 of 112.02.
    112.11 Attention Deficit Hyperactivity Disorder: Manifested by 
developmentally inappropriate degrees of inattention, impulsiveness, and 
hyperactivity.
    The required level of severity for these disorders is met when the 
requirements in both A and B are satisfied.
    A. Medically documented findings of all three of the following:
    1. Marked inattention; and
    2. Marked impulsiveness; and
    3. Marked hyperactivity;

AND

    B. For older infants and toddlers (age 1 to attainment of age 3), 
resulting in at least one of the appropriate age-group criteria in 
paragraph B1 of 112.02; or, for children (age 3 to attainment of age 
18), resulting in at least two of the appropriate age-group criteria in 
paragraph B2 of 112.02.

[[Page 516]]

    112.12 Developmental and Emotional Disorders of Newborn and Younger 
Infants (Birth to attainment of age 1): Developmental or emotional 
disorders of infancy are evidenced by a deficit or lag in the areas of 
motor, cognitive/communicative, or social functioning. These disorders 
may be related either to organic or to functional factors or to a 
combination of these factors.
    The required level of severity for these disorders is met when the 
requirements of A, B, C, D, or E are satisfied.
    A. Cognitive/communicative functioning generally acquired by 
children no more than one-half the child's chronological age, as 
documented by appropriate medical findings (e.g., in infants 0-6 months, 
markedly diminished variation in the production or imitation of sounds 
and severe feeding abnormality, such as problems with sucking 
swallowing, or chewing) including, if necessary, a standardized test;

OR

    B. Motor development generally acquired by children no more than 
one-half the child's chronological age, documented by appropriate 
medical findings, including if necessary, a standardized test;

OR

    C. Apathy, over-excitability, or fearfulness, demonstrated by an 
absent or grossly excessive response to one of the following:
    1. Visual stimulation; or
    2. Auditory stimulation; or
    3. Tactile stimulation;

OR

    D. Failure to sustain social interaction on an ongoing, reciprocal 
basis as evidenced by:
    1. Inability by 6 months to participate in vocal, visual, and 
motoric exchanges (including facial expressions); or
    2. Failure by 9 months to communicate basic emotional responses, 
such as cuddling or exhibiting protest or anger; or
    3. Failure to attend to the caregiver's voice or face or to explore 
an inanimate object for a period of time appropriate to the infant's 
age;

OR

    E. Attainment of development or function generally acquired by 
children no more than two-thirds of the child's chronological age in two 
or more areas (i.e., cognitive/communicative, motor, and social), 
documented by appropriate medical findings, including if necessary, 
standardized testing.

                  113.00 Neoplastic Diseases, Malignant

    A. Introduction. Determination of disability in the growing and 
developing child with a malignant neoplastic disease is based upon the 
combined effects of:
    1. The pathophysiology, histology, and natural history of the tumor; 
and
    2. The effects of the currently employed aggressive multimodal 
therapeutic regimens.
    Combinations of surgery, radiation, and chemotherapy or prolonged 
therapeutic schedules impart significant additional morbidity to the 
child during the period of greatest risk from the tumor itself. This 
period of highest risk and greatest therapeutically-induced morbidity 
defines the limits of disability for most of childhood neoplastic 
disease.
    B. Documentation. The diagnosis of neoplasm should be established on 
the basis of symptoms, signs, and laboratory findings. The site of the 
primary, recurrent, and metastatic lesion must be specified in all cases 
of malignant neoplastic diseases. If an operative procedure has been 
performed, the evidence should include a copy of the operative note and 
the report of the gross and microscopic examination of the surgical 
specimen, along with all pertinent laboratory reports or reports from 
appropriate medically acceptable imaging. Medically acceptable imaging 
includes, but is not limited to, x-ray imaging, computerized axial 
tomography (CAT scan) or magnetic resonance imaging (MRI), with or 
without contrast material, myelography, and radionuclear bone scans. 
``Appropriate'' means that the technique used is the proper one to 
support the evaluation and diagnosis of the impairment. The evidence 
should also include a recent report directed especially at describing 
whether there is evidence of local or regional recurrence, soft part or 
skeletal metastases, and significant post therapeutic residuals.
    C. Malignant solid tumors, as listed under 113.03, include the 
histiocytosis syndromes except for solitary eosinophilic granuloma. 
Thus, 113.03 should not be used for evaluating brain tumors (see 111.05) 
or thyroid tumors, which must be evaluated on the basis of whether they 
are controlled by prescribed therapy.
    D. Duration of disability from malignant neoplastic tumors is 
included in 113.02 and 113.03. Following the time periods designated in 
these sections, a documented diagnosis itself is no longer sufficient to 
establish a severe impairment. The severity of a remaining impairment 
must be evaluated on the basis of the medical evidence.

     113.01 Category of Impairments, Neoplastic Diseases--Malignant

    113.02 Lymphoreticular malignant neoplasms.
    A. Hodgkin's disease with progressive disease not controlled by 
prescribed therapy; or
    B. Non-Hodgkin's lymphoma. Consider under a disability:
    1. For 2\1/2\ years from time of initial diagnosis; or
    2. For 2\1/2\ years from time of recurrence of active disease.
    113.03 Malignant solid tumors. Consider under a diability:

[[Page 517]]

    A. For 2 years from the time of initial diagnosis; or
    B. For 2 years from the time of recurrence of active disease.
    113.04 Neuroblastoma. With one of the following:
    A. Extension across the midline; or
    B. Distant metastases; or
    C. Recurrence; or
    D. Onset at age 1 year or older.
    113.05 Retinoblastoma. With one of the following:
    A. Bilateral involvement; or
    B. Metastases; or
    C. Extension beyond the orbit; or
    D. Recurrence.

                          114.00 Immune System

    A. Listed disorders include impairments involving deficiency of one 
or more components of the immune system (i.e., antibody-producing B 
cells; a number of different types of cells associated with cell-
mediated immunity including T-lymphocytes, macrophages and monocytes; 
and components of the complement system).
    B. Dysregulation of the immune system may result in the development 
of a connective tissue disorder. Connective tissue disorders include 
several chronic multisystem disorders that differ in their clinical 
manifestation, course, and outcome. These disorders are described in 
part A, 14.00B; inflammatory arthritis is also described in 114.00E.
    Some of the features of connective tissue disorders in children may 
differ from the features in adults. When the clinical features are the 
same as that seen in adults, the principles and concepts in part A, 
14.00B apply.
    The documentation needed to establish the existence of a connective 
tissue disorder is medical history, physical examination, selected 
laboratory studies, appropriate medically acceptable imaging, and, in 
some instances, tissue biopsy. Medically acceptable imaging includes, 
but is not limited to, x-ray imaging, computerized axial tomography (CAT 
scan) or magnetic resonance imaging (MRI), with or without contrast 
material, myelography, and radionuclear bone scans. ``Appropriate'' 
means that the technique used is the proper one to support the 
evaluation and diagnosis of the impairment. However, the Social Security 
Administration will not purchase diagnostic tests or procedures that may 
involve significant risk, such as biopsies or angiograms. Generally, the 
existing medical evidence will contain this information.
    In addition to the limitations caused by the connective tissue 
disorder per se, the chronic adverse effects of treatment (e.g., 
corticosteroid-related ischemic necrosis of bone) may result in 
functional loss.
    A longitudinal clinical record of at least 3 months demonstrating 
active disease despite prescribed treatment during this period with the 
expectation that the disease will remain active for 12 months is 
necessary for assessment of severity and duration of impairment.
    In children the impairment may affect growth, development, 
attainment of age-appropriate skills, and performance of age-appropriate 
activities. The limitations may be the result of serious loss of 
function because of disease affecting a single organ or body system, or 
lesser degrees of functional loss because of disease affecting two or 
more organs/body systems associated with significant constitutional 
symptoms and signs of severe fatigue, fever, malaise, weight loss, and 
joint pain and stiffness. We use the term ``severe'' in these listings 
to describe medical severity; the term does not have the same meaning as 
it does when we use it in connection with a finding at the second step 
of the sequential evaluation processes in Sec. Sec. 404.1520, 416.920, 
and 416.924.
    C. Allergies, growth impairments and Kawasaki disease.
    1. Allergic disorders (e.g., asthma or atopic dermatitis) are 
discussed and evaluated under the appropriate listing of the affected 
body system.
    2. If growth is affected by the disorder or its treatment by 
immunosuppressive drugs, 100.00, Growth impairment, may apply. Children 
may have growth impairment as a result of the inflammatory arthritides 
because of the diseases' potential effects on the immature skeleton, 
open epiphyses, and young cartilage and bone. In such situations, the 
growth impairment should be evaluated under 100.00ff.
    3. Kawasaki disease, also known as mucocutaneous lymph node 
syndrome, is characterized by multisystem manifestations, but 
significant functional impairment is usually due to disease of the 
coronary arteries, which should be evaluated under 104.00.
    D. Human immunodeficiency virus (HIV) infection.
    1. HIV infection is caused by a specific retrovirus and may be 
characterized by susceptibility to one or more opportunistic diseases, 
cancers, or other conditions, as described in 114.08. Any child with HIV 
infection, including one with a diagnosis of acquired immunodeficiency 
syndrome (AIDS), may be found disabled under this listing if his or her 
impairment meets any of the criteria in 114.08 or is of equivalent 
severity to an impairment in 114.08.
    2. Definitions. In 114.08, the terms ``resistant to treatment,'' 
``recurrent,'' and ``disseminated'' have the same general meaning as 
used by the medical community. The precise meaning of any of these terms 
will depend upon the specific disease or condition in question, the body 
system affected, the

[[Page 518]]

usual course of the disorder and its treatment, and the other 
circumstances of the case.
    ``Resistant to treatment'' means that a condition did not respond 
adequately to an appropriate course of treatment. Whether a response is 
adequate, or a course of treatment appropriate, will depend on the facts 
of the particular case.
    ``Recurrent'' means that a condition that responded adequately to an 
appropriate course of treatment has returned after a period of remission 
or regression. The extent of response (or remission) and the time 
periods involved will depend on the facts of the particular case.
    ``Disseminated'' means that a condition is spread widely over a 
considerable area or body system(s). The type and extent of the spread 
will depend on the specific disease.
    3. Documentation of HIV infection in children. The medical evidence 
must include documentation of HIV infection. Documentation may be by 
laboratory evidence or by other generally acceptable methods consistent 
with the prevailing state of medical knowledge and clinical practice.
    a. Documentation of HIV infection in children by definitive 
diagnosis. A definitive diagnosis of HIV infection in children is 
documented by one or more of the following laboratory tests:
    i. For a child 24 months of age or older, a serum specimen that 
contains HIV antibodies. HIV antibodies are usually detected by a 
screening test. The most commonly used screening test is the ELISA. 
Although this test is highly sensitive, it may yield false positive 
results. Therefore, positive results from an ELISA must be confirmed by 
a more definitive test (e.g., Western blot, immunofluorescence assay). 
(See paragraph b, below, for information about HIV antibody testing in 
children younger than 24 months of age).
    ii. A specimen that contains HIV antigen (e.g., serum specimen, 
lymphocyte culture, or cerebrospinal fluid (CSF) specimen).
    iii. An immunoglobulin A (IgA) serological assay specific for HIV.
    iv. Other test(s) that are highly specific for detection of HIV in 
children (e.g., polymerase chain reaction (PCR)), or that are acceptable 
methods of detection consistent with the prevailing state of medical 
knowledge.
    When laboratory testing for HIV infection has been performed, every 
reasonable effort must be made to obtain reports of the results of that 
testing.
    b. Other acceptable documentation of HIV infection in children.
    As noted in paragraph a, above, HIV infection is not documented in 
children under 24 months of age by a serum specimen containing HIV 
antibodies. This is because women with HIV infection often transfer HIV 
antibodies to their newborns. The mother's antibodies can persist in the 
infant for up to 24 months, even if the infant is not HIV-infected. Only 
20 to 30 percent of such infants are actually infected. Therefore, the 
presence of serum HIV antibodies alone does not establish the presence 
of HIV infection in a child under 24 months of age. However, the 
presence of HIV antibodies accompanied by evidence of significantly 
depressed T-helper lymphocytes (CD4), an abnormal CD4/CD8 ratio, or 
abnormal immunoglobulin G (IgG) may be used to document HIV infection in 
a child under 24 months of age, even though such testing is not a basis 
for a definitive diagnosis.
    For children from birth to the attainment of 24 months of age who 
have tested positive for HIV antibodies (see D3a above), HIV infection 
may be documented by one or more of the following:
    i. For an infant 12 months of age or less, a CD4 (T4) count of 1500/
mm\3\ or less, or a CD4 count less than or equal to 20 percent of total 
lymphocytes.
    ii. For an infant from 12 to 24 months of age, a CD4 (T4) count of 
750/mm\3\ or less, or a CD4 count less than or equal to 20 percent of 
total lymphocytes.
    iii. An abnormal CD4/CD8 ratio.
    iv. An IgG significantly greater than or less than the normal range 
for age.
    HIV infection in children may also be documented without the 
definitive laboratory evidence described in paragraph a, or the other 
laboratory evidence discussed above, provided that such documentation is 
consistent with the prevailing state of medical knowledge and clinical 
practice and is consistent with the other evidence. If such laboratory 
evidence is not available, HIV infection may be documented by the 
medical history, clinical and laboratory findings, and diagnosis(es) 
indicated in the medical evidence. For example, a diagnosis of HIV 
infection in children will be accepted without definitive laboratory 
evidence if the child has an opportunistic disease (e.g., Pneumocystis 
carinii pneumonia (PCP)) predictive of a defect in cell-mediated 
immunity, and there is no other known cause of diminished resistance to 
that disease (e.g., long-term steroid treatment, lymphoma). In such 
cases, every reasonable effort must be made to obtain full details of 
the history, medical findings, and results of testing.
    4. Documentation of the manifestations of HIV infection in children. 
The medical evidence must also include documentation of the 
manifestations of HIV infection in children. Documentation may be by 
laboratory evidence or by other generally acceptable methods consistent 
with the prevailing state of medical knowledge and clinical practice.
    a. Documentation of the manifestations of HIV infection in children 
by definitive diagnosis.

[[Page 519]]

    The definitive method of diagnosing opportunistic diseases or 
conditions that are manifestations of HIV infection in children is by 
culture, serological test, or microscopic examination of biopsied tissue 
or other material (e.g., bronchial washings). Therefore, every 
reasonable effort must be made to obtain specific laboratory evidence of 
an opportunistic disease or other condition whenever this information is 
available. If a histological or other test has been performed, the 
evidence should include a copy of the appropriate report. If the report 
is not obtainable, the summary of hospitalization or a report from the 
treating source should include details of the findings and results of 
the diagnostic studies (including radiographic studies) or microscopic 
examination of the appropriate tissues or body fluids.
    Although a reduced CD4 lymphocyte count in a child may show that 
there is an increased susceptibility to opportunistic infections and 
diseases, that alone does not document the presence, severity, or 
functional effects of a manifestation of HIV infection in a child.
    b. Other acceptable documentation of the manifestations of HIV 
infection in children.
    Manifestations of HIV infection in children may also be documented 
without the definitive laboratory evidence described in paragraph a, 
provided that such documentation is consistent with the prevailing state 
of medical knowledge and clinical practice and is consistent with the 
other evidence. If no definitive laboratory evidence is available, 
manifestations of HIV infection may be documented by medical history, 
clinical and laboratory findings, and diagnosis(es) indicated in the 
medical evidence. In such cases, every reasonable effort must be made to 
obtain full details of the history, medical findings, and results of 
testing.
    Documentation of cytomegalovirus (CMV) disease (114.08D) presents 
special problems because diagnosis requires identification of viral 
inclusion bodies or a positive culture from the affected organ, and the 
absence of any other infectious agent. A positive serology test 
identifies infection with the virus, but does not confirm a disease 
process. With the exception of chorioretinitis (which may be diagnosed 
by an ophthalmologist), documentation of CMV disease requires 
confirmation by biopsy or other generally acceptable methods consistent 
with the prevailing state of medical knowledge and clinical practice.
    5. HIV infection in children. The clinical manifestation and course 
of disease in children who become infected with HIV perinatally or in 
the first 6 years of life may differ from that in older children and 
adults. In addition, survival times are shorter for children infected in 
the first year of life compared to those who become infected as older 
children or as adults. Infants may present with failure to thrive or 
pneumocystis carinii pneumonia (PCP); young children may present with 
recurrent infections, neurological problems, or developmental 
abnormalities. Older children may also exhibit neurological 
abnormalities, such as HIV encephalopathy, or failure to thrive.
    The methods of identifying and evaluating neurological abnormalities 
may vary depending on a child's age. For example, in an infant, impaired 
brain growth can be documented by a decrease in the growth rate of the 
head. In older children, impaired brain growth can be documented by 
brain atrophy on a CAT scan. Neurological abnormalities can also be 
observed in a younger child in the loss of previously acquired, or 
marked delays in achieving, developmental milestones. In an older child, 
this type of neurological abnormality would generally be demonstrated by 
the loss of previously acquired intellectual abilities. Although loss of 
previously acquired intellectual abilities can be documented by a 
decrease in intelligence quotient (IQ) scores or demonstrated if a child 
forgets information he or she previously learned, it can also be shown 
if the child is unable to learn new information. This could include the 
sudden acquisition of a new learning disability.
    Children with HIV infection may contract any of a broad range of 
bacterial infections. Certain major infections caused by pyogenic 
bacteria, e.g., some pneumonias, can be severely limiting, especially in 
pre-adolescent children. These major bacterial infections should be 
evaluated under 114.08A5, which requires two or more such infections 
within a 2-year period. Although 114.08A5 applies only to children less 
than 13 years of age, an older child may be found to have an impairment 
of equivalent severity if the circumstances of the case warrant (e.g., 
delayed puberty).
    Otherwise, bacterial infections are evaluated under 114.08A6. The 
criteria of the listing are met if one or more bacterial infection(s) 
occurs and requires hospitalization or intravenous antibiotic treatment 
3 or more times in 1 year. Pelvic inflammatory disease in older female 
children should be evaluated under multiple or recurrent bacterial 
infections (114.08A6).
    6. Evaluation of HIV infection in children. The criteria in 114.08 
do not describe the full spectrum of diseases or conditions manifested 
by children with HIV infection. As in any case, consideration must be 
given to whether a child's impairment(s) meets, medically equals, or 
functionally equals the severity of any other listing in appendix 1 of 
subpart P; e.g., a neoplastic disorder listed in 113.00ff. (See 
Sec. Sec. 404.1526, 416.926, and 416.926a.) Although 114.08 includes 
cross-references to other listings for the more common manifestations of 
HIV infection, additional listings may also apply.
    In addition, the impact of all impairments, whether or not related 
to the HIV infection,

[[Page 520]]

must be considered. Children with HIV infection may manifest signs and 
symptoms of a mental impairment (e.g., anxiety, depression), or of 
another physical impairment. Medical evidence should include 
documentation of all physical and mental impairments and the 
impairment(s) should be evaluated not only under the relevant listing(s) 
in 114.08, but under any other appropriate listing(s).
    It is also important to remember that children with HIV infection, 
like all others, are evaluated under the full sequential evaluation 
process described in Sec. 416.924. If a child with HIV infection is 
working and engaging in substantial gainful activity (SGA), or does not 
have a severe impairment, the case will be decided at the first or 
second step of the sequential evaluation process, and does not require 
evaluation under these listings. For a child with HIV infection who is 
not engaging in SGA and has a severe impairment, but whose impairment(s) 
does not meet the criteria of a listing, consideration will be given to 
whether the child's impairment or combination of impairments is either 
medically or functionally equivalent in severity to any listed 
impairment.
    7. Effect of treatment. Medical treatment must be considered in 
terms of its effectiveness in ameliorating the signs, symptoms, and 
laboratory abnormalities of the specific disorder, or of the HIV 
infection itself (e.g. antiretroviral agents) and in terms of any side 
effects of treatment that may further impair the child.
    Response to treatment and adverse or beneficial consequences of 
treatment may vary widely. For example, a child with HIV infection who 
develops otitis media may respond to the same antibiotic regimen used in 
treating children without HIV infection, but another child with HIV 
infection may not respond to the same regimen. Therefore, each case must 
be considered on an individual basis, along with the effects of 
treatment on the child's ability to function.
    A specific description of the drugs or treatment given (including 
surgery), dosage, frequency of administration, and a description of the 
complications or response to treatment should be obtained. The effects 
of treatment may be temporary or long-term. As such, the decision 
regarding the impact of treatment should be based on a sufficient period 
of treatment to permit proper consideration.
    8. Functional criteria. Paragraph O of 114.08 establishes standards 
for evaluating manifestations of HIV infection that do not meet the 
requirements listed in 114.08A-N. Paragraph O is applicable for 
manifestations that are not listed in 114.08A-N, as well as those listed 
in 114.08A-N that do not meet the criteria of any of the rules in 
114.08A-N.
    For children with HIV infection evaluated under 114.08O, listing-
level severity will be assessed in terms of the functional limitations 
imposed by the impairment. The full impact of signs, symptoms, and 
laboratory findings on the child's ability to function must be 
considered. Important factors to be considered in evaluating the 
functioning of children with HIV infection include, but are not limited 
to: symptoms, such as fatigue and pain; characteristics of the illness, 
such as the frequency and duration of manifestations or periods of 
exacerbation and remission in the disease course; and the functional 
impact of treatment for the disease, including the side effects of 
medication.
    To meet the criteria in 114.08O, a child with HIV infection must 
demonstrate a level of restriction in either one or two (depending on 
the child's age) of the general areas of functioning applicable to the 
child's age group. (See 112.00C for additional discussion of these areas 
of functioning).
    E. Inflammatory arthritis (114.09) includes a vast array of 
disorders that differ in cause, course, and outcome. For example, in 
children inflammatory spondyloarthropathies include juvenile ankylosing 
spondylitis, reactive arthropathies, psoriatic arthropathy, and 
Beh[ccedil]et's disease, as well as undifferentiated spondylitis. 
Inflammatory arthritis of peripheral joints likewise comprises many 
disorders, including juvenile rheumatoid arthritis, Sj[ouml]gren's 
syndrome, psoriatic arthritis, crystal deposition disorders, and Lyme 
disease. Clinically, inflammation of major joints may be the dominant 
problem causing difficulties with ambulation or fine and gross 
movements, or the arthritis may involve other joints or cause less 
restriction of age-appropriate ambulation or other movements but be 
complicated by extra-articular features that cumulatively result in 
serious functional deficit. When persistent deformity without ongoing 
inflammation is the dominant feature of the impairment, it should be 
evaluated under 101.02, or, if there has been surgical reconstruction, 
101.03.
    1. Because the features of inflammatory connective tissue diseases 
in children are modified by such factors as the child's limited 
antigenic exposure and immune reactivity, the acute inflammatory 
connective tissue diseases must be differentiated from each other in 
order to evaluate duration factors and responses to specific treatments. 
Chronic conditions must be differentiated from short-term reversible 
disorders, and also from other connective tissue diseases.
    2. In 114.09A, the term major joints refers to the major peripheral 
joints, which are the hip, knee, shoulder, elbow, wrist-hand, and ankle-
foot, as opposed to other peripheral joints (e.g., the joints of the 
hand or forefoot) or axial joints (i.e., the joints of the spine.) The 
wrist and hand are considered together as one major joint, as are the 
ankle and foot. Since only the ankle joint, which consists of the 
juncture of the bones of the

[[Page 521]]

lower leg (tibia and fibula) with the hindfoot (tarsal bones), but not 
the forefoot, is crucial to weight bearing, the ankle and foot are 
considered separately in evaluating weight bearing.
    3. The terms inability to ambulate effectively and inability to 
perform fine and gross movements effectively in 114.09A have the same 
meaning as in 101.00B2b and 101.00B2c and must have lasted, or be 
expected to last, for at least 12 months.
    4. Inability to ambulate effectively is implicit in 114.09B. Even 
though children who demonstrate the findings of 114.09B will not 
ordinarily require bilateral upper limb assistance, the required 
ankylosis of the cervical or dorsolumbar spine will result in an extreme 
loss of the ability to see ahead, above, and to the side.
    5. As in 114.02 through 114.06, extra-articular features of an 
inflammatory arthritis may satisfy the criteria for a listing in an 
involved extra-articular body system. Such impairments may be found to 
meet a criterion of 114.09C. Extra-articular impairments of lesser 
severity should be evaluated under 114.09D and 114.09E. Commonly 
occurring extra-articular impairments include keratoconjunctivitis 
sicca, uveitis, iridocyclitis, pleuritis, pulmonary fibrosis or nodules, 
restrictive lung disease, pericarditis, myocarditis, cardiac 
arrhythmias, aortic valve insufficiency, coronary arteritis, Raynaud's 
phenomena, systemic vasculitis, amyloidosis of the kidney, chronic 
anemia, thrombocytopenia, hypersplenism with compromised immune 
competence (Felty's syndrome), peripheral neuropathy, radiculopathy, 
spinal cord or cauda equina compression with sensory and motor loss, and 
heel enthesopathy with functionally limiting pain.
    6. The fact that a child is dependent on steroids, or any other 
drug, for the control of inflammatory arthritis is, in and of itself, 
insufficient to find disability. Advances in the treatment of 
inflammatory connective tissue disease and in the administration of 
steroids for its treatment have corrected some of the previously 
disabling consequences of continuous steroid use. Therefore, each case 
must be evaluated on its own merits, taking into consideration the 
severity of the underlying impairment and any adverse effects of 
treatment.

              114.01 Category of Impairments, Immune System

    114.02 Systemic lupus erythematosus. Documented as described in 
14.00B1 and 114.00B, with:
    A. One of the following:
    1. Growth impairment, as described under the criteria in 100.00ff; 
or
    2. Musculoskeletal involvement, as described under the criteria in 
101.00ff; or
    3. Muscle involvement, as described under the criteria in 14.05; or
    4. Ocular involvement, as described under the criteria in 102.00ff; 
or
    5. Respiratory involvement, as described under the criteria in 
103.00ff; or
    6. Cardiovascular involvement, as described under the criteria in 
104.00ff or 14.04D; or
    7. Digestive involvement, as described under the criteria in 
105.00ff; or
    8. Renal involvement, as described under the criteria in 106.00ff; 
or
    9. Hematologic involvement, as described under the criteria in 
107.00ff; or
    10. Skin involvement, as described under the criteria in 8.00ff; or
    11. Endocrine involvement, as described under the criteria in 
109.00ff; or
    12. Neurological involvement, as described under the criteria in 
111.00ff; or
    13. Mental involvement, as described under the criteria in 112.00ff.

or

    B. Lesser involvement of two or more organs/body systems listed in 
paragraph A, with significant, documented, constitutional symptoms and 
signs of severe fatigue, fever, malaise, and weight loss. At least one 
of the organs/body systems must be involved to at least a moderate level 
of severity.
    114.03 Systemic vasculitis. As described under the criteria in 14.03 
or, if growth impairment, as described under the criteria in 100.00ff.
    114.04 Systemic sclerosis and scleroderma. Documented as described 
in 14.00B3 and 114.00B, and:
    A. As described under the criteria in 14.04 or, if growth 
impairment, as described under the criteria in 100.00ff.

or

    B. Linear scleroderma, with one of the following:
    1. Fixed valgus or varus deformities of both hands or both feet; or
    2. Marked destruction or marked atrophy of an extremity; or
    3. Facial disfigurement from hypoplasia of the mandible, maxilla, or 
zygoma resulting in an impairment as described under the criteria in 
112.00ff; or
    4. Seizure disorder, as described under the criteria in 111.00ff.
    114.05 Polymyositis or dermatomyositis. Documented as described in 
14.00B4 and 114.00B, and:
    A. As described under the criteria in 14.05.

or

    B. With one of the following:
    1. Multiple joint contractures; or
    2. Diffuse cutaneous calcification with formation of an exoskeleton; 
or
    3. Systemic vasculitis as described under the criteria in 14.03.

[[Page 522]]

    114.06 Undifferentiated connective tissue disorder. As described 
under the criteria in 114.02 or 114.04.
    114.07 Congenital immune deficiency disease.
    A. Hypogammaglobulinemia or dysgammaglobulinemia, with:
    1. Documented, recurrent severe infections occurring 3 or more times 
within a 5-month period; or
    2. An associated disorder such as growth retardation, chronic lung 
disease, collagen disorder or tumor. Evaluate according to the 
appropriate body system listing.

or

    B. Thymic dysplastic syndromes (such as Swiss, diGeorge).
    114.08 Human immunodeficiency virus (HIV) infection. With 
documentation as described in 114.00D3 and one of the following:
    A. Bacterial infections:
    1. Mycobacterial infection (e.g., caused by M. avium-intracellulare, 
M. kansasii, or M. tuberculosis) at a site other than the lungs, skin, 
or cervical or hilar lymph nodes; or pulmonary tuberculosis resistant to 
treatment; or
    2. Nocardiosis; or
    3. Salmonella bacteremia, recurrent non-typhoid.
    4. Syphilis or neurosyphilis--evaluate sequelae under the criteria 
for the affected body system (e.g., 102.00 Special Senses and Speech, 
104.00 Cardiovascular System, 111.00 Neurological); or
    5. In a child less than 13 years of age, multiple or recurrent 
pyogenic bacterial infection(s) of the following types: sepsis, 
pneumonia, meningitis, bone or joint infection, or abscess of an 
internal organ or body cavity (excluding otitis media or superficial 
skin or mucosal abscesses) occurring 2 or more times in 2 years; or
    6. Other multiple or recurrent bacterial infection(s), including 
pelvic inflammatory disease, requiring hospitalization or intravenous 
antibiotic treatment 3 or more times in 1 year.

or

    B. Fungal infections:
    1. Aspergillosis; or
    2. Candidiasis, at a site other than the skin, urinary tract, 
intestinal tract, or oral or vulvovaginal mucous membranes; or 
candidiasis involving the esophagus, trachea, bronchi, or lungs; or
    3. Coccidioidomycosis, at a site other than the lungs or lymph 
nodes; or
    4. Cryptococcosis, at a site other than the lungs (e.g., 
cryptococcal meningitis); or
    5. Histoplasmosis, at a site other than the lungs or lymph nodes; or
    6. Mucormycosis.

or

    C. Protozoan or helminthic infections:
    1. Cryptosporidiosis, isosporiasis, or microsporidiosis, with 
diarrhea lasting for 1 month or longer; or
    2. Pneumocystis carinii pneumonia or extrapulmonary pneumocystis 
carinii infection; or
    3. Strongyloidiasis, extra-intestinal; or
    4. Toxoplasmosis of an organ other than the liver, spleen, or lymph 
nodes.

or

    D. Viral infections:
    1. Cytomegalovirus disease (documented as described in 114.00D4b) at 
a site other than the liver, spleen, or lymph nodes; or
    2. Herpes simplex virus causing:
    a. Mucocutaneous infection (e.g., oral, genital, perianal) lasting 
for 1 month or longer; or
    b. Infection at a site other than the skin or mucous membranes 
(e.g., bronchitis, pneumonitis, esophagitis, or encephalitis); or
    c. Disseminated infection; or
    3. Herpes zoster, either disseminated or with multidermatomal 
eruptions that are resistant to treatment; or
    4. Progressive multifocal leukoencephalopathy; or
    5. Hepatitis, as described under the criteria of 105.05.

or

    E. Malignant neoplasms:
    1. Carcinoma of the cervix, invasive, FIGO stage II and beyond; or
    2. Karposi's sarcoma with:
    a. Extensive oral lesions; or
    b. Involvement of the gastrointestinal tract, lungs, or other 
visceral organs; or
    c. Involvement of the skin or mucous membranes as described under 
the criteria of 114.08F; or
    3. Lymphoma (e.g., primary lymphoma of the brain, Burkitt's 
lymphoma, immunoblastic sarcoma, other Non-Hodgkin's lymphoma, Hodgkin's 
disease); or
    4. Squamous cell carcinoma of the anus.

or

    F. Conditions of the skin or mucous membranes (other than described 
in B2, D2, or D3 above) with extensive fungating or ulcerating lesions 
not responding to treatment (e.g., dermatological conditions such as 
eczema or psoriasis, vulvovaginal or other mucosal candida, condyloma 
caused by human papillomavirus, genital ulcerative disease), or evaluate 
under the criteria in 8.00ff.

or

    G. Hematologic abnormalities:
    1. Anemia, as described under the criteria in 7.02; or
    2. Granulocytopenia, as described under the criteria in 7.15; or
    3. Thrombocytopenia, as described under the criteria of 107.06 or 
7.06.

or


[[Page 523]]


    H. Neurological manifestations of HIV infection (e.g., HIV 
encephalopathy, peripheral neuropathy), as described under the criteria 
in 111.00ff, or resulting in one or more of the following:
    1. Loss of previously acquired, or marked delay in achieving, 
developmental milestones or intellectual ability (including the sudden 
acquisition of a new learning disability); or
    2. Impaired brain growth (acquired microcephaly or brain atrophy--
see 114.00D5); or
    3. Progressive motor dysfunction affecting gait and station or fine 
and gross motor skills.

or

    I. Growth disturbance, with:
    1. An involuntary weight loss (or failure to gain weight at an 
appropriate rate for age) resulting in a fall of 15 percentiles from 
established growth curve (on standard growth charts) that persists for 2 
months or longer; or
    2. An involuntary weight loss (or failure to gain weight at an 
appropriate rate for age) resulting in a fall to below the third 
percentile from established growth curve (on standard growth charts) 
that persists for 2 months or longer; or
    3. Involuntary weight loss greater than 10 percent of baseline that 
persists for 2 months or longer; or
    4. Growth impairment as described under the criteria in 100.00ff.

or

    J. Diarrhea, lasting for 1 month or longer, resistant to treatment, 
and requiring intravenous hydration, intravenous alimentation, or tube 
feeding.

or

    K. Cardiomyopathy, as described under the criteria in 104.00ff or 
11.04.

or

    L. Lymphoid interstitial pneumonia/pulmonary lymphoid hyperplasia 
(LIP/PLH complex), with respiratory symptoms that significantly 
interfere with age-appropriate activities, and that cannot be controlled 
by prescribed treatment.

or

    M. Nephropathy, as described under the criteria in 106.00.

or

    N. One or more of the following infections (other than described in 
A-M, above), resistant to treatment or requiring hospitalization or 
intravenous treatment 3 or more times in 1 year (or evaluate sequelae 
under the criteria for the affected body system):
    1. Sepsis;
    2. Meningitis; or
    3. Pneumonia; or
    4. Septic arthritis; or
    5. Endocarditis; or
    6. Sinusitis documented by appropriate medically acceptable imaging.

or

    O. Any other manifestation(s) of HIV infection (including any listed 
in 114.08A-N, but without the requisite findings, e.g., oral candidiasis 
not meeting the criteria in 114.08F, diarrhea not meeting the criteria 
in 114.08J, or any other manifestation(s), e.g., oral hairy leukoplakia, 
hepatomegaly), resulting in one of the following:
    1. For children from birth to attainment of age 1, at least one of 
the criteria in paragraphs A-E of 112.12; or
    2. For children age 1 to attainment of age 3, at least one of the 
appropriate age-group criteria in paragraph B1 of 112.02; or
    3. For children age 3 to attainment of age 18, at least two of the 
appropriate age-group criteria in paragraph B2 of 112.02.
    114.09 Inflammatory arthritis. Documented as described in 114.00E, 
with one of the following:
    A. History of joint pain, swelling, and tenderness, and signs on 
current physical examination of joint inflammation or deformity in two 
or more major joints resulting in inability to ambulate effectively or 
inability to perform fine and gross movements effectively, as defined in 
114.00E3 and 101.00B2b and B2c;

or

    B. Ankylosing spondylitis or other spondyloarthropathy, with 
diagnosis established by findings of unilateral or bilateral 
sacroiliitis (e.g., erosions or fusions), shown by appropriate medically 
acceptable imaging, with both:
    1. History of back pain, tenderness, and stiffness, and
    2. Findings on physical examination of ankylosis (fixation) of the 
dorsolumbar or cervical spine at 45[deg] or more of flexion measured 
from the vertical position (zero degrees);

or

    C. An impairment as described under the criteria in 114.02A.

or

    D. Inflammatory arthritis, with signs of peripheral joint 
inflammation on current examination, but with lesser joint involvement 
than in A and lesser extra-articular features than in C, and:
    1. Significant, documented constitutional symptoms and signs (e.g., 
fatigue, fever, malaise, weight loss), and
    2. Involvement of two or more organs/body systems (see 114.00E5). At 
least one of the organs/body systems must be involved to at least a 
moderate level of severity.

or

    E. Inflammatory spondylitis or other inflammatory 
spondyloarthropathies, with

[[Page 524]]

lesser deformity than in B and lesser extra-articular features than in 
C, with signs of unilateral or bilateral sacroiliitis on appropriate 
medically acceptable imaging; and with the extra-articular features 
described in 114.09D.

[50 FR 35066, Aug. 28, 1985]

    Editorial Note: For Federal Register citations affecting appendix 1 
to subpart P of part 404, see the List of CFR Sections Affected, which 
appears in the Finding Aids section of the printed volume and on GPO 
Access.

   Appendix 2 to Subpart P of Part 404--Medical-Vocational Guidelines

Sec.
200.00 Introduction.
201.00 Maximum sustained work capability limited to sedentary work as a 
          result of severe medically determinable impairment(s).
202.00 Maximum sustained work capability limited to light work as a 
          result of severe medically determinable impairment(s).
203.00 Maximum sustained work capability limited to medium work as a 
          result of severe medically determinable impairment(s).
204.00 Maximum sustained work capability limited to heavy work (or very 
          heavy work) as a result of severe medically determinable 
          impairment(s).
    200.00 Introduction. (a) The following rules reflect the major 
functional and vocational patterns which are encountered in cases which 
cannot be evaluated on medical considerations alone, where an individual 
with a severe medically determinable physical or mental impairment(s) is 
not engaging in substantial gainful activity and the individual's 
impairment(s) prevents the performance of his or her vocationally 
relevant past work. They also reflect the analysis of the various 
vocational factors (i.e., age, education, and work experience) in 
combination with the individual's residual functional capacity (used to 
determine his or her maximum sustained work capability for sedentary, 
light, medium, heavy, or very heavy work) in evaluating the individual's 
ability to engage in substantial gainful activity in other than his or 
her vocationally relevant past work. Where the findings of fact made 
with respect to a particular individual's vocational factors and 
residual functional capacity coincide with all of the criteria of a 
particular rule, the rule directs a conclusion as to whether the 
individual is or is not disabled. However, each of these findings of 
fact is subject to rebuttal and the individual may present evidence to 
refute such findings. Where any one of the findings of fact does not 
coincide with the corresponding criterion of a rule, the rule does not 
apply in that particular case and, accordingly, does not direct a 
conclusion of disabled or not disabled. In any instance where a rule 
does not apply, full consideration must be given to all of the relevant 
facts of the case in accordance with the definitions and discussions of 
each factor in the appropriate sections of the regulations.
    (b) The existence of jobs in the national economy is reflected in 
the ``Decisions'' shown in the rules; i.e., in promulgating the rules, 
administrative notice has been taken of the numbers of unskilled jobs 
that exist throughout the national economy at the various functional 
levels (sedentary, light, medium, heavy, and very heavy) as supported by 
the ``Dictionary of Occupational Titles'' and the ``Occupational Outlook 
Handbook,'' published by the Department of Labor; the ``County Business 
Patterns'' and ``Census Surveys'' published by the Bureau of the Census; 
and occupational surveys of light and sedentary jobs prepared for the 
Social Security Administration by various State employment agencies. 
Thus, when all factors coincide with the criteria of a rule, the 
existence of such jobs is established. However, the existence of such 
jobs for individuals whose remaining functional capacity or other 
factors do not coincide with the criteria of a rule must be further 
considered in terms of what kinds of jobs or types of work may be either 
additionally indicated or precluded.
    (c) In the application of the rules, the individual's residual 
functional capacity (i.e., the maximum degree to which the individual 
retains the capacity for sustained performance of the physical-mental 
requirements of jobs), age, education, and work experience must first be 
determined. When assessing the person's residual functional capacity, we 
consider his or her symptoms (such as pain), signs, and laboratory 
findings together with other evidence we obtain.
    (d) The correct disability decision (i.e., on the issue of ability 
to engage in substantial gainful activity) is found by then locating the 
individual's specific vocational profile. If an individual's specific 
profile is not listed within this appendix 2, a conclusion of disabled 
or not disabled is not directed. Thus, for example, an individual's 
ability to engage in substantial gainful work where his or her residual 
functional capacity falls between the ranges of work indicated in the 
rules (e.g., the individual who can perform more than light but less 
than medium work), is decided on the basis of the principles and 
definitions in the regulations, giving consideration to the rules for 
specific case situations in this appendix 2. These rules represent 
various combinations of exertional capabilities, age, education and work 
experience and also provide an overall structure for evaluation of those 
cases in which the judgments as to each factor do not coincide

[[Page 525]]

with those of any specific rule. Thus, when the necessary judgments have 
been made as to each factor and it is found that no specific rule 
applies, the rules still provide guidance for decisionmaking, such as in 
cases involving combinations of impairments. For example, if strength 
limitations resulting from an individual's impairment(s) considered with 
the judgments made as to the individual's age, education and work 
experience correspond to (or closely approximate) the factors of a 
particular rule, the adjudicator then has a frame of reference for 
considering the jobs or types of work precluded by other, nonexertional 
impairments in terms of numbers of jobs remaining for a particular 
individual.
    (e) Since the rules are predicated on an individual's having an 
impairment which manifests itself by limitations in meeting the strength 
requirements of jobs, they may not be fully applicable where the nature 
of an individual's impairment does not result in such limitations, e.g., 
certain mental, sensory, or skin impairments. In addition, some 
impairments may result solely in postural and manipulative limitations 
or environmental restrictions. Environmental restrictions are those 
restrictions which result in inability to tolerate some physical 
feature(s) of work settings that occur in certain industries or types of 
work, e.g., an inability to tolerate dust or fumes.
    (1) In the evaluation of disability where the individual has solely 
a nonexertional type of impairment, determination as to whether 
disability exists shall be based on the principles in the appropriate 
sections of the regulations, giving consideration to the rules for 
specific case situations in this appendix 2. The rules do not direct 
factual conclusions of disabled or not disabled for individuals with 
solely nonexertional types of impairments.
    (2) However, where an individual has an impairment or combination of 
impairments resulting in both strength limitations and nonexertional 
limitations, the rules in this subpart are considered in determining 
first whether a finding of disabled may be possible based on the 
strength limitations alone and, if not, the rule(s) reflecting the 
individual's maximum residual strength capabilities, age, education, and 
work experience provide a framework for consideration of how much the 
individual's work capability is further diminished in terms of any types 
of jobs that would be contraindicated by the nonexertional limitations. 
Also, in these combinations of nonexertional and exertional limitations 
which cannot be wholly determined under the rules in this appendix 2, 
full consideration must be given to all of the relevant facts in the 
case in accordance with the definitions and discussions of each factor 
in the appropriate sections of the regulations, which will provide 
insight into the adjudicative weight to be accorded each factor.
    201.00 Maximum sustained work capability limited to sedentary work 
as a result of severe medically determinable impairment(s). (a) Most 
sedentary occupations fall within the skilled, semi-skilled, 
professional, administrative, technical, clerical, and benchwork 
classifications. Approximately 200 separate unskilled sedentary 
occupations can be identified, each representing numerous jobs in the 
national economy. Approximately 85 percent of these jobs are in the 
machine trades and benchwork occupational categories. These jobs 
(unskilled sedentary occupations) may be performed after a short 
demonstration or within 30 days.
    (b) These unskilled sedentary occupations are standard within the 
industries in which they exist. While sedentary work represents a 
significantly restricted range of work, this range in itself is not so 
prohibitively restricted as to negate work capability for substantial 
gainful activity.
    (c) Vocational adjustment to sedentary work may be expected where 
the individual has special skills or experience relevant to sedentary 
work or where age and basic educational competences provide sufficient 
occupational mobility to adapt to the major segment of unskilled 
sedentary work. Inability to engage in substantial gainful activity 
would be indicated where an individual who is restricted to sedentary 
work because of a severe medically determinable impairment lacks special 
skills or experience relevant to sedentary work, lacks educational 
qualifications relevant to most sedentary work (e.g., has a limited 
education or less) and the individual's age, though not necessarily 
advanced, is a factor which significantly limits vocational 
adaptability.
    (d) The adversity of functional restrictions to sedentary work at 
advanced age (55 and over) for individuals with no relevant past work or 
who can no longer perform vocationally relevant past work and have no 
transferable skills, warrants a finding of disabled in the the absence 
of the rare situation where the individual has recently completed 
education which provides a basis for direct entry into skilled sedentary 
work. Advanced age and a history of unskilled work or no work experience 
would ordinarily offset any vocational advantages that might accrue by 
reason of any remote past education, whether it is more or less than 
limited education.
    (e) The presence of acquired skills that are readily transferable to 
a significant range of skilled work within an individual's residual 
functional capacity would ordinarily warrant a finding of ability to 
engage in substantial gainful activity regardless of the adversity of 
age, or whether the individual's formal education is commensurate with 
his or her demonstrated skill level. The acquisition of work skills 
demonstrates the ability

[[Page 526]]

to perform work at the level of complexity demonstrated by the skill 
level attained regardless of the individual's formal educational 
attainments.
    (f) In order to find transferability of skills to skilled sedentary 
work for individuals who are of advanced age (55 and over), there must 
be very little, if any, vocational adjustment required in terms of 
tools, work processes, work settings, or the industry.
    (g) Individuals approaching advanced age (age 50-54) may be 
significantly limited in vocational adaptability if they are restricted 
to sedentary work. When such individuals have no past work experience or 
can no longer perform vocationally relevant past work and have no 
transferable skills, a finding of disabled ordinarily obtains. However, 
recently completed education which provides for direct entry into 
sedentary work will preclude such a finding. For this age group, even a 
high school education or more (ordinarily completed in the remote past) 
would have little impact for effecting a vocational adjustment unless 
relevant work experience reflects use of such education.
    (h)(1) The term younger individual is used to denote an individual 
age 18 through 49. For individuals who are age 45-49, age is a less 
advantageous factor for making an adjustment to other work than for 
those who are age 18-44. Accordingly, a finding of ``disabled'' is 
warranted for individuals age 45-49 who:
    (i) Are restricted to sedentary work,
    (ii) Are unskilled or have no transferable skills,
    (iii) Have no past relevant work or can no longer perform past 
relevant work, and
    (iv) Are unable to communicate in English, or are able to speak and 
understand English but are unable to read or write in English.
    (2) For individuals who are under age 45, age is a more advantageous 
factor for making an adjustment to other work. It is usually not a 
significant factor in limiting such individuals' ability to make an 
adjustment to other work, including an adjustment to unskilled sedentary 
work, even when the individuals are unable to communicate in English or 
are illiterate in English.
    (3) Nevertheless, a decision of ``disabled'' may be appropriate for 
some individuals under age 45 (or individuals age 45-49 for whom rule 
201.17 does not direct a decision of disabled) who do not have the 
ability to perform a full range of sedentary work. However, the 
inability to perform a full range of sedentary work does not necessarily 
equate with a finding of ``disabled.'' Whether an individual will be 
able to make an adjustment to other work requires an adjudicative 
assessment of factors such as the type and extent of the individual's 
limitations or restrictions and the extent of the erosion of the 
occupational base. It requires an individualized determination that 
considers the impact of the limitations or restrictions on the number of 
sedentary, unskilled occupations or the total number of jobs to which 
the individual may be able to adjust, considering his or her age, 
education and work experience, including any transferable skills or 
education providing for direct entry into skilled work.
    (4) ``Sedentary work'' represents a significantly restricted range 
of work, and individuals with a maximum sustained work capability 
limited to sedentary work have very serious functional limitations. 
Therefore, as with any case, a finding that an individual is limited to 
less than the full range of sedentary work will be based on careful 
consideration of the evidence of the individual's medical impairment(s) 
and the limitations and restrictions attributable to it. Such evidence 
must support the finding that the individual's residual functional 
capacity is limited to less than the full range of sedentary work.
    (i) While illiteracy or the inability to communicate in English may 
significantly limit an individual's vocational scope, the primary work 
functions in the bulk of unskilled work relate to working with things 
(rather than with data or people) and in these work functions at the 
unskilled level, literacy or ability to communicate in English has the 
least significance. Similarly the lack of relevant work experience would 
have little significance since the bulk of unskilled jobs require no 
qualifying work experience. Thus, the functional capability for a full 
range of sedentary work represents sufficient numbers of jobs to 
indicate substantial vocational scope for those individuals age 18-44 
even if they are illiterate or unable to communicate in English.

   Table No. 1--Residual Functional Capacity: Maximum Sustained Work Capability Limited to Sedentary Work as a
                              Result of Severe Medically Determinable Impairment(s)
----------------------------------------------------------------------------------------------------------------
                                                                         Previous work
      Rule                  Age                   Education                experience              Decision
----------------------------------------------------------------------------------------------------------------
201.01..........  Advanced age...........  Limited or less........  Unskilled or none......  Disabled
201.02..........  ......do...............  ......do...............  Skilled or semiskilled--  Do.
                                                                     skills not
                                                                     transferable \1\.
201.03..........  ......do...............  ......do...............  Skilled or semiskilled-- Not disabled
                                                                     skills transferable
                                                                     \1\.
201.04..........  ......do...............  High school graduate or  Unskilled or none......  Disabled
                                            more--does not provide
                                            for direct entry into
                                            skilled work \2\.

[[Page 527]]

 
201.05..........  ......do...............  High school graduate or  ......do...............  Not disabled
                                            more--provides for
                                            direct entry into
                                            skilled work \2\.
201.06..........  ......do...............  High school graduate or  Skilled or semiskilled-- Disabled
                                            more--does not provide   skills not
                                            for direct entry into    transferable \1\.
                                            skilled work \2\.
201.07..........  ......do...............  ......do...............  Skilled or semiskilled-- Not disabled
                                                                     skills transferable
                                                                     \1\.
201.08..........  ......do...............  High school graduate or  Skilled or semiskilled--  Do.
                                            more--provides for       skills not
                                            direct entry into        transferable \1\.
                                            skilled work \2\.
201.09..........  Closely approaching      Limited or less........  Unskilled or none......  Disabled
                   advanced age.
201.10..........  ......do...............  ......do...............  Skilled or semiskilled--  Do.
                                                                     skills not
                                                                     transferable.
201.11..........  ......do...............  ......do...............  Skilled or semiskilled-- Not disabled
                                                                     skills transferable.
201.12..........  ......do...............  High school graduate or  Unskilled or none......  Disabled
                                            more--does not provide
                                            for direct entry into
                                            skilled work \3\.
201.13..........  ......do...............  High school graduate or  ......do...............  Not disabled
                                            more--provides for
                                            direct entry into
                                            skilled work \3\.
201.14..........  ......do...............  High school graduate or  Skilled or semiskilled-- Disabled
                                            more--does not provide   skills not
                                            for direct entry into    transferable.
                                            skilled work \3\.
201.15..........  ......do...............  ......do...............  Skilled or semiskilled-- Not disabled
                                                                     skills transferable.
201.16..........  ......do...............  High school graduate or  Skilled or semiskilled--  Do.
                                            more--provides for       skills not
                                            direct entry into        transferable.
                                            skilled work \3\.
201.17..........  Younger individual age   Illiterate or unable to  Unskilled or none......  Disabled
                   45-49.                   communicate in English.
201.18..........  ......do...............  Limited or less--at      ......do...............  Not disabled
                                            least literate and
                                            able to communicate in
                                            English.
201.19..........  ......do...............  Limited or less........  Skilled or semiskilled--  Do.
                                                                     skills not
                                                                     transferable.
201.20..........  ......do...............  ......do...............  Skilled or semiskilled--  Do.
                                                                     skills transferable.
201.21..........  ......do...............  High school graduate or  Skilled or semiskilled--  Do.
                                            more.                    skills not
                                                                     transferable.
201.22..........  ......do...............  ......do...............  Skilled or semiskilled--  Do.
                                                                     skills transferable.
201.23..........  Younger individual age   Illiterate or unable to  Unskilled or none......   Do.\4\
                   18-44.                   communicate in English.
201.24..........  ......do...............  Limited or less--at      ......do...............   Do.\4\
                                            least literate and
                                            able to communicate in
                                            English.
201.25..........  ......do...............  Limited or less........  Skilled or semiskilled--  Do.\4\
                                                                     skills not
                                                                     transferable.
201.26..........  ......do...............  ......do...............  Skilled or semiskilled--  Do.\4\
                                                                     skills transferable.
201.27..........  ......do...............  High school graduate or  Unskilled or none......   Do.\4\
                                            more.
201.28..........  ......do...............  ......do...............  Skilled or semiskilled--  Do.\4\
                                                                     skills not
                                                                     transferable.
201.29..........  ......do...............  ......do...............  Skilled or semiskilled--  Do.\4\
                                                                     skills transferable.
----------------------------------------------------------------------------------------------------------------
\1\ See 201.00(f).
\2\ See 201.00(d).
\3\ See 201.00(g).
\4\ See 201.00(h).

    202.00 Maximum sustained work capability limited to light work as a 
result of severe medically determinable impairment(s). (a) The 
functional capacity to perform a full range of light work includes the 
functional capacity to perform sedentary as well as light work. 
Approximately 1,600 separate sedentary and light unskilled occupations 
can be identified in eight broad occupational categories, each 
occupation representing numerous jobs in

[[Page 528]]

the national economy. These jobs can be performed after a short 
demonstration or within 30 days, and do not require special skills or 
experience.
    (b) The functional capacity to perform a wide or full range of light 
work represents substantial work capability compatible with making a 
work adjustment to substantial numbers of unskilled jobs and, thus, 
generally provides sufficient occupational mobility even for severely 
impaired individuals who are not of advanced age and have sufficient 
educational competences for unskilled work.
    (c) However, for individuals of advanced age who can no longer 
perform vocationally relevant past work and who have a history of 
unskilled work experience, or who have only skills that are not readily 
transferable to a significant range of semi-skilled or skilled work that 
is within the individual's functional capacity, or who have no work 
experience, the limitations in vocational adaptability represented by 
functional restriction to light work warrant a finding of disabled. 
Ordinarily, even a high school education or more which was completed in 
the remote past will have little positive impact on effecting a 
vocational adjustment unless relevant work experience reflects use of 
such education.
    (d) Where the same factors in paragraph (c) of this section 
regarding education and work experience are present, but where age, 
though not advanced, is a factor which significantly limits vocational 
adaptability (i.e., closely approaching advanced age, 50-54) and an 
individual's vocational scope is further significantly limited by 
illiteracy or inability to communicate in English, a finding of disabled 
is warranted.
    (e) The presence of acquired skills that are readily transferable to 
a significant range of semi-skilled or skilled work within an 
individual's residual functional capacity would ordinarily warrant a 
finding of not disabled regardless of the adversity of age, or whether 
the individual's formal education is commensurate with his or her 
demonstrated skill level. The acquisition of work skills demonstrates 
the ability to perform work at the level of complexity demonstrated by 
the skill level attained regardless of the individual's formal 
educational attainments.
    (f) For a finding of transferability of skills to light work for 
individuals of advanced age who are closely approaching retirement age 
(age 60-64), there must be very little, if any, vocational adjustment 
required in terms of tools, work processes, work settings, or the 
industry.
    (g) While illiteracy or the inability to communicate in English may 
significantly limit an individual's vocational scope, the primary work 
functions in the bulk of unskilled work relate to working with things 
(rather than with data or people) and in these work functions at the 
unskilled level, literacy or ability to communicate in English has the 
least significance. Similarly, the lack of relevant work experience 
would have little significance since the bulk of unskilled jobs require 
no qualifying work experience. The capability for light work, which 
includes the ability to do sedentary work, represents the capability for 
substantial numbers of such jobs. This, in turn, represents substantial 
vocational scope for younger individuals (age 18-49) even if illiterate 
or unable to communicate in English.

 Table No. 2--Residual Functional Capacity: Maximum Sustained Work Capability Limited to Light Work as a Result
                                 of Severe Medically Determinable Impairment(s)
----------------------------------------------------------------------------------------------------------------
                                                                         Previous work
         Rule                    Age                 Education            experience              Decision
----------------------------------------------------------------------------------------------------------------
202.01................  Advanced age.........  Limited or less.....  Unskilled or none...  Disabled.
202.02................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      not transferable.
202.03................  ......do.............  ......do............  Skilled or            Not disabled.
                                                                      semiskilled--skills
                                                                      transferable \1\.
202.04................  ......do.............  High school graduate  Unskilled or none...  Disabled.
                                                or more--does not
                                                provide for direct
                                                entry into skilled
                                                work \2\.
202.05................  ......do.............  High school graduate  ......do............  Not disabled.
                                                or more--provides
                                                for direct entry
                                                into skilled work
                                                \2\.
202.06................  ......do.............  High school graduate  Skilled or            Disabled.
                                                or more--does not     semiskilled--skills
                                                provide for direct    not transferable.
                                                entry into skilled
                                                work \2\.
202.07................  ......do.............  ......do............  Skilled or            Not disabled.
                                                                      semiskilled--skills
                                                                      transferable \2\.
202.08................  ......do.............  High school graduate  Skilled or             Do.
                                                or more--provides     semiskilled--skills
                                                for direct entry      not transferable.
                                                into skilled work
                                                \2\.
202.09................  Closely approaching    Illiterate or unable  Unskilled or none...  Disabled.
                         advanced age.          to communicate in
                                                English.

[[Page 529]]

 
202.10................  ......do.............  Limited or less--at   ......do............  Not disabled.
                                                least literate and
                                                able to communicate
                                                in English.
202.11................  ......do.............  Limited or less.....  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      not transferable.
202.12................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
202.13................  ......do.............  High school graduate  Unskilled or none...   Do.
                                                or more.
202.14................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      not transferable.
202.15................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
202.16................  Younger individual...  Illiterate or unable  Unskilled or none...   Do.
                                                to communicate in
                                                English.
202.17................  ......do.............  Limited or less--at   ......do............   Do.
                                                least literate and
                                                able to communicate
                                                in English.
202.18................  ......do.............  Limited or less.....  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      not transferable.
202.19................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
202.20................  ......do.............  High school graduate  Unskilled or none...   Do.
                                                or more.
202.21................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      not transferable.
202.22................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
----------------------------------------------------------------------------------------------------------------
\1\ See 202.00(f).
\2\ See 202.00(c).

    203.00 Maximum sustained work capability limited to medium work as a 
result of severe medically determinable impairment(s). (a) The 
functional capacity to perform medium work includes the functional 
capacity to perform sedentary, light, and medium work. Approximately 
2,500 separate sedentary, light, and medium occupations can be 
identified, each occupation representing numerous jobs in the national 
economy which do not require skills or previous experience and which can 
be performed after a short demonstration or within 30 days.
    (b) The functional capacity to perform medium work represents such 
substantial work capability at even the unskilled level that a finding 
of disabled is ordinarily not warranted in cases where a severely 
impaired individual retains the functional capacity to perform medium 
work. Even the adversity of advanced age (55 or over) and a work history 
of unskilled work may be offset by the substantial work capability 
represented by the functional capacity to perform medium work. However, 
we will find that an individual who (1) has a marginal education, (2) 
has work experience of 35 years or more during which he or she did only 
arduous unskilled physical labor, (3) is not working, and (4) is no 
longer able to do this kind of work because of a severe impairment(s) is 
disabled, even though the individual is able to do medium work. (See 
Sec. 404.1562(a) in this subpart and Sec. 416.962(a) in subpart I of 
part 416.)
    (c) However, the absence of any relevant work experience becomes a 
more significant adversity for individuals of advanced age (55 and 
over). Accordingly, this factor, in combination with a limited education 
or less, militates against making a vocational adjustment to even this 
substantial range of work and a finding of disabled is appropriate. 
Further, for individuals closely approaching retirement age (60-64) with 
a work history of unskilled work and with marginal education or less, a 
finding of disabled is appropriate.

 Table No. 3--Residual Functional Capacity: Maximum Sustained Work Capability Limited to Medium Work as a Result
                                 of Severe Medically Determinable Impairment(s)
----------------------------------------------------------------------------------------------------------------
                                                                         Previous work
         Rule                    Age                 Education            experience              Decision
----------------------------------------------------------------------------------------------------------------
203.01................  Closely approaching    Marginal or none....  Unskilled or none...  Disabled.
                         retirement age.
203.02................  ......do.............  Limited or less.....  None................   Do.
203.03................  ......do.............  Limited.............  Unskilled...........  Not disabled.
203.04................  ......do.............  Limited or less.....  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      not transferable.

[[Page 530]]

 
203.05................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
203.06................  ......do.............  High school graduate  Unskilled or none...   Do.
                                                or more.
203.07................  ......do.............  High school graduate  Skilled or             Do.
                                                or more--does not     semiskilled--skills
                                                provide for direct    not transferable.
                                                entry into skilled
                                                work.
203.08................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
203.09................  ......do.............  High school graduate  Skilled or             Do.
                                                or more--provides     semiskilled--skills
                                                for direct entry      not transferable.
                                                into skilled work.
203.10................  Advanced age.........  Limited or less.....  None................  Disabled.
203.11................  ......do.............  ......do............  Unskilled...........  Not disabled.
203.12................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      not transferable.
203.13................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
203.14................  ......do.............  High school graduate  Unskilled or none...   Do.
                                                or more.
203.15................  ......do.............  High school graduate  Skilled or             Do.
                                                or more--does not     semiskilled--skills
                                                provide for direct    not transferable.
                                                entry into skilled
                                                work.
203.16................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
203.17................  ......do.............  High school graduate  Skilled or             Do.
                                                or more--provides     semiskilled--skills
                                                for direct entry      not transferable.
                                                into skilled work.
203.18................  Closely approaching    Limited or less.....  Unskilled or none...   Do.
                         advanced age.
203.19................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      not transferable.
203.20................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
203.21................  ......do.............  High school graduate  Unskilled or none...   Do.
                                                or more.
203.22................  ......do.............  High school graduate  Skilled or             Do.
                                                or more--does not     semiskilled--skills
                                                provide for direct    not transferable.
                                                entry into skilled
                                                work.
203.23................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
203.24................  ......do.............  High school graduate  Skilled or             Do.
                                                or more--provides     semiskilled--skills
                                                for direct entry      not transferable.
                                                into skilled work.
203.25................  Younger individual...  Limited or less.....  Unskilled or none...   Do.
203.26................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      not transferable.
203.27................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
203.28................  ......do.............  High school graduate  Unskilled or none...   Do.
                                                or more.
203.29................  ......do.............  High school graduate  Skilled or             Do.
                                                or more--does not     semiskilled--skills
                                                provide for direct    not transferable.
                                                entry into skilled
                                                work.
203.30................  ......do.............  ......do............  Skilled or             Do.
                                                                      semiskilled--skills
                                                                      transferable.
203.31................  ......do.............  High school graduate  Skilled or             Do.
                                                or more--provides     semiskilled--skills
                                                for direct entry      not transferable.
                                                into skilled work.
----------------------------------------------------------------------------------------------------------------

    204.00 Maximum sustained work capability limited to heavy work (or 
very heavy work) as a result of severe medically determinable 
impairment(s). The residual functional capacity to perform heavy work or 
very heavy work includes the functional capability for work at the 
lesser functional levels as well, and represents substantial work 
capability for jobs in the national economy at all skill and physical 
demand levels. Individuals who retain the functional capacity to perform 
heavy work (or very heavy work) ordinarily will not have a severe 
impairment or will be able to do their past work--either of which would 
have already provided a basis for a decision of ``not disabled''. 
Environmental restrictions ordinarily would not significantly affect the 
range of work existing in the national economy for individuals with the 
physical capability for heavy work (or very

[[Page 531]]

heavy work). Thus an impairment which does not preclude heavy work (or 
very heavy work) would not ordinarily be the primary reason for 
unemployment, and generally is sufficient for a finding of not disabled, 
even though age, education, and skill level of prior work experience may 
be considered adverse.

[45 FR 55584, Aug. 20, 1980, as amended at 56 FR 57944, Nov. 14, 1991; 
68 FR 51164, Aug. 26, 2003]



                 Subpart Q_Determinations of Disability

    Authority: Secs. 205(a), 221, and 702(a)(5) of the Social Security 
Act (42 U.S.C. 405(a), 421, and 902(a)(5)).

    Source: 46 FR 29204, May 29, 1981, unless otherwise noted.

                           General Provisions



Sec. 404.1601  Purpose and scope.

    This subpart describes the standards of performance and 
administrative requirements and procedures for States making 
determinations of disability for the Commissioner under title II of the 
Act. It also establishes the Commissioner's responsibilities in carrying 
out the disability determination function.
    (a) Sections 404.1601 through 404.1603 describe the purpose of the 
regulations and the meaning of terms frequently used in the regulations. 
They also briefly set forth the responsibilities of the Commissioner and 
the States covered in detail in other sections.
    (b) Sections 404.1610 through 404.1618 describe the Commissioner's 
and the State's responsibilities in performing the disability 
determination function.
    (c) Sections 404.1620 through 404.1633 describe the administrative 
responsibilities and requirements of the States. The corresponding role 
of the Commissioner is also set out.
    (d) Sections 404.1640 through 404.1650 describe the performance 
accuracy and processing time standards for measuring State agency 
performance.
    (e) Sections 404.1660 through 404.1661 describe when and what kind 
of assistance the Commissioner will provide State agencies to help them 
improve performance.
    (f) Sections 404.1670 through 404.1675 describe the level of 
performance below which the Commissioner will consider a State agency to 
be substantially failing to make disability determinations consistent 
with the regulations and other written guidelines and the resulting 
action the Commissioner will take.
    (g) Sections 404.1680 through 404.1683 describe the rules for 
resolving disputes concerning fiscal issues and providing hearings when 
we propose to find that a State is in substantial failure.
    (h) Sections 404.1690 through 404.1694 describe when and what action 
the Commissioner will take and what action the State will be expected to 
take if the Commissioner assumes the disability determination function 
from a State agency.

[46 FR 29204, May 29, 1981, as amended at 62 FR 38451, July 18, 1997



Sec. 404.1602  Definitions.

    For purposes of this subpart:
    Act means the Social Security Act, as amended.
    Class or classes of cases means the categories into which disability 
claims are divided according to their characteristics.
    Commissioner means the Commissioner of Social Security or his or her 
authorized designee.
    Determination of disability or disability determination means one or 
more of the following decisions:
    (a) Whether or not a person is under a disability;
    (b) The date a person's disability began; or
    (c) The date a person's disability ended.
    Disability means disability or blindness as defined in sections 
216(i) and 223 of the Act or as defined in title IV of the Federal Mine 
Safety and Health Act of 1977, as amended.
    Disability determination function means making determinations as to 
disability and carrying out related administrative and other 
responsibilities.
    Disability program means, as appropriate, the Federal programs for 
providing disability insurance benefits under title II of the Act and 
disability benefits under title IV of the Federal Mine Safety and Health 
Act of 1977, as amended.

[[Page 532]]

    Initial means the first level of disability adjudication.
    Other written guidelines means written issuances such as Social 
Security Rulings and memoranda by the Commissioner of Social Security, 
the Deputy Commissioner for Programs and Policy, or the Associate 
Commissioner for Disability and the procedures, guides, and operating 
instructions in the Disability Insurance sections of the Program 
Operations Manual System, that are instructive, interpretive, 
clarifying, and/or administrative and not designated as advisory or 
discretionary. The purpose of including the foregoing material in the 
definition is to assure uniform national application of program 
standards and service delivery to the public.
    Regulations means regulations in this subpart issued under sections 
205(a), 221 and 1102 of the Act, unless otherwise indicated.
    State means any of the 50 States of the United States, the 
Commonwealth of Puerto Rico, the District of Columbia, or Guam. It 
includes the State agency.
    State agency means that agency of a State which has been designated 
by the State to carry out the disability determination function.
    We, us, and our refers to the Social Security Administration (SSA).

[46 FR 29204, May 29, 1981, as amended at 56 FR 11018, Mar. 14, 1991; 62 
FR 38452, July 18, 1997]



Sec. 404.1603  Basic responsibilities for us and the State.

    (a) General. We will work with the State to provide and maintain an 
effective system for processing claims of those who apply for and who 
are receiving benefits under the disability program. We will provide 
program standards, leadership, and oversight. We do not intend to become 
involved in the State's ongoing management of the program except as is 
necessary and in accordance with these regulations. The State will 
comply with our regulations and other written guidelines.
    (b) Our responsibilities. We will:
    (1) Periodically review the regulations and other written guidelines 
to determine whether they insure effective and uniform administration of 
the disability program. To the extent feasible, we will consult with and 
take into consideration the experience of the States in issuing 
regulations and guidelines necessary to insure effective and uniform 
administration of the disability program;
    (2) Provide training materials or in some instances conduct or 
specify training, see Sec. 404.1622;
    (3) Provide funds to the State agency for the necessary cost of 
performing the disability determination function, see Sec. 404.1626;
    (4) Monitor and evaluate the performance of the State agency under 
the established standards, see Sec. Sec. 404.1644 and 404.1645; and
    (5) Maintain liaison with the medical profession nationally and with 
national organizations and agencies whose interests or activities may 
affect the disability program.
    (c) Responsibilities of the State. The State will:
    (1) Provide management needed to insure that the State agency 
carries out the disability determination function so that disability 
determinations are made accurately and promptly;
    (2) Provide an organizational structure, adequate facilities, 
qualified personnel, medical consultant services, and a quality 
assurance function (Sec. Sec. 404.1620 through 404.1624);
    (3) Furnish reports and records relating to the administration of 
the disability program (Sec. 404.1625);
    (4) Submit budgets (Sec. 404.1626);
    (5) Cooperate with audits (Sec. 404.1627);
    (6) Insure that all applicants for and recipients of disability 
benefits are treated equally and courteously;
    (7) Be responsible for property used for disability program purposes 
(Sec. 404.1628);
    (8) Take part in the research and demonstration projects (Sec. 
404.1629);
    (9) Coordinate with other agencies (Sec. 404.1630);
    (10) Safeguard the records created by the State in performing the 
disability determination function (Sec. 404.1631);
    (11) Comply with other provisions of the Federal law and regulations 
that apply to the State in performing the disability determination 
function;
    (12) Comply with other written guidelines (Sec. 404.1633);

[[Page 533]]

    (13) Maintain liaison with the medical profession and organizations 
that may facilitate performing the disability determination function; 
and
    (14) Assist us in other ways that we determine may promote the 
objectives of effective and uniform administration.

  Responsibilities for Performing the Disability Determination Function



Sec. 404.1610  How a State notifies us that it wishes to perform the 
disability determination function.

    (a) Deemed notice. Any State that has in effect as of June 1, 1981, 
an agreement with us to make disability determinations will be deemed to 
have given us notice that it wishes to perform the disability 
determination function, in lieu of continuing the agreement in effect 
after June 1, 1981.
    (b) Written notice. After June 1, 1981, a State not making 
disability determinations that wishes to perform the disability 
determination function under these regulations must notify us in 
writing. The notice must be from an official authorized to act for the 
State for this purpose. The State will provide an opinion from the 
State's Attorney General verifying the authority of the official who 
sent the notice to act for the State.



Sec. 404.1611  How we notify a State whether it may perform the disability 
determination function.

    (a) If a State notifies us in writing that it wishes to perform the 
disability determination function, we will notify the State in writing 
whether or not it may perform the function. The State will begin 
performing the disability determination function beginning with the 
month we and the State agree upon.
    (b) If we have previously found that a State agency has 
substantially failed to make disability determinations in accordance 
with the law or these regulations and other written guidelines or if the 
State has previously notified us in writing that it does not wish to 
make disability determinations, the notice will advise the State whether 
the State agency may again make the disability determinations and, if 
so, the date and the conditions under which the State may again make 
them.



Sec. 404.1613  Disability determinations the State makes.

    (a) General rule. A State agency will make determinations of 
disability with respect to all persons in the State except those 
individuals whose cases are in a class specifically excluded by our 
written guidelines. A determination of disability made by the State is 
the determination of the Commissioner, except as described in Sec. 
404.1503(d)(1).
    (b) New classes of cases. Where any new class or classes of cases 
arise requiring determinations of disability, we will determine the 
conditions under which a State may choose not to make the disability 
determinations. We will provide the State with the necessary funding to 
do the additional work.
    (c) Temporary transfer of classes of cases. We will make disability 
determinations for classes of cases temporarily transferred to us by the 
State agency if the State agency asks us to do so and we agree. The 
State agency will make written arrangements with us which will specify 
the period of time and the class or classes of cases we will do.

[46 FR 29204, May 29, 1981, as amended at 62 FR 38452, July 18, 1997]



Sec. 404.1614  Responsibilities for obtaining evidence to make disability 
determinations.

    (a) The State agency will secure from the claimant, or other 
sources, any evidence it needs to make a disability determination.
    (b) We will secure from the claimant or other special arrangement 
sources, any evidence we can obtain as adequately and more readily than 
the State agency. We will furnish the evidence to the State agency for 
use in making a disability determination.
    (c) At our request, the State agency will obtain and furnish medical 
or other evidence and provide assistance as may be necessary for us to 
carry out our responsibilities--
    (1) For making disability determinations in those classes of cases 
described in the written guidelines for which the State agency does not 
make the determination; or

[[Page 534]]

    (2) Under international agreements with respect to social security 
benefits payable under section 233 of the Act.



Sec. 404.1615  Making disability determinations.

    (a) When making a disability determination, the State agency will 
apply subpart P, part 404, of our regulations.
    (b) The State agency will make disability determinations based only 
on the medical and nonmedical evidence in its files.
    (c) Disability determinations will be made by either:
    (1) A State agency medical or psychological consultant and a State 
agency disability examiner;
    (2) A State agency disability examiner alone when there is no 
medical evidence to be evaluated (i.e., no medical evidence exists or we 
are unable, despite making every reasonable effort, to obtain any 
medical evidence that may exist) and the individual fails or refuses, 
without a good reason, to attend a consultative examination (see Sec. 
404.1518); or
    (3) A State agency disability hearing officer.

See Sec. 404.1616 for the definition of medical or psychological 
consultant and Sec. 404.915 for the definition of disability hearing 
officer. The State agency disability examiner and disability hearing 
officer must be qualified to interpret and evaluate medical reports and 
other evidence relating to the claimant's physical or mental impairments 
and as necessary to determine the capacities of the claimant to perform 
substantial gainful activity.

See Sec. 404.1572 for what we mean by substantial gainful activity.
    (d) An initial determination by the State agency that an individual 
is not disabled, in any case where there is evidence which indicates the 
existence of a mental impairment, will be made only after every 
reasonable effort has been made to ensure that a qualified psychiatrist 
or psychologist has completed the medical portion of the case review and 
any applicable residual functional capacity assessment. (See Sec. 
404.1616 for the qualifications we consider necessary for a psychologist 
to be a psychological consultant and Sec. 404.1617 for what we mean by 
``reasonable effort''.) If the services of qualified psychiatrists or 
psychologists cannot be obtained because of impediments at the State 
level, the Commissioner may contract directly for the services. In a 
case where there is evidence of mental and nonmental impairments and a 
qualified psychologist serves as a psychological consultant, the 
psychologist will evaluate only the mental impairment, and a physician 
will evaluate the nonmental impairment.
    (e) The State agency will certify each determination of disability 
to us on forms we provide.
    (f) The State agency will furnish us with all the evidence it 
considered in making its determination.
    (g) The State agency will not be responsible for defending in court 
any determination made, or any procedure formaking determinations, under 
these regulations.

[52 FR 33926, Sept. 9, 1987, as amended at 56 FR 11018, Mar. 14, 1991; 
61 FR 11135, Mar. 19, 1996; 62 FR 38452, July 18, 1997; 65 FR 34958, 
June 1, 2000]



Sec. 404.1616  Medical or psychological consultants.

    (a) What is a medical consultant? A medical consultant is a person 
who is a member of a team that makes disability determinations in a 
State agency, as explained in Sec. 404.1615, or who is a member of a 
team that makes disability determinations for us when we make disability 
determinations ourselves.
    (b) What qualifications must a medical consultant have? A medical 
consultant must be an acceptable medical source identified in Sec. 
404.1513(a)(1) or (a)(3) through (a)(5); that is, a licensed physician 
(medical or osteopathic), a licensed optometrist, a licensed podiatrist, 
or a qualified speech-language pathologist. The medical consultant must 
meet any appropriate qualifications for his or her specialty as 
explained in Sec. 404.1513(a).
    (c) Are there any limitations on what medical consultants who are 
not physicians can evaluate? Medical consultants who are not physicians 
are limited to evaluating the impairments for which they are qualified, 
as described in Sec. 404.1513(a). Medical consultants who are not 
physicians also are limited as

[[Page 535]]

to when they may serve as a member of a team that makes a disability 
determination. For example, a speech-language pathologist who is a 
medical consultant in a State agency may be a member of a team that 
makes a disability determination in a claim only if a speech or language 
impairment is the only impairment in the claim or if there is a 
combination of a speech or language impairment with another impairment 
but the speech or language impairment alone would justify a finding of 
disability. In all other cases, a physician will be a member of the team 
that makes a disability determination, except in cases in which this 
function may be performed by a psychological consultant as discussed in 
paragraph (f) of this section and Sec. 404.1615(d).
    (d) What is a psychological consultant? A psychological consultant 
is a psychologist who has the same responsibilities as a medical 
consultant explained in paragraph (a) of this section, but who can 
evaluate only mental impairments.
    (e) What qualifications must a psychological consultant have? A 
psychological consultant used in cases where there is evidence of a 
mental impairment must be a qualified psychologist. For disability 
program purposes, a psychologist will not be considered qualified unless 
he or she:
    (1) Is licensed or certified as a psychologist at the independent 
practice level of psychology by the State in which he or she practices; 
and
    (2)(i) Possesses a doctorate degree in psychology from a program in 
clinical psychology of an educational institution accredited by an 
organization recognized by the Council on Post-Secondary Accreditation; 
or
    (ii) Is listed in a national register of health service providers in 
psychology which the Commissioner of Social Security deems appropriate; 
and
    (3) Possesses 2 years of supervised clinical experience as a 
psychologist in health service, at least 1 year of which is post masters 
degree.
    (f) Are there any limitations on what a psychological consultant can 
evaluate? Psychological consultants are limited to the evaluation of 
mental impairments, as explained in Sec. 404.1615(d). Psychological 
consultants also are limited as to when they can serve as a member of a 
team that makes a disability determination. They may do so only when a 
mental impairment is the only impairment in the claim or when there is a 
combination of a mental impairment with another impairment but the 
mental impairment alone would justify a finding of disability.

[65 FR 34958, June 1, 2000]



Sec. 404.1617  Reasonable efforts to obtain review by a qualified 
psychiatrist or psychologist.

    (a) The State agency must determine if additional qualified 
psychiatrists and psychologists are needed to make the necessary reviews 
(see Sec. 404.1615(d)). Where it does not have sufficient resources to 
make the necessary reviews, the State agency must attempt to obtain the 
resources needed. If the State agency is unable to obtain additional 
psychiatrists and psychologists because of low salary rates or fee 
schedules it should attempt to raise the State agency's levels of 
compensation to meet the prevailing rates for psychiatrists' and 
psychologists' services. If these efforts are unsuccessful, the State 
agency will seek assistance from us. We will assist the State agency as 
necessary. We will also monitor the State agency's efforts and where the 
State agency is unable to obtain the necessary services, we will make 
every reasonable effort to provide the services using Federal resources.
    (b) Federal resources may include the use of Federal contracts for 
the services of qualified psychiatrists and psychologists to review 
mental impairment cases. Where Federal resources are required to perform 
these reviews, which are a basic State agency responsibility, and where 
appropriate, the State agency's budget will be reduced accordingly.
    (c) Where every reasonable effort is made to obtain the services of 
a qualified psychiatrist or psychologist to review a mental impairment 
case, but the professional services are not obtained, a physician who is 
not a psychiatrist will review the mental impairment case. For these 
purposes, every reasonable effort to ensure that a qualified 
psychiatrist or psychologist review mental impairment cases will

[[Page 536]]

be considered to have been made only after efforts by both State and 
Federal agencies as set forth in paragraphs (a) and (b) of this section 
are made.

[52 FR 33927, Sept. 9, 1987]



Sec. 404.1618  Notifying claimants of the disability determination.

    The State agency will prepare denial notices in accordance with 
subpart J of this part whenever it makes a disability determination 
which is wholly or partly unfavorable to the claimant.

            Administrative Responsibilities and Requirements



Sec. 404.1620  General administrative requirements.

    (a) The State will provide the organizational structure, qualified 
personnel, medical consultant services, and a quality assurance function 
sufficient to ensure that disability determinations are made accurately 
and promptly. We may impose specific administrative requirements in 
these areas and in those under ``Administrative Responsibilities and 
Requirements'' in order to establish uniform, national administrative 
practices or to correct the areas of deficiencies which may later cause 
the State to be substantially failing to comply with our regulations or 
other written guidelines. We will notify the State, in writing, of the 
administrative requirements being imposed and of any administrative 
deficiencies it is required to correct. We will allow the State 90 days 
from the date of this notice to make appropriate corrections. Once 
corrected, we will monitor the State's administrative practices for 180 
days. If the State does not meet the requirements or correct all of the 
deficiencies, or, if some of the deficiencies recur, we may initiate 
procedures to determine if the State is substantially failing to follow 
our regulations or other written guidelines.
    (b) The State is responsible for making accurate and prompt 
disability determinations.

[46 FR 29204, May 29, 1981, as amended at 56 FR 11018, Mar. 14, 1991]



Sec. 404.1621  Personnel.

    (a) Equal employment opportunity. The State will comply with all 
applicable Federal statutes, executive orders and regulations concerned 
with equal employment opportunities.
    (b) Selection, tenure, and compensation. The State agency will, 
except as may be inconsistent with paragraph (a) of this section, adhere 
to applicable State approved personnel standards in the selection, 
tenure, and compensation of any individual employed in the disability 
program.
    (c) Travel. The State will make personnel available to attend 
meetings or workshops as may be sponsored or approved by us for 
furthering the purposes of the disability program.
    (d) Restrictions. Subject to appropriate Federal funding, the State 
will, to the best of its ability, facilitate the processing of 
disability claims by avoiding personnel freezes, restrictions against 
overtime work, or curtailment of facilities or activities.



Sec. 404.1622  Training.

    The State will insure that all employees have an acceptable level of 
competence. We will provide training and other instructional materials 
to facilitate basic and advanced technical proficiency of disability 
staff in order to insure uniformity and effectiveness in the 
administration of the disability program. We will conduct or specify 
training, as appropriate, but only if:
    (a) A State agency's performance approaches unacceptable levels; or
    (b) The material required for the training is complex or the 
capacity of the State to deliver the training is in doubt and uniformity 
of the training is essential.



Sec. 404.1623  Facilities.

    (a) Space, equipment, supplies, and other services. Subject to 
appropriate Federal funding, the State will provide adequate space, 
equipment, supplies, and other services to facilitate making accurate 
and prompt disability determinations.
    (b) Location of facilities. Subject to appropriate Federal funding, 
the State will determine the location where the disability determination 
function is to be performed so that disability determinations are made 
accurately and promptly.

[[Page 537]]

    (c) Access. The State will permit us access to the premises where 
the disability determination function is performed and also where it is 
managed for the purposes of inspecting and obtaining information about 
the work and activities required by our regulations and assuring 
compliance with pertinent Federal statutes and regulations. Access 
includes personal onsite visits and other means, such as 
telecommunications, of contacting the State agency to obtain information 
about its functions. We will contact the State agency and give 
reasonable prior notice of the times and purposes of any visits.

[46 FR 29204, May 29, 1981, as amended at 56 FR 11019, Mar. 14, 1991]



Sec. 404.1624  Medical and other purchased services.

    The State will determine the rates of payment to be used for 
purchasing medical or other services necessary to make determinations of 
disability. The rates may not exceed the highest rate paid by Federal or 
other agencies in the State for the same or similar type of service. The 
State will maintain documentation to support the rates of payment it 
uses.



Sec. 404.1625  Records and reports.

    (a) The State will establish and maintain the records and furnish 
the schedules, financial, cost, and other reports relating to the 
administration of the disability programs as we may require.
    (b) The State will permit us and the Comptroller General of the 
United States (including duly authorized representatives) access to and 
the right to examine records relating to the work which the State 
performs under these regulations. These records will be retained by the 
State for the periods of time specified for retention of records in the 
Federal Procurement Regulations (41 CFR parts 1-20).



Sec. 404.1626  Fiscal.

    (a) We will give the State funds, in advance or by way of 
reimbursement, for necessary costs in making disability determinations 
under these regulations. Necessary costs are direct as well as indirect 
costs as defined in 41 CFR part 1-15, subpart 1-15.7 of the Federal 
Procurement Regulations System for costs incurred before April 1, 1984; 
and 48 CFR part 31, subpart 31.6 of the Federal Acquisition Regulations 
System and Federal Management Circular A-74-4 \1\ as amended or 
superseded for costs incurred after March 31, 1984.
---------------------------------------------------------------------------

    \1\ The circular is available from the Office of Administration, 
Publications Unit, Rm. G-236, New Executive Office Bldg., Washington, DC 
20503.
---------------------------------------------------------------------------

    (b) The State will submit estimates of anticipated costs in the form 
of a budget at the time and in the manner we require.
    (c) We will notify the State of the amount which will be made 
available to it as well as what anticipated costs are being approved.
    (d) The State may not incur or make expenditures for items of cost 
not approved by us or in excess of the amount we make available to the 
State.
    (e) After the close of a period for which funds have been made 
available to the State, the State will submit a report of its 
expenditures. Based on an audit arranged by the State under Pub. L. 98-
502, the Single Audit Act of 1984, or by the Inspector General of the 
Social Security Administration or based on an audit or review by the 
Social Security Administration (see Sec. 404.1627), we will determine 
whether the expenditures were consistent with cost principles described 
in 41 CFR part 1-15, subpart 1-15.7 for costs incurred before April 1, 
1984; and 48 CFR part 31, subpart 31.6 and Federal Management Circular 
A-741-4 for costs incurred after March 31, 1984: and in other applicable 
written guidelines in effect at the time the expenditures were made or 
incurred.
    (f) Any monies paid to the State which are used for purposes not 
within the scope of these regulations will be paid back to the Treasury 
of the United States.

[46 FR 29204, May 29, 1981, as amended at 56 FR 11019, Mar. 14, 1991; 62 
FR 38452, July 18, 1997]



Sec. 404.1627  Audits.

    (a) Audits performed by the State--(1) Generally. Audits of accounts 
and

[[Page 538]]

records pertaining to the administration of the disability program under 
the Act, will be performed by the States in accordance with the Single 
Audit Act of 1984 (Pub. L. 98-502) which establishes audit requirements 
for States receiving Federal assistance. If the audit performed by the 
State meets our program requirements, we will accept the findings and 
recommendations of the audit. The State will make every effort to act 
upon and resolve any items questioned in the audit.
    (2) Questioned items. Items questioned as a result of an audit under 
the Single Audit Act of 1984 of a cross-cutting nature will be resolved 
by the Department of Health and Human Services, Office of Grant and 
Contract Financial Management. A cross-cutting issue is one that 
involves more than one Federal awarding agency. Questioned items 
affecting only the disability program will be resolved by SSA in accord 
with paragraph (b)(2) of this section,
    (3) State appeal of audit determinations. The Office of Grant and 
Contract Financial Management will notify the State of its determination 
on questioned cross-cutting items. If the State disagrees with that 
determination, it may appeal in writing within 60 days of receiving the 
determination. State appeals of a cross-cutting issue as a result of an 
audit under the Single Audit Act of 1984 will be made to the Department 
of Health and Human Services' Departmental Appeals Board. The rules for 
hearings and appeals are provided in 45 CFR part 16.
    (b) Audits performed by the Commissioner--(1) Generally. If the 
State does not perform an audit under the Single Audit Act of 1984 or 
the audit performed is not satisfactory for disability program purposes, 
the books of account and records in the State pertaining to the 
administrations of the disability programs under the Act will be audited 
by the SSA's Inspector General or audited or reviewed by SSA as 
appropriate. These audits or reviews will be conducted to determine 
whether the expenditures were made for the intended purposes and in 
amounts necessary for the proper and efficient administration of the 
disability programs. Audits or reviews will also be made to inspect the 
work and activities required by the regulations to ensure compliance 
with pertinent Federal statutes and regulations. The State will make 
every effort to act upon and resolve any items questioned in an audit or 
review.
    (2) Questioned items. Expenditures of State agencies will be audited 
or reviewed, as appropriate, on the basis of cost principles and written 
guidelines in effect at the time the expenditures were made or incurred. 
Both the State and the State agency will be informed and given a full 
explanation of any items questioned. They will be given reasonable time 
to explain items questioned. Any explanation furnished by the State or 
State agency will be given full consideration before a final 
determination is made on the audit or review report.
    (3) State appeal of audit determinations. The appropriate Social 
Security Administration Regional Commissioner will notify the State of 
his or her determination on the audit or review report. If the State 
disagrees with that determination, the State may request reconsideration 
in writing within 60 days of the date of the Regional Commissioner's 
notice of the determination. The written request may be made, through 
the Associate Commissioner, Office of Disability, to the Commissioner of 
Social Security, room 900, Altmeyer Building, 6401 Security Boulevard, 
Baltimore, Maryland 21235. The Commissioner will make a determination 
and notify the State of the decision in writing no later than 90 days 
from the date the Social Security Administration receives the State's 
appeal and all supporting documents. The decision by the Commissioner on 
other than monetary disallowances will be final and binding upon the 
State. The decision by the Commissioner on monetary disallowances will 
be final and binding upon the State unless the State appeals the 
decision in writing to the Department of Health and Human Services, 
Departmental Appeals Board within 30 days after receiving the 
Commissioner's decision. See Sec. 404.1683.

[56 FR 11019, Mar. 14, 1991, as amended at 62 FR 38452, July 18, 1997]

[[Page 539]]



Sec. 404.1628  Property.

    The State will have title to equipment purchased for disability 
program purposes. The State will be responsible for maintaining all 
property it acquires or which we furnish to it for performing the 
disability determination function. The State will identify the equipment 
by labeling and by inventory and will credit the SSA account with the 
fair market value of disposed property.
    In the event we assume the disability determination function from a 
State, ownership of all property and equipment acquired with SSA funds 
will be transferred to us effective on the date the State is notified 
that we are assuming the disability determination function or we are 
notified that the State is terminating the relationship.



Sec. 404.1629  Participation in research and demonstration projects.

    We will invite State participation in federally funded research and 
demonstration projects to assess the effectiveness of the disability 
program and to ascertain the effect of program policy changes. Where we 
determine that State participation is necessary for the project to be 
complete, for example, to provide national uniformity in a claims 
process, State participation is mandatory.



Sec. 404.1630  Coordination with other agencies.

    (a) The State will establish cooperative working relationships with 
other agencies concerned with serving the disabled and, insofar as 
practicable, use their services, facilities, and records to:
    (1) Assist the State in developing evidence and making 
determinations of disability; and
    (2) Insure that referral of disabled or blind persons for 
rehabilitation services will be carried out effectively.
    (b) The State may pay these agencies for the services, facilities, 
or records they provide. The State will include these costs in its 
estimates of anticipated costs and reports of actual expenditures.



Sec. 404.1631  Confidentiality of information and records.

    The State will comply with the confidentiality of information, 
including the security of systems, and records requirements described in 
20 CFR part 401 and pertinent written guidelines (see Sec. 404.1633).



Sec. 404.1632  Other Federal laws and regulations.

    The State will comply with the provisions of other Federal laws and 
regulations that directly affect its responsibilities in carrying out 
the disability determination function; for example, Treasury Department 
regulations on letters of credit (31 CFR part 205).



Sec. 404.1633  Policies and operating instructions.

    (a) We will provide the State agency with written guidelines 
necessary for it to carry out its responsibilities in performing the 
disability determination function.
    (b) The State agency making determinations of disability will comply 
with our written guidelines that are not designated as advisory or 
discretionary. (See Sec. 404.1602 for what we mean by written 
guidelines.)
    (c) A representative group of State agencies will be given an 
opportunity to participate in formulating disability program policies 
that have an affect on their role in carrying out the disability 
determination function. State agencies will also be given an opportunity 
to comment before changes are made in written guidelines unless delay in 
issuing a change may impair service to the public.

[46 FR 29204, May 29, 1981, as amended at 56 FR 11020, Mar. 14, 1991]

                          Performance Standards



Sec. 404.1640  General.

    The following sections provide the procedures and guidelines we use 
to determine whether the State agency is substantially complying with 
our regulations and other written guidelines, including meeting 
established national performance standards. We use performance standards 
to help assure effective and uniform administration of our disability 
programs and to measure

[[Page 540]]

whether the performance of the disability determination function by each 
State agency is acceptable. Also, the standards are designed to improve 
overall State agency performance in the disability determination process 
and to ensure that benefits are made available to all eligible persons 
in an accurate and efficient manner. We measure the performance of a 
State agency in two areas--processing time and quality of documentation 
and decisions on claims. State agency compliance is also judged by State 
agency adherence to other program requirements.

[56 FR 11020, Mar. 14, 1991]



Sec. 404.1641  Standards of performance.

    (a) General. The performance standards include both a target level 
of performance and a threshold level of performance for the State 
agency. The target level represents a level of performance that we and 
the States will work to attain in the future. The threshold level is the 
minimum acceptable level of performance. Performance below the threshold 
level will be the basis for the Commissioner's taking from the State 
agency partial or complete responsibility for performing the disability 
determination function. Intermediate State agency goals are designed to 
help each State agency move from its current performance levels to the 
target levels.
    (b) The target level. The target level is the optimum level of 
performance. There are three targets--one for combined title II and 
title XVI initial performance accuracy, one for title II initial 
processing time, and one for title XVI initial processing time.
    (c) The threshold level. The threshold level is the minimum 
acceptable level of performance. There are three thresholds--one for 
combined title II and title XVI initial performance accuracy, one for 
title II initial processing time, and one for title XVI initial 
processing time.
    (d) Intermediate goals. Intermediate goals are levels of performance 
between the threshold levels and the target levels established by our 
appropriate Regional Commissioner after negotiation with each State 
agency. The intermediate goals are designed to help the State agencies 
reach the target levels. Failure to meet these goals is not a cause for 
considering the State agency to be substantially failing to comply with 
the performance standards. However, failure to meet the intermediate 
goals may result in consultation and an offer of optional performance 
support depending on the availability of our resources.

[46 FR 29204, May 29, 1981, as amended at 56 FR 11020, Mar. 14, 1991; 62 
FR 38452, July 18, 1997]



Sec. 404.1642  Processing time standards.

    (a) General. Title II processing time refers to the average number 
of days, including Saturdays, Sundays, and holidays, it takes a State 
agency to process an initial disability claim from the day the case 
folder is received in the State agency until the day it is released to 
us by the State agency. Title XVI processing time refers to the average 
number of days, including Saturdays, Sundays, and holidays, from the day 
of receipt of the initial disability claim in the State agency until 
systems input of a presumptive disability decision or the day the case 
folder is released to us by the State agency, whichever is earlier.
    (b) Target levels. The processing time target levels are:
    (1) 37 days for title II initial claims.
    (2) 43 days for title XVI initial claims.
    (c) Threshold levels. The processing time threshold levels are:
    (1) 49.5 days for title II initial claims.
    (2) 57.9 days for title XVI initial claims.

[46 FR 29204, May 29, 1981, as amended at 56 FR 11020, Mar. 14, 1991]



Sec. 404.1643  Performance accuracy standard.

    (a) General. Performance accuracy refers to the percentage of cases 
that do not have to be returned to State agencies for further 
development or correction of decisions based on evidence in the files 
and as such represents the reliability of State agency adjudication. The 
definition of performance accuracy includes the measurement of factors 
that have a potential for affecting a decision, as well as the 
correctness of the decision. For example, if a particular

[[Page 541]]

item of medical evidence should have been in the file but was not 
included, even though its inclusion does not change the result in the 
case, that is a performance error. Performance accuracy, therefore, is a 
higher standard than decisional accuracy. As a result, the percentage of 
correct decisions is significantly higher than what is reflected in the 
error rate established by SSA's quality assurance system.
    (b) Target level. The State agency initial performance accuracy 
target level for combined title II and title XVI cases is 97 percent 
with a corresponding decision accuracy rate of 99 percent.
    (c) Intermediate Goals. These goals will be established annually by 
SSA's regional commissioner after negotiation with the State and should 
be used as stepping stones to progress towards our targeted level of 
performance.
    (d) Threshold levels. The State agency initial performance accuracy 
threshold level for combined title II and title XVI cases is 90.6 
percent.



Sec. 404.1644  How and when we determine whether the processing time 
standards are met.

    (a) How we determine processing times. For all initial title II 
cases, we calculate the mean number of days, including Saturdays, 
Sundays and holidays, from the day the case folder is received in the 
State agency until the day it is released to us by the State agency. For 
initial title XVI cases, we calculate the mean number of days, including 
Saturdays, Sundays, and holidays, from the day the case folder is 
received in the State agency until the day there is a systems input of a 
presumptive disability decision or the day the case folder is released 
to us by the State agency, whichever is earlier.
    (b) Frequency of review. Title II processing times and title XVI 
processing times are monitored separately on a quarterly basis. The 
determination as to whether or not the processing time thresholds have 
been met is made at the end of each quarter each year. Quarterly State-
by-State mean processing times are compared with the threshold levels 
for both title II and title XVI.

[46 FR 29204, May 29, 1981, as amended at 56 FR 11020, Mar. 14, 1991]



Sec. 404.1645  How and when we determine whether the performance 
accuracy standard is met.

    (a) How we determine performance accuracy. We determine a State 
agency's performance accuracy rate on the basis of decision and 
documentation errors identified in our review of the sample cases.
    (b) Frequency of review. Title II and title XVI initial performance 
accuracy are monitored together on a quarterly basis. The determinations 
as to whether the performance accuracy threshold has been met is made at 
the end of each quarter each year. Quarterly State-by-State combined 
initial performance accuracy rates are compared to the established 
threshold level.



Sec. 404.1650  Action we will take if a State agency does not meet the 
standards.

    If a State agency does not meet two of the three established 
threshold levels (one of which must be performance accuracy) for two or 
more consecutive calendar quarters, we will notify the State agency in 
writing that it is not meeting the standards. Following our 
notification, we will provide the State agency appropriate performance 
support described in Sec. Sec. 404.1660, 404.1661 and 404.1662 for a 
period of up to 12 months.

[56 FR 11020, Mar. 14, 1991]

                   Performance Monitoring and Support



Sec. 404.1660  How we will monitor.

    We will regularly analyze State agency combined title II and title 
XVI initial performance accuracy rate, title II initial processing time, 
and title XVI initial processing time. Within budgeted resources, we 
will also routinely conduct fiscal and administrative management reviews 
and special onsite reviews. A fiscal and administrative management 
review is a fact-finding mission to review particular aspects of State 
agency operations. During these reviews we will also review the quality

[[Page 542]]

assurance function. This regular monitoring and review program will 
allow us to determine the progress each State is making and the type and 
extent of performance support we will provide to help the State progress 
toward threshold, intermediate, and/or target levels.

[56 FR 11020, Mar. 14, 1991]



Sec. 404.1661  When we will provide performance support.

    (a) Optional support. We may offer, or a State may request, 
performance support at any time that the regular monitoring and review 
process reveals that support could enhance performance. The State does 
not have to be below the initial performance accuracy rate of 90.6 
percent to receive performance support. Support will be offered, or 
granted upon request, based on available resources.
    (b) Mandatory support. (1) We will provide a State agency with 
mandatory performance support if regular monitoring and review reveal 
that two of three threshold levels (one of which must be performance 
accuracy) are not met for two consecutive calendar quarters.
    (2) We may also decide to provide a State agency with mandatory 
performance support if regular monitoring and review reveal that any one 
of the three threshold levels is not met for two consecutive calendar 
quarters. Support will be provided based on available resources.
    (3) The threshold levels are:
    (i) Combined title II and title XVI initial performance accuracy 
rate--90.6 percent,
    (ii) Title II initial processing time--49.5 days, and
    (iii) Title XVI initial processing time--57.9 days.

[56 FR 11020, Mar. 14, 1991]



Sec. 404.1662  What support we will provide.

    Performance support may include, but is not limited to, any or all 
of the following:
    (a) An onsite review of cases processed by the State agency 
emphasizing adherence to written guidelines.
    (b) A request that necessary administrative measures be implemented 
(e.g., filling staffing vacancies, using overtime, assisting with 
training activities, etc.).
    (c) Provisions for Federal personnel to perform onsite reviews, 
conduct training, or perform other functions needed to improve 
performance.
    (d) Provisions for fiscal aid to allow for overtime, temporary 
hiring of additional staff, etc., above the authorized budget.

[56 FR 11020, Mar. 14, 1991]

                           Substantial Failure



Sec. 404.1670  General.

    After a State agency falls below two of three established threshold 
levels, one being performance accuracy, for two consecutive quarters, 
and after the mandatory performance support period, we will give the 
State agency a 3-month adjustment period. During this 3-month period we 
will not require the State agency to meet the threshold levels. 
Following the adjustment period, if the State agency again falls below 
two of three threshold levels, one being performance accuracy, in two 
consecutive quarters during the next 12 months, we will notify the State 
that we propose to find that the State agency has substantially failed 
to comply with our standards and advise it that it may request a hearing 
on that issue. After giving the State notice and an opportunity for a 
hearing, if it is found that a State agency has substantially failed to 
make disability determinations consistent with the Act, our regulations 
or other written guidelines, we will assume partial or complete 
responsibility for performing the disability determination function 
after we have complied with Sec. Sec. 404.1690 and 404.1692.

[56 FR 11021, Mar. 14, 1991]



Sec. 404.1671  Good cause for not following the Act, our regulations, 
or other written guidelines.

    If a State has good cause for not following the Act, our 
regulations, or other written guidelines, we will not find that the 
State agency has substantially failed to meet our standards. We will 
determine if good cause exists.

[[Page 543]]

Some of the factors relevant to good cause are:
    (a) Disasters such as fire, flood, or civil disorder, that--
    (1) Require the diversion of significant personnel normally assigned 
to the disability determination function, or
    (2) Destroyed or delayed access to significant records needed to 
make accurate disability determinations;
    (b) Strikes of State agency staff or other government or private 
personnel necessary to the performance of the disability determination 
function;
    (c) Sudden and unanticipated workload changes which result from 
changes in Federal law, regulations, or written guidelines, systems 
modification or systems malfunctions, or rapid, unpredictable caseload 
growth for a 6-month period or longer.

[56 FR 11021, Mar. 14, 1991]



Sec. 404.1675  Finding of substantial failure.

    A finding of substantial failure with respect to a State may not be 
made unless and until the State is afforded an opportunity for a 
hearing.

                          Hearings and Appeals



Sec. 404.1680  Notice of right to hearing on proposed finding of substantial 
failure.

    If, following the mandatory performance support period and the 3-
month adjustment period, a State agency again falls below two of three 
threshold levels (one being performance accuracy) in two consecutive 
quarters in the succeeding 12 months, we will notify the State in 
writing that we will find that the State agency has substantially failed 
to meet our standards unless the State submits a written request for a 
hearing with the Department of Health and Human Services' Departmental 
Appeals Board within 30 days after receiving the notice. The notice will 
identify the threshold levels that were not met by the State agency, the 
period during which the thresholds were not met and the accuracy and 
processing time levels attained by the State agency during this period. 
If a hearing is not requested, the State agency will be found to have 
substantially failed to meet our standards, and we will implement our 
plans to assume the disability determination function.

[56 FR 11021, Mar. 14, 1991]



Sec. 404.1681  Disputes on matters other than substantial failure.

    Disputes concerning monetary disallowances will be resolved in 
proceedings before the Department of Health and Human Services' 
Departmental Appeals Board if the issue cannot be resolved between us 
and the State. Disputes other than monetary disallowances will be 
resolved through an appeal to the Commissioner of Social Security, who 
will make the final decision. (See Sec. 404.1627.)

[56 FR 11021, Mar. 14, 1991]



Sec. 404.1682  Who conducts the hearings.

    If a hearing is required, it will be conducted by the Department of 
Health and Human Services' Grant Appeals Board (the Board).

[46 FR 29204, May 29, 1981, as amended at 62 FR 38452, July 18, 1997]



Sec. 404.1683  Hearings and appeals process.

    The rules for hearings and appeals before the Board are provided in 
45 CFR part 16. A notice under Sec. 404.1680 of this subpart will be 
considered a ``final written decision'' for purposes of Board review.

             Assumption of Disability Determination Function



Sec. 404.1690  Assumption when we make a finding of substantial failure.

    (a) Notice to State. When we find that substantial failure exists, 
we will notify the State in writing that we will assume responsibility 
for performing the disability determination function from the State 
agency, whether the assumption will be partial or complete, and the date 
on which the assumption will be effective.
    (b) Effective date of assumption. The date of any partial or 
complete assumption of the disability determination function from a 
State agency may not be earlier than 180 days after our finding of 
substantial failure, and not

[[Page 544]]

before compliance with the requirements of Sec. 404.1692.



Sec. 404.1691  Assumption when State no longer wishes to perform the 
disability determination function.

    (a) Notice to the Commissioner. If a State no longer wishes to 
perform the disability determination function, it will notify us in 
writing. The notice must be from an official authorized to act for the 
State for this purpose. The State will provide an opinion from the 
State's Attorney General verifying the authority of the official who 
gave the notice.
    (b) Effective date of assumption. The State agency will continue to 
perform whatever activities of the disability determination function it 
is performing at the time the notice referred to in paragraph (a) of 
this section is given for not less than 180 days or, if later, until we 
have complied with the requirements of Sec. 404.1692. For example, if 
the State is not making disability determinations (because we previously 
assumed responsibility for making them) but is performing other 
activities related to the disability determination function at the time 
it gives notice, the State will continue to do these activities until 
the requirements of this paragraph are met. Thereafter, we will assume 
complete responsibility for performing the disability determination 
function.

[46 FR 29204, May 29, 1981, as amended at 62 FR 38452, July 18, 1997]



Sec. 404.1692  Protection of State employees.

    (a) Hiring preference. We will develop and initiate procedures to 
implement a plan to partially or completely assume the disability 
determination function from the State agency under Sec. 404.1690 or 
Sec. 404.1691, as appropriate. Except for the State agency's 
administrator, deputy administrator, or assistant administrator (or his 
equivalent), we will give employees of the State agency who are capable 
of performing duties in the disability determination function preference 
over any other persons in filling positions with us for which they are 
qualified. We may also give a preference in hiring to the State agency's 
administrator, deputy administrator, or assistant administrator (or his 
equivalent). We will establish a system for determining the hiring 
priority among the affected State agency employees in those instances 
where we are not hiring all of them.
    (b) Determination by Secretary of Labor. We will not assume 
responsibility for performing the disability determination function from 
a State until the Secretary of Labor determines that the State has made 
fair and equitable arrangements under applicable Federal, State and 
local law to protect the interests of employees who will be displaced 
from their employment because of the assumption and who we will not 
hire.



Sec. 404.1693  Limitation on State expenditures after notice.

    The State agency may not, after it receives the notice referred to 
in Sec. 404.1690, or gives the notice referred to in Sec. 404.1691, 
make any new commitments to spend funds allocated to it for performing 
the disability determination function without the approval of the 
appropriate SSA regional commissioner. The State will make every effort 
to close out as soon as possible all existing commitments that relate to 
performing the disability determination function.



Sec. 404.1694  Final accounting by the State.

    The State will submit its final claims to us as soon as possible, 
but in no event later than 1 year from the effective date of our 
assumption of the disability determination function unless we grant an 
extension of time. When the final claim(s) is submitted, a final 
accounting will be made by the State of any funds paid to the State 
under Sec. 404.1626 which have not been spent or committed prior to the 
effective date of our assumption of the disability determination 
function. Disputes concerning final accounting issues which cannot be 
resolved between the State and us will be resolved in proceedings before 
the Departmental Appeals Board as described in 45 CFR part 16.

[46 FR 29204, May 29, 1981, as amended at 62 FR 38452, July 18, 1997]

[[Page 545]]



                   Subpart R_Representation of Parties

    Authority: Secs. 205(a), 206, and 702(a)(5) of the Social Security 
Act (42 U.S.C. 405(a), 406, and 902(a)(5)).

    Source: 45 FR 52090, Aug. 5, 1980, unless otherwise noted.



Sec. 404.1700  Introduction.

    You may appoint someone to represent you in any of your dealings 
with us. This subpart explains, among other things--
    (a) Who may be your representative and what his or her 
qualifications must be;
    (b) How you appoint a representative;
    (c) The payment of fees to a representative;
    (d) Our rules that representatives must follow; and
    (e) What happens to a representative who breaks the rules.



Sec. 404.1703  Definitions.

    As used in this subpart--
    Past-due benefits means the total amount of benefits payable under 
title II of the Act to all beneficiaries that has accumulated because of 
a favorable administrative or judicial determination or decision, up to 
but not including the month the determination or decision is made.
    Representative means an attorney who meets all of the requirements 
of Sec. 404.1705(a), or a person other than an attorney who meets all 
of the requirements of Sec. 404.1705(b), and whom you appoint to 
represent you in dealings with us.
    We, our, or us refers to the Social Security Administration.
    You or your refers to any person claiming a right under the old-age, 
disability, dependents', or survivors' benefits program.



Sec. 404.1705  Who may be your representative.

    (a) Attorney. You may appoint as your representative in dealings 
with us, any attorney in good standing who--
    (1) Has the right to practice law before a court of a State, 
Territory, District, or island possession of the United States, or 
before the Supreme Court or a lower Federal court of the United States;
    (2) Is not disqualified or suspended from acting as a representative 
in dealings with us; and
    (3) Is not prohibited by any law from acting as a representative.
    (b) Person other than attorney. You may appoint any person who is 
not an attorney to be your representative in dealings with us if he or 
she--
    (1) Is generally known to have a good character and reputation;
    (2) Is capable of giving valuable help to you in connection with 
your claim;
    (3) Is not disqualified or suspended from acting as a representative 
in dealings with us; and
    (4) Is not prohibited by any law from acting as a representative.



Sec. 404.1706  Notification of options for obtaining attorney representation.

    If you are not represented by an attorney and we make a 
determination or decision that is subject to the administrative review 
process provided under subpart J of this part and it does not grant all 
of the benefits or other relief you requested or it adversely affects 
any entitlement to benefits that we have established or may establish 
for you, we will include with the notice of that determination or 
decision information about your options for obtaining an attorney to 
represent you in dealing with us. We will also tell you that a legal 
services organization may provide you with legal representation free of 
charge if you satisfy the qualifying requirements applicable to that 
organization.

[58 FR 64886, Dec. 10, 1993]



Sec. 404.1707  Appointing a representative.

    We will recognize a person as your representative if the following 
things are done:
    (a) You sign a written notice stating that you want the person to be 
your representative in dealings with us.
    (b) That person signs the notice, agreeing to be your 
representative, if the person is not an attorney. An attorney does not 
have to sign a notice of appointment.
    (c) The notice is filed at one of our offices if you have initially 
filed a

[[Page 546]]

claim or have requested reconsideration; with an administrative law 
judge if you requested a hearing; or with the Appeals Council if you 
have requested a review of the administrative law judge's decision.



Sec. 404.1710  Authority of a representative.

    (a) What a representative may do. Your representative may, on your 
behalf--
    (1) Obtain information about your claim to the same extent that you 
are able to do;
    (2) Submit evidence;
    (3) Make statements about facts and law; and
    (4) Make any request or give any notice about the proceedings before 
us.
    (b) What a representative may not do. A representative may not sign 
an application on behalf of a claimant for rights or benefits under 
title II of the Act unless authorized to do so under Sec. 404.612.



Sec. 404.1715  Notice or request to a representative.

    (a) We shall send your representative--
    (1) Notice and a copy of any administrative action, determination, 
or decision; and
    (2) Requests for information or evidence.
    (b) A notice or request sent to your representative, will have the 
same force and effect as if it had been sent to you.



Sec. 404.1720  Fee for a representative's services.

    (a) General. A representative may charge and receive a fee for his 
or her services as a representative only as provided in paragraph (b) of 
this section.
    (b) Charging and receiving a fee. (1) The representative must file a 
written request with us before he or she may charge or receive a fee for 
his or her services.
    (2) We decide the amount of the fee, if any, a representative may 
charge or receive.
    (3) A representative shall not charge or receive any fee unless we 
have approved it, and he or she shall not charge or receive any fee that 
is more than the amount we approve. This rule applies whether the fee is 
charged to or received from you or from someone else.
    (4) If the representative is an attorney and the claimant is 
entitled to past-due benefits, we will pay the authorized fee, or a part 
of the authorized fee, directly to the attorney out of the past-due 
benefits, subject to the limitations described in Sec. 404.1730(b)(1). 
If the representative is not an attorney, we assume no responsibility 
for the payment of any fee that we have authorized.
    (c) Notice of fee determination. We shall mail to both you and your 
representative at your last known address a written notice of what we 
decide about the fee. We shall state in the notice--
    (1) The amount of the fee that is authorized;
    (2) How we made that decision;
    (3) That we are not responsible for paying the fee, except when we 
may pay an attorney from past-due benefits; and
    (4) That within 30 days of the date of the notice, either you or 
your representative may request us to review the fee determination.
    (d) Review of fee determination--(1) Request filed on time. We will 
review the decision we made about a fee if either you or your 
representative files a written request for the review at one of our 
offices within 30 days after the date of the notice of the fee 
determination. Either you or your representative, whoever requests the 
review, shall mail a copy of the request to the other person. An 
authorized official of the Social Security Administration who did not 
take part in the fee determination being questioned will review the 
determination. This determination is not subject to further review. The 
official shall mail a written notice of the decision made on review both 
to you and to your representative at your last known address.
    (2) Request not filed on time. (i) If you or your representative 
requests a review of the decision we made about a fee, but does so more 
than 30 days after the date of the notice of the fee determination, 
whoever makes the request shall state in writing why it was not

[[Page 547]]

filed within the 30-day period. We will review the determination if we 
decide that there was good cause for not filing the request on time.
    (ii) Some examples of good cause follow:
    (A) Either you or your representative was seriously ill and the 
illness prevented you or your representative from contacting us in 
person or in writing.
    (B) There was a death or serious illness in your family or in the 
family of your representative.
    (C) Material records were destroyed by fire or other accidental 
cause.
    (D) We gave you or your representative incorrect or incomplete 
information about the right to request review.
    (E) You or your representative did not timely receive notice of the 
fee determination.
    (F) You or your representative sent the request to another 
government agency in good faith within the 30-day period, and the 
request did not reach us until after the period had ended.
    (3) Payment of fees. We assume no responsibility for the payment of 
a fee based on a revised determination if the request for administrative 
review was not filed on time.



Sec. 404.1725  Request for approval of a fee.

    (a) Filing a request. In order for your representative to obtain 
approval of a fee for services he or she performed in dealings with us, 
he or she shall file a written request with one of our offices. This 
should be done after the proceedings in which he or she was a 
representative are completed. The request must contain--
    (1) The dates the representative's services began and ended;
    (2) A list of the services he or she gave and the amount of time he 
or she spent on each type of service;
    (3) The amount of the fee he or she wants to charge for the 
services;
    (4) The amount of fee the representative wants to request or charge 
for his or her services in the same matter before any State or Federal 
court;
    (5) The amount of and a list of any expenses the representative 
incurred for which he or she has been paid or expects to be paid;
    (6) A description of the special qualifications which enabled the 
representative, if he or she is not an attorney, to give valuable help 
in connection with your claim; and
    (7) A statement showing that the representative sent a copy of the 
request for approval of a fee to you.
    (b) Evaluating a request for approval of a fee. (1) When we evaluate 
a representative's request for approval of a fee, we consider the 
purpose of the social security program, which is to provide a measure of 
economic security for the beneficiaries of the program, together with--
    (i) The extent and type of services the representative performed;
    (ii) The complexity of the case;
    (iii) The level of skill and competence required of the 
representative in giving the services;
    (iv) The amount of time the representative spent on the case;
    (v) The results the representative achieved;
    (vi) The level of review to which the claim was taken and the level 
of the review at which the representative became your representative; 
and
    (vii) The amount of fee the representative requests for his or her 
services, including any amount authorized or requested before, but not 
including the amount of any expenses he or she incurred.
    (2) Although we consider the amount of benefits, if any, that are 
payable, we do not base the amount of fee we authorize on the amount of 
the benefit alone, but on a consideration of all the factors listed in 
this section. The benefits payable in any claim are determined by 
specific provisions of law and are unrelated to the efforts of the 
representative. We may authorize a fee even if no benefits are payable.



Sec. 404.1728  Proceedings before a State or Federal court.

    (a) Representation of a party in court proceedings. We shall not 
consider any service the representative gave you in any proceeding 
before a State or Federal court to be services as a representative in 
dealings with us. However, if the representative also has given service 
to you in the same connection in any dealings with us, he or she must

[[Page 548]]

specify what, if any, portion of the fee he or she wants to charge is 
for services performed in dealings with us. If the representative 
charges any fee for those services, he or she must file the request and 
furnish all of the information required by Sec. 404.1725.
    (b) Attorney fee allowed by a Federal court. If a Federal court in 
any proceeding under title II of the Act makes a judgment in favor of a 
claimant who was represented before the court by an attorney, and the 
court, under section 206(b) of the Act, allows to the attorney as part 
of its judgment a fee not in excess of 25 percent of the total of past-
due benefits to which the claimant is entitled by reason of the 
judgment, we may pay the attorney the amount of the fee out of, but not 
in addition to, the amount of the past-due benefits payable. We will not 
certify for direct payment any other fee your representative may 
request.



Sec. 404.1730  Payment of fees.

    (a) Fees allowed by a Federal court. We will pay a representative 
who is an attorney, out of the claimant's past-due benefits, the amount 
of fee allowed by a Federal court in a proceeding under title II of the 
Act. The payment we make to the attorney is subject to the limitations 
described in paragraph (b)(1) of this section.
    (b) Fees we may authorize--(1) Attorneys. Except as provided in 
paragraph (c) of this section, if we make a determination or decision in 
favor of a claimant who was represented by an attorney, and as a result 
of the determination or decision past-due benefits are payable, we will 
pay the attorney out of the past-due benefits the smallest of--
    (i) Twenty-five percent of the total of the past-due benefits;
    (ii) The amount of the fee that we set; or
    (iii) The amount agreed upon between the attorney and the claimant 
represented.
    (2) Persons other than attorneys. If the representative is not an 
attorney, we assume no responsibility for the payment of any fee that we 
have authorized. We will not deduct the fee from any benefits payable to 
the claimant represented.
    (c) Time limit for filing request for approval of attorney fee. (1) 
In order to receive direct payment of a fee from a claimant's past-due 
benefits, an attorney should file a request for approval of a fee, or 
written notice of the intent to file a request, at one of our offices 
within 60 days of the date the notice of the favorable determination is 
mailed.
    (2)(i) If no request is filed within 60 days of the date the notice 
of the favorable determination is mailed, we will mail a written notice 
to the attorney and to the claimant, at their last known addresses. The 
notice will inform the attorney and the claimant that unless the 
attorney files, within 20 days from the date of the notice, a written 
request for approval of a fee under Sec. 404.1725, or a written request 
for an extension of time, we will pay all the past-due benefits to the 
claimant.
    (ii) The attorney must send the claimant a copy of any request made 
to us for an extension of time. If the request is not filed within 20 
days of the date of the notice, or by the last day of any extension we 
approved, we will pay all past-due benefits to the claimant. Any fee the 
attorney charges after that time must be approved by us, but the 
collection of any approved fee is a matter between the attorney and the 
claimant represented.



Sec. 404.1735  Services in a proceeding under title II of the Act.

    Services provided a claimant in any dealing with us under title II 
of the Act consist of services performed for that claimant in connection 
with any claim he or she may have before the Commissioner of Social 
Security under title II of the Act. These services include any in 
connection with any asserted right a claimant may have calling for an 
initial or reconsidered determination by us, and a decision or action by 
an administrative law judge or by the Appeals Council.

[45 FR 52090, Aug. 5, 1980, as amended at 62 FR 38452, July 18, 1997]



Sec. 404.1740  Rules of conduct and standards of responsibility for 
representatives.

    (a) Purpose and scope. (1) All attorneys or other persons acting on 
behalf of a party seeking a statutory right or

[[Page 549]]

benefit shall, in their dealings with us, faithfully execute their 
duties as agents and fiduciaries of a party. A representative shall 
provide competent assistance to the claimant and recognize the authority 
of the Agency to lawfully administer the process. The following 
provisions set forth certain affirmative duties and prohibited actions 
which shall govern the relationship between the representative and the 
Agency, including matters involving our administrative procedures and 
fee collections.
    (2) All representatives shall be forthright in their dealings with 
us and with the claimant and shall comport themselves with due regard 
for the nonadversarial nature of the proceedings by complying with our 
rules and standards, which are intended to ensure orderly and fair 
presentation of evidence and argument.
    (b) Affirmative duties. A representative shall, in conformity with 
the regulations setting forth our existing duties and responsibilities 
and those of claimants (see Sec. 404.1512 in disability and blindness 
claims):
    (1) Act with reasonable promptness to obtain the information and 
evidence that the claimant wants to submit in support of his or her 
claim, and forward the same to us for consideration as soon as 
practicable. In disability and blindness claims, this includes the 
obligations to assist the claimant in bringing to our attention 
everything that shows that the claimant is disabled or blind, and to 
assist the claimant in furnishing medical evidence that the claimant 
intends to personally provide and other evidence that we can use to 
reach conclusions about the claimant's medical impairment(s) and, if 
material to the determination of whether the claimant is blind or 
disabled, its effect upon the claimant's ability to work on a sustained 
basis, pursuant to Sec. 404.1512(a);
    (2) Assist the claimant in complying, as soon as practicable, with 
our requests for information or evidence at any stage of the 
administrative decisionmaking process in his or her claim. In disability 
and blindness claims, this includes the obligation pursuant to Sec. 
404.1512(c) to assist the claimant in providing, upon our request, 
evidence about:
    (i) The claimant's age;
    (ii) The claimant's education and training;
    (iii) The claimant's work experience;
    (iv) The claimant's daily activities both before and after the date 
the claimant alleges that he or she became disabled;
    (v) The claimant's efforts to work; and
    (vi) Any other factors showing how the claimant's impairment(s) 
affects his or her ability to work. In Sec. Sec. 404.1560 through 
404.1569, we discuss in more detail the evidence we need when we 
consider vocational factors; and
    (3) Conduct his or her dealings in a manner that furthers the 
efficient, fair and orderly conduct of the administrative decisionmaking 
process, including duties to:
    (i) Provide competent representation to a claimant. Competent 
representation requires the knowledge, skill, thoroughness and 
preparation reasonably necessary for the representation. This includes 
knowing the significant issue(s) in a claim and having a working 
knowledge of the applicable provisions of the Social Security Act, as 
amended, the regulations and the Rulings; and
    (ii) Act with reasonable diligence and promptness in representing a 
claimant. This includes providing prompt and responsive answers to 
requests from the Agency for information pertinent to processing of the 
claim.
    (c) Prohibited actions. A representative shall not:
    (1) In any manner or by any means threaten, coerce, intimidate, 
deceive or knowingly mislead a claimant, or prospective claimant or 
beneficiary, regarding benefits or other rights under the Act;
    (2) Knowingly charge, collect or retain, or make any arrangement to 
charge, collect or retain, from any source, directly or indirectly, any 
fee for representational services in violation of applicable law or 
regulation;
    (3) Knowingly make or present, or participate in the making or 
presentation of, false or misleading oral or written statements, 
assertions or representations about a material fact or

[[Page 550]]

law concerning a matter within our jurisdiction;
    (4) Through his or her own actions or omissions, unreasonably delay 
or cause to be delayed, without good cause (see Sec. 404.911(b)), the 
processing of a claim at any stage of the administrative decisionmaking 
process;
    (5) Divulge, without the claimant's consent, except as may be 
authorized by regulations prescribed by us or as otherwise provided by 
Federal law, any information we furnish or disclose about a claim or 
prospective claim;
    (6) Attempt to influence, directly or indirectly, the outcome of a 
decision, determination or other administrative action by offering or 
granting a loan, gift, entertainment or anything of value to a presiding 
official, Agency employee or witness who is or may reasonably be 
expected to be involved in the administrative decisionmaking process, 
except as reimbursement for legitimately incurred expenses or lawful 
compensation for the services of an expert witness retained on a non-
contingency basis to provide evidence; or
    (7) Engage in actions or behavior prejudicial to the fair and 
orderly conduct of administrative proceedings, including but not limited 
to:
    (i) Repeated absences from or persistent tardiness at scheduled 
proceedings without good cause (see Sec. 404.911(b));
    (ii) Willful behavior which has the effect of improperly disrupting 
proceedings or obstructing the adjudicative process; and
    (iii) Threatening or intimidating language, gestures or actions 
directed at a presiding official, witness or Agency employee which 
results in a disruption of the orderly presentation and reception of 
evidence.

[63 FR 41416, Aug. 4, 1998]



Sec. 404.1745  Violations of our requirements, rules, or standards.

    When we have evidence that a representative fails to meet our 
qualification requirements or has violated the rules governing dealings 
with us, we may begin proceedings to suspend or disqualify that 
individual from acting in a representational capacity before us. We may 
file charges seeking such sanctions when we have evidence that a 
representative:
    (a) Does not meet the qualifying requirements described in Sec. 
404.1705;
    (b) Has violated the affirmative duties or engaged in the prohibited 
actions set forth in Sec. 404.1740; or
    (c) Has been convicted of a violation under section 206 of the Act.

[63 FR 41416, Aug. 4, 1998]



Sec. 404.1750  Notice of charges against a representative.

    (a) The Deputy Commissioner for Disability and Income Security 
Programs (or other official the Commissioner may designate), or his or 
her designee, will prepare a notice containing a statement of charges 
that constitutes the basis for the proceeding against the 
representative.
    (b) We will send this notice to the representative either by 
certified or registered mail, to his or her last known address, or by 
personal delivery.
    (c) We will advise the representative to file an answer, within 30 
days from the date of the notice, or from the date the notice was 
delivered personally, stating why he or she should not be suspended or 
disqualified from acting as a representative in dealings with us.
    (d) The Deputy Commissioner for Disability and Income Security 
Programs (or other official the Commissioner may designate), or his or 
her designee, may extend the 30-day period for good cause.
    (e) The representative must--
    (1) Answer the notice in writing under oath (or affirmation); and
    (2) File the answer with the Social Security Administration, Office 
of Hearings and Appeals, Attention: Special Counsel Staff, within the 
30-day time period.
    (f) If the representative does not file an answer within the 30-day 
time period, he or she does not have the right to present evidence, 
except as may be provided in Sec. 404.1765(g).

[45 FR 52090, Aug. 5, 1980, as amended at 56 FR 24131, May 29, 1991; 62 
FR 38452, July 18, 1997; 63 FR 41417, Aug. 4, 1998]



Sec. 404.1755  Withdrawing charges against a representative.

    We may withdraw charges against a representative. We will do this if 
the

[[Page 551]]

representative files an answer, or we obtain evidence, that satisfies us 
that there is reasonable doubt about whether he or she should be 
suspended or disqualified from acting as a representative in dealings 
with us. If we withdraw the charges, we shall notify the representative 
by mail at his or her last known address.



Sec. 404.1765  Hearing on charges.

    (a) Scheduling the hearing. If the Deputy Commissioner for 
Disability and Income Security Programs (or other official the 
Commissioner may designate), or his or her designee, does not take 
action to withdraw the charges within 15 days after the date on which 
the representative filed an answer, we will hold a hearing and make a 
decision on the charges.
    (b)(1) Hearing officer. The Associate Commissioner for Hearings and 
Appeals, or his or her designee, shall assign an administrative law 
judge, designated to act as a hearing officer, to hold a hearing on the 
charges.
    (2) No hearing officer shall hold a hearing in a case in which he or 
she is prejudiced or partial about any party, or has any interest in the 
matter.
    (3) If the representative or any party to the hearing objects to the 
hearing officer who has been named to hold the hearing, we must be 
notified at the earliest opportunity. The hearing officer shall consider 
the objection(s) and either proceed with the hearing or withdraw from 
it.
    (4) If the hearing officer withdraws from the hearing, another one 
will be named.
    (5) If the hearing officer does not withdraw, the representative or 
any other person objecting may, after the hearing, present his or her 
objections to the Appeals Council explaining why he or she believes the 
hearing officer's decision should be revised or a new hearing held by 
another administrative law judge designated to act as a hearing officer.
    (c) Time and place of hearing. The hearing officer shall mail the 
parties a written notice of the hearing at their last known addresses, 
at least 20 days before the date set for the hearing.
    (d) Change of time and place for hearing. (1) The hearing officer 
may change the time and place for the hearing. This may be done either 
on his or her own initiative, or at the request of the representative or 
the other party to the hearing.
    (2) The hearing officer may adjourn or postpone the hearing.
    (3) The hearing officer may reopen the hearing for the receipt of 
additional evidence at any time before mailing notice of the decision.
    (4) The hearing officer shall give the representative and the other 
party to the hearing reasonable notice of any change in the time or 
place for the hearing, or of an adjournment or reopening of the hearing.
    (e) Parties. The representative against whom charges have been made 
is a party to the hearing. The Deputy Commissioner for Disability and 
Income Security Programs (or other official the Commissioner may 
designate), or his or her designee, shall also be a party to the 
hearing.
    (f) Subpoenas. (1) The representative or the other party to the 
hearing may request the hearing officer to issue a subpoena for the 
attendance and testimony of witnesses and for the production of books, 
records, correspondence, papers, or other documents that are material to 
any matter being considered at the hearing. The hearing officer may, on 
his or her own initiative, issue subpoenas for the same purposes when 
the action is reasonably necessary for the full presentation of the 
facts.
    (2) The representative or the other party who wants a subpoena 
issued shall file a written request with the hearing officer. This must 
be done at least 5 days before the date set for the hearing. The request 
must name the documents to be produced, and describe the address or 
location in enough detail to permit the witnesses or documents to be 
found.
    (3) The representative or the other party who wants a subpoena 
issued shall state in the request for a subpoena the material facts that 
he or she expects to establish by the witness or document, and why the 
facts could not be established by the use of other evidence which could 
be obtained without use of a subpoena.
    (4) We will pay the cost of the issuance and the fees and mileage of

[[Page 552]]

any witness subpoenaed, as provided in section 205(d) of the Act.
    (g) Conduct of the hearing. (1) The hearing officer shall make the 
hearing open to the representative, to the other party, and to any 
persons the hearing officer or the parties consider necessary or proper. 
The hearing officer shall inquire fully into the matters being 
considered, hear the testimony of witnesses, and accept any documents 
that are material.
    (2) If the representative did not file an answer to the charges, he 
or she has no right to present evidence at the hearing. The hearing 
officer may make or recommend a decision on the basis of the record, or 
permit the representative to present a statement about the sufficiency 
of the evidence or the validity of the proceedings upon which the 
suspension or disqualification, if it occurred, would be based.
    (3) If the representative did file an answer to the charges, and if 
the hearing officer believes that there is material evidence available 
that was not presented at the hearing, the hearing officer may at any 
time before mailing notice of the hearing decision reopen the hearing to 
accept the additional evidence.
    (4) The hearing officer has the right to decide the order in which 
the evidence and the allegations will be presented and the conduct of 
the hearing.
    (h) Evidence. The hearing officer may accept evidence at the 
hearing, even though it is not admissible under the rules of evidence 
that apply to Federal court procedure.
    (i) Witnesses. Witnesses who testify at the hearing shall do so 
under oath or affirmation. Either the representative or a person 
representing him or her may question the witnesses. The other party and 
that party's representative must also be allowed to question the 
witnesses. The hearing officer may also ask questions as considered 
necessary, and shall rule upon any objection made by either party about 
whether any question is proper.
    (j) Oral and written summation. (1) The hearing officer shall give 
the representative and the other party a reasonable time to present oral 
summation and to file briefs or other written statements about proposed 
findings of fact and conclusions of law if the parties request it.
    (2) The party that files briefs or other written statements shall 
provide enough copies so that they may be made available to any other 
party to the hearing who requests a copy.
    (k) Record of hearing. In all cases, the hearing officer shall have 
a complete record of the proceedings at the hearing made.
    (l) Representation. The representative, as the person charged, may 
appear in person and may be represented by an attorney or other 
representative.
    (m) Failure to appear. If the representative or the other party to 
the hearing fails to appear after being notified of the time and place, 
the hearing officer may hold the hearing anyway so that the party 
present may offer evidence to sustain or rebut the charges. The hearing 
officer shall give the party who failed to appear an opportunity to show 
good cause for failure to appear. If the party fails to show good cause, 
he or she is considered to have waived the right to be present at the 
hearing. If the party shows good cause, the hearing officer may hold a 
supplemental hearing.
    (n) Dismissal of charges. The hearing officer may dismiss the 
charges in the event of the death of the representative.
    (o) Cost of transcript. If the representative or the other party to 
a hearing requests a copy of the transcript of the hearing, the hearing 
officer will have it prepared and sent to the party upon payment of the 
cost, unless the payment is waived for good cause.

[45 FR 52090, Aug. 5, 1980, as amended at 56 FR 24131, 24132, May 29, 
1991; 62 FR 38452, July 18, 1997; 63 FR 41417, Aug. 4, 1998]



Sec. 404.1770  Decision by hearing officer.

    (a) General. (1) After the close of the hearing, the hearing officer 
shall issue a decision or certify the case to the Appeals Council. The 
decision must be in writing, will contain findings of fact and 
conclusions of law, and be based upon the evidence of record.
    (2) If the hearing officer finds that the charges against the 
representative have been sustained, he or she shall either--

[[Page 553]]

    (i) Suspend the representative for a specified period of not less 
than 1 year, nor more than 5 years, from the date of the decision; or
    (ii) Disqualify the representative from acting as a representative 
in dealings with us until he or she may be reinstated under Sec. 
404.1799.
    (3) The hearing officer shall mail a copy of the decision to the 
parties at their last known addresses. The notice will inform the 
parties of the right to request the Appeals Council to review the 
decision.
    (b) Effect of hearing officer's decision. (1) The hearing officer's 
decision is final and binding unless reversed or modified by the Appeals 
Council upon review.
    (2) If the final decision is that a person is disqualified from 
being a representative in dealings with us, he or she will not be 
permitted to represent anyone in dealings with us until authorized to do 
so under the provisions of Sec. 404.1799.
    (3) If the final decision is that a person is suspended for a 
specified period of time from being a representative in dealings with 
us, he or she will not be permitted to represent anyone in dealings with 
us during the period of suspension unless authorized to do so under the 
provisions of Sec. 404.1799.

[45 FR 52090, Aug. 5, 1980, as amended at 56 FR 24132, May 29, 1991; 63 
FR 41417, Aug. 4, 1998]



Sec. 404.1775  Requesting review of the hearing officer's decision.

    (a) General. After the hearing officer issues a decision, either the 
representative or the other party to the hearing may ask the Appeals 
Council to review the decision.
    (b) Time and place of filing request for review. The party 
requesting review shall file the request for review in writing with the 
Appeals Council within 30 days from the date the hearing officer mailed 
the notice. The party requesting review shall certify that a copy of the 
request for review and of any documents that are submitted have been 
mailed to the opposing party.



Sec. 404.1776  Assignment of request for review of the hearing officer's 
decision.

    Upon receipt of a request for review of the hearing officer's 
decision, the matter will be assigned to a panel consisting of three 
members of the Appeals Council none of whom shall be the Chair of the 
Appeals Council. The panel shall jointly consider and rule by majority 
opinion on the request for review of the hearing officer's decision, 
including a determination to dismiss the request for review. Matters 
other than a final disposition of the request for review may be disposed 
of by the member designated chair of the panel.

[56 FR 24132, May 29, 1991]



Sec. 404.1780  Appeals Council's review of hearing officer's decision.

    (a) Upon request, the Appeals Council shall give the parties a 
reasonable time to file briefs or other written statements as to fact 
and law, and to appear before the Appeals Council to present oral 
argument.
    (b) If a party files a brief or other written statement with the 
Appeals Council, he or she shall send a copy to the opposing party and 
certify that the copy has been sent.



Sec. 404.1785  Evidence permitted on review.

    (a) General. Generally, the Appeals Council will not consider 
evidence in addition to that introduced at the hearing. However, if the 
Appeals Council believes that the evidence offered is material to an 
issue it is considering, the evidence will be considered.
    (b) Individual charged filed an answer. (1) When the Appeals Council 
believes that additional material evidence is available, and the 
representative has filed an answer to the charges, the Appeals Council 
shall require that the evidence be obtained. The Appeals Council may 
name an administrative law judge or a member of the Appeals Council to 
receive the evidence.
    (2) Before additional evidence is admitted into the record, the 
Appeals Council shall mail a notice to the parties, telling them that 
evidence about certain issues will be obtained, unless the notice is 
waived. The Appeals

[[Page 554]]

Council shall give each party a reasonable opportunity to comment on the 
evidence and to present other evidence that is material to an issue it 
is considering.
    (c) Individual charged did not file an answer. If the representative 
did not file an answer to the charges, the Appeals Council will not 
permit the introduction of evidence that was not considered at the 
hearing.



Sec. 404.1790  Appeals Council's decision.

    (a) The Appeals Council shall base its decision upon the evidence in 
the hearing record and any other evidence it may permit on review. The 
Appeals Council shall either--
    (1) Affirm, reverse, or modify the hearing officer's decision; or
    (2) Return a case to the hearing officer when the Appeals Council 
considers it appropriate.
    (b) The Appeals Council, in changing a hearing officer's decision to 
suspend a representative for a specified period, shall in no event 
reduce the period of suspension to less than 1 year. In modifying a 
hearing officer's decision to disqualify a representative, the Appeals 
Council shall in no event impose a period of suspension of less than 1 
year.
    (c) If the Appeals Council affirms or changes a hearing officer's 
decision, the period of suspension or the disqualification is effective 
from the date of the Appeals Council's decision.
    (d) If the hearing officer did not impose a period of suspension or 
a disqualification, and the Appeals Council decides to impose one or the 
other, the suspension or disqualification is effective from the date of 
the Appeals Council's decision.
    (e) The Appeals Council shall make its decision in writing and shall 
mail a copy of the decision to the parties at their last known 
addresses.

[45 FR 52090, Aug. 5, 1980, as amended at 56 FR 24132, May 29, 1991]



Sec. 404.1795  When the Appeals Council will dismiss a request for review.

    The Appeals Council may dismiss a request for the review of any 
proceeding to suspend or disqualify a representative in any of the 
following circumstances:
    (a) Upon request of party. The Appeals Council may dismiss a request 
for review upon written request of the party or parties who filed the 
request if there is no other party who objects to the dismissal.
    (b) Death of party. The Appeals Council may dismiss a request for 
review in the event of the death of the representative.
    (c) Request for review not timely filed. The Appeals Council will 
dismiss a request for review if a party failed to file a request for 
review within the 30-day time period and the Appeals Council does not 
extend the time for good cause.



Sec. 404.1797  Reinstatement after suspension--period of suspension expired.

    We shall automatically allow a person to serve again as a 
representative in dealings with us at the end of any suspension.



Sec. 404.1799  Reinstatement after suspension or disqualification--period 
of suspension not expired.

    (a) After more than one year has passed, a person who has been 
suspended or disqualified, may ask the Appeals Council for permission to 
serve as a representative again.
    (b) The suspended or disqualified person shall submit any evidence 
he or she wishes to have considered along with the request to be allowed 
to serve as a representative again.
    (c) The Deputy Commissioner for Disability and Income Security 
Programs (or other official the Commissioner may designate), or his or 
her designee, upon notification of receipt of the request, shall have 30 
days in which to present a written report of any experiences with the 
suspended or disqualified person subsequent to that person's suspension 
or disqualification. The Appeals Council shall make available to the 
suspended or disqualified person a copy of the report.
    (d) The Appeals Council shall not grant the request unless it is 
reasonably satisfied that the person will in the future act according to 
the provisions of section 206(a) of the Act, and to our rules and 
regulations.
    (e) The Appeals Council shall mail a notice of its decision on the 
decision to

[[Page 555]]

the suspended or disqualified person. It shall also mail a copy to the 
Deputy Commissioner for Disability and Income Security Programs (or 
other official the Commissioner may designate), or his or her designee.
    (f) If the Appeals Council decides not to grant the request, it 
shall not consider another request before the end of 1 year from the 
date of the notice of the previous denial.

[45 FR 52090, Aug. 5, 1980, as amended at 56 FR 24132, May 29, 1991; 62 
FR 38452, July 18, 1997; 63 FR 41417, Aug. 4, 1998]



                      Subpart S_Payment Procedures

    Authority: Secs. 205 (a) and (n), 207, 702(a)(5), and 708(a) of the 
Social Security Act (42 U.S.C. 405 (a) and (n), 407, 902(a)(5) and 
909(a)).

    Source: 45 FR 52095, Aug. 5, 1980, unless otherwise noted.



Sec. 404.1800  Introduction.

    After we have made a determination or decision that you are entitled 
to benefits under title II of the Act, we begin paying those benefits to 
you as soon as possible. This subpart explains--
    (a) What we must do so that your benefits begin promptly;
    (b) When and how you may request that payment of benefits be 
expedited;
    (c) When we may cause your benefits to be withheld;
    (d) Our obligation not to assign or transfer your benefits to 
someone; and
    (e) When we will use one check to pay benefits to two or more 
persons in a family.



Sec. 404.1805  Paying benefits.

    (a) As soon as possible after we have made a determination or 
decision that you are entitled to benefits, we certify to the Secretary 
of the Treasury, who is the Managing Trustee of the Trust Funds--
    (1) Your name and address, or the name and address of the person to 
be paid if someone receives your benefits on your behalf as a 
representative payee;
    (2) The amount of the payment or payments to be made from the 
appropriate Trust Fund; and
    (3) The time at which the payment or payments should be made in 
accordance with Sec. 404.1807.
    (b) Under certain circumstances when you have had railroad 
employment, we will certify the information to the Railroad Retirement 
Board.

[45 FR 52095, Aug. 5, 1980, as amended at 62 FR 6120, Feb. 11, 1997]



Sec. 404.1807  Monthly payment day.

    (a) General. Once we have made a determination or decision that you 
are entitled to recurring monthly benefits, you will be assigned a 
monthly payment day. Thereafter, any recurring monthly benefits which 
are payable to you will be certified to the Managing Trustee for 
delivery on or before that day of the month as part of our certification 
under Sec. 404.1805(a)(3). Except as provided in paragraphs (c)(2) 
through (c)(6) of this section, once you have been assigned a monthly 
payment day, that day will not be changed.
    (b) Assignment of payment day. (1) We will assign the same payment 
day for all individuals who receive benefits on the earnings record of a 
particular insured individual.
    (2) The payment day will be selected based on the day of the month 
on which the insured individual was born. Insured individuals born on 
the 1st through the 10th of the month will be paid on the second 
Wednesday of each month. Insured individuals born on the 11th through 
the 20th of the month will be paid on the third Wednesday of each month. 
Insured individuals born after the 20th of the month will be paid on the 
fourth Wednesday of each month. See paragraph (c) of this section for 
exceptions.
    (3) We will notify you in writing of the particular monthly payment 
day that is assigned to you.
    (c) Exceptions. (1) If you or any other person became entitled to 
benefits on the earnings record of the insured individual based on an 
application filed before May 1, 1997, you will continue to receive your 
benefits on the 3rd day of the month (but see paragraph (c)(6) of this 
section). All persons who subsequently become entitled to benefits on 
that earnings record will be assigned to the 3rd day of the month as the 
monthly payment day.

[[Page 556]]

    (2) If you or any other person become entitled to benefits on the 
earnings record of the insured individual based on an application filed 
after April 30, 1997, and also become entitled to Supplemental Security 
Income (SSI) benefits or have income which is deemed to an SSI 
beneficiary (per Sec. 416.1160), all persons who are or become entitled 
to benefits on that earnings record will be assigned to the 3rd day of 
the month as the monthly payment day. We will notify you in writing if 
your monthly payment day is being changed to the 3rd of the month due to 
this provision.
    (3) If you or any other person become entitled to benefits on the 
earnings record of the insured individual based on an application filed 
after April 30, 1997, and also reside in a foreign country, all persons 
who are or become entitled to benefits on that earnings record will be 
assigned to the 3rd day of the month as the monthly payment day. We will 
notify you in writing if your monthly payment day is being changed to 
the 3rd of the month due to this provision.
    (4) If you or any other person become entitled on the earnings 
record of the insured individual based on an application filed after 
April 30, 1997, and are not entitled to SSI but are or become eligible 
for the State where you live to pay your Medicare premium under the 
provisions of section 1843 of the Act, all persons who are or become 
entitled to benefits on that earnings record will be assigned to the 3rd 
day of the month as the monthly payment day. We will notify you in 
writing if your monthly payment day is being changed to the 3rd of the 
month due to this provision.
    (5) After April 30, 1997, all individuals who become entitled on one 
record and later entitled on another record, without a break in 
entitlement, will be paid all benefits to which they are entitled no 
later than their current payment day. Individuals who are being paid 
benefits on one record on the 3rd of the month, and who become entitled 
on another record without a break in entitlement, will continue to 
receive all benefits on the 3rd of the month.
    (6) If the day regularly scheduled for the delivery of your benefit 
payment falls on a Saturday, Sunday, or Federal legal holiday, you will 
be paid on the first preceding day that is not a Saturday, Sunday, or 
Federal legal holiday.

[62 FR 6120, Feb. 11, 1997]



Sec. 404.1810  Expediting benefit payments.

    (a) General. We have established special procedures to expedite the 
payment of benefits in certain initial and subsequent claims. This 
section tells how you may request an expedited payment and when we will 
be able to hasten your payments by means of this process.
    (b) Applicability of section. (1) This section applies to monthly 
benefits payable under title II of the Act, except as indicated in 
paragraph (b)(2) of this section; and to those cases where we certify 
information to the Railroad Retirement Board.
    (2) This section does not apply--
    (i) If an initial determination has been made and a request for a 
reconsideration, a hearing, a review by the Appeals Council, or review 
by a Federal court is pending on any issue of entitlement to or payment 
of a benefit;
    (ii) To any benefit for which a check has been cashed; or
    (iii) To any benefit based on an alleged disability.
    (c) Request for payment. (1) You shall submit to us a written 
request for payment of benefits in accordance with paragraph (c)(2) or 
(c)(3) of this section. Paragraph (c)(2) of this section applies if you 
were receiving payments regularly and you then fail to receive payment 
for one or more months. Paragraph (c)(3) of this section applies if we 
have not made a determination about your entitlement to benefits, or if 
we have suspended or withheld payment due, for example, to excess 
earnings or recovery of an overpayment.
    (2) If you received a regular monthly benefit in the month before 
the month in which a payment was allegedly due, you may make a written 
request for payment any time 30 days after the 15th day of the month in 
which the payment was allegedly due. If you request is made before the 
end of the 30-day period, we will consider it to have been made at the 
end of the period.
    (3)(i) If you did not receive a regular monthly benefit in the month 
before

[[Page 557]]

the month in which a payment was allegedly due, you may make a written 
request for payment any time 90 days after the later of--
    (A) The date on which the benefit is alleged to have been due; or
    (B) The date on which you furnished us the last information we 
requested from you.
    (ii) If your request is made before the end of the 90-day period we 
will consider it to have been made at the end of the period.
    (d) Certification for payment. If we find that benefits are due, we 
shall certify the benefits for payment in sufficient time to permit the 
payment to be made within 15 days after the request for expedited 
payment is made, or considered to have been made, as provided in 
paragraph (c) of this section.
    (e) Preliminary certification for payment. If we determine that 
there is evidence, although additional evidence may be required for a 
final decision, that a monthly benefit due to you in a particular month 
was not paid, we may make preliminary certification of payment even 
though the 30-day or 90-day periods described in paragraph (c) of this 
section have not elapsed.



Sec. 404.1815  Withholding certification or payments.

    (a) When certification may be withheld. After a determination or 
decision, we may withhold certification to the Managing Trustee, or, if 
we have already made certification, we may notify the Managing Trustee 
to withhold payments. We may do this if a question about the validity of 
the payment or payments to be made under the determination or decision 
arises as the result of one of the following events:
    (1) A reconsideration (whether at the request of a claimant or on 
our own motion), hearing, or review is being conducted, or a civil 
action has been filed in a Federal district court concerning the 
determination or decision.
    (2) An application or request is pending concerning the payment of 
benefits or a lump sum to another person, and the application or request 
is inconsistent, in whole or in part, with the payment or payments under 
the determination or decision.
    (b) When certification will not be withheld. We will not withhold 
certification or payment as explained in paragraph (a) of this section 
unless evidence is submitted with the request or application that is 
sufficient to raise a reasonable question about the validity of the 
payment or payments under the determination or decision. We will not 
withhold certification of any amount of the payment or payments not in 
question. Your acceptance of any payment or payments will not affect 
your right to reconsideration, hearing, or review about any additional 
payment or payments you may claim.



Sec. 404.1820  Transfer or assignment of payments.

    (a) General. We shall not certify payment to--
    (1) Any person designated as your assignee or transferee; or
    (2) Any person claiming payment because of an execution, levy, 
attachment, garnishment, or other legal process, or because of any 
bankruptcy or insolvency proceeding against or affecting you.
    (b) Enforcement of a child support or alimony obligation. If you 
have a legal obligation to provide child support or make alimony 
payments and legal process is issued to enforce this obligation, the 
provisions of paragraph (a) of this section do not apply.



Sec. 404.1825  Joint payments to a family.

    (a) Two or more beneficiaries in same family. If an amount is 
payable under title II of the Act for any month to two or more persons 
who are members of the same family, we may certify any two or more of 
the individuals for joint payment of the total benefits payable to them 
for the month.
    (b) Joint payee dies before cashing a check. (1) If a check has been 
issued for joint payment to an individual and spouse residing in the 
same household, and one of the joint payees dies before the check has 
been cashed, we may authorize the surviving payee to cash the check. We 
make the authorization by placing on the face of the check a stamped 
legend signed by an official of the Social Security Administration or

[[Page 558]]

the Treasury Disbursing Office redesignating the survivor as the payee 
of the check.
    (2) If the uncashed check represents benefits for a month after the 
month of death, we will not authorize the surviving payee to cash the 
check unless the proceeds of the check are necessary to meet the 
ordinary and necessary living expenses of the surviving payee.
    (c) Adjustment or recovery of overpayment. If a check representing 
payment of benefits to an individual and spouse residing in the same 
household is cashed by the surviving payee under the authorization in 
paragraph (b) of this section, and the amount of the check exceeds the 
amount to which the surviving payee is entitled, we shall make 
appropriate adjustment or recovery of the excess amount.



                    Subpart T_Totalization Agreements

    Authority: Secs. 205(a), 233, and 702(a)(5) of the Social Security 
Act (42 U.S.C. 405(a), 433, and 902(a)(5)).

    Source: 44 FR 42964, July 23, 1979, unless otherwise noted.

                           General Provisions



Sec. 404.1901  Introduction.

    (a) Under section 233 of the Social Security Act, the President may 
enter into an agreement establishing a totalization arrangement between 
the social security system of the United States and the social security 
system of a foreign country. An agreement permits entitlement to and the 
amount of old-age, survivors, disability, or derivative benefits to be 
based on a combination of a person's periods of coverage under the 
social security system of the United States and the social security 
system of the foreign country. An agreement also provides for the 
precluding of dual coverage and dual social security taxation for work 
covered under both systems. An agreement may provide that the provisions 
of the social security system of each country will apply equally to the 
nationals of both countries (regardless of where they reside). For this 
purpose, refugees, stateless persons, and other nonnationals who derive 
benefit rights from nationals, refugees, or stateless persons may be 
treated as nationals if they reside within one of the countries.
    (b) The regulations in this subpart provide definitions and 
principles for the negotiation and administration of totalization 
agreements. Where necessary to accomplish the purposes of totalization, 
we will apply these definitions and principles, as appropriate and 
within the limits of the law, to accommodate the widely diverse 
characteristics of foreign social security systems.



Sec. 404.1902  Definitions.

    For purposes of this subpart--
    Act means the Social Security Act (42 U.S.C. 301 et seq.).
    Agency means the agency responsible for the specific administration 
of a social security system including responsibility for implementing an 
agreement; the Social Security Administration (SSA) is the agency in the 
U.S.
    Agreement means the agreement negotiated to provide coordination 
between the social security systems of the countries party to the 
agreement. The term agreement includes any administrative agreements 
concluded for purposes of administering the agreement.
    Competent authority means the official with overall responsibility 
for administration of a country's social security system including 
applicable laws and international social security agreements; the 
Commissioner of Social Security is the competent authority in the U.S.
    Period of coverage means a period of payment of contributions or a 
period of earnings based on wages for employment or on self-employment 
income, or any similar period recognized as equivalent under the social 
security system of the U.S. or under the social security system of the 
foreign country which is a party to an agreement.
    Residence or ordinarily resides, when used in agreements, has the 
following meaning for the U.S. Residence or ordinarily resides in a 
country means that a person has established a home in that country 
intending to remain there permanently or for an indefinite period of 
time. Generally, a person will be considered to have established a home 
in a country if that person assumes certain

[[Page 559]]

economic burdens, such as the purchase of a dwelling or establishment of 
a business, and participates in the social and cultural activities of 
the community. If residence in a country is established, it may continue 
even though the person is temporarily absent from that country. 
Generally, an absence of six months or less will be considered 
temporary. If an absence is for more than six months, residence in the 
country will generally be considered to continue only if there is 
sufficient evidence to establish that the person intends to maintain the 
residence. Sufficient evidence would include the maintenance of a home 
or apartment in that country, the departure from the country with a 
reentry permit, or similar acts. The existence of business or family 
associations sufficient to warrant the person's return would also be 
considered.
    Social security system means a social insurance or pension system 
which is of general application and which provides for paying periodic 
benefits, or the actuarial equivalent, because of old-age, death, or 
disability.

[44 FR 42964, July 23, 1979, as amended at 62 FR 38452, July 18, 1997]



Sec. 404.1903  Negotiating totalization agreements.

    An agreement shall be negotiated with the national government of the 
foreign country for the entire country. However, agreements may only be 
negotiated with foreign countries that have a social security system of 
general application in effect. The system shall be considered to be in 
effect if it is collecting social security taxes or paying social 
security benefits.



Sec. 404.1904  Effective date of a totalization agreement.

    Section 233 of the Social Security Act provides that a totalization 
agreement shall become effective on any date provided in the agreement 
if--
    (a) The date occurs after the expiration of a period during which at 
least one House of Congress has been in session on each of 60 days 
following the date on which the agreement is transmitted to Congress by 
the President; and
    (b) Neither House of Congress adopts a resolution of disapproval of 
the agreement within the 60-day period described in paragraph (a) of 
this section.

[49 FR 29775, July 24, 1984]



Sec. 404.1905  Termination of agreements.

    Each agreement shall contain provisions for its possible 
termination. If an agreement is terminated, entitlement to benefits and 
coverage acquired by an individual before termination shall be retained. 
The agreement shall provide for notification of termination to the other 
party and the effective date of termination.

                           Benefit Provisions



Sec. 404.1908  Crediting foreign periods of coverage.

    (a) General. To have foreign periods of coverage combined with U.S. 
periods of coverage for purposes of determining entitlement to and the 
amount of benefits payable under title II, an individual must have at 
least 6 quarters of coverage, as defined in section 213 of the Social 
Security Act, under the U.S. system. As a rule, SSA will accept foreign 
coverage information, as certified by the foreign country's agency, 
unless otherwise specified by the agreement. No credit will be given, 
however, for periods of coverage acquired before January 1, 1937.
    (b) For quarters of coverage purposes. (1) Generally, a quarter of 
coverage (QC) will be credited for every 3 months (or equivalent 
period), or remaining fraction of 3 months, of coverage in a reporting 
period certified to SSA by the other country's agency. A reporting 
period used by a foreign country may be one calendar year or some other 
period of time. QCs based on foreign periods of coverage may be credited 
as QCs only to calender quarters not already QCs under title II. The QCs 
will be assigned chronologically beginning with the first calendar 
quarter (not already a QC under title II) within the reporting period 
and continuing until all the QCs are assigned, or the reporting period 
ends. Example: Country XYZ, which has an annual reporting period, 
certifies to SSA that a worker has 8 months of coverage in 1975, from 
January 1 to August 25. The

[[Page 560]]

worker has no QCs under title II in that year. Since 8 months divided by 
3 months equals 2 QCs with a remainder of 2 months, the U.S. will credit 
the worker with 3 QCs. The QCs will be credited to the first 3 calendar 
quarters in 1975.
    (2) If an individual fails to meet the requirements for currently 
insured status or the insured status needed for establishing a period of 
disability solely because of the assignment of QCs based on foreign 
coverage to calendar quarters chronologically, the QCs based on foreign 
coverage may be assigned to different calendar quarters within the 
beginning and ending dates of the reporting period certified by the 
foreign country, but only as permitted under paragraph (b)(1) of this 
section.



Sec. 404.1910  Person qualifies under more than one totalization agreement.

    (a) An agreement may not provide for combining periods of coverage 
under more than two social security systems.
    (b) If a person qualifies under more than one agreement, the person 
will receive benefits from the U.S. only under the agreement affording 
the most favorable treatment.
    (c) In the absence of evidence to the contrary, the agreement that 
affords the most favorable treatment for purposes of paragraph (b) of 
this section will be determined as follows:
    (1) If benefit amounts are the same under all such agreements, 
benefits will be paid only under the agreement which affords the 
earliest month of entitlement.
    (2) If benefit amounts and the month of entitlement are the same 
under all such agreements, benefits will be paid only under the 
agreement under which all information necessary to pay such benefits is 
first available.
    (3) If benefit amounts under all such agreements are not the same, 
benefits will be paid only under the agreement under which the highest 
benefit is payable. However, benefits may be paid under an agreement 
under which a lower benefit is payable for months prior to the month of 
first entitlement to such higher benefit.

[44 FR 42964, July 23, 1979, as amended at 49 FR 29775, July 24, 1984]



Sec. 404.1911  Effects of a totalization agreement on entitlement to 
hospital insurance benefits.

    A person may not become entitled to hospital insurance benefits 
under section 226 or section 226A of the Act by combining the person's 
periods of coverage under the social security system of the United 
States with the person's periods of coverage under the social security 
system of the foreign country. Entitlement to hospital insurance 
benefits is not precluded if the person otherwise meets the 
requirements.

                           Coverage Provisions



Sec. 404.1913  Precluding dual coverage.

    (a) General. Employment or self-employment or services recognized as 
equivalent under the Act or the social security system of the foreign 
country shall, on or after the effective date of the agreement, result 
in a period of coverage under the U.S. system or under the foreign 
system, but not under both. Methods shall be set forth in the agreement 
for determining under which system the employment, self-employment, or 
other service shall result in a period of coverage.
    (b) Principles for precluding dual coverage. (1) An agreement 
precludes dual coverage by assigning responsibility for coverage to the 
U.S. or a foreign country. An agreement may modify the coverage 
provisions of title II of the Act to accomplish this purpose. Where an 
agreement assigns coverage to the foreign country, it may exempt from 
coverage services otherwise covered by the Act. Where an agreement 
assigns coverage to the U.S., it may extend coverage to services not 
otherwise covered by the Act but only for taxable years beginning on or 
after April 20, 1983.
    (2) If the work would otherwise be covered by both countries, an 
agreement will exempt it from coverage by one of the countries.
    (3) Generally, an agreement will provide that a worker will be 
covered by the country in which he or she is employed and will be exempt 
from coverage by the other country.

    Example: A U.S. national employed in XYZ country by an employer 
located in the

[[Page 561]]

United States will be covered by XYZ country and exempt from U.S. 
coverage.

    (4) An agreement may provide exceptions to the principle stated in 
paragraph (b)(3) of this section so that a worker will be covered by the 
country to which he or she has the greater attachment.

    Example: A U.S. national sent by his employer located in the United 
States to work temporarily for that employer in XYZ country will be 
covered by the United States and will be exempt from coverage by XYZ 
country.

    (5) Generally, if a national of either country resides in one 
country and has self employment income that is covered by both 
countries, an agreement will provide that the person will be covered by 
the country in which he or she resides and will be exempt from coverage 
by the other country.
    (6) Agreements may provide for variations from the general 
principles for precluding dual coverage to avoid inequitable or 
anomalous coverage situations for certain workers. However, in all cases 
coverage must be provided by one of the countries.

[44 FR 42964, July 23, 1979, as amended at 50 FR 36575, Sept. 9, 1985]



Sec. 404.1914  Certificate of coverage.

    Under some agreements, proof of coverage under one social security 
system may be required before the individual may be exempt from coverage 
under the other system. Requests for certificates of coverage under the 
U.S. system may be submitted by the employer, employee, or self-employed 
individual to SSA.



Sec. 404.1915  Payment of contributions.

    On or after the effective date of the agreement, to the extent that 
employment or self-employment (or service recognized as equivalent) 
under the U.S. social security system or foreign system is covered under 
the agreement, the agreement shall provide that the work or equivalent 
service be subject to payment of contributions or taxes under only one 
system (see sections 1401(c), 3101(c), and 3111(c) of the Internal 
Revenue Code of 1954). The system under which contributions or taxes are 
to be paid is the system under which there is coverage pursuant to the 
agreement.

                         Computation Provisions



Sec. 404.1918  How benefits are computed.

    (a) General. Unless otherwise provided in an agreement, benefits 
will be computed in accordance with this section. Benefits payable under 
an agreement are based on a pro rata primary insurance amount (PIA), 
which we determine as follows:
    (1) We establish a theoretical earnings record for a worker which 
attributes to all computation base years (see Sec. Sec. 404.211(b) and 
404.241(c)) the same relative earnings position (REP) as he or she has 
in the years of his or her actual U.S. covered work. As explained in 
paragraph (b)(3) of this section, the REP is derived by determining the 
ratio of the worker's actual U.S. covered earnings in each year to the 
average of the total U.S. covered wages of all workers for that year, 
and then averaging the ratios for all such years. This average is the 
REP and is expressed as a percentage.
    (2) We compute a theoretical PIA as prescribed in Sec. 404.1918(c) 
based on the theoretical earnings record and the provisions of subpart C 
of this part.
    (3) We multiply the theoretical PIA by a fraction equal to the 
number of quarters of coverage (QC's) which the worker completed under 
the U.S. Social Security system over the number of calendar quarters in 
the worker's coverage lifetime (see paragraph (d)(2) of this section). 
See Sec. 404.140 for the definition of QC.
    (4) If the pro rata PIA is higher than the PIA which would be 
computed if the worker were insured under the U.S. system without 
totalization, the pro rata PIA will be reduced to the later PIA.
    (b) Establishing a theoretical earnings record. (1) To establish a 
worker's theoretical earnings record, we divide his or her U.S. earnings 
in each year credited with at least one U.S. QC by the average of the 
total wages of all workers for that year and express the quotient as a 
percentage. For the years 1937 through 1950, the average of the total 
wages is as follows:

[[Page 562]]



------------------------------------------------------------------------
                                                              Average of
                                                              the total
                            Year                               wages of
                                                             all workers
------------------------------------------------------------------------
1937.......................................................    $1,137.96
1938.......................................................     1,053.24
1939.......................................................     1,142.36
1940.......................................................     1,195.00
1941.......................................................     1,276.04
1942.......................................................     1,454.28
1943.......................................................     1,713.52
1944.......................................................     1,936.32
1945.......................................................     2,021.40
1946.......................................................     1,891.76
1947.......................................................     2,175.32
1948.......................................................     2,361.64
1949.......................................................     2,483.20
1950.......................................................     2,543.96
------------------------------------------------------------------------

    (2) For years after 1950, the average of the total wages is as 
prescribed in Sec. 404.211(c). If a worker has earnings in the year 
preceding the year of eligibility or death, or in a later year, we may 
not have been able to establish the average of the total wages of all 
workers for that year. Therefore, we will divide a worker's actual 
earnings in these years by the average of the total wages for the latest 
year for which that information is available. Average wage information 
is considered available on January 1 of the year following the year in 
which it is published in the Federal Register.
    (3) The percentages for all years of actual covered earnings are 
then averaged to give the worker's REP for the entire period of work in 
the U.S. In determining the percentages for all years of covered 
earnings and the REP, we make adjustments as necessary to take account 
of the fact that the covered earnings for some years may have involved 
less than four U.S. QC's. The actual earnings that are taken into 
account in determining the percentage for any year with 1, 2, or 3 QC's 
cannot exceed \1/4\, \1/2\, or \3/4\, respectively, of the maximum 
creditable earnings for that year. When we determine the REP from the 
percentages for all years, we add the percentages for all years, divide 
this sum by the total number of QC's credited to the worker, and 
multiply this quotient by 4 (see Example 1 of paragraph (d) of this 
section). This has the effect of calculating the REP on a quarterly 
basis.
    (4) For each of the worker's computation base years (see Sec. Sec. 
404.211(b), 404.221(b) and 404.241(c)), we multiply the average of the 
total wages of all workers for that year by the worker's REP. The 
product is the amount of earnings attributed to the worker for that 
year, subject to the annual wage limitation (see Sec. 404.1047). The 
worker's theoretical earnings record consists of his or her attributed 
earnings based on his or her REP for all computation base years. 
However, we do not attribute earnings to computation base years before 
the year of attainment of age 22 or to computation base years beginning 
with the year of attainment of retirement age (or the year in which a 
period of disability begins), unless the worker is actually credited 
with U.S. earnings in those years. In death cases, earnings for the year 
of death will be attributed only through the quarter of death, on a 
proportional basis.
    (c) Determining the theoretical PIA. We determine the worker's 
theoretical PIA based on his or her theoretical earnings record by 
applying the same computation method that would have applied under 
subpart C if the worker had these theoretical earnings and had qualified 
for benefits without application of an agreement. However, when the 
criteria in Sec. 404.210(a) for the Average Indexed Monthly Earnings 
(AIME) computation method are met, only that method is used. If these 
criteria are not met but the criteria in Sec. 404.220(a) for the 
Average Monthly Wage method are met, then only that method is used. If 
neither of these criteria are met, then the old-start method described 
in Sec. 404.241 is used. If a theoretical PIA is to be determined based 
on a worker's AIME, theoretical earnings amounts for each year, 
determined under paragraph (b) of this section, are indexed in 
determining the AIME under Sec. 404.211.
    (d) Determining the pro rata PIA. We then determine a pro rata PIA 
from the theoretical PIA. The pro rata PIA is the product of--
    (1) The theoretical PIA; and
    (2) The ratio of the worker's actual number of U.S. QC's to the 
number of calendar quarters in the worker's coverage lifetime. A 
coverage lifetime means the worker's benefit computation years as 
determined under Sec. 404.211(e), Sec. 404.221(c), or Sec. 
404.241(d).

    Example 1: C attains age 62 in 1982 and needs 31 QC's to be insured. 
C worked under

[[Page 563]]

the U.S. system from July 1, 1974 to December 31, 1980 and therefore has 
only 6\1/2\ years during which he worked under the U.S. system (26 
QC's). C, however, has worked under the Social Security system of a 
foreign country that is party to a totalization agreement, and his total 
U.S. and foreign work, combined as described in Sec. 404.1908, equals 
more than 31 QC's. Thus, the combined coverage gives C insured status. 
The benefit is computed as follows:
    Step 1: Establish C's theoretical earnings record:
    The following table shows: (1) C's actual U.S. covered earnings for 
each year, (2) the average of the total wages of all workers for that 
year and (3) the ratio of (1) to (2):

----------------------------------------------------------------------------------------------------------------
                                                                              C's actual
                                                                                 U.S.      National   Percentage
                                Year                                   QC's     covered     average    ratio of
                                                                               earnings      wage     (1) to (2)
----------------------------------------------------------------------------------------------------------------
                                                                     .......         (1)         (2)         (3)
--------------------------------------------------------------------
1974...............................................................        2   $2,045.08   $8,030.76    25.46558
1975...............................................................        4    7,542.00    8,630.92    87.38350
1976...............................................................        4    9,016.00    9,226.48    97.71874
1977...............................................................        4    9,952.00    9,779.44   101.76452
1978...............................................................        4   10,924.00   10,556.03   103.48587
1979...............................................................        4   12,851.00   11,479.46   111.94777
1980...............................................................        4   11,924.00   12,513.46    95.28939
----------------------------------------------------------------------------------------------------------------

    C's REP is the average of the ratios in column 3, adjusted to take 
account of the fact that C had only 2 QC's in 1974. Thus, the REP equals 
the sum of the figures in column 3 (623.05537), divided by the total 
number of C's QC's (26) and multiplied by 4, or 95.85467 percent.
    Since C attained age 62 in 1982, his computation base years are 1951 
through 1981. To establish his theoretical earnings record we use 
95.85467 percent of the national average wage for each of the years 1951 
through 1981. Since national average wage data is not available for 
1981, for that year we attribute 95.85467 percent of the national 
average wage for 1980 or $11,994.74. His theoretical earnings record 
would look like this:

1951.......................................................    $2,683.13
1952.......................................................     2,850.07
1953.......................................................     3,009.30
1954.......................................................     3,024.83
1955.......................................................     3,164.58
1956.......................................................     3,385.93
1957.......................................................     3,490.76
1958.......................................................     3,521.51
1959.......................................................     3,695.96
1960.......................................................     3,841.01
1961.......................................................     3,917.35
1962.......................................................     4,113.51
1963.......................................................     4,214.38
1964.......................................................     4,386.62
1965.......................................................     4,465.60
1966.......................................................     4,733.65
1967.......................................................     4,997.33
1968.......................................................     5,340.79
1969.......................................................     5,649.44
1970.......................................................     5,929.80
1971.......................................................     6,227.75
1972.......................................................     6,838.08
1973.......................................................     7,265.94
1974.......................................................     7,697.86
1975.......................................................     8,273.14
1976.......................................................     8,844.01
1977.......................................................     9,374.05
1978.......................................................    10,118.45
1979.......................................................    11,003.60
1980.......................................................    11,994.74
1981.......................................................    11,994.74
 

    Step 2: Compute the theoretical PIA: Since C attains age 62 in 1982, 
we determine his theoretical PIA using an AIME computation. In applying 
the AIME computation, we index each year's earnings on the theoretical 
earnings record in accordance with Sec. 404.211(d). In this example, 
the theoretical PIA is $453.
    Step 3: Compute the pro rata PIA:

                                                        Theoretical PIA
                                                      - Actual U.S. QC's
                                        ----------------------------------------------
                                                     calendar quarters in
                                                   benefit computation years
 
 
                                                 $453 - 26 QC's (6\1/2\ years)
                                        ----------------------------------------------
                                                    104 quarters (26 years)
 
 
                                             = $113.20 pro rata PIA
 

    Example 2: M needs 27 QC's to be insured, but she has only 3 years 
of work (12 QC's) under the U.S. system. M has enough foreign work, 
however, to be insured. She attained age 62 in 1978, and her U.S. 
covered earnings were in 1947, 1948 and 1949. Based on M's date of 
birth, her theoretical PIA can be computed, in accordance with Sec. 
404.220, under a new start method. If M's earnings in 1947, 1948, and 
1949 were 50 percent, 60 percent and 70 percent, respectively, of the 
average wage for each year, her REP would be 60 percent. For each year 
in the computation period, 60 percent of the average wage for that year 
will be attributed as M's assumed earnings. The theoretical PIA will 
then be computed as described in Sec. Sec. 404.220 through 404.222.
    To determine M's pro rata PIA, the theoretical PIA will be 
multiplied by the ratio of the actual number of U.S. QC's to the number 
of calendar quarters in the benefit computation years. There are 22 
benefit computation years, or 88 quarters. The pro rata PIA would, 
therefore, be \12/88\ x theoretical PIA.

    (e) Rounding of benefits. (1) If the effective date of the pro rata 
PIA is before June 1982, we will round to the next higher multiple of 10 
cents if it is not already a multiple of 10 cents.
    (2) If the effective date of the pro rata PIA is June 1982 or later, 
we will round to the next lower multiple of 10 cents if it is not 
already a multiple of 10 cents.

[[Page 564]]

    (f) Auxiliary and survivors benefits; reductions; family maximum. We 
will determine auxiliary and survivors benefit amounts (see subpart D) 
on the basis of the pro rata PIA. We will apply the regular reductions 
for age under section 202(q) of the Act to the benefits of the worker or 
to any auxiliaries or survivors which are based on the pro rata PIA (see 
Sec. 404.410). Benefits will be payable subject to the family maximum 
(see Sec. 404.403) derived from the pro rata PIA. If the pro rata PIA 
is less than the minimum PIA, the family maximum will be 1\1/2\ times 
the pro rata PIA.

[49 FR 29775, July 24, 1984]



Sec. 404.1919  How benefits are recomputed.

    Unless otherwise provided in an agreement, we will recompute 
benefits in accordance with this section. We will recompute the pro rata 
PIA only if the inclusion of the additional earnings results in an 
increase in the benefits payable by the U.S. to all persons receiving 
benefits on the basis of the worker's earnings. Subject to this 
limitation, the pro rata PIA will be automatically recomputed (see Sec. 
404.285) to include additional earnings under the U.S. system. In so 
doing, a new REP will be established for the worker, taking the 
additional earnings into account, and assumed earnings in the 
computation base years used in the original computation will be 
refigured using the new REP. Assumed earnings will also be determined 
for the year of additional earnings using the new REP. The additional 
U.S. earnings will also be used in refiguring the ratio described in 
Sec. 404.1918(d)(2).

[49 FR 29777, July 24, 1984]



Sec. 404.1920  Supplementing the U.S. benefit if the total amount of the 
combined benefits is less than the U.S. minimum benefit.

    If a resident of the U.S. receives benefits under an agreement from 
both the U.S. and from the foreign country, the total amount of the two 
benefits may be less than the amount for which the resident would 
qualify under the U.S. system based on the minimum PIA as in effect for 
persons first becoming eligible for benefits before January 1982. An 
agreement may provide that in the case of an individual who first 
becomes eligible for benefits before January 1982, the U.S. will 
supplement the total amount to raise it to the amount for which the 
resident would have qualified under the U.S. system based on the minimum 
PIA. (The minimum benefit will be based on the first figure in column IV 
in the table in section 215(a) of the Act for a person becoming eligible 
for the benefit before January 1, 1979, or the PIA determined under 
section 215(a)(1)(C)(i)(I) of the Act (as in effect in December 1981) 
for a person becoming eligible for the benefit after December 31, 1978.)

[49 FR 29777, July 24, 1984]



Sec. 404.1921  Benefits of less than $1 due.

    If the monthly benefit amount due an individual (or several 
individuals, e.g., children, where several benefits are combined in one 
check) as a result of a claim filed under an agreement is less than $1, 
the benefits may be accumulated until they equal or exceed $5.

                            Other Provisions



Sec. 404.1925  Applications.

    (a)(1) An application, or written statement requesting benefits, 
filed with the competent authority or agency of a country with which the 
U.S. has concluded an agreement shall be considered an application for 
benefits under title II of the Act as of the date it is filed with the 
competent authority or agency if--
    (i) An applicant expresses or implies an intent to claim benefits 
from the U.S. under an agreement; and
    (ii) The applicant files an application that meets the requirements 
in subpart G of this part.
    (2) The application described in paragraph (a)(1)(ii) of this 
section must be filed, even if it is not specifically provided for in 
the agreement.
    (b) Benefits under an agreement may not be paid on the basis of an 
application filed before the effective date of the agreement.



Sec. 404.1926  Evidence.

    (a) An applicant for benefits under an agreement shall submit the 
evidence needed to establish entitlement, as provided in subpart H of 
this part. Special

[[Page 565]]

evidence requirements for disability benefits are in subpart P of this 
part.
    (b) Evidence submitted to the competent authority or agency of a 
country with which the U.S. has concluded an agreement shall be 
considered as evidence submitted to SSA. SSA shall use the rules in 
Sec. Sec. 404.708 and 404.709 to determine if the evidence submitted is 
sufficient, or if additional evidence is needed to prove initial or 
continuing entitlement to benefits.
    (c) If an application is filed for disability benefits, SSA shall 
consider medical evidence submitted to a competent authority or agency, 
as described in paragraph (b) of this section, and use the rules of 
subpart P of this part for making a disability determination.



Sec. 404.1927  Appeals.

    (a) A request for reconsideration, hearing, or Appeals Council 
review of a determination that is filed with the competent authority or 
agency of a country with which the U.S. has concluded an agreement, 
shall be considered to have been timely filed with SSA if it is filed 
within the 60-day time period provided in Sec. Sec. 404.911, 404.918, 
and 404.946.
    (b) A request for reconsideration, hearing, or Appeals Council 
review of a determination made by SSA resulting from a claim filed under 
an agreement shall be subject to the provisions in subpart J of this 
part. The rules governing administrative finality in subpart J of this 
part shall also apply.



Sec. 404.1928  Effect of the alien non-payment provision.

    An agreement may provide that a person entitled to benefits under 
title II of the Social Security Act may receive those benefits while 
residing in the foreign country party to the agreement, regardless of 
the alien non-payment provision (see Sec. 404.460).



Sec. 404.1929  Overpayments.

    An agreement may not authorize the adjustment of title II benefits 
to recover an overpayment made under the social security system of a 
foreign country (see Sec. 404.501). Where an overpayment is made under 
the U.S. system, the provisions in subpart F of this part will apply.



Sec. 404.1930  Disclosure of information.

    The use of information furnished under an agreement generally shall 
be governed by the national statutes on confidentiality and disclosure 
of information of the country that has been furnished the information. 
(The U.S. will be governed by pertinent provisions of the Social 
Security Act, the Freedom of Information Act, the Privacy Act, the Tax 
Reform Act, and other related statutes.) In negotiating an agreement, 
consideration, should be given to the compatibility of the other 
country's laws on confidentiality and disclosure to those of the U.S. To 
the extent possible, information exchanged between the U.S. and the 
foreign country should be used exclusively for purposes of implementing 
the agreement and the laws to which the agreement pertains.



                    Subpart U_Representative Payment

    Authority: Secs. 205 (a), (j), and (k), and 702(a)(5) of the Social 
Security Act (42 U.S.C. 405 (a), (j), and (k), and 902(a)(5)).

    Source: 47 FR 30472, July 14, 1982, unless otherwise noted.



Sec. 404.2001  Introduction.

    (a) Explanation of representative payment. This subpart explains the 
principles and procedures that we follow in determining whether to make 
representative payment and in selecting a representative payee. It also 
explains the responsibilities that a representative payee has concerning 
the use of the funds he or she receives on behalf of a beneficiary. A 
representative payee may be either a person or an organization selected 
by us to receive benefits on behalf of a beneficiary. A representative 
payee will be selected if we believe that the interest of a beneficiary 
will be served by representative payment rather than direct payment of 
benefits. Generally, we appoint a representative payee if we have 
determined that the beneficiary is not able to manage or direct the 
management of benefit payments in his or her interest.

[[Page 566]]

    (b) Policy used to determine whether to make representative payment. 
(1) Our policy is that every beneficiary has the right to manage his or 
her own benefits. However, some beneficiaries due to a mental or 
physical condition or due to their youth may be unable to do so. Under 
these circumstances, we may determine that the interests of the 
beneficiary would be better served if we certified benefit payments to 
another person as a representative payee.
    (2) If we determine that representative payment is in the interest 
of a beneficiary, we will appoint a representative payee. We may appoint 
a representative payee even if the beneficiary is a legally competent 
individual. If the beneficiary is a legally incompetent individual, we 
may appoint the legal guardian or some other person as a representative 
payee.
    (3) If payment is being made directly to a beneficiary and a 
question arises concerning his or her ability to manage or direct the 
management of benefit payments, we will, if the beneficiary is 18 years 
old or older and has not been adjudged legally incompetent, continue to 
pay the beneficiary until we make a determination about his or her 
ability to manage or direct the management of benefit payments and the 
selection of a representative payee.



Sec. 404.2010  When payment will be made to a representative payee.

    (a) We pay benefits to a representative payee on behalf of a 
beneficiary 18 years old or older when it appears to us that this method 
of payment will be in the interest of the beneficiary. We do this if we 
have information that the beneficiary is--
    (1) Legally incompetent or mentally incapable of managing benefit 
payments; or
    (2) Physically incapable of managing or directing the management of 
his or her benefit payments.
    (b) Generally, if a beneficiary is under age 18, we will pay 
benefits to a representative payee. However, in certain situations, we 
will make direct payments to a beneficiary under age 18 who shows the 
ability to manage the benefits. For example, we make direct payments to 
a beneficiary under age 18 if the beneficiary is--
    (1) Receiving disability insurance benefits on his or her own Social 
Security earnings record; or
    (2) Serving in the military services; or
    (3) Living alone and supporting himself or herself; or
    (4) A parent and files for himself or herself and/or his or her 
child and he or she has experience in handling his or her own finances; 
or
    (5) Capable of using the benefits to provide for his or her current 
needs and no qualified payee is available; or
    (6) Within 7 months of attaining age 18 and is initially filing an 
application for benefits.

[47 FR 30472, July 14, 1982, as amended at 54 FR 35483, Aug. 28, 1989]



Sec. 404.2015  Information considered in determining whether to make 
representative payments.

    In determining whether to make representative payment we consider 
the following information:
    (a) Court determinations. If we learn that a beneficiary has been 
found to be legally incompetent, a certified copy of the court's 
determination will be the basis of our determination to make 
representative payment.
    (b) Medical evidence. When available, we will use medical evidence 
to determine if a beneficiary is capable of managing or directing the 
management of benefit payments. For example, a statement by a physician 
or other medical professional based upon his or her recent examination 
of the beneficiary and his or her knowledge of the beneficiary's present 
condition will be used in our determination, if it includes information 
concerning the nature of the beneficiary's illness, the beneficiary's 
chances for recovery and the opinion of the physician or other medical 
professional as to whether the beneficiary is able to manage or direct 
the management of benefit payments.
    (c) Other evidence. We will also consider any statements of 
relatives, friends and other people in a position to know and observe 
the beneficiary, which contain information helpful to us in deciding 
whether the beneficiary is able to manage or direct the management of 
benefit payments.

[[Page 567]]



Sec. 404.2020  Information considered in selecting a representative payee.

    In selecting a payee we try to select the person, agency, 
organization or institution that will best serve the interest of the 
beneficiary. In making our selection we consider--
    (a) The relationship of the person to the beneficiary;
    (b) The amount of interest that the person shows in the beneficiary;
    (c) Any legal authority the person, agency, organization or 
institution has to act on behalf of the beneficiary;
    (d) Whether the potential payee has custody of the beneficiary; and
    (e) Whether the potential payee is in a position to know of and look 
after the needs of the beneficiary.



Sec. 404.2021  Order of preference in selecting a representative payee.

    As a guide in selecting a representative payee, categories of 
preferred payees have been established. These preferences are flexible. 
Our primary concern is to select the payee who will best serve the 
beneficiary's interest. The preferences are:
    (a) For beneficiaries 18 years old or older, our preference is--
    (1) A legal guardian, spouse (or other relative) who has custody of 
the beneficiary or who demonstrates strong concern for the personal 
welfare of the beneficiary;
    (2) A friend who has custody of the beneficiary or demonstrates 
strong concern for the personal welfare of the beneficiary;
    (3) A public or nonprofit agency or institution having custody of 
the beneficiary;
    (4) A private institution operated for profit and licensed under 
State law, which has custody of the beneficiary; and
    (5) Persons other than above who are qualified to carry out the 
responsibilities of a payee and who are able and willing to serve as a 
payee for a beneficiary; e.g., members of community groups or 
organizations who volunteer to serve as payee for a beneficiary.
    (b) For beneficiaries under age 18, our preference is--
    (1) A natural or adoptive parent who has custody of the beneficiary, 
or a guardian;
    (2) A natural or adoptive parent who does not have custody of the 
beneficiary, but is contributing toward the beneficiary's support and is 
demonstrating strong concern for the beneficiary's well being;
    (3) A natural or adoptive parent who does not have custody of the 
beneficiary and is not contributing toward his or her support but is 
demonstrating strong concern for the beneficiary's well being;
    (4) A relative or stepparent who has custody of the beneficiary;
    (5) A relative who does not have custody of the beneficiary but is 
contributing toward the beneficiary's support and is demonstrating 
concern for the beneficiary's well being;
    (6) A relative or close friend who does not have custody of the 
beneficiary but is demonstrating concern for the beneficiary's well 
being; and
    (7) An authorized social agency or custodial institution.

[47 FR 30472, July 14, 1982; 47 FR 32936, July 30, 1982]



Sec. 404.2025  Information to be submitted by a representative payee.

    (a) Before we select a representative payee, the payee applicant 
must give us information showing his or her relationship to the 
beneficiary and his or her responsibility for the care of the 
beneficiary.
    (b) Anytime after we have selected a payee, we may ask the payee to 
give us information showing a continuing relationship to the beneficiary 
and a continuing responsibility for the care of the beneficiary. If the 
payee does not give us the requested information within a reasonable 
period of time, we may stop paying the payee unless we determine that 
the payee had a good reason for not complying with our request, and we 
receive the information requested.



Sec. 404.2030  Advance notice of the determination to make representative 
payment.

    (a) Generally, whenever we intend to make representative payment and 
to name a payee, we notify the beneficiary or the individual acting on 
his or her behalf, of our proposed actions. In this notice we tell the 
person that

[[Page 568]]

we plan to name a representative payee and who that payee will be. We 
also ask the person to contact us if he or she objects to either 
proposed action. If he or she objects to either proposed action, the 
person may--
    (1) Review the evidence upon which the proposed actions will be 
based; and
    (2) Submit any additional evidence regarding the proposed actions.
    (b) If the person objects to the proposed actions, we will review 
our proposed determinations and consider any additional information 
given to us. We will then issue our determinations. If the person is 
dissatisfied with either determination, he or she may request a 
reconsideration.
    (c) If the person does not object to the proposed actions, we will 
issue our determinations. If the person is dissatisfied with either 
determination, he or she may request a reconsideration.

[47 FR 30472, July 14, 1982; 47 FR 32936, July 30, 1982]



Sec. 404.2035  Responsibilities of a representative payee.

    A representative payee has a responsibility to--
    (a) Use the payments he or she receives only for the use and benefit 
of the beneficiary in a manner and for the purposes he or she 
determines, under the guidelines in this subpart, to be in the best 
interests of the beneficiary;
    (b) Notify us of any event that will affect the amount of benefits 
the beneficiary receives or the right of the beneficiary to receive 
benefits;
    (c) Submit to us, upon our request, a written report accounting for 
the benefits received; and
    (d) Notify us of any change in his or her circumstances that would 
affect performance of the payee responsibilities.



Sec. 404.2040  Use of benefit payments.

    (a) Current maintenance. (1) We will consider that payments we 
certify to a representative payee have been used for the use and benefit 
of the beneficiary if they are used for the beneficiary's current 
maintenance. Current maintenance includes cost incurred in obtaining 
food, shelter, clothing, medical care, and personal comfort items.

    Example: An aged beneficiary is entitled to a monthly Social 
Security benefit of $400. Her son, who is her payee, disburses her 
benefits in the following manner:

Rent and utilities...............................................   $200
Medical..........................................................     25
Food.............................................................     60
Clothing (coat)..................................................     55
Savings..........................................................     30
Miscellaneous....................................................     30
 


The above expenditures would represent proper disbursements on behalf of 
the beneficiary.

    (2) Notwithstanding the provisions of paragraph (a)(1) of this 
section, if a beneficiary is a member of an Aid to Families With 
Dependent Children (AFDC) assistance unit, we do not consider it 
inappropriate for a representative payee to make the benefit payments 
available to the AFDC assistance unit.
    (b) Institutional care. If a beneficiary is receiving care in a 
Federal, State, or private institution because of mental or physical 
incapacity, current maintenance includes the customary charges made by 
the institution, as well as expenditures for those items which will aid 
in the beneficiary's recovery or release from the institution or 
expenses for personal needs which will improve the beneficiary's 
conditions while in the institution.

    Example: An institutionalized beneficiary is entitled to a monthly 
Social Security benefit of $320. The institution charges $700 a month 
for room and board. The beneficiary's brother, who is the payee, learns 
the beneficiary needs new shoes and does not have any funds to purchase 
miscellaneous items at the institution's canteen.
    The payee takes his brother to town and buys him a pair of shoes for 
$29. He also takes the beneficiary to see a movie which costs $3. When 
they return to the institution, the payee gives his brother $3 to be 
used at the canteen.
    Although the payee normally withholds only $25 a month from Social 
Security benefit for the beneficiary's personal needs, this month the 
payee deducted the above expenditures and paid the institution $10 less 
than he usually pays.
    The above expenditures represent what we would consider to be proper 
expenditures for current maintenance.

    (c) Support of legal dependents. If the current maintenance needs of 
the beneficiary are met, the payee may use part of the payments for the 
support of the

[[Page 569]]

beneficiary's legally dependent spouse, child, and/or parent.

    Example: A disabled beneficiary receives a Veterans Administration 
(VA) benefit of $325 and a Social Security benefit of $525. The 
beneficiary resides in a VA hospital and his VA benefits are sufficient 
to provide for all of his needs; i.e., cost of care and personal needs. 
The beneficiary's legal dependents--his wife and two children--have a 
total income of $250 per month in Social Security benefits. However, 
they have expenses of approximately $450 per month.
    Because the VA benefits are sufficient to meet the beneficiary's 
needs, it would be appropriate to use part of his Social Security 
benefits to support his dependents.

    (d) Claims of creditors. A payee may not be required to use benefit 
payments to satisfy a debt of the beneficiary, if the debt arose prior 
to the first month for which payments are certified to a payee. If the 
debt arose prior to this time, a payee may satisfy it only if the 
current and reasonably foreseeable needs of the beneficiary are met.

    Example: A retroactive Social Security check in the amount of 
$1,640, representing benefits due for July 1980 through January 1981, 
was issued on behalf of the beneficiary to the beneficiary's aunt who is 
the representative payee. The check was certified in February 1981.
    The nursing home, where the beneficiary resides, submitted a bill 
for $1,139 to the payee for maintenance expenses the beneficiary 
incurred during the period from June 1980 through November 1980. 
(Maintenance charges for December 1980 through February 1981 had 
previously been paid.)
    Because the benefits were not required for the beneficiary's current 
maintenance, the payee had previously saved over $500 for the 
beneficiary and the beneficiary had no foreseeable needs which would 
require large disbursements, the expenditure for the maintenance charges 
would be consistent with our guidelines.

[47 FR 30472, July 14, 1982, as amended at 54 FR 35483, Aug. 28, 1989]



Sec. 404.2040a  Compensation for qualified organizations serving as 
representative payees.

    (a) General. A community-based, nonprofit social service agency 
which meets the requirements set out in paragraph (b) of this section 
may request our authorization to collect a monthly fee from a 
beneficiary for providing representative payee services.
    (b) Organizations that may request compensation. We will authorize 
an organization to collect a fee if all the following requirements are 
met.
    (1) It is community-based, i.e., serves or represents one or more 
neighborhoods, city or county locales and is located within its service 
area.
    (2) It is a nonprofit social service organization founded for 
religious, charitable or social welfare purposes and is tax exempt under 
section 501(c) of the Internal Revenue Code.
    (3) It is bonded or licensed in the State in which it serves as 
representative payee.
    (4) It regularly provides representative payee services concurrently 
to at least five beneficiaries. An organization which has received our 
authorization to collect a fee for representative payee services, but is 
temporarily not a payee for at least five beneficiaries, may request our 
approval to continue to collect fees.
    (5) It was in existence on October 1, 1988.
    (6) It is not a creditor of the beneficiary. See paragraph (c) of 
this section for exceptions to this requirement.
    (c) Creditor relationship. If an organization has a creditor 
relationship with a beneficiary, we may, on a case-by-case basis, 
authorize the organization to collect a fee for payee services 
notwithstanding this relationship. To provide this authorization, we 
will review all of the evidence submitted by the organization and 
authorize collection of a fee when:
    (1) The services provided by the organization help to meet the 
current needs of the beneficiary; and
    (2) The amount the organization charges the beneficiary for these 
services is commensurate with the beneficiary's ability to pay.
    (d) Authorization process. (1) An organization must request in 
writing and receive an authorization from us before it may collect a 
fee.
    (2) An organization seeking authorization to collect a fee must also 
give us evidence to show that it is qualified, pursuant to paragraphs 
(b) and (c) of this section, to collect a fee.
    (3) If the evidence provided to us by the organization shows that 
the requirements of this section are met, we

[[Page 570]]

will notify the organization in writing that it is authorized to collect 
a fee. If we need more evidence, or if we are not able to authorize the 
collection of a fee, we will also notify the organization in writing 
that we have not authorized the collection of a fee.
    (e) Revocation, cancellation and expiration of the authorization. 
(1) We will revoke an authorization to collect a fee if we have evidence 
which establishes that an organization no longer meets the requirements 
of this section. We will issue a written notice to the organization 
explaining the reason(s) for the revocation.
    (2) An organization may cancel its authorization at any time upon 
written notice to us.
    (f) Notices. The written notice we will send to an organization 
authorizing the collection of a fee will contain an effective date for 
the collection of a fee pursuant to paragraphs (b) and (c) of this 
section. The effective date will be no earlier than the month in which 
the organization asked for authorization to collect a fee. The notice 
will be applicable to all beneficiaries for whom the organization was 
payee at the time of our authorization and all beneficiaries for whom 
the organization becomes payee while the authorization is in effect.
    (g) Limitation on fees. (1) An organization authorized to collect a 
fee pursuant to this section may collect from a beneficiary a monthly 
fee for expenses (including overhead) it has incurred in providing payee 
services to a beneficiary if the fee does not exceed the lesser of--
    (i) 10 percent of the beneficiary's monthly benefit payments; or
    (ii) $25.00 per month.
    (2) Any agreement providing for a fee in excess of the amount 
permitted under paragraph (g)(1) of this section shall be void and 
treated as misuse of benefits by the organization of the individual's 
benefits under Sec. 404.2041.
    (3) A fee may be collected for any month during which the 
organization--
    (i) Provides representative payee services;
    (ii) Receives a benefit payment for the beneficiary; and
    (iii) Is authorized to receive a fee for representative payee 
services.
    (4) Fees for services may not be taken from any funds conserved for 
the beneficiary by a payee in accordance with Sec. 404.2045.
    (5) Generally, an organization may not collect a fee for months in 
which it does not receive a benefit payment. However, an organization 
will be allowed to collect a fee for months in which it did not receive 
a payment if we later issue payments for these months and the 
organization:
    (i) Received our approval to collect a fee for the months for which 
payment is made;
    (ii) Provided payee services in the months for which payment is 
made; and
    (iii) Was the payee when the retroactive payment was paid by us.
    (6) An authorized organization may not collect a fee for the 
expenses it incurred in providing representative payee services if these 
expenses are paid from another source.

[57 FR 23057, June 1, 1992]



Sec. 404.2041  Liability for misuse of benefit payments.

    Our obligation to the beneficiary is completely discharged when we 
make a correct payment to a representative payee on behalf of the 
beneficiary. The payee in his or her personal capacity, and not SSA, may 
be liable if the payee misuses the beneficiary's benefits.



Sec. 404.2045  Conservation and investment of benefit payments.

    (a) General. After the representative payee has used benefit 
payments consistent with the guidelines in this subpart (see Sec. 
404.2040 regarding use of benefits), any remaining amount shall be 
conserved or invested on behalf of the beneficiary. Conserved funds 
should be invested in accordance with the rules followed by trustees. 
Any investment must show clearly that the payee holds the property in 
trust for the beneficiary.

    Example: A State institution for mentally retarded children, which 
is receiving Medicaid funds, is representative payee for several Social 
Security beneficiaries. The checks the payee receives are deposited into 
one account which shows that the benefits are held in trust for the 
beneficiaries. The institution has supporting records which

[[Page 571]]

show the share each individual has in the account. Funds from this 
account are disbursed fairly quickly after receipt for the current 
support and maintenance of the beneficiaries as well as for 
miscellaneous needs the beneficiaries may have. Several of the 
beneficiaries have significant accumulated resources in this account. 
For those beneficiaries whose benefits have accumulated over $150, the 
funds should be deposited in an interest-bearing account or invested 
relatively free of risk on behalf of the beneficiaries.

    (b) Preferred investments. Preferred investments for excess funds 
are U.S. Savings Bonds and deposits in an interest or dividend paying 
account in a bank, trust company, credit union, or savings and loan 
association which is insured under either Federal or State law. The 
account must be in a form which shows clearly that the representative 
payee has only a fiduciary and not a personal interest in the funds. If 
the payee is the legally appointed guardian or fiduciary of the 
beneficiary, the account may be established to indicate this 
relationship. If the payee is not the legally appointed guardian or 
fiduciary, the accounts may be established as follows:
    (1) For U.S. Savings Bonds--

    ------------ (Name of beneficiary) ------------ (Social Security 
Number), for whom ------ (Name of payee) is representative payee for 
Social Security benefits;

    (2) For interest or dividend paying accounts--

    ------------ (Name of beneficiary) by ------------ (Name of payee), 
representative payee.

    (c) Interest and dividend payments. The interest and dividends which 
result from an investment are the property of the beneficiary and may 
not be considered to be the property of the payee.

[47 FR 30472, July 14, 1982, as amended at 54 FR 35483, Aug. 28, 1989]



Sec. 404.2050  When a new representative payee will be selected.

    When we learn that the interests of the beneficiary are not served 
by continuing payment to the present payee or that the present payee is 
no longer able to carry out the payee responsibilities, we try to find a 
new payee. We will select a new payee if we find a preferred payee or if 
the present payee--
    (a) Has not used the benefit payments on the beneficiary's behalf in 
accordance with the guidelines in this subpart;
    (b) Has not carried out the other responsibilities described in this 
subpart;
    (c) Dies;
    (d) No longer wishes to be payee;
    (e) Is unable to manage the benefit payments; or
    (f) Fails to cooperate, within a reasonable time, in providing 
evidence, accounting, or other information which we request.



Sec. 404.2055  When representative payment will be stopped.

    If a beneficiary receiving representative payment shows us that he 
or she is mentally and physically able to manage or direct the 
management of benefit payments, we will make direct payment. Information 
which the beneficiary may give us to support his or her request for 
direct payment include the following--
    (a) A physician's statement regarding the beneficiary's condition, 
or a statement by a medical officer of the institution where the 
beneficiary is or was confined, showing that the beneficiary is able to 
manage or direct the management of his or her funds; or
    (b) A certified copy of a court order restoring the beneficiary's 
rights in a case where a beneficiary was adjudged legally incompetent; 
or
    (c) Other evidence which establishes the beneficiary's ability to 
manage or direct the management of benefits.



Sec. 404.2060  Transfer of accumulated benefit payments.

    A representative payee who has conserved or invested benefit 
payments shall transfer these funds, and the interest earned from the 
invested funds, to either a successor payee or to us, as we will 
specify. If the funds and the earned interest are returned to us, we 
will recertify them to a successor representative payee or to the 
beneficiary.

[47 FR 30472, July 14, 1982; 47 FR 34781, Aug. 11, 1982]

[[Page 572]]



Sec. 404.2065  Accounting for benefit payments.

    A representative payee is accountable for the use of benefits. We 
may require periodic written reports from representative payees. We may 
also, in certain situations, verify how a representative payee used the 
funds. A representative payee should keep records of what was done with 
the benefit payments in order to make accounting reports. We may ask the 
following questions--
    (a) The amount of benefit payments on hand at the beginning of the 
accounting period;
    (b) How the benefit payments were used;
    (c) How much of the benefit payments were saved and how the savings 
were invested;
    (d) Where the beneficiary lived during the accounting period; and
    (e) The amount of the beneficiary's income from other sources during 
the accounting period. We ask for information about other funds to 
enable us to evaluate the use of benefit payments.



        Subpart V_Payments for Vocational Rehabilitation Services

    Authority: Secs. 205(a), 222, and 702(a)(5) of the Social Security 
Act (42 U.S.C. 405(a), 422, and 902(a)(5)).

    Source: 48 FR 6293, Feb. 10, 1983, unless otherwise noted.

                           General Provisions



Sec. 404.2101  General.

    Section 222(d) of the Social Security Act authorizes the transfer 
from the Federal Old-Age and Survivors Insurance Trust Fund and the 
Federal Disability Insurance Trust Fund of such sums as may be necessary 
to pay for the reasonable and necessary costs of vocational 
rehabilitation (VR) services provided certain disabled individuals 
entitled under section 223, 225(b), 202(d), 202(e) or 202(f) of the 
Social Security Act. The purpose of this provision is to make VR 
services more readily available to disabled individuals and ensure that 
savings accrue to the Federal Old-Age and Survivors Insurance Trust Fund 
and the Federal Disability Insurance Trust Fund. Payment will be made 
for VR services provided on behalf of such an individual in cases 
where--
    (a) The furnishing of the VR services results in the individual's 
completion of a continuous 9-month period of substantial gainful 
activity (SGA) as specified in Sec. Sec. 404.2110 through 404.2111; or
    (b) The individual continues to receive disability payments from us, 
even though his or her disability has ceased, because of his or her 
continued participation in an approved VR program which we have 
determined will increase the likelihood that he or she will not return 
to the disability rolls (see Sec. 404.2112).

[68 FR 40123, July 7, 2003]



Sec. 404.2102  Purpose and scope.

    This subpart describes the rules under which the Commissioner will 
pay the State VR agencies or alternate participants for VR services. 
Payment will be provided for VR services provided on behalf of disabled 
individuals under one or more of the provisions discussed in Sec. 
404.2101.
    (a) Sections 404.2101 through 404.2103 describe the purpose of these 
regulations and the meaning of terms we frequently use in them.
    (b) Section 404.2104 explains how State VR agencies or alternate 
participants may participate in the payment program under this subpart.
    (c) Section 404.2106 describes the basic qualifications for 
alternate participants.
    (d) Sections 404.2108 through 404.2109 describe the requirements and 
conditions under which we will pay a State VR agency or alternate 
participant under this subpart.
    (e) Sections 404.2110 through 404.2111 describe when an individual 
has completed a continuous period of SGA and when VR services will be 
considered to have contributed to that period.
    (f) Section 404.2112 describes when payment will be made to a VR 
agency or alternate participant because an individual's disability 
benefits are continued based on his or her participation in a VR program 
which we have determined will increase the likelihood that he or she 
will not return to the disability rolls.

[[Page 573]]

    (g) Sections 404.2114 through 404.2115 describe services for which 
payment will be made.
    (h) Section 404.2116 describes the filing deadlines for claims for 
payment for VR services.
    (i) Section 404.2117 describes the payment conditions.
    (j) Section 404.2118 describes the applicability of these 
regulations to alternate participants.
    (k) Section 404.2119 describes how we will make payment to State VR 
agencies or alternate participants for rehabilitation services.
    (l) Sections 404.2120 and 404.2121 describe the audits and the 
prepayment and postpayment validation reviews we will conduct.
    (m) Section 404.2122 discusses confidentiality of information and 
records.
    (n) Section 404.2123 provides for the applicability of other Federal 
laws and regulations.
    (o) Section 404.2127 provides for the resolution of disputes.

[48 FR 6293, Feb. 10, 1983, as amended at 55 FR 8454, Mar. 8, 1990; 59 
FR 11912, Mar. 15, 1994; 62 FR 38452, July 18, 1997; 68 FR 40123, July 
7, 2003]



Sec. 404.2103  Definitions.

    For purposes of this subpart:
    Accept the beneficiary as a client for VR services means that the 
State VR agency determines that the individual is eligible for VR 
services and places the individual into an active caseload status for 
development of an individualized written rehabilitation program.
    Act means the Social Security Act, as amended.
    Alternate participants means any public or private agencies (except 
participating State VR agencies (see Sec. 404.2104)), organizations, 
institutions, or individuals with whom the Commissioner has entered into 
an agreement or contract to provide VR services.
    Commissioner means the Commissioner of Social Security or the 
Commissioner's designee.
    Disability means ``disability'' or ``blindness'' as defined in 
sections 216(i) and 223 of the Act.
    Disability beneficiary means a disabled individual who is entitled 
to benefits under section 223, 202(d), 202(e) or 202(f) of the act or is 
continuing to receive payment under section 225(b) of the Act after his 
or her disabling physical or mental impairments have ceased.
    Medical recovery for purposes of this subpart is established when a 
beneficiary's disability entitlement ceases for any medical reason 
(other than death). The determination of medical recovery is made by the 
Commissioner in deciding a beneficiary's continuing entitlement to 
benefits.
    Place the beneficiary into an extended evaluation process means that 
the State VR agency determines that an extended evaluation of the 
individual's VR potential is necessary to determine whether the 
individual is eligible for VR services and places the individual into an 
extended evaluation status.
    SGA means substantial gainful activity performed by an individual as 
defined in Sec. Sec. 404.1571 through 404.1575 or Sec. 404.1584 of 
this subpart.
    State means any of the 50 States of the United States, the 
Commonwealth of Puerto Rico, the District of Columbia, the Virgin 
Islands, or Guam. It includes the State VR agency.
    Trust Funds means the Federal Old-Age and Survivors Insurance Trust 
Fund and the Federal Disability Insurance Trust Fund.
    Vocational rehabilitation services has the meaning assigned to it 
under title I of the Rehabilitation Act of 1973.
    VR agency means an agency of the State which has been designated by 
the State to provide vocational rehabilitation services under title I of 
the Rehabilitation Act of 1973.
    Waiting period means a five consecutive calendar month period 
throughout which an individual must be under a disability and which must 
be served before disability benefits can be paid (see Sec. 404.315(d)).
    We, us and our refer to the Social Security Administration (SSA).

[48 FR 6293, Feb. 10, 1983, as amended at 55 FR 8454, Mar. 8, 1990; 59 
FR 11912, Mar. 15, 1994; 62 FR 38452, July 18, 1997; 68 FR 40123, July 
7, 2003]



Sec. 404.2104  Participation by State VR agencies or alternate participants.

    (a) General. In order to participate in the payment program under 
this subpart through its VR agency(ies), a State must have a plan which 
meets

[[Page 574]]

the requirements of title I of the Rehabilitation Act of 1973, as 
amended. An alternate participant must have a similar plan and otherwise 
qualify under Sec. 404.2106.
    (b) Participation by States. (1) The opportunity to participate 
through its VR agency(ies) with respect to disability beneficiaries in 
the State will be offered first to the State in accordance with 
paragraph (c) of this section, unless the State has notified us in 
advance under paragraph (e)(1) of this section of its decision not to 
participate or to limit such participation.
    (2) A State with one or more approved VR agencies may choose to 
limit participation of those agencies to a certain class(es) of 
disability beneficiaries. For example, a State with separate VR agencies 
for the blind and disabled may choose to limit participation to the VR 
agency for the blind. In such a case, we would give the State, through 
its VR agency for the blind, the opportunity to participate with respect 
to blind disability beneficiaries in the State in accordance with 
paragraph (d) of this section. We would arrange for VR services for non-
blind disability beneficiaries in the State through an alternate 
participant(s). A State that chooses to limit participation of its VR 
agency(ies) must notify us in advance under paragraph (e)(1) of this 
section of its decision to limit such participation.
    (3) If a State chooses to participate by using a State agency other 
than a VR agency with a plan for VR services approved under title I of 
the Rehabilitation Act of 1973, as amended, that State agency may 
participate only as an alternate participant.
    (c) Opportunity for participation through State VR agencies. (1) 
Unless a State has decided not to participate or to limit participation, 
we will give the State the opportunity to participate through its VR 
agency(ies) with respect to disability beneficiaries in the State by 
referring such beneficiaries first to the State VR agency(ies) for 
necessary VR services. A State, through its VR agency(ies), may 
participate with respect to any beneficiary so referred by accepting the 
beneficiary as a client for VR services or placing the beneficiary into 
an extended evaluation process and notifying us under paragraph (c)(2) 
of this section of such acceptance or placement.
    (2)(i) In order for the State to participate with respect to a 
disability beneficiary whom we referred to a State VR agency, the State 
VR agency must notify the appropriate Regional Commissioner (SSA) in 
writing or through electronic notification of its decision either to 
accept the beneficiary as a client for VR services or to place the 
beneficiary into an extended evaluation process. The notice must be 
received by the appropriate Regional Commissioner (SSA) no later than 
the close of the fourth month following the month in which we referred 
the beneficiary to the State VR agency. If we do not receive such notice 
with respect to a beneficiary whom we referred to the State VR agency, 
we may arrange for VR services for that beneficiary through an alternate 
participant.
    (ii) In any case in which a State VR agency notifies the appropriate 
Regional Commissioner (SSA) in writing within the stated time period 
under paragraph (c)(2)(i) of this section of its decision to place the 
beneficiary into an extended evaluation process, the State VR agency 
also must notify that Regional Commissioner in writing upon completion 
of the evaluation of its decision whether or not to accept the 
beneficiary as a client for VR services. If we receive a notice of a 
decision by the State VR agency to accept the beneficiary as a client 
for VR services following the completion of the extended evaluation, the 
State may continue to participate with respect to such beneficiary. If 
we receive a notice of a decision by the State VR agency not to accept 
the beneficiary as a client for VR services following the completion of 
the extended evaluation, we may arrange for VR services for that 
beneficiary through an alternate participant.
    (d) Opportunity for limited participation through State VR agencies. 
If a State has decided under paragraph (e)(1) of this section to limit 
participation of its VR agency(ies) to a certain class(es) of disability 
beneficiaries in the State, we will give the State the opportunity to 
participate with respect

[[Page 575]]

to such class(es) of disability beneficiaries by referring such 
beneficiaries first to the State VR agency(ies) for necessary VR 
services. The State, through its VR agency(ies), may participate with 
respect to any beneficiary so referred by accepting the beneficiary as a 
client for VR services or placing the beneficiary into an extended 
evaluation process and notifying us under paragraph (c)(2) of this 
section of such acceptance or placement.
    (e) Decision of a State not to participate or to limit 
participation. (1) A State may choose not to participate through its VR 
agency(ies) with respect to any disability beneficiaries in the State, 
or it may choose to limit participation of its VR agency(ies) to a 
certain class(es) of disability beneficiaries in the State. A State 
which decides not to participate or to limit participation must provide 
advance written notice of that decision to the appropriate Regional 
Commissioner (SSA). Unless a State specifies a later month, a decision 
not to participate or to limit participation will be effective beginning 
with the third month following the month in which the notice of the 
decision is received by the appropriate Regional Commissioner (SSA). The 
notice of the State decision must be submitted by an official authorized 
to act for the State for this purpose. A State must provide to the 
appropriate Regional Commissioner (SSA) an opinion from the State's 
Attorney General verifying the authority of the official who sent the 
notice to act for the State. This opinion will not be necessary if the 
notice is signed by the Governor of the State.
    (2)(i) If a State has decided not to participate through its VR 
agency(ies), we may arrange for VR services through an alternate 
participant(s) for disability beneficiaries in the State.
    (ii) If a State has decided to limit participation of its VR 
agency(ies) to a certain class(es) of disability beneficiaries, we may 
arrange for VR services through an alternate participant(s) for the 
class(es) of disability beneficiaries in the State excluded from the 
scope of the State's participation.
    (3) A State which has decided not to participate or to limit 
participation may participate later through its VR agency(ies) in 
accordance with paragraph (c) of this section, provided that such 
participation will not conflict with any previous commitment which we 
may have made to an alternate participant(s) under paragraph (e)(2) of 
this section. A State which decides to resume participation under 
paragraph (c) of this section must provide advance written notice of 
that decision to the appropriate Regional Commissioner (SSA). Unless a 
commitment to an alternate participant(s) requires otherwise, a decision 
of a State to resume participation under paragraph (c) of this section 
will be effective beginning with the third month following the month in 
which the notice of the decision is received by the appropriate Regional 
Commissioner (SSA) or, if later, with a month specified by the State. 
The notice of the State decision must be submitted by an official 
authorized to act for the State as explained in paragraph (e)(1) of this 
section.
    (f) Use of alternate participants. The Commissioner, by written 
agreement or contract, may arrange for VR services through an alternate 
participant(s) for any disability beneficiary in the State with respect 
to whom the State is unwilling to participate through its VR 
agency(ies). In such a case, we may refer the beneficiary to such 
alternate participant for necessary VR services. The Commissioner will 
find that a State is unwilling to participate with respect to any of the 
following disability beneficiaries in that State:
    (1) A disability beneficiary whom we referred to a State VR agency 
under paragraph (c) or (d) of this section if we do not receive a notice 
within the stated time period under paragraph (c)(2)(i) of this section 
of a decision by the VR agency either to accept the beneficiary as a 
client for VR services or to place the beneficiary into an extended 
evaluation process;
    (2) A disability beneficiary with respect to whom we receive a 
notice under paragraph (c)(2)(ii) of this section of a decision by the 
VR agency not to accept the beneficiary as a client for VR services 
following the completion of the extended evaluation;

[[Page 576]]

    (3) The class(es) of disability beneficiaries excluded from the 
scope of the State's participation if the State has decided to limit 
participation of its VR agency(ies); and
    (4) All disability beneficiaries in the State if the State has 
decided not to participate through its VR agency(ies).

[59 FR 11912, Mar. 15, 1994]



Sec. 404.2106  Basic qualifications for alternate participants.

    (a) General. We may arrange for VR services through an alternate 
participant by written agreement or contract as explained in Sec. 
404.2104(f). An alternate participant may be a public or private agency, 
organization, institution or individual (that is, any entity whether 
for-profit or not-for-profit), other than a State VR agency.
    (1) An alternate participant must--
    (i) Be licensed, certified, accredited, or registered, as 
appropriate, to provide VR services in the State in which it provides 
services; and
    (ii) Under the terms of the written contract or agreement, have a 
plan similar to the State plan described in Sec. 404.2104(a) which 
shall govern the provision of VR services to individuals.
    (2) We will not use as an alternate participant any agency, 
organization, institution, or individual--
    (i) Whose license, accreditation, certification, or registration is 
suspended or revoked for reasons concerning professional competence or 
conduct or financial integrity;
    (ii) Who has surrendered such license, accreditation, certification, 
or registration pending a final determination of a formal disciplinary 
proceeding; or
    (iii) Who is precluded from Federal procurement or nonprocurement 
programs.
    (b) Standards for the provision of VR services. An alternate 
participant's plan must provide, among other things, that the provision 
of VR services to individuals will meet certain minimum standards, 
including, but not limited to, the following:
    (1) All medical and related health services furnished will be 
prescribed by, or provided under the formal supervision of, persons 
licensed to prescribe or supervise the provision of these services in 
the State;
    (2) Only qualified personnel and rehabilitation facilities will be 
used to furnish VR services; and
    (3) No personnel or rehabilitation facility described in paragraph 
(a)(2) (i), (ii), or (iii) of this section will be used to provide VR 
services.

[59 FR 11914, Mar. 15, 1994]

                           Payment Provisions



Sec. 404.2108  Requirements for payment.

    (a) The State VR agency or alternate participant must file a claim 
for payment in each individual case within the time periods specified in 
Sec. 404.2116;
    (b) The claim for payment must be in a form prescribed by us and 
contain the following information:
    (1) A description of each service provided;
    (2) When the service was provided; and
    (3) The cost of the service;
    (c) The VR services for which payment is being requested must have 
been provided during the period specified in Sec. 404.2115;
    (d) The VR services for which payment is being requested must have 
been provided under a State plan for VR services approved under title I 
of the Rehabilitation Act of 1973, as amended, or, in the case of an 
alternate participant, under a negotiated plan, and must be services 
that are described in Sec. 404.2114;
    (e) The individual must meet one of the VR payment provisions 
specified in Sec. 404.2101;
    (f) The State VR agency or alternate participant must maintain, and 
provide as we may require, adequate documentation of all services and 
costs for all disability beneficiaries with respect to whom a State VR 
agency or alternate participant could potentially request payment for 
services and costs under this subpart; and
    (g) The amount to be paid must be reasonable and necessary and be in 
compliance with the cost guidelines specified in Sec. 404.2117.

[48 FR 6293, Feb. 10, 1983, as amended at 55 FR 8454, Mar. 8, 1990; 59 
FR 11914, Mar. 15, 1994

[[Page 577]]



Sec. 404.2109  Responsibility for making payment decisions.

    The Commissioner will decide--
    (a) Whether a continuous period of 9 months of SGA has been 
completed;
    (b) Whether a disability beneficiary whose disability has ceased 
should continue to receive benefits under Sec. 404.316(c), 404.337(c), 
or 404.352(c) for a month after October 1984, based on his or her 
continued participation in a VR program;
    (c) If and when medical recovery has occurred;
    (d) Whether documentation of VR services and expenditures is 
adequate;
    (e) If payment is to be based on completion of a continuous 9-month 
period of SGA, whether the VR services contributed to the continuous 
period of SGA;
    (f) Whether a VR service is a service described in Sec. 404.2114; 
and
    (g) What VR costs were reasonable and necessary and will be paid.

[55 FR 8454, Mar. 8, 1990, as amended at 59 FR 11914, Mar. 15, 1994; 68 
FR 40123, July 7, 2003]



Sec. 404.2110  What we mean by ``SGA'' and by ``a continuous period of 9 months''.

    (a) What we mean by ``SGA''. In determining whether an individual's 
work is SGA, we will follow the rules in Sec. Sec. 404.1572 through 
404.1575. We will follow these same rules for individuals who are 
statutorily blind, but we will evaluate the earnings in accordance with 
the rules in Sec. 404.1584(d).
    (b) What we mean by ``a continuous period of 9 months''. A 
continuous period of 9 months ordinarily means a period of 9 consecutive 
calendar months. Exception: When an individual does not perform SGA in 9 
consecutive calendar months, he or she will be considered to have done 
so if--
    (1) The individual performs 9 months of SGA within 10 consecutive 
months and has monthly earnings that meet or exceed the guidelines in 
Sec. 404.1574(b)(2), or Sec. 404.1584(d) if the individual is 
statutorily blind; or
    (2) The individual performs at least 9 months of SGA within 12 
consecutive months, and the reason for not performing SGA in 2 or 3 of 
those months was due to circumstances beyond his or her control and 
unrelated to the impairment (e.g., the employer closed down for 3 
months).
    (c) What work we consider. In determining if a continuous period of 
SGA has been completed, all of an individual's work activity may be 
evaluated for purposes of this section, including work performed before 
October 1981, during the waiting period, during the trial work period 
and after entitlement to disability benefits terminated. We will 
ordinarily consider only the first 9 months of SGA that occur. The 
exception will be if an individual who completed 9 months of SGA later 
stops performing SGA, receives VR services and then performs SGA for a 
9-month period. See Sec. 404.2115 for the use of the continuous period 
in determining payment for VR services.

[48 FR 6293, Feb. 10, 1983, as amended at 55 FR 8454, Mar. 8, 1990]



Sec. 404.2111  Criteria for determining when VR services will be considered 
to have contributed to a continuous period of 9 months.

    The State VR agency or alternate participant may be paid for VR 
services if such services contribute to the individual's performance of 
a continuous 9-month period of SGA. The following criteria apply to 
individuals who received more than just evaluation services. If a State 
VR agency or alternate participant claims payment for services to an 
individual who received only evaluation services, it must establish that 
the individual's continuous period or medical recovery (if medical 
recovery occurred before completion of a continuous period) would not 
have occurred without the services provided. In applying the criteria 
below, we will consider services described in Sec. 404.2114 that were 
initiated, coordinated or provided, including services before October 1, 
1981.
    (a) Continuous period without medical recovery. If an individual who 
has completed a ``continuous period'' of SGA has not medically recovered 
as of the date of completion of the period, the determination as to 
whether VR services contributed will depend on whether the continuous 
period began one year or less after VR services ended or more than one 
year after VR services ended.

[[Page 578]]

    (1) One year or less. Any VR services which significantly motivated 
or assisted the individual in returning to, or continuing in, SGA will 
be considered to have contributed to the continuous period.
    (2) More than one year. (i) If the continuous period was preceded by 
transitional work activity (employment or self-employment which 
gradually evolved, with or without periodic interruption, into SGA), and 
that work activity began less than a year after VR services ended, any 
VR services which significantly motivated or assisted the individual in 
returning to, or continuing in, SGA will be considered to have 
contributed to the continuous period.
    (ii) If the continuous period was not preceded by transitional work 
activity that began less than a year after VR services ended, VR 
services will be considered to have contributed to the continuous period 
only if it is reasonable to conclude that the work activity which 
constitutes a continuous period could not have occurred without the VR 
services (e.g., training).
    (b) Continuous period with medical recovery occurring before 
completion. (1) If an individual medically recovers before a continuous 
period has been completed, VR services under paragraph (a) of this 
section will not be payable unless some VR services contributed to the 
medical recovery. VR services will be considered to have contributed to 
the medical recovery if--
    (i) The individualized written rehabilitation program (IWRP) or, in 
the case of an alternate participant, a similar document, included 
medical services; and
    (ii) The medical recovery occurred, at least in part, because of 
these medical services. (For example, the individual's medical recovery 
was based on improvement in a back condition which, at least in part, 
stemmed from surgery initiated, coordinated or provided under an IWRP).
    (2) In some instances, the State VR agency or alternate participant 
will not have provided, initiated, or coordinated medical services. If 
this happens, payment for VR services may still be possible under 
paragraph (a) of this section if: (i) The medical recovery was not 
expected by us; and (ii) the individual's impairment is determined by us 
to be of such a nature that any medical services provided would not 
ordinarily have resulted in, or contributed to, the medical cessation.

[48 FR 6293, Feb. 10, 1983, as amended at 59 FR 11914, Mar. 15, 1994]



Sec. 404.2112  Payment for VR services in a case where an individual 

continues to receive disability payments based on participation in 
an approved VR program.

    Sections 404.1586(g), 404.316(c), 404.337(c), and 404.352(c) explain 
the criteria we will use in determining if an individual whose 
disability has ceased should continue to receive disability benefits 
from us because of his or her continued participation in a VR program. A 
VR agency or alternate participant can be paid for the cost of VR 
services provided to an individual if the individual was receiving 
benefits in a month or months, after October 1984, based on Sec. 
404.316(c), 404.337(c), or 404.352(c). If this requirement is met, a VR 
agency or alternate participant can be paid for the costs of VR services 
provided within the period specified in Sec. 404.2115, subject to the 
other payment and administrative provisions of this subpart.

[55 FR 8455, Mar. 8, 1990]



Sec. 404.2114  Services for which payment may be made.

    (a) General. Payment may be made for VR services provided by a State 
VR agency in accordance with title I of the Rehabilitation Act of 1973, 
as amended, or by an alternate participant under a negotiated plan, 
subject to the limitations and conditions in this subpart. VR services 
for which payment may be made under this subpart include only those 
services described in paragraph (b) of this section which are--
    (1) Necessary to determine an individual's eligibility for VR 
services or the nature and scope of the services to be provided; or
    (2) Provided by a State VR agency under an IWRP, or by an alternate 
participant under a similar document, but only if the services could 
reasonably be

[[Page 579]]

expected to motivate or assist the individual in returning to, or 
continuing in, SGA.
    (b) Specific services. Payment may be made under this subpart only 
for the following VR services:
    (1) An assessment for determining an individual's eligibility for VR 
services and vocational rehabilitation needs by qualified personnel, 
including, if appropriate, an assessment by personnel skilled in 
rehabilitation technology, and which includes determining--
    (i) The nature and extent of the physical or mental impairment(s) 
and the resultant impact on the individual's employability;
    (ii) The likelihood that an individual will benefit from vocational 
rehabilitation services in terms of employability; and
    (iii) An employment goal consistent with the capacities of the 
individual and employment opportunities;
    (2) Counseling and guidance, including personal adjustment 
counseling, and those referrals and other services necessary to help an 
individual secure needed services from other agencies;
    (3) Physical and mental restoration services necessary to correct or 
substantially modify a physical or mental condition which is stable or 
slowly progressive and which constitutes an impediment to suitable 
employment at or above the SGA level;
    (4) Vocational and other training services, including personal and 
vocational adjustment, books, tools, and other training materials, 
except that training or training services in institutions of higher 
education will be covered under this section only if maximum efforts 
have been made by the State VR agency or alternate participant to secure 
grant assistance in whole or in part from other sources;
    (5) Maintenance expenses that are extra living expenses over and 
above the individual's normal living expenses and that are incurred 
solely because of and while the individual is participating in the VR 
program and that are necessary in order for the individual to benefit 
from other necessary VR services;
    (6) Travel and related expenses necessary to transport an individual 
for purpose of enabling the individual's participation in other 
necessary VR services;
    (7) Services to family members of a disabled individual only if 
necessary to the successful vocational rehabilitation of that 
individual;
    (8) Interpreter services and note-taking services for an individual 
who is deaf and tactile interpreting for an individual who is deaf and 
blind;
    (9) Reader services, rehabilitation teaching services, note-taking 
services, and orientation and mobility services for an individual who is 
blind;
    (10) Telecommunications, sensory, and other technological aids and 
devices;
    (11) Work-related placement services to secure suitable employment;
    (12) Post-employment services necessary to maintain, regain or 
advance into suitable employment at or above the SGA level;
    (13) Occupational licenses, tools, equipment, initial stocks, and 
supplies;
    (14) Rehabilitation technology services; and
    (15) Other goods and services that can reasonably be expected to 
motivate or assist the individual in returning to, or continuing in, 
SGA.

[59 FR 11915, Mar. 15, 1994]



Sec. 404.2115  When services must have been provided.

    (a) In order for the VR agency or alternate participant to be paid, 
the services must have been provided--
    (1) After September 30, 1981;
    (2) No earlier than the beginning of the waiting period or the first 
month of entitlement, if no waiting period is required; and
    (3) Before completion of a continuous 9-month period of SGA or 
termination of entitlement to disability benefits, whichever occurs 
first.
    (b) If an individual who is entitled to disability benefits under 
this part also is or has been receiving disability or blindness benefits 
under part 416 of this chapter, the determination as to when services 
must have been provided may be made under this section or Sec. 416.2215

[[Page 580]]

of this chapter, whichever is advantageous to the State VR agency or 
alternate participant that is participating in both VR programs.

[55 FR 8455, Mar. 8, 1990, as amended at 61 FR 31025, June 19, 1996]



Sec. 404.2116  When claims for payment for VR services must be made 
(filing deadlines).

    The State VR agency or alternate participant must file a claim for 
payment in each individual case within the following time periods:
    (a) A claim for payment for VR services based on the individual's 
completion of a continuous 9-month period of SGA must be filed within 12 
months after the month in which the continuous 9-month period of SGA is 
completed.
    (b) A claim for payment for VR services provided to an individual 
whose disability benefits were continued after disability has ceased 
because of that individual's continued participation in a VR program 
must be filed as follows:
    (1) If a written notice requesting that a claim be filed was sent to 
the State VR agency or alternate participant, a claim must be filed 
within 90 days following the month in which VR services end, or if 
later, within 90 days after receipt of the notice.
    (2) If no written notice was sent to the State VR agency or 
alternate participant, a claim must be filed within 12 months after the 
month in which VR services end.

[55 FR 8455, Mar. 8, 1990, as amended at 61 FR 31025, June 19, 1996; 68 
FR 40124, July 7, 2003]



Sec. 404.2117  What costs will be paid.

    In accordance with section 222(d) of the Social Security Act, the 
Commissioner will pay the State VR agency or alternate participant for 
the VR services described in Sec. 404.2114 which were provided during 
the period described in Sec. 404.2115 and which meet the criteria in 
Sec. 404.2111 or Sec. 404.2112, but subject to the following 
limitations:
    (a) The cost must have been incurred by the State VR agency or 
alternate participant;
    (b) The cost must not have been paid or be payable from some other 
source. For this purpose, State VR agencies or alternate participants 
will be required to seek payment or services from other sources in 
accordance with the ``similar benefit'' provisions under 34 CFR part 
361, including making maximum efforts to secure grant assistance in 
whole or part from other sources for training or training services in 
institutions of higher education. Alternate participants will not be 
required to consider State VR services a similar benefit.
    (c)(1) The cost must be reasonable and necessary, in that it 
complies with the written cost-containment policies of the State VR 
agency or, in the case of an alternate participant, it complies with 
similar written policies established under a negotiated plan. A cost 
which complies with these policies will be considered necessary only if 
the cost is for a VR service described in Sec. 404.2114. The State VR 
agency or alternate participant must maintain and use these cost-
containment policies, including any reasonable and appropriate fee 
schedules, to govern the costs incurred for all VR services, including 
the rates of payment for all purchased services, for which payment will 
be requested under this subpart. For the purpose of this subpart, the 
written cost-containment policies must provide guidelines designed to 
ensure--
    (i) The lowest reasonable cost for such services; and
    (ii) Sufficient flexibility so as to allow for an individual's 
needs.
    (2) The State VR agency shall submit to us before the end of the 
first calendar quarter of each year a written statement certifying that 
cost-containment policies are in effect and are adhered to in procuring 
and providing goods and services for which the State VR agency requests 
payment under this subpart. Such certification must be signed by the 
State's chief financial official or the head of the VR agency. Each 
certification must specify the basis upon which it is made, e.g., a 
recent audit by an authorized State, Federal or private auditor (or 
other independent compliance review) and the date of such audit (or 
compliance review). In the case of an alternate participant, these 
certification requirements shall be incorporated into the negotiated 
agreement or contract. We may request the State VR agency or

[[Page 581]]

alternate participant to submit to us a copy(ies) of its specific 
written cost-containment policies and procedures (e.g., any guidelines 
and fee schedules for a given year) if we determine that such additional 
information is necessary to ensure compliance with the requirements of 
this subpart. The State VR agency or alternate participant shall provide 
such information when requested by us.
    (d) The total payment in each case, including any prior payments 
related to earlier continuous 9-month periods of SGA made under this 
subpart, must not be so high as to preclude a ``net saving'' to the 
trust funds (a ``net saving'' is the difference between the estimated 
saving to the trust funds, if disability benefits eventually terminate, 
and the total amount we pay to the State VR agency or alternate 
participant);
    (e) Any payment to the State VR agency for either direct or indirect 
VR expenses must be consistent with the cost principles described in OMB 
Circular No. A-87, published at 46 FR 9548 on January 28, 1981 (see 
Sec. 404.2118(a) for cost principles applicable to alternate 
participants);
    (f) Payment for VR services or costs may be made under more than one 
of the VR payment provisions described in Sec. Sec. 404.2111 and 
404.2112 of this subpart and similar provisions in Sec. Sec. 416.2211 
and 416.2212 of subpart V of part 416. However, payment will not be made 
more than once for the same VR service or cost; and
    (g) Payment will be made for administrative costs and for counseling 
and placement costs. This payment may be on a formula basis, or on an 
actual cost basis, whichever the State VR agency prefers. The formula 
will be negotiated. The payment will also be subject to the preceding 
limitations.

[48 FR 6293, Feb. 10, 1983. Redesignated and amended at 55 FR 8454, 
8455, Mar. 8, 1990; 59 FR 11915, Mar. 15, 1994; 62 FR 38452, July 18, 
1997; 68 FR 40124, July 7, 2003]

                        Administrative Provisions



Sec. 404.2118  Applicability of these provisions to alternate participants.

    When an alternate participant provides rehabilitation services under 
this subpart, the payment procedures stated herein shall apply except 
that:
    (a) Payment must be consistent with the cost principles described in 
45 CFR part 74 or 41 CFR parts 1-15 as appropriate; and
    (b) Any disputes, including appeals of audit determinations, shall 
be resolved in accordance with applicable statutes and regulations which 
will be specified in the negotiated agreement or contract.

[48 FR 6293, Feb. 10, 1983. Redesignated at 55 FR 8454, Mar. 8, 1990]



Sec. 404.2119  Method of payment.

    Payment to the State VR agencies or alternate participants pursuant 
to this subpart will be made either by advancement of funds or by 
payment for services provided (with necessary adjustments for any 
overpayments and underpayments), as decided by the Commissioner.

[55 FR 8455, Mar. 8, 1990]



Sec. 404.2120  Audits.

    (a) General. The State or alternate participant shall permit us and 
the Comptroller General of the United States (including duly authorized 
representatives) access to and the right to examine records relating to 
the services and costs for which payment was requested or made under 
these regulations. These records shall be retained by the State or 
alternate participant for the periods of time specified for retention of 
records in the Federal Procurement Regulations (41 CFR parts 1-20).
    (b) Audit basis. Auditing will be based on cost principles and 
written guidelines in effect at the time services were provided and 
costs were incurred. The State VR agency or alternate participant will 
be informed and given a full explanation of any questioned items. It 
will be given a reasonable time to explain questioned items. Any 
explanation furnished by the State VR agency or alternate participant 
will be given full consideration before a final determination is made on 
questioned items in the audit report.
    (c) Appeal of audit determinations. The appropriate SSA Regional 
Commissioner will notify the State VR agency

[[Page 582]]

or alternate participant in writing of his or her final determination on 
the audit report. If the State VR agency (see Sec. 404.2118(b) for 
alternate participants) disagrees with that determination, it may 
request reconsideration in writing within 60 days after receiving the 
Regional Commissioner's notice of the determination. The Commissioner 
will make a determination and notify the State VR agency of that 
decision in writing, usually, no later than 45 days from the date of 
appeal. The decision by the Commissioner will be final and conclusive 
unless the State VR agency appeals that decision in writing in 
accordance with 45 CFR part 16 to the Department of Health and Human 
Services' Departmental Appeals Board within 30 days after receiving it.

[48 FR 6293, Feb. 10, 1983, as amended at 55 FR 8456, Mar. 8, 1990; 62 
FR 38452, July 18, 1997]



Sec. 404.2121  Validation reviews.

    (a) General. We will conduct a validation review of a sample of the 
claims for payment filed by each State VR agency or alternate 
participant. We will conduct some of these reviews on a prepayment basis 
and some on a postpayment basis. We may review a specific claim, a 
sample of the claims, or all the claims filed by any State VR agency or 
alternate participant, if we determine that such review is necessary to 
ensure compliance with the requirements of this subpart. For each claim 
selected for review, the State VR agency or alternate participant must 
submit such records of the VR services and costs for which payment has 
been requested or made under this subpart, or copies of such records, as 
we may require to ensure that the services and costs meet the 
requirements for payment. For claims for cases described in Sec. 
404.2101(a), a clear explanation or existing documentation which 
demonstrates how the service contributed to the individual's performance 
of a continuous 9-month period of SGA must be provided. For claims for 
cases described in Sec. 404.2101 (b) or (c), a clear explanation or 
existing documentation which demonstrates how the service was reasonably 
expected to motivate or assist the individual to return to or continue 
in SGA must be provided. If we find in any prepayment validation review, 
that the scope or content of the information is inadequate, we will 
request additional information and will withhold payment until adequate 
information has been provided. The State VR agency or alternate 
participant shall permit us (including duly authorized representatives) 
access to, and the right to examine, any records relating to such 
services and costs. Any review performed under this section will not be 
considered an audit for purposes of this subpart.
    (b) Purpose. The primary purpose of these reviews is--
    (1) To ensure that the VR services and costs meet the requirements 
for payment under this subpart;
    (2) To assess the validity of our documentation requirements; and
    (3) To assess the need for additional validation reviews or 
additional documentation requirements for any State VR agency or 
alternate participant to ensure compliance with the requirements under 
this subpart.
    (c) Determinations. In any validation review, we will determine 
whether the VR services and costs meet the requirements for payment and 
determine the amount of payment. We will notify in writing the State VR 
agency or alternate participant of our determination. If we find in any 
postpayment validation review that more or less than the correct amount 
of payment was made for a claim, we will determine that an overpayment 
or underpayment has occurred and will notify the State VR agency or 
alternate participant that we will make the appropriate adjustment.
    (d) Appeals. If the State VR agency or alternate participant 
disagrees with our determination under this section, it may appeal that 
determination in accordance with Sec. 404.2127. For purposes of this 
section, an appeal must be filed within 60 days after receiving the 
notice of our determination.

[59 FR 11916, Mar. 15, 1994]



Sec. 404.2122  Confidentiality of information and records.

    The State or alternate participant shall comply with the provisions 
for confidentiality of information, including the security of systems, 
and

[[Page 583]]

records requirements described in 20 CFR part 401 and pertinent written 
guidelines (see Sec. 404.2123).



Sec. 404.2123  Other Federal laws and regulations.

    Each State VR agency and alternate participant shall comply with the 
provisions of other Federal laws and regulations that directly affect 
its responsibilities in carrying out the vocational rehabilitation 
function.



Sec. 404.2127  Resolution of disputes.

    (a) Disputes on the amount to be paid. The appropriate SSA official 
will notify the State VR agency or alternative participant in writing of 
his or her determination concerning the amount to be paid. If the State 
VR agency (see Sec. 404.2118(b) for alternate participants) disagrees 
with that determination, the State VR agency may request reconsideration 
in writing within 60 days after receiving the notice of determination. 
The Commissioner will make a determination and notify the State VR 
agency of that decision in writing, usually no later than 45 days from 
the date of the State VR agency's appeal. The decision by the 
Commissioner will be final and conclusive upon the State VR agency 
unless the State VR agency appeals that decision in writing in 
accordance with 45 CFR part 16 to the Department of Health and Human 
Services' Departmental Appeals Board within 30 days after receiving the 
Commissioner's decision.
    (b) Disputes on whether there was a continuous period of SGA and 
whether VR services contributed to a continuous period of SGA. The rules 
in paragraph (a) of this section will apply, except that the 
Commissioner's decision will be final and conclusive. There is no right 
of appeal to the Departmental Appeals Board.
    (c) Disputes on determinations made by the Commissioner which affect 
a disability beneficiary's rights to benefits. Determinations made by 
the Commissioner which affect an individual's right to benefits (e.g., 
determinations that disability benefits should be terminated, denied, 
suspended, continued or begun at a different date than alleged) cannot 
be appealed by a State VR agency or alternate participant. Because these 
determinations are an integral part of the disability benefits claims 
process, they can only be appealed by the beneficiary or applicant whose 
rights are affected or by his or her authorized representative. However, 
if an appeal of an unfavorable determination is made by the individual 
and is successful, the new determination would also apply for purposes 
of this subpart. While a VR agency or alternate participant cannot 
appeal a determination made by the Commissioner which affects a 
beneficiary's or applicant's rights, the VR agency can furnish any 
evidence it may have which would support a revision of a determination.

[48 FR 6293, Feb. 10, 1983, as amended at 55 FR 8456, Mar. 8, 1990; 62 
FR 38452, July 18, 1997]



PART 408_SPECIAL BENEFITS FOR CERTAIN WORLD WAR II VETERANS--Table of 
Contents




        Subpart A_Introduction, General Provision and Definitions

Sec.
408.101 What is this part about?
408.105 Purpose and administration of the program.
408.110 General definitions and use of terms.
408.120 Periods of limitations ending on Federal nonworkdays.

               Subpart B_SVB Qualification and Entitlement

408.201 What is this subpart about?
408.202 How do you qualify for SVB?
408.204 What conditions will prevent you from qualifying for SVB or 
          being entitled to receive SVB payments?
408.206 What happens when you apply for SVB?
408.208 What happens if you establish residence outside the United 
          States within 4 calendar months?
408.210 What happens if you do not establish residence outside the 
          United States within 4 calendar months?
408.212 What happens if you are a qualified individual already residing 
          outside the United States?

                                   Age

408.214 Are you age 65?

                            Military Service

408.216 Are you a World War II veteran?

[[Page 584]]

                             SSI Eligibility

408.218 Do you meet the SSI eligibility requirements?

                          Other Benefit Income

408.220 Do you have other benefit income?
408.222 How does your other benefit income affect your SVB?
408.224 How do we determine the monthly amount of your other benefit 
          income?
408.226 What happens if you begin receiving other benefit income after 
          you become entitled to SVB?

                   Residence Outside the United States

408.228 When do we consider you to be residing outside the United 
          States?
408.230 When must you begin residing outside the United States?
408.232 When do you lose your foreign resident status?
408.234 Can you continue to receive SVB payments if you stay in the 
          United States for more than 1 full calendar month?

                      Subpart C_Filing Applications

                         Filing Your Application

408.301 What is this subpart about?
408.305 Why do you need to file an application to receive benefits?
408.310 What makes an application a claim for SVB?
408.315 Who may sign your application?
408.320 What evidence shows that a person has authority to sign an 
          application for you?
408.325 When is your application considered filed?
408.330 How long will your application remain in effect?

         Filing Date Based on Written Statement or Oral Inquiry

408.340 When will we use a written statement as your filing date?
408.345 When will we use the date of an oral inquiry as your application 
          filing date?

               Deemed Filing Date Based on Misinformation

408.351 What happens if we give you misinformation about filing an 
          application?

                        Withdrawal of Application

408.355 Can you withdraw your application?
408.360 Can you cancel your request to withdraw your application?

                     Subpart D_Evidence Requirements

                           General Information

408.401 What is this subpart about?
408.402 When do you need to give us evidence?
408.403 Where should you give us your evidence?
408.404 What happens if you fail to give us the evidence we ask for?
408.405 When do we require original records or copies as evidence?
408.406 How do we evaluate the evidence you give us?

                                   Age

408.410 When do you need to give us evidence of your age?
408.412 What kinds of evidence of age do you need to give us?
408.413 How do we evaluate the evidence of age you give us?

                            Military Service

408.420 What evidence of World War II military service do you need to 
          give us?

                             SSI Eligibility

408.425 How do we establish your eligibility for SSI?

                          Other Benefit Income

408.430 When do you need to give us evidence of your other benefit 
          income?
408.432 What kind of evidence of your other benefit income do you need 
          to give us?

                                Residence

408.435 How do you prove that you are residing outside the United 
          States?
408.437 How do you prove that you had good cause for staying in the 
          United States for more than 1 full calendar month?

                Subpart E_Amount and Payment of Benefits

408.501 What is this subpart about?
408.505 How do we determine the amount of your SVB payment?
408.510 How do we reduce your SVB when you receive other benefit income?
408.515 When do we make SVB payments?

    Source: 68 FR 16418, Apr. 4, 2003, unless otherwise noted.



        Subpart A_Introduction, General Provision and Definitions

    Authority: Secs. 702(a)(5) and 801-813 of the Social Security Act 
(42 U.S.C. 902(a)(5) and 1001-1013).



Sec. 408.101  What is this part about?

    The regulations in this part 408 (Regulation No. 8 of the Social 
Security Administration) relate to the provisions of title VIII of the 
Social Security Act

[[Page 585]]

as added by Pub. L. 106-169 enacted December 14, 1999. Title VIII 
(Special Benefits for Certain World War II Veterans) established a 
program for the payment of benefits to certain World War II veterans. 
The regulations in this part are divided into the following subparts 
according to subject content.
    (a) Subpart A contains this introductory section, a statement of the 
general purpose underlying the payment of special benefits to World War 
II veterans, general provisions applicable to the program and its 
administration, and defines certain terms that we use throughout part 
408.
    (b) Subpart B contains the requirements for qualification and 
entitlement to monthly title VIII benefits.
    (c) Subpart C contains the provisions relating to the filing and 
withdrawal of applications.
    (d) Subpart D contains the provisions relating to the evidence 
required for establishing qualification for and entitlement to monthly 
title VIII benefits.
    (e) Subpart E contains the provisions about the amount and payment 
of monthly benefits.



Sec. 408.105  Purpose and administration of the program.

    The purpose of the title VIII program is to assure a basic income 
level for certain veterans who are entitled to supplemental security 
income (SSI) and who want to leave the United States to live abroad. The 
title VIII program is administered by the Social Security 
Administration.



Sec. 408.110  General definitions and use of terms.

    (a) Terms relating to the Act and regulations. (1) The Act means the 
Social Security Act as amended (42 U.S.C. Chap.7).
    (2) Title means the title of the Act.
    (3) Section or Sec.  means a section of the regulations in part 408 
of this chapter unless the context indicates otherwise.
    (b) Commissioner; Appeals Council; Administrative Law Judge defined. 
(1) Commissioner means the Commissioner of Social Security.
    (2) Appeals Council means the Appeals Council of the Office of 
Hearings and Appeals of the Social Security Administration or a member 
or members of the Council designated by the Chairman.
    (3) Administrative Law Judge means an Administrative Law Judge in 
the Office of Hearings and Appeals in the Social Security 
Administration.
    (c) Miscellaneous. (1) A calendar month. The period including all of 
24 hours of each day of January, February, March, April, May, June, 
July, August, September, October, November, or December.
    (2) Federal benefit rate (FBR). The amount of the cash benefit 
payable under title XVI for the month to an eligible individual who has 
no income. The FBR does not include any State supplementary payment that 
is paid by the Commissioner pursuant to an agreement with a State under 
section 1616(a) of the Act or section 212(b) of Public Law 93-66.
    (3) Qualified individual. An individual who meets all the 
requirements for qualification for SVB in Sec. 408.202 and does not 
meet any of the conditions that prevent qualification in Sec. 408.204.
    (4) Special veterans benefits (SVB). The benefits payable to certain 
veterans of World War II under title VIII of the Act.
    (5) State. Unless otherwise indicated, this means:
    (i) A State of the United States
    (ii) The District of Columbia; or
    (iii) The Northern Mariana Islands.
    (6) Supplemental Security Income (SSI). SSI is the national program 
for providing a minimum level of income to aged, blind, and disabled 
individuals under title XVI of the Act.
    (7) United States. When used in the geographical sense, this is:
    (i) The 50 States;
    (ii) The District of Columbia; and
    (iii) The Northern Mariana Islands.
    (8) We, us or our means the Social Security Administration (SSA).
    (9) World War II. The period beginning September 16, 1940 and ending 
on July 24, 1947.
    (10) You or your means, as appropriate, the person who applies for 
benefits, the person for whom an application is filed, or the person who 
is considering applying for benefits.

[[Page 586]]



Sec. 408.120  Periods of limitations ending on Federal nonworkdays.

    Title VIII of the Act and the regulations in this part require you 
to take certain actions within specified time periods or you may lose 
your right to a portion or all of your benefits. If any such period ends 
on a Saturday, Sunday, Federal legal holiday, or any other day all or 
part of which is declared to be a nonworkday for Federal employees by 
statute or Executive Order, you will have until the next Federal workday 
to take the prescribed action.



               Subpart B_SVB Qualification and Entitlement

    Authority: Secs. 702(a)(5), 801, 802, 803, 804, 806, 810 and 1129A 
of the Social Security Act (42 U.S.C. 902(a)(5), 1001, 1002, 1003, 1004, 
1006, 1010 and 1320a-8a); Sec. 251, Pub. L. 106-169, 113 Stat. 1844.



Sec. 408.201  What is this subpart about?

    You are qualified for SVB if you meet the requirements listed in 
Sec. 408.202 and if none of the conditions listed in Sec. 408.204 
exist. However, you cannot be entitled to receive benefits for any month 
before the first month in which you reside outside the United States on 
the first day of the month and meet all the qualification requirements. 
You must give us any information we request and evidence to prove that 
you meet these requirements. You continue to be qualified for SVB unless 
we determine that you no longer meet the requirements for qualification 
in Sec. 408.202 or we determine that you are not qualified because one 
of the conditions listed in Sec. 404.204 of this chapter exists. You 
continue to be entitled to receive benefits unless we determine you are 
no longer residing outside the United States.



Sec. 408.202  How do you qualify for SVB?

    You qualify for SVB if you meet all of the following requirements.
    (a) Age. You were age 65 or older on December 14, 1999 (the date on 
which Pub. L. 106-169 was enacted into law).
    (b) World War II veteran. You are a World War II veteran as 
explained in Sec. 408.216.
    (c) SSI eligible. You were eligible for SSI, as explained in Sec. 
408.218, for both December 1999 (the month in which Pub. L. 106-169 was 
enacted into law) and for the month in which you file your application 
for SVB.
    (d) Application. You file an application for SVB as explained in 
subpart C of this part.
    (e) Other benefit income. You do not have other benefit income, as 
explained in Sec. 408.220, which is equal to, or more than, 75 percent 
of the current FBR.



Sec. 408.204  What conditions will prevent you from qualifying for SVB 
or being entitled to receive SVB payments?

    (a) General rule. Even if you meet all the qualification 
requirements in Sec. 408.202, you will not be qualified for SVB for or 
entitled to receive SVB payments for any of the following months.
    (1) Removal from the United States. Any month that begins after the 
month in which we are advised by the Attorney General that you have been 
removed (including deported) from the United States pursuant to section 
237(a) or 212(a)(6)(A) of the Immigration and Nationality Act and before 
the month in which you are subsequently lawfully admitted to the United 
States for permanent residence.
    (2) Fleeing felon. Any month during any part of which you are 
fleeing to avoid prosecution, or custody or confinement after 
conviction, under the laws of the United States or the jurisdiction in 
the United States from which you fled, for a crime or an attempt to 
commit a crime that is a felony under the laws of the place from which 
you fled, or in the case of the State of New Jersey, is a high 
misdemeanor.
    (3) Parole violation. Any month during any part of which you violate 
a condition of probation or parole imposed under Federal or State law.
    (4) Residence in certain countries. Any month during which you are 
not a citizen or national of the United States and reside in a country 
to which payments to residents of that country are withheld by the 
Treasury Department under section 3329 of title 31, United States Code.

[[Page 587]]

    (b) Condition occurs before we determine that you are qualified. If 
one of the conditions in paragraph (a) of this section occurs before we 
determine that you are qualified, we will deny your claim for SVB.
    (c) Condition occurs after we determine that you are qualified. If 
one of the conditions in paragraph (a) of this section occurs after we 
determine that you are qualified for SVB, you cannot receive SVB 
payments for any month in which the condition exists.



Sec. 408.206  What happens when you apply for SVB?

    (a) General rule. When you apply for SVB, we will ask you for 
documents and other information that we need to determine if you meet 
all the requirements for qualification. You must give us complete 
information (see subpart D of this part for our rules on evidence). If 
you do not meet all of the requirements for qualification listed in 
Sec. 408.202, or if one of the conditions listed in Sec. 408.204 
exists, we will deny your claim.
    (b) If you are a qualified individual residing in the United States. 
If you meet all the requirements for qualification listed in Sec. 
408.202 and if none of the conditions listed in Sec. 408.204 exist, we 
will send you a letter telling you the following:
    (1) You are qualified for SVB;
    (2) In order to become entitled to SVB, you will have to begin 
residing outside the United States by the end of the fourth calendar 
month after the month in which your notice of qualification is dated. 
For example, if our letter is dated May 15, you must establish residence 
outside the United States before October 1 of that year; and
    (3) What documents and information you must give us to establish 
that you are residing outside the United States.



Sec. 408.208  What happens if you establish residence outside the United 
States within 4 calendar months?

    If you begin residing outside the United States within 4 calendar 
months after the month in which your SVB qualification notice is dated, 
we will send you a letter telling you that you are entitled to SVB and 
the first month for which SVB payments can be made to you. The letter 
will also tell you the amount of your monthly benefit payments, whether 
your payments are reduced because of your other benefit income, and what 
rights you have to a reconsideration of our determination.



Sec. 408.210  What happens if you do not establish residence outside the 
United States within 4 calendar months?

    If you do not establish residence outside the United States within 4 
calendar months after the month in which your SVB qualification notice 
is dated, we will deny your SVB claim. We will send you a notice 
explaining what rights you have to a reconsideration of our 
determination. You will have to file a new application and meet all the 
requirements for qualification and entitlement based on the new 
application to become entitled to SVB.



Sec. 408.212  What happens if you are a qualified individual already 
residing outside the United States?

    If you meet all the requirements for qualification listed in Sec. 
408.202 and if none of the conditions listed in Sec. 408.204 exist, we 
will ask you for documents and information to establish your residence 
outside the United States. If you establish that you are residing 
outside the United States, we will send you a letter telling you that 
you are entitled to SVB and the first month for which SVB payments can 
be made to you. The letter will also tell you the amount of your monthly 
benefit payments, whether your payments are reduced because of your 
other benefit income, and what rights you have to a reconsideration of 
our determination.

                                   Age



Sec. 408.214  Are you age 65?

    You become age 65 on the first moment of the day before the 
anniversary of your birth corresponding to age 65. Thus, you must have 
been born on or before December 15, 1934 to be at least age 65 on 
December 14, 1999 and to qualify for SVB.

[[Page 588]]

                            Military Service



Sec. 408.216  Are you a World War II veteran?

    (a) Service requirements. For SVB purposes, you are a World War II 
veteran if you:
    (1) Served in the active military, naval or air service of the 
United States during World War II at any time during the period 
beginning on September 16, 1940 and ending on July 24, 1947; or
    (2) Served in the organized military forces of the Government of the 
Commonwealth of the Philippines, while the forces were in the service of 
the U.S. Armed Forces pursuant to the military order of the President 
dated July 26, 1941, including among the military forces organized 
guerrilla forces under commanders appointed, designated, or subsequently 
recognized by the Commander in Chief, Southwest Pacific Area, or other 
competent authority in the U.S. Army. This service must have been 
rendered at any time during the period beginning July 26, 1941 and 
ending on December 30, 1946.
    (b) Discharge requirements. You must have been discharged or 
released from this service under conditions other than dishonorable 
after service of 90 days or more or, if your service was less than 90 
days, because of a disability or injury incurred or aggravated in the 
line of active duty.

                             SSI Eligibility



Sec. 408.218  Do you meet the SSI eligibility requirements?

    For SVB purposes, you are eligible for SSI for a given month if all 
of the following are met:
    (a) You have been determined to be eligible for SSI (except as noted 
in paragraph (c) of this section); you do not have to actually receive a 
payment for that month;
    (b) Your SSI eligibility has not been terminated for that month; and
    (c) Your SSI benefits are not subject to a penalty under Sec. 
416.1340 of this chapter. This includes months in which a penalty has 
been imposed, as well as months in which a penalty cannot be imposed 
because you are in SSI nonpay status for some other reason.

                          Other Benefit Income



Sec. 408.220  Do you have other benefit income?

    (a) Description of other benefit income. Other benefit income is any 
regular periodic payment (such as an annuity, pension, retirement or 
disability benefit) that you receive. For other benefit income to affect 
your SVB eligibility, you must have been receiving the other benefit 
income in any part of the 12-month period before the month in which you 
filed your application for SVB. Payments received after you become 
entitled to SVB can be included as other benefit income only if you 
received a similar payment from the same or a related source during any 
part of the 12-month period before the month in which you filed your 
application for SVB.
    (b) When other benefit payments are considered to be similar 
payments from the same or a related source. Payments are similar 
payments from the same or a related source if they are received from 
sources substantially related to the sources of income received before 
you became entitled to SVB. For example, if you received U.S. Social 
Security spouse's benefits in the 12-month period before you filed your 
application for SVB and these were changed to widower's benefits after 
you became entitled to SVB, we would consider this to be from the same 
or a related source.
    (c) Examples of other benefit income. Other benefit income can come 
from a source inside or outside the United States. It includes, but is 
not limited to, any of the following:
    (1) Veterans' compensation or pension,
    (2) Workers' compensation,
    (3) U.S. or foreign Social Security benefits (not including SSI 
payments from the U.S.),
    (4) Railroad retirement annuity or pension,
    (5) Retirement or disability pension,
    (6) Individual Retirement Account (IRA) payments, and
    (7) Unemployment insurance benefit.
    (d) If you receive a lump-sum payment. Regular periodic payments can 
also include lump-sum payments made at your request or as an 
administrative convenience or practice in place of

[[Page 589]]

more frequent payments. See Sec. 408.224(e) for an explanation of how 
we determine the monthly amount of your benefit income if you receive a 
lump-sum payment.



Sec. 408.222  How does your other benefit income affect your SVB?

    (a) Income began before you qualify for SVB. If, at the time you 
file your application for SVB, your other benefit income is equal to, or 
more than, the maximum SVB payment possible (see Sec. 408.505), we will 
deny your SVB claim. If it is less, we will reduce any monthly SVB 
payments you become entitled to by the amount of your other benefit 
income (see Sec. 408.510 for a description of how we make the 
reduction).
    (b) Income begins after you qualify for SVB. If you have been 
determined to be qualified for SVB, we will reduce any monthly SVB 
payments you become entitled to by the amount of your other benefit 
income (see Sec. 408.510 for a description of how we make the 
reduction).



Sec. 408.224  How do we determine the monthly amount of your other benefit 
income?

    If your other benefit income is paid in other than monthly amounts, 
we will compute the equivalent monthly amount as follows:
    (a) Weekly payments. We multiply the amount of the weekly payment by 
52 and divide by 12 to determine the equivalent monthly payment amount.
    (b) Bi-weekly payments. We multiply the amount of the bi-weekly 
payment by 26 and divide by 12 to determine the equivalent monthly 
payment amount.
    (c) Quarterly payments. We multiply the amount of the quarterly 
payment by 4 and divide by 12 to determine the equivalent monthly 
payment amount.
    (d) Semi-annual payments. We multiply the amount of the semi-annual 
payment by 2 and divide by 12 to determine the equivalent monthly 
payment amount.
    (e) Lump sum payment. If the paying agency will not prorate the lump 
sum to determine the monthly amount, we will compute the amount as 
follows:
    (1) If the payment is for a specific period. We divide the lump sum 
by the number of months in the period for which the payment was made to 
determine the equivalent monthly payment amount.
    (2) If the payment is for a lifetime or for an unspecified period. 
We divide the lump sum amount by your life expectancy in months at the 
time the lump sum is paid.



Sec. 408.226  What happens if you begin receiving other benefit income 
after you become entitled to SVB?

    If you begin receiving other benefit income after you become 
entitled to SVB, we will reduce your SVB by the amount of those payments 
only if you were receiving similar benefits from the same or a related 
source during the 12-month period before you filed for SVB. (See Sec. 
408.220(b) for a description of when we consider other benefit income to 
be from the same or a related source.)

                   Residence Outside the United States



Sec. 408.228  When do we consider you to be residing outside the United 
States?

    (a) Effect of residency on SVB eligibility. You can be paid SVB only 
for those months in which you are residing outside the United States but 
you can not be paid for a month that is earlier than the month in which 
you filed your application for SVB. You are residing outside the United 
States in a month only if you reside outside the United States on the 
first day of that month. For SVB purposes, you can be a resident of only 
one country at a time. You cannot, for example, maintain a residence in 
the United States and a residence outside the United States at the same 
time.
    (b) Definition of residing outside the United States. We consider 
you to be residing outside the United States if you:
    (1) Have established an actual dwelling place outside the United 
States; and
    (2) Intend to continue to live outside the United States.
    (c) When we will assume you intend to continue living outside the 
United States. If you tell us, or the evidence shows, that you intend to 
reside outside the United States for at least 6 months, we will assume 
you meet the intent requirement in paragraph (b)(2) of this

[[Page 590]]

section. Otherwise we will assume, absent convincing evidence to the 
contrary, that your stay is temporary and that you are not residing 
outside the United States.



Sec. 408.230  When must you begin residing outside the United States?

    (a) 4-month rule. Except as provided in paragraph (b) of this 
section, you must begin residing outside the United States by the end of 
the fourth calendar month after the month in which the notice explaining 
that you are qualified for SVB is dated, as explained in Sec. 408.206. 
If you do not establish residence outside the United States within this 
4-month period, we will deny your claim for SVB. You will have to file a 
new application and meet all the requirements for qualification and 
entitlement based on the new application to become entitled to SVB.
    (b) When we will extend the 4-month period. We will extend the 4-
month period for establishing residence outside the United States if you 
are in the United States and are appealing either:
    (1) A determination that we made on your SVB claim, or
    (2) A determination that we made on a title II and/or a title XVI 
claim but only if the determination affects your SVB qualification.
    (c) How we extend the 4-month period. If the requirements in 
paragraph (b) of this section are met, the 4-month period begins with 
the month after the month in which your notice of our decision on your 
appeal is dated or the month in which your appeal rights have expired.



Sec. 408.232  When do you lose your foreign resident status?

    (a) General rule. We consider you to have lost or abandoned your 
residence outside the United States if you:
    (1) Enter the United States and stay for more than 1 full calendar 
month (see Sec. 408.234 for exceptions to this rule);
    (2) Tell us that you no longer consider yourself to be residing 
outside the United States; or
    (3) Become eligible (as defined by title XVI) for SSI benefits.
    (b) Resumption of SVB following a period of U.S. residence. Once you 
lose or abandon your residence outside the United States, you cannot 
receive SVB again until you meet all the requirements for SVB 
qualification and reestablish your residence outside the United States.

    Example: You leave your home outside the United States on June 15 to 
visit your son in the United States and return to your home abroad on 
August 15. Your SVB payments will continue for the months of June and 
July. However, because you were in the United States for the entire 
calendar month of July (i.e., all of the first day through all of the 
last day of July), you are not entitled to an SVB payment for the month 
of August. Your SVB payments resume with September, the month you 
reestablished your residence outside the United States.



Sec. 408.234  Can you continue to receive SVB payments if you stay in the 
United States for more than 1 full calendar month?

    (a) When we will consider your foreign residence to continue. We 
will continue to consider you to be a foreign resident and will continue 
to pay you SVB payments even if you have been in the United States for 
more than 1 full calendar month if you--
    (1) Made a good faith effort to return to your home abroad within 
that 1-month period but were prevented from doing so by circumstances 
beyond your control (e.g., sickness, a death in the family, a 
transportation strike, etc.); or
    (2) Are exercising your option to be personally present in the 
United States to present testimony and other evidence in the appeal of 
an SSA decision on a claim filed under any SSA-administered program. 
This extension applies only as long as you are participating in 
activities where you are providing testimony and other evidence in 
connection with a determination or decision at a specific level of the 
appeals process (e.g., a hearing before an administrative law judge).
    (b) When you must return to your home abroad. When the circumstance/
event that was the basis for the continuation of your SVB payments 
ceases to exist, you must return to your home abroad within 1 full 
calendar month. If you do not return to your home abroad within this 1-
calendar-month period, we will consider you to have lost or abandoned

[[Page 591]]

your foreign resident status for SVB purposes and we will stop your SVB 
payments with the first day of the month following the first full 
calendar month you remain in the United States.



                      Subpart C_Filing Applications

    Authority: Secs. 702(a)(5), 802, 806, and 810 of the Social Security 
Act (42 U.S.C. 902(a)(5), 1102, 1106 and 1110); Sec. 251, Pub. L. 106-
169, 113 Stat. 1844.

                         Filing Your Application



Sec. 408.301  What is this subpart about?

    This subpart contains our rules about filing applications for SVB. 
It explains what an application is, who may sign it, where and when it 
must be signed and filed, the period of time it is in effect, and how it 
may be withdrawn. This subpart also explains when a written statement or 
an oral inquiry may be considered to establish your application filing 
date.



Sec. 408.305  Why do you need to file an application to receive benefits?

    In addition to meeting other requirements, you must file an 
application to become entitled to SVB. If you believe you may be 
entitled to SVB, you should file an application. Filing an application 
will--
    (a) Permit us to make a formal decision on whether you qualify for 
SVB;
    (b) Assure that you receive SVB for any months you are entitled to 
receive payments; and
    (c) Give you the right to appeal if you are dissatisfied with our 
determination.



Sec. 408.310  What makes an application a claim for SVB?

    To be considered a claim for SVB, an application must generally meet 
all of the following conditions:
    (a) It must be on the prescribed SVB application form (SSA-2000-F6, 
Application for Special Benefits for World War II Veterans).
    (b) It must be completed and filed with SSA as described in Sec. 
408.325.
    (c) It must be signed by you or by someone who may sign an 
application for you as described in Sec. 408.315.
    (d) You must be alive at the time it is filed.



Sec. 408.315  Who may sign your application?

    (a) When you must sign. If you are mentally competent, and 
physically able to do so, you must sign your own application.
    (b) When someone else may sign for you. (1) If you are mentally 
incompetent, or physically unable to sign, your application may be 
signed by a court-appointed representative or a person who is 
responsible for your care, including a relative. If you are in the care 
of an institution, the manager or principal officer of the institution 
may sign your application.
    (2) If it is necessary to protect you from losing benefits and there 
is good cause why you could not sign the application, we may accept an 
application signed by someone other than you or a person described in 
paragraph (b)(1) of this section.

    Example: Mr. Smith comes to a Social Security office a few days 
before the end of a month to file an application for SVB for his 
neighbor, Mr. Jones. Mr. Jones, a 68-year-old widower, just suffered a 
heart attack and is in the hospital. He asked Mr. Smith to file the 
application for him. We will accept an application signed by Mr. Smith 
because it would not be possible to have Mr. Jones sign and file the 
application until the next calendar month and a loss of one month's 
benefits would result.



Sec. 408.320  What evidence shows that a person has authority to sign 
an application for you?

    (a) A person who signs an application for you will be required to 
give us evidence of his or her authority to sign the application for you 
under the following rules:
    (1) If the person who signs is a court-appointed representative, he 
or she must give us a certificate issued by the court showing authority 
to act for you.
    (2) If the person who signs is not a court-appointed representative, 
he or she must give us a statement describing his or her relationship to 
you. The statement must also describe the extent to which the person is 
responsible for your care.

[[Page 592]]

    (3) If the person who signs is the manager or principal officer of 
an institution which is responsible for your care, he or she must give 
us a statement indicating the person's position of responsibility at the 
institution.
    (b) We may, at any time, require additional evidence to establish 
the authority of a person to sign an application for you.



Sec. 408.325  When is your application considered filed?

    (a) General rule. We consider an application for SVB filed on the 
day it is received by an SSA employee at one of our offices, by an SSA 
employee who is authorized to receive it at a place other than one of 
our offices, or by any office of the U.S. Foreign Service or by the 
Veterans Affairs Regional Office in the Philippines.
    (b) Exceptions. (1) When we receive an application that is mailed, 
we will use the date shown by the United States postmark as the filing 
date if using the date we receive it would result in your entitlement to 
additional benefits. If the postmark is unreadable, or there is no 
United States postmark, we will use the date the application is signed 
(if dated) or 5 days before the day we receive the signed application, 
whichever date is later.
    (2) We consider an application to be filed on the date of the filing 
of a written statement or the making of an oral inquiry under the 
conditions in Sec. Sec. 408.340 and 408.345.
    (3) We will establish a deemed filing date of an application in a 
case of misinformation under the conditions described in Sec. 408.351. 
The filing date of the application will be a date determined under Sec. 
408.351(b).



Sec. 408.330  How long will your application remain in effect?

    Your application for SVB will remain in effect from the date it is 
filed until we make a final determination on it, unless there is a 
hearing decision on your application. If there is a hearing decision, 
your application will remain in effect until the hearing decision is 
issued.

         Filing Date Based on Written Statement or Oral Inquiry



Sec. 408.340  When will we use a written statement as your filing date?

    If you file with us under the rules stated in Sec. 408.325 a 
written statement, such as a letter, indicating your intent to claim 
SVB, we will use the filing date of the written statement as the filing 
date of your application. If the written statement is mailed, we will 
use the date the statement was mailed to us as shown by the United 
States postmark. If the postmark is unreadable or there is no United 
States postmark, we will use the date the statement is signed (if dated) 
or 5 days before the day we receive the written statement, whichever 
date is later, as the filing date. In order for us to use your written 
statement to protect your filing date, the following requirements must 
be met:
    (a) The statement indicates your intent to file for benefits.
    (b) The statement is signed by you, your spouse, or a person 
described in Sec. 408.315.
    (c) You file an application with us on an application form as 
described in Sec. 408.310(a), or one is filed for you by a person 
described in Sec. 408.315, within 60 days after the date of a notice we 
will send advising of the need to file an application. The notice will 
say that we will make an initial determination of your qualification if 
an application form is filed within 60 days after the date of the 
notice. We will send the notice to you. However, if it is clear from the 
information we receive that you are mentally incompetent, we will send 
the notice to the person who submitted the written statement.
    (d) You are alive when the application is filed.



Sec. 408.345  When will we use the date of an oral inquiry as your 
application filing date?

    We will use the date of an oral inquiry about SVB as the filing date 
of your application for SVB if the following requirements are met:
    (a) The inquiry asks about your entitlement to SVB.
    (b) The inquiry is made by you, your spouse, or a person who may 
sign an

[[Page 593]]

application on your behalf as described in Sec. 408.315.
    (c) The inquiry, whether in person or by telephone, is directed to 
an office or an official described in Sec. 408.325(a).
    (d) You, or a person on your behalf as described in Sec. 408.315, 
file an application on a prescribed form within 60 days after the date 
of the notice we will send telling of the need to file an application. 
The notice will say that we will make an initial determination on 
whether you qualify for SVB if an application form is filed within 60 
days after the date of the notice. However, if it is clear from the 
information we receive that you are mentally incompetent, we will send 
the notice to the person who made the inquiry.
    (e) You are alive when the prescribed application is filed.

               Deemed Filing Date Based on Misinformation



Sec. 408.351  What happens if we give you misinformation about filing 
an application?

    (a) General rule. You may have considered applying for SVB, for 
yourself or another person and you may have contacted us in writing, by 
telephone or in person to inquire about filing an application for SVB. 
It is possible that in responding to your inquiry, we may have given you 
misinformation about qualification for such benefits that caused you not 
to file an application at that time. If this happened and use of that 
date will result in entitlement to additional benefits, and you later 
file an application for SVB with us, we may establish an earlier filing 
date as explained in paragraphs (b) through (f) of this section.
    (b) Deemed filing date of an application based on misinformation. 
Subject to the requirements and conditions in paragraphs (c) through (f) 
of this section, we may establish a deemed filing date of an application 
for SVB under the following provisions.
    (1) If we determine that you failed to apply for SVB because we gave 
you misinformation about qualification for or entitlement to such 
benefits, we will deem an application for such benefits to have been 
filed with us on the later of--
    (i) The date on which we gave you the misinformation; or
    (ii) The date on which all of the requirements for qualification to 
SVB were met, other than the requirement of filing an application.
    (2) Before we may establish a deemed filing date of an application 
for SVB under paragraph (b)(1) of this section, you or a person 
described in Sec. 408.315 must file an application for such benefits.
    (c) Requirements concerning the misinformation. We apply the 
following requirements for purposes of paragraph (b) of this section.
    (1) The misinformation must have been provided to you by one of our 
employees while he or she was acting in his or her official capacity as 
our employee. For purposes of this section, an employee includes an 
officer of SSA, an employee of a U.S. Foreign Service office, and an 
employee of the SSA Division of the Veterans Affairs Regional Office in 
the Philippines who is authorized to take and develop Social Security 
claims.
    (2) Misinformation is information which we consider to be incorrect, 
misleading, or incomplete in view of the facts which you gave to the 
employee, or of which the employee was aware or should have been aware, 
regarding your particular circumstances. In addition, for us to find 
that the information you were given was incomplete, the employee must 
have failed to provide you with the appropriate, additional information 
which he or she would be required to provide in carrying out his or her 
official duties.
    (3) The misinformation may have been provided to you orally or in 
writing.
    (4) The misinformation must have been provided to you in response to 
a specific request by you to us for information about your qualification 
for SVB.
    (d) Evidence that misinformation was provided. We will consider the 
following evidence in making a determination under paragraph (b) of this 
section.
    (1) Preferred evidence. Preferred evidence is written evidence which 
relates directly to your inquiry about your qualification for SVB and 
which shows that we gave you misinformation

[[Page 594]]

which caused you not to file an application. Preferred evidence 
includes, but is not limited to, the following--
    (i) A notice, letter or other document which was issued by us and 
addressed to you; or
    (ii) Our record of your telephone call, letter or in-person contact.
    (2) Other evidence. In the absence of preferred evidence, we will 
consider other evidence, including your statements about the alleged 
misinformation, to determine whether we gave you misinformation, which 
caused you not to file an application. We will not find that we gave you 
misinformation, however, based solely on your statements. Other evidence 
which you provide or which we obtain must support your statements. 
Evidence which we will consider includes, but is not limited to, the 
following--
    (i) Your statements about the alleged misinformation, including 
statements about--
    (A) The date and time of the alleged contact(s);
    (B) How the contact was made, e.g., by telephone or in person;
    (C) The reason(s) the contact was made;
    (D) Who gave the misinformation; and
    (E) The questions you asked and the facts you gave us, and the 
questions we asked and the information we gave you, at the time of the 
contact;
    (ii) Statements from others who were present when you were given the 
alleged misinformation, e.g., a neighbor who accompanied you to our 
office;
    (iii) If you can identify the employee or the employee can recall 
your inquiry about benefits--
    (A) Statements from the employee concerning the alleged contact, 
including statements about the questions you asked, the facts you gave, 
the questions the employee asked, and the information provided to you at 
the time of the alleged contact; and
    (B) Our assessment of the likelihood that the employee provided the 
alleged misinformation;
    (iv) An evaluation of the credibility and the validity of your 
allegations in conjunction with other relevant information; and
    (v) Any other information regarding your alleged contact.
    (e) Information which does not constitute satisfactory proof that 
misinformation was given. Certain kinds of information will not be 
considered satisfactory proof that we gave you misinformation which 
caused you not to file an application. Examples of such information 
include--
    (1) General informational pamphlets that we issue to provide basic 
program information;
    (2) General information which we review or prepare but which is 
disseminated by the media, e.g., radio, television, magazines, and 
newspapers; and
    (3) Information provided by other governmental agencies, e.g., the 
Department of Veterans Affairs (except for certain employees of the SSA 
Division of the Veterans Affairs Regional Office in the Philippines as 
provided in paragraph (c)(1) of this section), the Department of 
Defense, State unemployment agencies, and State and local governments.
    (f) Claim for benefits based on misinformation. You may make a claim 
for SVB based on misinformation at any time. Your claim must contain 
information that will enable us to determine if we did provide 
misinformation to you about qualification for SVB which caused you not 
to file an application. Specifically, your claim must be in writing and 
it must explain what information was provided, how, when and where it 
was provided and by whom, and why the information caused you not to file 
an application. If you give us this information, we will make a 
determination on such a claim for benefits if all of the following 
conditions are also met.
    (1) An application for SVB is filed with us by you or someone 
described in Sec. 408.315 who may file. The application must be filed 
after the alleged misinformation was provided. This application may be--
    (i) An application on which we have made a previous final 
determination or decision awarding SVB, but only if the claimant 
continues to be entitled to benefits based on that application;
    (ii) An application on which we have made a previous final 
determination or decision denying the benefits, but only

[[Page 595]]

if such determination or decision is reopened; or
    (iii) A new application on which we have not made a final 
determination or decision.
    (2) The establishment of a deemed filing date of an application for 
benefits based on misinformation could result in entitlement to benefits 
or payment of additional benefits.
    (3) We have not made a previous final determination or decision to 
which you were a party on a claim for benefits based on alleged 
misinformation involving the same facts and issues. This provision does 
not apply, however, if the final determination or decision may be 
reopened.

                        Withdrawal of Application



Sec. 408.355  Can you withdraw your application?

    (a) Request for withdrawal filed before a determination is made. You 
may withdraw your application for SVB before we make a determination on 
it if--
    (1) You, or a person who may sign an application for you under Sec. 
408.315, file a written request for withdrawal at a place described in 
Sec. 408.325; and
    (2) You are alive at the time the request is filed.
    (b) Request for withdrawal filed after a determination is made. An 
application may be withdrawn after we make a determination on it if you 
repay all benefits already paid based on the application being withdrawn 
or we are satisfied that the benefits will be repaid.
    (c) Effect of withdrawal. If we approve your request to withdraw 
your application, we consider that the application was never filed. If 
we disapprove your request for withdrawal, we treat your application as 
though you did not file a request for withdrawal.



Sec. 408.360  Can you cancel your request to withdraw your application?

    You may request to cancel your request to withdraw your application 
and have your application reinstated if all of the following 
requirements are met:
    (a) You, or someone who may sign an application for you under Sec. 
408.315, file a written request for cancellation at a place described in 
Sec. 408.325;
    (b) You are alive at the time you file your request for 
cancellation; and
    (c) A cancellation request received after we have approved your 
withdrawal must be filed no later than 60 days after the date of the 
notice of approval.



                     Subpart D_Evidence Requirements

    Authority: Secs. 702(a)(5), 806, and 810 of the Social Security Act 
(42 U.S.C. 902(a)(5), 1006, and 1010); sec. 251, Pub. L. 106-169, 113 
Stat. 1844.

                           General Information



Sec. 408.401  What is this subpart about?

    We cannot determine your entitlement to SVB based solely on your 
statements about your qualification for benefits or other facts 
concerning payments to you. We will ask you for specific evidence or 
additional information. We may verify the evidence you give us with 
other sources to ensure that it is correct. This subpart contains our 
rules about the evidence you need to give us when you claim SVB.



Sec. 408.402  When do you need to give us evidence?

    When you apply for SVB, we will ask you for any evidence we need to 
make sure that you meet the SVB qualification and entitlement 
requirements. After you begin receiving SVB, we may ask you for evidence 
showing whether your SVB payments should be reduced or stopped. We will 
help you get any documents you need but do not have. If your evidence is 
a foreign-language record or document, we can have it translated for 
you. The evidence you give us will be kept confidential and not 
disclosed to anyone but you except under the rules set out in part 401 
of this chapter. You should also be aware that section 811 of the Act 
provides criminal penalties for misrepresenting the facts or for making 
false statements to obtain SVB payments for yourself or someone else, or 
to continue entitlement to benefits.



Sec. 408.403  Where should you give us your evidence?

    You should give your evidence to the people at a Social Security 
Administration office. In the Philippines, you

[[Page 596]]

should give your evidence to the people at the Veterans Affairs Regional 
Office. Elsewhere outside the United States, you should give your 
evidence to the people at the nearest U.S. Social Security office or a 
United States Foreign Service Office.



Sec. 408.404  What happens if you fail to give us the evidence we ask for?

    (a) You have not yet qualified for SVB. Generally, we will ask you 
to give us specific evidence or information by a certain date to prove 
that you qualify for SVB or to prove your foreign residence. If we do 
not receive the evidence or information by that date, we may decide that 
you do not qualify for SVB or may not receive SVB and deny your claim.
    (b) You have qualified for or become entitled to SVB. If you have 
already qualified for or become entitled to SVB, we may ask you to give 
us information by a specific date to decide whether you should receive 
benefits or, if you are already receiving benefits, whether your 
benefits should be stopped or reduced. If you do not give us the 
requested evidence or information by the date given, we may decide that 
you are no longer entitled to benefits or that your benefits should be 
stopped or reduced.
    (c) If you need more time. You should let us know if you are unable 
to give us the evidence or information within the specified time and 
explain why there will be a delay. If this delay is due to illness, 
failure to receive timely evidence you have asked for from another 
source, or a similar circumstance, we will give you additional time to 
give us the evidence.



Sec. 408.405  When do we require original records or copies as evidence?

    (a) General rule. To prove your qualification for or continuing 
entitlement to SVB, you may be asked to show us an original document or 
record. These original documents or records will be returned to you 
after we have photocopied them. We will also accept copies of original 
records that are properly certified and some uncertified birth 
certifications. These types of records are described in paragraphs (b) 
and (c) of this section.
    (b) Certified copies of original records. You may give us copies of 
original records or extracts from records if they are certified as true 
and exact copies by:
    (1) The official custodian of the record;
    (2) A Social Security Administration employee authorized to certify 
copies;
    (3) A Veterans Affairs employee if the evidence was given to that 
agency to obtain veteran's benefits;
    (4) An employee of the Veterans Affairs Regional Office, Manila, 
Philippines who is authorized to certify copies; or
    (5) A U.S. Consular Officer or employee of the Department of State 
authorized to certify evidence received outside the United States.
    (c) Uncertified copies of original birth records. You may give us an 
uncertified photocopy of a birth registration notification as evidence 
of age where it is the practice of the local birth registrar to issue 
them in this way.



Sec. 408.406  How do we evaluate the evidence you give us?

    When you give us evidence, we examine it to see if it is convincing 
evidence. This means that unless we have information in our records that 
raises a doubt about the evidence, other evidence of the same fact will 
not be needed. If the evidence you give us is not convincing by itself, 
we may ask you for additional evidence. In evaluating whether the 
evidence you give us is convincing, we consider such things as whether:
    (a) The information contained in the evidence was given by a person 
in a position to know the facts;
    (b) There was any reason to give false information when the evidence 
was created;
    (c) The information in the evidence was given under oath, or with 
witnesses present, or with the knowledge that there was a penalty for 
giving false information;
    (d) The evidence was created at the time the event took place or 
shortly thereafter;
    (e) The evidence has been altered or has any erasures on it; and

[[Page 597]]

    (f) The information contained in the evidence agrees with other 
available evidence including our records.

                                   Age



Sec. 408.410  When do you need to give us evidence of your age?

    To qualify for SVB you must establish that you were age 65 or older 
on December 14, 1999, the date on which Public Law 106-169 was enacted 
into law. If we have already established your age or date of birth in 
connection with your claim for other benefit programs that we 
administer, you will not have to give us evidence of your age for your 
SVB claim. If we have not established your age or date of birth, you 
must give us evidence of your age or date of birth. In the absence of 
information to the contrary, we generally will not ask for additional 
evidence of your age or date of birth if you state that you are at least 
age 68, and you submit documentary evidence that is at least 3 years old 
when the application is filed and supports your statement.



Sec. 408.412  What kinds of evidence of age do you need to give us?

    For a description of the kinds of evidence of age you may need to 
give us, see Sec. 416.802 of this chapter.



Sec. 408.413  How do we evaluate the evidence of age you give us?

    In evaluating the evidence of age you give us, we use the rules in 
Sec. 416.803 of this chapter.

                            Military Service



Sec. 408.420  What evidence of World War II military service do you need 
to give us?

    (a) Kinds of evidence you can give us. To show that you are a World 
War II veteran as defined in Sec. 408.216, you can give us any of the 
documents listed in Sec. 404.1370(b)(1) through (5) of this chapter 
that were issued by a U.S. Government agency. However, depending on the 
type of document you give us and what the document shows, we may verify 
your military service, or the dates of your service, with the National 
Personnel Records Center (NPRC) in St. Louis, Missouri. If we do, we 
will use the information in NPRC's records to determine whether you meet 
the military service requirements for SVB.
    (b) What the evidence must show. When you file an application for 
SVB, you must give us evidence of your World War II military service. 
The evidence you give us must show:
    (1) Your name;
    (2) The branch of service in which you served;
    (3) The dates of your military service;
    (4) Your military service serial number;
    (5) The character of your discharge; and
    (6) If your service was in the organized military forces of the 
Government of the Commonwealth of the Philippines (including the 
organized guerrilla forces), the period of your service that was under 
the control of U.S. Armed Forces.

                             SSI Eligibility



Sec. 408.425  How do we establish your eligibility for SSI?

    To qualify for SVB, you must have been eligible for SSI for the 
month of December 1999, the month in which Public Law 106-169 was 
enacted, and for the month in which you filed your application for SVB. 
You do not have to submit evidence of this. We will use our SSI record 
of your eligibility to determine if you meet these requirements.

                          Other Benefit Income



Sec. 408.430  When do you need to give us evidence of your other benefit 
income?

    If you tell us or if we have information indicating that you are 
receiving other benefit income that could affect your qualification for 
or the amount of your SVB payments, we will ask you to give us evidence 
of that income as explained in Sec. 408.432.



Sec. 408.432  What kind of evidence of your other benefit income do you 
need to give us?

    As evidence of your other benefit income, we may require a document 
such as an award notice or other letter from

[[Page 598]]

the paying agency or written notification from the former employer, 
insurance company, etc. The evidence should show the benefit payable, 
the current amount of the payment, and the date the payment began.

                                Residence



Sec. 408.435  How do you prove that you are residing outside the United 
States?

    (a) General rule. To establish that you are residing outside the 
United States for SVB purposes, you must give us all of the following:
    (1) Evidence of the date on which you arrived in the country in 
which you are residing;
    (2) A statement signed by you showing the address at which you are 
living and that you intend to continue living there; and
    (3) Evidence that you are actually living at the address given in 
your signed statement.
    (b) Evidence of the date you entered the foreign country. To 
establish the date you arrived in the country in which you are residing, 
you can give us evidence such as:
    (1) A visa or passport showing the date you entered that country;
    (2) Your plane ticket showing the date you arrived in that country; 
or
    (3) An entry permit showing the date you entered that country.
    (c) Evidence of your actual place of residence. To establish your 
actual place of residence, you can give us evidence such as:
    (1) A lease agreement showing where you live;
    (2) Rental or mortgage receipts;
    (3) Utility or other bills addressed to you at the address where you 
live;
    (4) A signed statement from a local official showing that he or she 
knows where you live, when you began living there and how he or she 
knows this information; or
    (5) A Standard Form 1199A, Direct Deposit Sign-Up Form, showing your 
address abroad and signed by an official of the financial institution 
after the date you arrived in the country in which you will be residing.



Sec. 408.437  How do you prove that you had good cause for staying in 
the United States for more than 1 full calendar month?

    (a) General rule. If you believe that you meet the requirements in 
Sec. 408.234 and that you should continue to receive SVB payments even 
though you have been in the United States for more than 1 full calendar 
month, you must give us evidence that you had good cause for staying in 
the United States.
    (b) Circumstances prevent you from returning to your home abroad. To 
prove that you had good cause for staying in the United States for more 
than 1 full calendar month, you must give us evidence of your good faith 
effort to return to your home abroad before the 1-month period had 
elapsed and of the circumstances/event which prevented your return to 
your home abroad.
    (1) Evidence of your good faith effort to return to your home 
abroad. Evidence of your plans to return to your home abroad can 
include, but is not limited to:
    (i) A plane ticket showing that you intended to return to your home 
abroad before the expiration of 1 full calendar month; or
    (ii) Notice from a travel agency or airline confirming the 
cancellation of your reservation to return to your home abroad on a date 
within 1 full calendar month.
    (2) Evidence of the circumstances preventing your return to your 
home abroad. The evidence we will accept from you to support the 
circumstance or event that prevented you from returning to your home 
abroad will depend on the reason you are staying in the United States. 
It can include, but is not limited to, a:
    (i) Newspaper article or other publication describing the event or 
natural disaster which prevented your return; or
    (ii) Doctor's statement, etc. showing that you are unable to travel; 
or
    (iii) Death certificate or notice if you are staying in the United 
States to attend the funeral of a member of your family.
    (c) You are appealing a decision we made. To establish that you had 
good cause to stay in the United States for

[[Page 599]]

more than 1 full calendar month because you want to appear in person at 
the appeal of a decision on a claim filed under a program administered 
by the Social Security Administration, you must submit evidence of this. 
The evidence must identify the appeal proceeding and the dates you are 
scheduled to attend.
    (d) When we may ask for more evidence. If you stay in the United 
States for several months, we may ask you to give us more evidence to 
prove that you are still unable to return to your home abroad.



                Subpart E_Amount and Payment of Benefits

    Authority: Secs. 702(a)(5), 801, 805, and 810 of the Social Security 
Act (42 U.S.C. 902(a)(5), 1001, 1005, and 1010); Sec. 251, Pub. L. 106-
169, 113 Stat. 1844.



Sec. 408.501  What is this subpart about?

    This subpart explains how we compute the amount of your monthly SVB 
payment, including how we reduce your payments if you receive other 
benefit income. It also explains how we pay benefits under the SVB 
program.



Sec. 408.505  How do we determine the amount of your SVB payment?

    (a) Maximum SVB payment. The maximum monthly SVB payment is equal to 
75% of the FBR for an individual under title XVI of the Act. See Sec. 
416.410 of this chapter.
    (b) Cost-of-living adjustments in the FBR. The maximum SVB amount 
will increase whenever there is a cost-of-living increase in the SSI FBR 
under the provisions of Sec. 416.405 of this chapter. The basic SVB 
amount following such an increase is equal to 75 percent of the 
increased FBR.
    (c) When we will reduce the amount of your basic benefit. We will 
reduce your basic benefit by the amount of the other benefit income you 
receive in that month, as explained in Sec. 408.510.



Sec. 408.510  How do we reduce your SVB when you receive other benefit 
income?

    (a) Amount of the reduction. If you receive other benefit income as 
defined in Sec. 408.220, we will reduce your SVB payment by the amount 
of the other benefit income you receive in that month. The reduction is 
on a dollar-for-dollar and cents-for-cents basis. We do not round SVB 
payment amounts except as described in paragraph (b) of this section.
    (b) Minimum benefit amount. If the reduction described in paragraph 
(a) of this section results in a benefit amount that is greater than 
zero but less than $1.00, we will pay you a benefit of $1.00 for that 
month.



Sec. 408.515  When do we make SVB payments?

    SVB payments are made on the first day of each month and represent 
payment for that month. If the first day of the month falls on a 
Saturday, Sunday, or Federal legal holiday, payment will be made on the 
first day preceding such day that is not a Saturday, Sunday, or Federal 
legal holiday.



PART 410_FEDERAL COAL MINE HEALTH AND SAFETY ACT OF 1969, TITLE IV_BLACK 
LUNG BENEFITS (1969	 )--Table of Contents




       Subpart A_Introduction, General Provisions, and Definitions

Sec.
410.101 Introduction.
410.110 General definitions and use of terms.
410.120 Disclosure of program information.
410.130 Periods of limitation ending on nonworkdays.

Subpart B_Requirements for Entitlement; Duration of Entitlement; Filing 
                         of Claims and Evidence

410.200 Types of benefits; general.
410.201 Conditions of entitlement; miner.
410.202 Duration of entitlement; miner.
410.210 Conditions of entitlement; widow or surviving divorced wife.
410.211 Duration of entitlement; widow or surviving divorced wife.
410.212 Conditions of entitlement; child.
410.213 Duration of entitlement; child.
410.214 Conditions of entitlement; parent, brother, or sister.
410.215 Duration of entitlement; parent, brother, or sister.
410.216 ``Good cause'' for delayed filing of proof of support.
410.219 Filing a claim under State workmen's compensation law; when 
          filing such claim shall be considered futile.

[[Page 600]]

410.220 Claim for benefits; definitions.
410.221 Prescribed application and request forms.
410.222 Execution of a claim.
410.223 Evidence of authority to execute a claim on behalf of another.
410.224 Claimant must be alive when claim is filed.
410.226 Periods for which claims are effective.
410.227 When a claim is considered to have been filed; time and place of 
          filing.
410.228 Requests and notices to be in writing.
410.229 When written statement is considered a claim; general.
410.230 Written statement filed by or for a miner on behalf of a member 
          of his family.
410.231 Time limits for filing claims.
410.232 Withdrawal of a claim.
410.233 Cancellation of a request for withdrawal.
410.234 Interim provisions.
410.240 Evidence.
410.250 Effect of conviction of felonious and intentional homicide on 
          entitlement to benefits.

                  Subpart C_Relationship and Dependency

410.300 Relationship and dependency; general.
410.310 Determination of relationship; wife.
410.311 Determination of relationship; divorced wife.
410.320 Determination of relationship; widow.
410.321 Determination of relationship; surviving divorced wife.
410.330 Determination of relationship; child.
410.340 Determination of relationship; parent, brother, or sister.
410.350 Determination of dependency; wife.
410.351 Determination of dependency; divorced wife.
410.360 Determination of dependency; widow.
410.361 Determination of dependency; surviving divorced wife.
410.370 Determination of dependency; child.
410.380 Determination of dependency; parent, brother, or sister.
410.390 Time of determinations.
410.391 Legal impediment.
410.392 Domicile.
410.393 ``Member of the same household''; ``living with''; ``living in 
          the same household''; and ``living in the miner's household''.
410.394 [Reserved]
410.395 Contributions and support.

        Subpart D_Total Disability or Death Due to Pneumoconiosis

410.401 Scope of subpart D.
410.410 Total disability due to pneumoconiosis, including statutory 
          presumption.
410.412 ``Total disability'' defined.
410.414 Determining the existence of pneumoconiosis, including statutory 
          presumption.
410.416 Determining origin of pneumoconiosis, including statutory 
          presumption.
410.418 Irrebuttable presumption of total disability due to 
          pneumoconiosis.
410.422 Determining total disability: General criteria.
410.424 Determining total disability: Medical criteria only.
410.426 Determining total disability: Age, education, and work 
          experience criteria.
410.428 X-ray, biopsy, and autopsy evidence of pneumoconiosis.
410.430 Ventilatory studies.
410.432 Cessation of disability.
410.450 Death due to pneumoconiosis, including statutory presumption.
410.454 Determining the existence of pneumoconiosis, including statutory 
          presumption--survivor's claim.
410.456 Determining origin of pneumoconiosis, including statutory 
          presumption--survivor's claim.
410.458 Irrebuttable presumption of death due to pneumoconiosis--
          survivor's claim.
410.462 Presumption relating to respirable disease.
410.470 Determination by nongovernmental organization or other 
          governmental agency.
410.471 Conclusion by physician regarding miner's disability or death.
410.472 Consultative examinations.
410.473 Evidence of continuation of disability.
410.474 Place and manner of submitting evidence.
410.475 Failure to submit evidence.
410.476 Responsibility to give notice of event which may affect a change 
          in disability status.
410.490 Interim adjudicatory rules for certain part B claims filed by a 
          miner before July 1, 1973, or by a survivor where the miner 
          died before January 1, 1974.

Appendix to Subpart D

                      Subpart E_Payment of Benefits

410.501 Payment periods.
410.505 Payees.
410.510 Computation of benefits.
410.511 Certification to dependent of augmentation portion of benefit.
410.515 Modification of benefit amounts; general.
410.520 Reductions; receipt of State benefit.
410.530 Reductions; excess earnings.
410.535 Reductions; effect of an additional claim for benefits.

[[Page 601]]

410.536 Reductions; effect of augmentation of benefits based on 
          subsequent qualification of individual.
410.540 Reductions; more than one reduction event.
410.550 Nonpayment of benefits to residents of certain States.
410.560 Overpayments.
410.561 Notice of right to waiver consideration.
410.561a When waiver may be applied and how to process the request.
410.561b Fault.
410.561c Defeat the purpose of title IV.
410.561d Against equity and good conscience; defined.
410.561e When an individual is ``without fault'' in a reduction-
          overpayment.
410.561f When an individual is ``without fault'' in an entitlement 
          overpayment.
410.561g When an individual is at ``fault'' in a reduction-overpayment.
410.561h When adjustment or recovery of an overpayment will be waived.
410.563 Liability of a certifying officer.
410.565 Collection and compromise of claims for overpayment.
410.570 Underpayments.
410.580 Relation to provisions for reductions or increases.
410.581 Payments on behalf of an individual.
410.582 Submission of evidence by representative payee.
410.583 Responsibility of representative payee.
410.584 Use of benefits for current maintenance.
410.585 Conservation and investment of payments.
410.586 Use of benefits for beneficiary in institution.
410.587 Support of legally dependent spouse, child, or parent.
410.588 Claims of creditors.
410.589 Accountability.
410.590 Transfer of accumulated benefit payments.
410.591 Eligibility for services and supplies under part C of title IV 
          of the act.

     Subpart F_Determinations of Disability, Other Determinations, 
  Administrative Review, Finality of Decisions, and Representation of 
                                 Parties

410.601 Determinations of disability.
410.610 Administrative actions that are initial determinations.
410.615 Administrative actions that are not initial determinations.
410.620 Notice of initial determination.
410.621 Effect of initial determination.
410.622 Reconsideration and hearing.
410.623 Reconsideration; right to reconsideration.
410.624 Time and place of filing request.
410.625 Parties to the reconsideration.
410.626 Notice of reconsideration.
410.627 Reconsidered determination.
410.628 Notice of reconsidered determination.
410.629 Effect of a reconsidered determination.
410.629a Expedited appeals process; conditions for use of such process.
410.629b Expedited appeals process; place and time of filing request.
410.629c Expedited appeals process; parties.
410.629d Expedited appeals process; agreement requirements.
410.629e Expedited appeals process; effect of agreement.
410.629f Effect of a request that does not result in agreement.
410.630 Hearing; right to hearing.
410.631 Time and place of filing request.
410.632 Parties to a hearing.
410.633 Additional parties to the hearing.
410.634 Administrative Law Judge.
410.635 Disqualification of Administrative Law Judge.
410.636 Time and place of hearing.
410.637 Hearing on new issues.
410.638 Change of time and place for hearing.
410.639 Subpenas.
410.640 Conduct of hearing.
410.641 Evidence.
410.642 Witnesses.
410.643 Oral argument and written allegations.
410.644 Record of hearing.
410.645 Joint hearings.
410.646 Consolidated issues.
410.647 Waiver of right to appear and present evidence.
410.648 Dismissal of request for hearing; by application of party.
410.649 Dismissal by abandonment of party.
410.650 Dismissal for cause.
410.651 Notice of dismissal and right to request review thereon.
410.652 Effect of dismissal.
410.653 Vacation of dismissal of request for hearing.
410.654 Administrative Law Judge's decision or certification to Appeals 
          Council.
410.655 Effect of Administrative Law Judge's decision.
410.656 Removal of hearing to Appeals Council.
410.657 Appeals Council proceedings on certification and review; 
          procedure before Appeals Council on certification by the 
          Administrative Law Judge.
410.658 Evidence in proceeding before Appeals Council.
410.659 Decision of Appeals Council.
410.660 Right to request review of Administrative Law Judge's decision 
          or dismissal.
410.661 Time and place of filing request.
410.662 Action by Appeals Council on review.

[[Page 602]]

410.663 Procedure before Appeals Council on review.
410.664 Evidence admissible on review.
410.665 Decision by Appeals Council or remanding of case.
410.666 Effect of Appeals Council's decision or refusal to review.
410.667 Dismissal by Appeals Council.
410.668 Extension of time to request reconsideration.
410.669 Extension of time to request hearing or review or begin civil 
          action.
410.670 Review by Appeals Council.
410.670a Judicial review.
410.670b Interim provision for the adjudication of certain claims filed 
          prior to May 19, 1972.
410.670c Application of circuit court law.
410.671 Revision for error or other reason; time limitation generally.
410.672 Reopening initial, revised or reconsidered determinations of the 
          Administration and decisions of an Administrative Law Judge or 
          the Appeals Council; finality of determinations and decisions.
410.673 Good cause for reopening a determination or decision.
410.674 Finality of suspension of benefit payments for entire taxable 
          year because of earnings.
410.675 Time limitation for revising finding suspending benefit payments 
          for entire taxable year because of earnings.
410.675a Late completion of timely investigation.
410.676 Notice of revision.
410.677 Effect of revised determination.
410.678 Time and place of requesting hearing on revised determination.
410.679 Finality of findings with respect to other claims for benefits 
          based on the disability or death of a miner.
410.680 Imposition of reductions.
410.681 Change of ruling or legal precedent.
410.682 General applicability.
410.683 Certification of payment; determination or decision providing 
          for payment.
410.683a [Reserved]
410.683b Transfer or assignment.
410.684 Representation of party; appointment of representative.
410.685 Qualifications of representative.
410.686 Authority of representative.
410.686a Proceedings before a State or Federal court.
410.686b Fee for services performed for an individual before the Social 
          Security Administration.
410.686c Petition for approval of fee.
410.686d Payment of fees.
410.686e Services rendered for an individual in a proceeding before the 
          Administration under part B of title IV of the Act.
410.687 Rules governing the representation and advising of claimants and 
          parties.
410.687a Effective date.
410.688 Disqualification or suspension of an individual from acting as a 
          representative in proceedings before SSA.
410.689 Notice of charges.
410.690 Withdrawal of charges.
410.691 Referral to the Deputy Commissioner for Programs and Policy, or 
          his or her designee, for hearing and decision.
410.692 Hearing on charges.
410.693 Decision by hearing officer.
410.694 Right to request review of the hearing officer's decision.
410.695 Procedure before Appeals Council on review of hearing officer's 
          decision.
410.696 Evidence admissible on review.
410.697 Decision by Appeals Council on review of hearing officer's 
          decision.
410.698 Dismissal by Appeals Council.
410.699 Reinstatement after suspension or disqualification.
410.699a Penalties for fraud.

 Subpart G_Rules for the Review of Denied and Pending Claims Under the 
             Black Lung Benefits Reform Act (BLBRA) of 1977

410.700 Background.
410.701 Jurisdiction for determining entitlement under part B.
410.702 Definitions and terms.
410.703 Adjudicatory rules for determining entitlement to benefits.
410.704 Review procedures.
410.705 Duplicate claims.
410.706 Effect of Social Security Administration determination of 
          entitlement.
410.707 Hearings and appeals.



       Subpart A_Introduction, General Provisions, and Definitions

    Authority: Secs. 702(a)(5) of the Social Security Act (42 U.S.C. 
902(a)(5)), Secs. 3 (g) and (h), 402, 411, 412, 413, 414, 426(a), and 
508, 83 Stat. 744; 30 U.S.C. 802 (g) and (h), 902, 921-924, 936(a), and 
957. Sec. 410.120 also issued under sec. 1106, 53 Stat. 1398, as 
amended, 42 U.S.C. 1306.



Sec. 410.101  Introduction.

    The regulations in this part 410 (Regulation No. 10 of the Social 
Security Administration) relate to the provisions of part B (Black Lung 
Benefits) of title IV of the Federal Coal Mine Health and Safety Act of 
1969, as enacted December 30, 1969, as amended by the Black Lung 
Benefits Act of 1972, and as may hereafter be amended. The regulations 
in this part are divided into the following subparts according to 
subject content:

[[Page 603]]

    (a) This subpart A contains this introduction, general provisions, 
and provisions relating to definitions and the use of terms.
    (b) Subpart B of this part relates to the requirements for 
entitlement, duration of entitlement, filing of claims, and evidence.
    (c) Subpart C of this part describes the relationship and dependency 
required for widows, children, parents, brothers, and sisters, and 
relationship and dependency requirements which affect the benefit 
amounts of entitled miners and widows.
    (d) Subpart D of this part provides standards for determining total 
disability and death due to pneumoconiosis.
    (e) Subpart E of this part relates to payment of benefits, payment 
periods, benefit rates and their modification, representative payees, 
and overpayments and underpayments.
    (f) Subpart F of this part relates to determinations of disability 
and other determinations, the procedures for administrative review, 
finality of decisions, and the representation of parties.

[36 FR 23752, Dec. 14, 1971, as amended at 37 FR 20635, Sept. 30, 1972]



Sec. 410.110  General definitions and use of terms.

    For purposes of this part, except where the context clearly 
indicates otherwise, the following definitions apply:
    (a) The Act, means the Federal Coal Mine Health and Safety Act of 
1969 (Pub. L. 91-173), enacted December 30, 1969, as amended by the 
Black Lung Benefits Act of 1972 (Pub. L. 92-303), enacted May 19, 1972, 
and as may hereafter be amended.
    (b) Benefit means the black lung benefit provided under part B of 
title IV of the Act to coal miners, to surviving widows of miners, to 
the surviving child or children of a miner, or of a widow of a miner, to 
the surviving dependent parent or parents of a miner, and to the 
surviving dependent brother(s) or sister(s) of a miner.
    (c) Commissioner means the Commissioner of Social Security.
    (d) Administration means the Social Security Administration (SSA).
    (e) Appeals Council means the Appeals Council of the Social Security 
Administration or such member or members thereof as may be designated by 
the Chairman.
    (f) Administrative Law Judge means an Administrative Law Judge 
(SSA).
    (g) Coal mine means an area of land and all structures, facilities, 
machinery, tools, equipment, shafts, slopes, tunnels, excavations, and 
other property, real or personal, placed upon, under, or above the 
surface of such land by any person, used in, or to be used in, or 
resulting from, the work of extracting in such area bituminous coal, 
lignite, or anthracite from its natural deposits in the earth by any 
means or method, and the work of preparing the coal so extracted, and 
includes custom coal preparation facilities.
    (h) Underground coal mine means a coal mine in which the earth and 
other materials which lie above the natural deposit of coal (overburden) 
is not removed in mining. In addition to the natural deposits of coal in 
the earth, the underground mine includes all land, buildings and 
equipment appurtenant thereto.
    (i) Miner or coal miner means any individual who is working or has 
worked as an employee in a coal mine, performing functions in extracting 
the coal or preparing the coal so extracted.
    (j) The Nation's coal mines comprise all coal mines as defined in 
paragraph (h) of this section located in a State as defined in paragraph 
(l) of this section.
    (k) State includes a State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American 
Samoa, Guam, the Trust Territory of the Pacific Islands, and prior to 
January 3, 1959, and August 21, 1959, respectively, the Territories of 
Alaska and Hawaii.
    (l) Employee means an individual in a legal relationship (between 
the person for whom he performs services and himself) of employer and 
employee under the usual common-law rules.
    (1) Generally, such relationship exists when the person for whom 
services are performed has the right to control and direct the 
individual who performs the services, not only as to the result to be 
accomplished by the work but

[[Page 604]]

also as to the means by which that result is accomplished; that is, an 
employee is subject to the will and control of the employer not only as 
to what shall be done but how it shall be done. In this connection, it 
is not necessary that the employer actually direct or control the manner 
in which the services are performed; it is sufficient if he has the 
right to do so. The right to discharge is also an important factor 
indicating that the person possessing that right is an employer. Other 
factors characteristic of an employer, but not necessarily present in 
every case, are the furnishing of tools and the furnishing of a place to 
work to the individual who performs the services. In general, if an 
individual is subject to the control or direction of another merely as 
to the result to be accomplished by the work and not as to the means and 
methods for accomplishing the result, he is an independent contractor. 
An individual performing services as an independent contractor is not as 
to such services an employee under the usual common-law rules.
    (2) Whether the relationship of employer and employee exists under 
the usual common-law rules will in doubtful cases be determined upon an 
examination of the particular facts of each case.
    (m) The Social Security Act means the Social Security Act (49 Stat. 
620) as amended from time to time.
    (n) Pneumoconiosis means: (1) A chronic dust disease of the lung 
arising out of employment in the Nation's coal mines, and includes coal 
workers' pneumoconiosis, anthracosilicosis, anthracosis, 
anthrosilicosis, massive pulmonary fibrosis, progressive massive 
fibrosis, silicosis, or silicotuberculosis, arising out of such 
employment.


For purposes of this subpart, the term also includes the following 
conditions that may be the basis for application of the statutory 
presumption of disability or death due to pneumoconiosis under the 
circumstances prescribed in section 411(c) of the Act:
    (2) Any other chronic respiratory or pulmonary impairment when the 
conditions are met for the application of the presumption described in 
Sec. 410.414(b) or Sec. 410.454(b), and
    (3) Any respirable disease when the conditions are met for the 
application of the presumption described in Sec. 410.462.
    (o) A workmen's compensation law means a law providing for payment 
of compensation to an employee (and his dependents) for injury 
(including occupational disease) or death suffered in connection with 
his employment. A payment funded wholly out of general revenues and paid 
(without regard to insurance principles) solely on account of the 
financial need of the miner and his family, shall not be considered a 
payment under a workmen's compensation law.
    (p) Masculine gender includes the feminine, and the singular 
includes the plural.
    (q) Beneficiary means a miner or a surviving widow, child, parent, 
brother, or sister, who is entitled to a benefit as defined in paragraph 
(b) of this section.

[35 FR 5623, Apr. 7, 1970, as amended at 37 FR 20635, Sept. 30, 1972; 62 
FR 38452, July 18, 1997]



Sec. 410.120  Disclosure of program information.

    Disclosure of any file, record, report, or other paper, or any 
information obtained at any time by the Social Security Administration, 
or any officer or employee of that Administration, or any person, 
agency, or organization with whom the Administration has entered into an 
agreement to perform certain functions in the Administration of title IV 
of the Act, which in any way relates to, or is necessary to, or is used 
in, or in connection with, the administration of such title, shall be 
made in accordance with the regulations of the Administration contained 
in 20 CFR part 401, except that any such file, record, report, or other 
paper or information obtained in connection with the administration of 
the old-age, survivors, disability, or health insurance programs 
pursuant to titles II and XVIII of the Social Security Act, shall be 
disclosed only in accordance with Regulation No. 1 of the Social 
Security Administration, part 401 of this chapter.

[36 FR 23752, Dec. 14, 1971, as amended at 62 FR 38452, July 18, 1997]

[[Page 605]]



Sec. 410.130  Periods of limitation ending on nonworkdays.

    Where any provision of part B of title IV of the Act, or any 
provision of another law of the United States, relating to or changing 
the effect of part B, or any regulation of the Commissioner issued under 
part B, provides for a period within which an act is required to be done 
which affects eligibility for or the amount of any benefit or payment 
under this part or is necessary to establish or protect any right under 
this part, and such period ends on a Saturday, Sunday, or Federal legal 
holiday, or on any other day all or part of which is declared to be a 
nonworkday for Federal employees by statute or Executive order, then 
such act shall be considered as done within such period if it is done on 
the first day thereafter which is not a Saturday, Sunday, or legal 
holiday, or any other day all or part of which is declared to be a 
nonworkday for Federal employees either by statute or Executive order. 
For purposes of this section, the day on which a period ends shall 
include the final day of the extended period where such extension is 
authorized by law or by the Commissioner pursuant to law. Such extension 
of any period of limitation does not apply to periods during which 
benefits may be paid for months prior to the month a claim for such 
benefits is filed (see Sec. 410.226).

[37 FR 20635, Sept. 30, 1972, as amended at 62 FR 38453, July 18, 1997]



Subpart B_Requirements for Entitlement; Duration of Entitlement; Filing 
                         of Claims and Evidence

    Authority: Sec. 702(a)(5) of the Social Security Act (42 U.S.C. 
902(a)(5)), sec. 402, 411, 412, 413, 414, 426(a), and 508, 83 Stat. 792; 
30 U.S.C. 902, 921-924, 936(a), 957.

    Source: 36 FR 23752, Dec. 14, 1971, unless otherwise noted.



Sec. 410.200  Types of benefits; general.

    (a) Part B of title IV of the Act provides for the payment of 
periodic benefits:
    (1) To a miner who is determined to be totally disabled due to 
pneumoconiosis; or
    (2) To the widow or child of a miner who was entitled to benefits at 
the time of his death, who is determined to have been totally disabled 
due to pneumoconiosis at the time of his death, or whose death was due 
to pneumoconiosis; or
    (3) To the child of a widow of a miner who was entitled to benefits 
at the time of her death; or
    (4) To the surviving dependent parents, or the surviving dependent 
brothers or sisters, of a miner who is determined to have been entitled 
to benefits at the time of his death, or who was totally disabled due to 
pneumoconiosis at the time of his death, or whose death was due to 
pneumoconiosis.
    (b) The following sections of this subpart set out the conditions of 
entitlement to benefits for a miner, a widow, child, parent, brother, or 
sister; describe the events which terminate or preclude entitlement to 
benefits and the procedures for filing a claim; and prescribe certain 
requirements as to evidence. Also see subpart C of this part for 
regulations relating to the relationship and dependency requirements 
applicable to claimants for benefits as a widow, child, parent, brother, 
or sister, and to beneficiaries with dependents.

[37 FR 20635, Sept. 30, 1972]



Sec. 410.201  Conditions of entitlement; miner.

    An individual is entitled to benefits if such individual:
    (a) Is a miner (see Sec. 410.110(j)); and
    (b) Is totally disabled due to pneumoconiosis (see subpart D of this 
part); and
    (c) Has filed a claim for benefits in accordance with the provisions 
of Sec. Sec. 410.220 through 410.234.

[36 FR 23752, Dec. 14, 1971, as amended at 37 FR 20635, Sept. 30, 1972]



Sec. 410.202  Duration of entitlement; miner.

    (a) An individual is entitled to benefits as a miner for each month 
beginning with the first month in which all of the conditions of 
entitlement prescribed in Sec. 410.201 are satisfied.

[[Page 606]]

    (b) The last month for which such individual is entitled to such 
benefit is the month before the month:
    (1) In which the miner dies (see, however, Sec. 410.226); or
    (2) In no part of which the miner is under a disability.
    (c) A miner's entitlement to benefits under part B of title IV of 
the Act which is based on a claim which is filed (see Sec. 410.227) 
after June 30, 1973, and before January 1, 1974, shall terminate on 
December 31, 1973, unless sooner terminated under paragraph (b) of this 
section.

[36 FR 23752, Dec. 14, 1971, as amended at 37 FR 20635, Sept. 30, 1972]



Sec. 410.210  Conditions of entitlement; widow or surviving divorced wife.

    An individual is entitled to benefits if such individual:
    (a) Is the widow (see Sec. 410.320) or surviving divorced wife (see 
Sec. 410.321) of a miner (see Sec. 410.110(j));
    (b) Is not married during her initial month of entitlement (or, for 
months prior to May 1972, had not remarried since the miner's death);
    (c) Has filed a claim for benefits in accordance with the provisions 
of Sec. Sec. 410.220 through 410.234;
    (d) Was dependent on the miner at the pertinent time (see Sec. 
410.360 or Sec. 410.361); and
    (e) The deceased miner:
    (1) Was entitled to benefits at the time of his death; or
    (2) Died before January 1, 1974, and it is determined that he was 
totally disabled due to pneumoconiosis at the time of his death, or that 
his death was due to pneumoconiosis (see subpart D of this part).

[37 FR 20636, Sept. 30, 1972, as amended at 41 FR 4899, Feb. 3, 1976]



Sec. 410.211  Duration of entitlement; widow or surviving divorced wife.

    (a) An individual is entitled to benefits as a widow, or as a 
surviving divorced wife, for each month beginning with the first month 
in which all of the conditions of entitlement prescribed in Sec. 
410.210 are satisfied. If such individual remarries, payment of benefits 
ends with the month before the month of remarriage (see paragraph (b) of 
this section). Should the remarriage subsequently end, payment of 
benefits may be resumed beginning with the month after December 1973 in 
which the remarriage ends if the Social Security Administration receives 
notice in writing within 3 months of the end of such remarriage or 
within 3 months of February 3, 1976, whichever is later. Where such 
notice is not provided within the prescribed time period, resumption of 
payment will begin with the month the individual provides such notice to 
the Social Security Administration.
    (b) The last month for which such individual is entitled to such 
benefit is the month before the month in which either of the following 
events first occurs:
    (1) The widow or surviving divorced wife dies; or
    (2) Where the individual has qualified as the widow of a miner under 
Sec. 410.320 (d), she ceases to so qualify, as provided therein.
    (c) Although payment of benefits to a widow or surviving divorced 
wife ends with the month before the month in which she marries (see 
paragraph (a) of this section), her entitlement is not terminated by 
such marriage. However, but solely for purposes of entitlement of a 
child under Sec. 410.212(b), a widow is deemed not entitled to benefits 
in months for which she is not paid benefits because she is married.

[41 FR 4899, Feb. 3, 1976]



Sec. 410.212  Conditions of entitlement; child.

    (a) An individual is entitled to benefits if such individual:
    (1) Is the child or stepchild (see Sec. 410.330) of (i) a deceased 
miner (see Sec. 410.110(j)) or (ii) of the widow of a miner who was 
entitled to benefits at the time of her death (see Sec. Sec. 410.210 
and 410.211);
    (2) Has filed a claim for benefits in accordance with the provisions 
of Sec. Sec. 410.220 through 410.234;
    (3) Meets the dependency requirements in Sec. 410.370;
    (4) If a child of a miner, the deceased miner:
    (i) Was entitled to benefits at the time of his death; or
    (ii) Died before January 1, 1974, and his death is determined to 
have been

[[Page 607]]

due to pneumoconiosis (see subpart D of this part), or
    (iii) Died before January 1, 1974, and it is determined that at the 
time of his death he was totally disabled by pneumoconiosis (see subpart 
D of this part).
    (b) A child is not entitled to benefits for any month for which a 
widow of a miner is entitled to benefits, except that (for purposes of 
entitlement of a child under this section) a widow is deemed not 
entitled to benefits in months for which she is not paid benefits 
because she is married (see Sec. 410.211). Thus, a child may be 
entitled to benefits for months wherein such benefits are not payable to 
the widow because of marriage.

[37 FR 20636, Sept. 30, 1972, as amended at 41 FR 4900, Feb. 3, 1976]



Sec. 410.213  Duration of entitlement; child.

    (a) An individual is entitled to benefits as a child for each month 
beginning with the first month in which all of the conditions of 
entitlement prescribed in Sec. 410.212 are satisfied.
    (b) The last month for which such individual is entitled to or may 
be paid such benefit is the month before the month in which any one of 
the following events first occurs:
    (1) The child dies;
    (2) The child marries;
    (3) The child attains age 18 and,
    (i) Is not under a disability at that time, and
    (ii) Is not a student (as defined in Sec. 410.370) during any part 
of the month in which he attains age 18;
    (4) If the child's entitlement is based on his status as a student, 
the earlier of:
    (i) The first month during no part of which he is a student, or
    (ii) The month in which he attains age 23 and is not under a 
disability at that time (but see Sec. 410.370(c)(4) for an exception);
    (5) If the child's entitlement is based on disability, the first 
month in no part of which such individual is under a disability;
    (6) A widow's benefit payment, which was ended because of marriage, 
is resumed following termination of such marriage. (See Sec. 
410.211(a)). (In the month before the month in which a widow marries, 
payment of benefits to her ends and non-payment of such benefits 
continues for the duration of the marriage. Thereafter, if her 
remarriage ends, subject to the provisions of Sec. 410.211 her benefit 
payments may be resumed. Should such widow again remarry or die, payment 
of benefits to such child, if he is otherwise entitled, will be resumed 
effective with the month of such remarriage or death. In such event no 
action by or on behalf of such child is required for resumption of 
payment.)
    (c) A child whose entitlement to benefits terminated with the month 
before the month in which he attained age 18, or later, may thereafter 
(provided he is not married) again become entitled to such benefits upon 
filing application for such reentitlement, beginning with the first 
month in which he files such application in or after such termination 
and in which he is a student and has not attained the age of 23.

[37 FR 20636, Sept. 30, 1972, as amended at 41 FR 4900, Feb. 3, 1976]



Sec. 410.214  Conditions of entitlement; parent, brother, or sister.

    An individual is entitled to benefits if:
    (a) Such individual:
    (1) Is the parent, brother, or sister (see Sec. 410.340) of a 
deceased miner (see Sec. 410.110(j));
    (2) Has filed a claim for benefits in accordance with the provisions 
of Sec. Sec. 410.220 through 410.234;
    (3) Was dependent on the miner at the pertinent time (see Sec. 
410.380); and
    (4) Files proof of support before June 1, 1974, or within 2 years 
after the miner's death, whichever is later, or it is shown to the 
satisfaction of the Administration that there is good cause for failure 
to file such proof within such period (see Sec. 410.216).
    (b) In the case of a brother, he also:
    (1) Is under 18 years of age; or
    (2) Is 18 years of age or older and is under a disability as defined 
in section 223(d) of the Social Security Act, 42 U.S.C. 423(d) (see 
subpart P of part 404 of this chapter), which began:
    (i) Before he attained age 22, however, no entitlement to brother's 
benefits may be established for any month

[[Page 608]]

before January 1973, based on a disability which began after attainment 
of age 18; or
    (ii) In the case of a student, before he ceased to be a student (see 
Sec. 410.370(c)); or
    (3) Is a student (see Sec. 410.370(c)); or
    (4) Is under a disability as defined in section 223(d) of the Social 
Security Act, 42 U.S.C. 423(d) (see subpart P of part 404 of this 
chapter), at the time of the miner's death.
    (c) In addition to the requirements set forth in paragraphs (a) and 
(b) of this section, the deceased miner:
    (1) Was entitled to benefits at the time of his death; or
    (2) Died before January 1, 1974, and his death is determined to have 
been due to pneumoconiosis (see subpart D of this part); or
    (3) Died before January 1, 1974, and it is determined that at the 
time of his death he was totally disabled by pneumoconiosis (see subpart 
D of this part).
    (d) Notwithstanding the provisions of paragraphs (a), (b), and (c) 
of this section:
    (1) A parent is not entitled to benefits if the deceased miner was 
survived by a widow or child at the time of his death, and
    (2) A brother or sister is not entitled to benefits if the deceased 
miner was survived by a widow, child, or parent at the time of his 
death.

[37 FR 20636, Sept. 30, 1972, as amended at 41 FR 7091, Feb. 17, 1976]



Sec. 410.215  Duration of entitlement; parent, brother, or sister.

    (a) parent, brother, or sister is entitled to benefits beginning 
with the month all the conditions of entitlement described in Sec. 
410.214 are met.
    (b) The last month for which such parent is entitled to benefits is 
the month before the month in which the parent dies.
    (c) The last month for which such sister is entitled to benefits is 
the month before the month in which any of the following events occurs:
    (1) She dies;
    (2)(i) She marries or remarries; or
    (ii) If already married, she receives support in any amount from her 
spouse.
    (d) The last month for which such brother is entitled to benefits is 
the month before the month in which any of the following events first 
occurs:
    (1) He dies;
    (2)(i) He marries or remarries; or
    (ii) If already married, he receives support in any amount from his 
spouse;
    (3) He attains age 18 and,
    (i) Is not under a disability at that time, and
    (ii) Is not a student (see Sec. 410.370(c)) during any part of the 
month in which he attains age 18;
    (4) If his entitlement is based on his status as a student, the 
earlier of:
    (i) The first month during no part of which he is a student; or
    (ii) The month in which he attains age 23 and is not under a 
disability at that time;
    (5) If his entitlement is based on disability, the first month in no 
part of which such individual is under a disability.

[37 FR 20636, Sept. 30, 1972]



Sec. 410.216  ``Good cause'' for delayed filing of proof of support.

    (a) What constitutes ``good cause.'' Good cause may be found for 
failure to file proof of support within the 2-year period where the 
parent, brother, or sister establishes to the satisfaction of the 
Administration that such failure to file was due to:
    (1) Circumstances beyond the individual's control, such as extended 
illness, mental or physical incapacity, or communication difficulties; 
or
    (2) Incorrect or incomplete information furnished the individual by 
the Administration; or
    (3) Efforts by the individual to secure supporting evidence without 
a realization that such evidence could be submitted after filing proof 
of support; or
    (4) Unusual or unavoidable circumstances, the nature of which 
demonstrate that the individual could not reasonably be expected to have 
been aware of the need to file timely the proof of support.
    (b) What does not constitute ``good cause.'' Good cause for failure 
to file timely such proof of support does not exist when there is 
evidence of record in the Administration that the individual was 
informed that he should file

[[Page 609]]

within the initial 2-year period and he failed to do so through 
negligence or intent not to file.

[37 FR 20637, Sept. 30, 1972]



Sec. 410.219  Filing a claim under State workmen's compensation law; 
when filing such claim shall be considered futile.

    (a) A claimant for benefits under this part must file a claim under 
the applicable State workmen's compensation law prior to a final 
decision on his claim for benefits under this part (see Sec. 
410.227(c)) except where the filing of a claim under such applicable 
State workmen's compensation law would clearly be futile.
    (b) The Administration shall determine that the filing of such a 
claim would clearly be futile when:
    (1) The period within which such a claim may be filed under such law 
has expired; or
    (2) Pneumoconiosis as defined in Sec. 410.110(o) is not compensable 
under such law; or
    (3) The maximum amount of compensation or the maximum number of 
compensation payments allowable under such law has already been paid; or
    (4) The claimant does not meet one or more conditions of eligibility 
for workmen's compensation payments under applicable State law; or
    (5) In any other situation the claimant establishes to the 
satisfaction of the Administration that the filing of a claim on account 
of pneumoconiosis would result as a matter of law in a denial of his 
claim for compensation under such law.
    (c) To be considered to have complied with the statutory requirement 
for filing a claim under the applicable State workmen's compensation 
law, a claimant for benefits under this part must diligently prosecute 
such State claim.
    (d) Where, but for the failure to file a claim under the applicable 
State workmen's compensation law, an individual's claim for benefits 
under this part would be allowed, the Administration shall notify the 
individual in writing of the need to file such State claim as a 
prerequisite to such allowance. Such claim, when filed within 30 days of 
the date such notice is mailed to the individual, will be considered to 
have been filed timely.
    (e) Where, on the other hand, a claim has not been filed under the 
applicable State workmen's compensation law, and the Administration 
determines that a claim for benefits under this part would be disallowed 
even if such a State claim were filed, the Administration shall make 
such determination as may be necessary for the adjudication of the 
individual's claim for benefits under this part pursuant to Sec. 
410.610.

[36 FR 23752, Dec. 14, 1971; 36 FR 24214, Dec. 22, 1971. Redesignated at 
37 FR 20636, Sept. 30, 1972]



Sec. 410.220  Claim for benefits; definitions.

    For purposes of this part:
    (a) Claim defined. The term claim means a writing asserting a right 
to benefits by an individual, or by a proper party on his behalf as 
defined in Sec. 410.222, which writing is filed with the Administration 
in accordance with the regulations in this subpart.
    (b) Application defined. The term application refers only to a 
writing on a form prescribed in Sec. 410.221.
    (c) Claimant defined. The term claimant refers to the individual who 
has filed a claim for benefits on his own behalf, or on whose behalf a 
proper party as defined in Sec. 410.222 has filed a claim.
    (d) Applicant defined. The term applicant refers to the individual 
who has filed an application on his own behalf, or on behalf of another, 
for benefits.
    (e) Execution of claim defined. The term to execute a claim means to 
complete and sign an application (but, for an exception, see Sec. 
410.234). Irrespective of who may have prepared or completed the 
application, it is considered to have been executed by or on behalf of 
the claimant when it is signed by him or by an individual authorized to 
do so on his behalf (see Sec. 410.222).
    (f) Provisions with respect to claims applicable with respect to 
requests. The provisions of Sec. Sec. 410.222 through 410.234 (relating 
to the preparation, execution, or filing of a claim for benefits) are 
applicable to the preparation, execution, and filing of a written 
request required under this part, e.g., a request to be selected as 
representative payee (see Sec. 410.581 et seq.), a request for separate

[[Page 610]]

payment of an augmentation (see Sec. 410.511), a request for 
reconsideration (see Sec. 410.622), etc. In such cases, the term 
claimant as used therein refers to the individual filing the request on 
his own behalf or the individual on whose behalf such request is filed.

[36 FR 23752, Dec. 14, 1971, as amended at 37 FR 20637, Sept. 30, 1972]



Sec. 410.221  Prescribed application and request forms.

    (a) Claims shall be made as provided in this subpart on such 
application forms and in accordance with such instructions (provided 
thereon or attached thereto) as are prescribed by the Administration.
    (b) The application forms used by the public to file claims for 
benefits under part B of title IV of the Act are SSA-46 (application for 
benefits under the Federal Coal Mine Health and Safety Act of 1969 (coal 
miner's claim of total disability)), SSA-47 (application for benefits 
under the Federal Coal Mine Health and Safety Act of 1969 (widow's 
claim)), SSA-48 (application for benefits under the Black Lung Benefits 
Act of 1972 (child's claim)), and SSA-49 (application for benefits under 
the Black Lung Act of 1972 (parent's, brother's, or sister's claim)).
    (c) The form used by an individual to request that such individual 
be selected as a representative payee or by a dependent to request that 
payment be certified to him separately is SSA-50 (Request to be Selected 
as Payee).
    (d) For further information about some of the forms used in the 
administration of part B of title IV of the Act, see Sec. Sec. 
422.505(b), 422.515, 422.525, and 422.527 of this chapter.

[37 FR 20637, Sept. 30, 1972]



Sec. 410.222  Execution of a claim.

    The Administration determines who is the proper party to execute a 
claim in accordance with the following rules:
    (a) If the claimant has attained the age of 18, is mentally 
competent, and is physically able to execute the claim, the claim shall 
be executed by him. Where, however, paragraph (d) of this section 
applies, the claim may also be executed by the claimant's legal 
guardian, committee, or other representative.
    (b) If the claimant is between the ages of 16 and 18, is mentally 
competent, has no legally appointed guardian, committee, or other 
representative, and is not in the care of any person, such claimant may 
execute the claim upon filing a statement on the prescribed form 
indicating capacity to act on his own behalf.
    (c) If the claimant is mentally competent but has not attained age 
18 and is in the care of a person, the claim may be executed by such 
person.
    (d) If the claimant (regardless of his age) has a legally appointed 
guardian, committee, or other representative, the claim may be executed 
by such guardian committee, or representative.
    (e) If the claimant (regardless of his age) is mentally incompetent 
or is physically unable to execute the claim, it may be executed by the 
person who has the claimant in his care or by a legally appointed 
guardian, committee, or other representative.
    (f) Where the claimant is in the care of an institution and is not 
mentally competent or physically able to execute a claim, the manager or 
principal officer of such institution may execute the claim.
    (g) For good cause shown, the Administration may accept a claim 
executed by a person other than one described in paragraph (a), (b), 
(c), (d), (e), or (f) of this section.

[37 FR 20637, Sept. 30, 1972]



Sec. 410.223  Evidence of authority to execute a claim on behalf of another.

    Where the claim is executed by a person other than the claimant, 
such person shall, at the time of filing the claim or within a 
reasonable time thereafter, file evidence of his authority to execute 
the claim on behalf of such claimant in accordance with the following 
rules:
    (a) If the person executing the claim is the legally appointed 
guardian, committee, or other legal representative of such claimant, the 
evidence shall be a certificate executed by the proper official of the 
court of appointment.
    (b) If the person executing the claim is not such a legal 
representative, the

[[Page 611]]

evidence shall be a statement describing his relationship to the 
claimant, the extent to which he has the care of such claimant, or his 
position as an officer of the institution of which the claimant is an 
inmate. The Administration may, at any time, require additional evidence 
to establish the authority of any such person.



Sec. 410.224  Claimant must be alive when claim is filed.

    For a claim to be effective, the claimant must be alive at the time 
a properly executed claim (see Sec. 410.222) is filed with the 
Administration (see Sec. 410.227). (See Sec. Sec. 410.229 and 410.230 
concerning the filing of a prescribed application form after submittal 
of a written statement.)



Sec. 410.226  Periods for which claims are effective.

    (a) Application effective for entire month of filing. Benefits are 
payable for full calendar months. If the claimant meets all the 
requirements for entitlement to benefits in the same calendar month in 
which his application is filed, the application will be effective for 
the whole month. If a miner dies in the first month for which he meets 
all the requirements for entitlement to benefits, he will, 
notwithstanding the provisions of Sec. 410.202(b), be considered to be 
entitled to benefits for that month.
    (b) Prospective life of claims. A claim which is filed before the 
claimant meets all the requirements for entitlement to such benefits 
will be deemed a valid claim if the claimant meets such requirements of 
entitlement (1) before the Administration makes a final decision on such 
claim or (2) if the claimant has timely requested judicial review of 
such final decision before such review is completed. If the claimant 
first meets the requirements for entitlement to benefits in a month 
after the month of actual filing but before a final administrative or 
judicial decision is rendered on his claim, his claim will be deemed to 
have been effectively filed in such first month of entitlement.
    (c) Retroactive life of claims. Except in the case of a claim for 
benefits as a surviving child (see Sec. 410.212) a claim for benefits 
has no retroactive effect. (See, however, Sec. 410.230.) Generally, a 
claim for benefits for a surviving child is effective (depending on the 
first month of eligibility) for up to 12 months preceding the month in 
which such claim is filed. However, if such claim is filed before 
December 1972, such claim may be effective retroactively (depending on 
the first month of eligibility) to December 1969.

[37 FR 20637, Sept. 30, 1972]



Sec. 410.227  When a claim is considered to have been filed; time and 
place of filing.

    (a) Date of receipt. Except as otherwise provided in this part, a 
claim is considered to have been filed only as of the date it is 
received at an office of the Administration or by an employee of the 
Administration who is authorized to receive such claims.
    (b) Date of mailing. If the claim is deposited in and transmitted by 
the U.S. mail and the fixing of the date of delivery as the date of 
filing would result in a loss or impairment of benefit rights, it will 
be considered to have been filed as of the date of mailing. The date 
appearing on the postmark (when available and legible) shall be prima 
facie evidence of the date of mailing. If there is no postmark or it is 
not legible, other evidence may be used to establish the mailing date.

[36 FR 23752, Dec. 14, 1971, as amended at 37 FR 20637, Sept. 30, 1972]



Sec. 410.228  Requests and notices to be in writing.

    Except as otherwise provided in this part, any request to the 
Administration for a determination or a decision relating to a person's 
right to benefits, the withdrawal of a claim, the cancellation of a 
request for such withdrawal, or any notice provided for pursuant to the 
regulations in this part 410, shall be in writing and shall be signed by 
the person authorized to execute a claim under Sec. 410.222.



Sec. 410.229  When written statement is considered a claim; general.

    (a) Written statement filed by claimant on his own behalf. Where an 
individual files a written statement with the Administration (see Sec. 
410.227) which indicates an intention to claim benefits,

[[Page 612]]

and such statement bears his signature or his mark properly witnessed, 
the filing of such written statement, unless otherwise indicated by the 
regulations in this part, shall be considered to be the filing of a 
claim for benefits: Provided, That:
    (1) The claimant or a proper party on his behalf (see Sec. 410.222) 
executes a prescribed application form (see Sec. 410.221) that is filed 
with the Administration during the claimant's lifetime and within the 
period prescribed in paragraph (c)(1) of this section; or
    (2) In the case of a claimant who dies prior to the filing of such 
prescribed application form within the period prescribed in paragraph 
(c)(1) of this section, a prescribed application form is filed with the 
Administration within the period prescribed in paragraph (c)(2) of this 
section by a party acting on behalf of the deceased claimant's estate.
    (b) Written statement filed by individual on behalf of another. A 
written statement filed by an individual which indicates an intention to 
claim benefits on behalf of another person shall, unless otherwise 
indicated thereon, be considered to be the filing of a claim for such 
purposes: Provided, That:
    (1) The written statement bears the signature (or mark properly 
witnessed) of the individual filing the statement; and
    (2) The individual filing the statement is the spouse of the 
claimant on whose behalf the statement is being filed, or a proper party 
to execute a claim on behalf of a claimant as determined by Sec. 
410.222; and
    (3) Except as specified in Sec. 410.230, a prescribed application 
form (see Sec. 410.221) is executed and filed in accordance with the 
provisions of paragraph (a) (1) or (2) of this section.
    (c) Period within which prescribed application form must be filed. 
After the Administration has received from an individual a written 
statement as described in paragraph (a) or (b) of this section:
    (1) Notice in writing shall be sent to the claimant or to the 
individual who submitted the written statement on his behalf, stating 
that an initial determination will be made with respect to such written 
statement if a prescribed application form executed by the claimant or 
by a proper party on his behalf (see Sec. 410.222), is filed with the 
Administration within 6 months from the date of such notice; or
    (2) If the Administration is notified that the death of such 
claimant occurred before the mailing of the notice described in 
paragraph (c)(1) of this section, or within the 6-month period following 
the mailing of such notice but before the filing of a prescribed 
application form by or on behalf of such individual, notification in 
writing shall be sent to a person acting on behalf of his estate, or to 
the deceased's last known address. Such notification will include 
information that an initial determination with respect to such written 
statement will be made only if a prescribed application form is filed 
within 6 months from the date of such notification.
    (3) If, after the notice as described in this paragraph (c) has been 
sent, a prescribed application form is not filed (in accordance with the 
provisions of paragraph (a) or (b) of this section) within the 
applicable period prescribed in paragraph (c)(1) or (c)(2) of this 
section, it will be deemed that the filing of the written statement to 
which such notice refers is not to be considered the filing of a claim 
for the purposes set forth in paragraphs (a) and (b) of this section.

[36 FR 23752, Dec. 14, 1971, as amended at 39 FR 41525, Nov. 29, 1974]



Sec. 410.230  Written statement filed by or for a miner on behalf of a 
member of his family.

    Notwithstanding the provisions of Sec. 410.229, the Social Security 
Administration will take no action with respect to a written statement 
filed by or for a miner on behalf of a member of his family until such 
miner's death. At such time, the provisions of Sec. 410.229 shall apply 
as if such miner's claim on behalf of a member of his family had been 
filed on the day of the miner's death. However, for purposes of paying 
benefits to an otherwise entitled survivor of a miner, such written 
statement will be considered to be a valid claim for benefits (see 
Sec. Sec. 410.210(c) and 410.212(a)(2)) where such member of his family 
qualified as a dependent for purposes of augmentation of the miner's

[[Page 613]]

benefits prior to his death. In such case the member of his family is 
not required to file a prescribed application form (see Sec. 410.221) 
with the Social Security Administration (see Sec. 410.229(b)). 
Nevertheless, the survivor beneficiary may be required to furnish 
supplemental information within 6 months of notification to do so. If 
such beneficiary fails to furnish the information requested within 6 
months of notice to do so, benefits may be suspended, after notice of 
such proposed action and opportunity to be heard is provided the 
beneficiary. A subsequent determination to suspend benefits shall be an 
initial determination (see Sec. 410.610).

[39 FR 41525, Nov. 29, 1974]



Sec. 410.231  Time limits for filing claims.

    (a) A claim by or on behalf of a miner must be filed on or before 
December 31, 1973, and when so filed, is a claim for benefits under part 
B of title IV of the Act. (See Sec. 410.227 for when a claim is 
considered to have been filed. See also Sec. 410.202(c) for the 
duration of entitlement to benefits of a miner based on a claim for such 
benefits which is filed after June 30, 1973, and before January 1, 
1974.)
    (b) In the case of a miner who was entitled to benefits for the 
month before the month of his death, or died in the first month for 
which he met all the requirements for entitlement (see Sec. 410.226), a 
claim for benefits by or on behalf of the widow, child, parent, brother, 
or sister of a miner must be filed by December 31, 1973, or within 6 
months after the miner's death, whichever is later. When so filed, it 
constitutes a claim for benefits under part B of title IV of the Act.
    (c) In the case of a miner who was not entitled to benefits for the 
month before the month of his death, and whose death occurred prior to 
January 1, 1974, a claim for benefits by or on behalf of the widow, 
child, parent, brother, or sister of a miner must be filed by December 
31, 1973, or, in the case of the death of a miner occurring after June 
30, 1973, and before January 1, 1974, within 6 months of such miner's 
death. When so filed, it constitutes a claim for benefits under part B 
of title IV of the Act.
    (d) Notwithstanding the provisions of paragraphs (b) and (c) of this 
section, if a widow established entitlement to benefits under this part 
(see Sec. 410.210), a claim by or on behalf of a surviving child of a 
miner or of such widow, must be filed within 6 months after the death of 
such miner or of such widow, or by December 31, 1973, whichever is the 
later.

[37 FR 20637, Sept. 30, 1972]



Sec. 410.232  Withdrawal of a claim.

    (a) Before adjudication of claim. A claimant (or an individual who 
is authorized to execute a claim on his behalf under Sec. 410.222), may 
withdraw his previously filed claim provided that:
    (1) He files a written request for withdrawal.
    (2) The claimant is alive at the time the request for withdrawal is 
filed,
    (3) The Administration approves the request for withdrawal, and
    (4) The request for withdrawal is filed on or before the date the 
Administration makes a determination on the claim.
    (b) After adjudication of claim. A claim for benefits may be 
withdrawn by a written request filed after the date the Administration 
makes a determination on the claim provided that:
    (1) The conditions enumerated in paragraphs (a) (1) through (3) of 
this section are met; and
    (2) There is repayment of the amount of benefits previously paid 
because of the claim that is being withdrawn or it can be established to 
the satisfaction of the Administration that repayment of any such amount 
is assured.
    (c) Effect of withdrawal of claim. Where a request for withdrawal of 
a claim is filed and such request for withdrawal is approved by the 
Administration, such claim will be deemed not to have been filed. After 
the withdrawal (whether made before or after the date the Administration 
makes a determination) further action will be taken by the 
Administration only upon the filing of a new claim, except as provided 
in Sec. 410.233.



Sec. 410.233  Cancellation of a request for withdrawal.

    Before or after a written request for withdrawal has been approved 
by the

[[Page 614]]

Administration, the claimant (or a person who is authorized under Sec. 
410.222 to execute a claim on his behalf) may request that the ``request 
for withdrawal'' be canceled and that the withdrawn claim be reinstated. 
Such request for cancellation must be in writing and must be filed, in a 
case where the requested withdrawal was approved by the Administration, 
no later than 60 days after such approval. The claimant must be alive at 
the time the request for cancellation of the ``request for withdrawal'' 
is filed with the Administration.



Sec. 410.234  Interim provisions.

    (a) Notwithstanding any other provision of this subpart, a written 
request for benefits which is filed before January 31, 1972, and which 
meets the requirements of this subpart except for the filing of a 
prescribed application form, shall be considered a claim for benefits. 
Nevertheless, where a prescribed application form has not been filed, 
the Administration may require that such a form be completed and filed 
before adjudicating the claim. (See Sec. 410.240(a).)
    (b) Notwithstanding any other provision of this part, where (1) a 
request has been made before the effective date of this regulation that 
a claim for benefits be withdrawn and (2) such request has been approved 
(see Sec. 410.232), such claim may nevertheless be reinstated and 
adjudicated under the provisions of the Black Lung Benefits Act of 1972 
(Pub. L. 92-303).

[37 FR 20638, Sept. 30, 1972]



Sec. 410.240  Evidence.

    (a) Evidence of eligibility. A claimant for benefits shall submit 
such evidence of eligibility as is specified in this section. The 
Administration may at any time require additional evidence to be 
submitted with regard to entitlement or the right to receive payment.
    (b) Insufficient evidence of eligibility. Whenever a claimant for 
benefits has submitted no evidence or insufficient evidence of 
eligibility, the Administration will inform the claimant what evidence 
is necessary for a determination of eligibility and will request him to 
submit such evidence within a specified reasonable time which may be 
extended for a further reasonable time upon the claimant's request.
    (c) Reports by beneficiary; evidence of nonoccurrence of 
termination, suspension, or reduction event. Any individual entitled to 
a benefit who is aware of any circumstance which, under the provisions 
of this part could affect his entitlement to benefits, his eligibility 
for payment, or the amount of his benefit, or result in the termination, 
suspension, or reduction of his benefit, shall promptly report such 
circumstance to the Administration. The Administration may at any time 
require an individual receiving, or claiming that he is entitled to 
receive, a benefit, either on behalf of himself or on behalf of another, 
to submit a written statement giving pertinent information bearing upon 
the issue of whether or not an event has occurred which would cause such 
benefit to be terminated, or which would subject such benefit to 
reductions or suspension under the provisions of the Act. The failure on 
the part of such individual to submit any such report or statement, 
properly executed, to the Administration, shall subject such benefit to 
reductions, suspension, or termination, as the case may be.
    (d) Place and manner of submitting evidence. Evidence in support of 
a claim shall be filed at an office of the Administration or with an 
employee of the Administration authorized to receive such evidence at a 
place other than such office. Such evidence may be submitted as part of 
a prescribed application form if the form provides for its inclusion, or 
it may be submitted in addition to such prescribed form and in the 
manner indicated in this section.
    (e) Certification of evidence by authorized individual. In cases 
where a copy of a record, document, or other evidence, or an excerpt of 
information therefrom, is acceptable as evidence in lieu of the 
original, such copy or excerpt shall, except as may otherwise clearly be 
indicated thereon, be certified as a true and exact copy or excerpt by 
the official custodian of any such record or by an employee of the 
Administration authorized to make certifications of any such evidence.

[[Page 615]]

    (f) Evidence of total disability or death due to pneumoconiosis. For 
evidence requirements to support allegations of total disability or 
death due to pneumoconiosis; for the effect of the failure or refusal of 
an individual to present himself for an examination or test in 
connection with the alleged disability, or to submit evidence of 
disability; and for evidence as to the cessation of disability, see 
subpart D of this part 410.
    (g) Evidence of matters other than total disability or death due to 
pneumoconiosis. With respect to the following matters, evidence shall be 
submitted in accordance with the provisions of Regulations No. 4 (part 
404 of this chapter) cited hereinafter, as if the claim for benefits 
under the Act were an application for benefits under section 202 of the 
Social Security Act. Evidence as to:
    (1) Age: Sec. Sec. 404.715 through 404.716 of this part;
    (2) Death: Sec. Sec. 404.720 through 404.722 of this part;
    (3) Marriage and termination of marriage: Sec. Sec. 404.723 through 
404.728 of this part;
    (4) Relationship of parent and child: Sec. Sec. 404.730 through 
404.750 of this part;
    (5) Domicile: Sec. 404.770 of this part;
    (6) Living with or member of the same household: Sec. 404.760 of 
this part.
    (h) Reimbursement for reasonable expenses in obtaining medical 
evidence. Claimants for benefits under this part shall be reimbursed 
promptly for reasonable medical expenses incurred by them for services 
from medical sources of their choice, in establishing their claims, 
including the reasonable and necessary cost of travel incident thereto. 
A medical expense generally is not ``reasonable'' when the medical 
evidence for which the expense was incurred is of no value in the 
adjudication of a claim. Medical evidence will then be considered to be 
of ``no value'' when, for instance, it is wholly duplicative or when it 
is wholly extraneous to the medical issue of whether the claimant is 
disabled or died due to pneumoconiosis. In order to minimize 
inconvenience and possible expense to the claimant, he should not 
generally incur any medical expense for which he intends to claim 
reimbursement without first contacting the district office to determine 
what types of evidence not already available to the Administration may 
be useful in adjudicating his claim, what types of medical evidence may 
be reimbursable, and what would constitute a ``reasonable medical 
expense'' in a given case. However, a claimant's failure to contact the 
Administration before the expense is incurred will not preclude the 
Administration from later approving reimbursal for any reasonable 
medical expense. Where a reasonable expense for medical evidence is 
ascertained, the Administration may authorize direct payment to the 
provider of such evidence.

[36 FR 23752, Dec. 14, 1971, as amended at 37 FR 20638, Sept. 30, 1972; 
65 FR 16814, Mar. 30, 2000]



Sec. 410.250  Effect of conviction of felonious and intentional homicide 
on entitlement to benefits.

    An individual who has been finally convicted by a court of competent 
jurisdiction of the felonious and intentional homicide of a miner or of 
a widow shall not be entitled to receive any benefits payable because of 
the death of such miner or widow, and such felon shall be considered 
nonexistent in determining the entitlement to benefits of other 
individuals with respect to such miner or widow.

[37 FR 20638, Sept. 30, 1972]



                  Subpart C_Relationship and Dependency

    Authority: Sec. 702(a)(5) of the Social Security Act (42 U.S.C. 
902(a)(5)), secs. 402, 412(a), 426(a), and 508, 83 Stat. 792; 30 U.S.C. 
902, 922(a), 936, and 957.



Sec. 410.300  Relationship and dependency; general.

    (a) In order to establish entitlement to benefits, a widow, child, 
parent, brother, or sister must meet relationship and dependency 
requirements with respect to the miner or widow, as applicable, 
prescribed by or pursuant to the Act.
    (b) In order for an entitled miner or widow to qualify for augmented 
benefits because of one or more dependents (see Sec. 410.510(c)), such 
dependents must

[[Page 616]]

meet relationship and dependency requirements with respect to such 
beneficiary prescribed by or pursuant to the Act.
    (c) References in Sec. Sec. 410.310(c), 410.320(c), 410.330(d), and 
410.340, to the ``same right to share in the intestate personal 
property'' of a deceased miner (or widow), refer to the right of an 
individual to share in such distribution in his own right and not by 
right of representation.

[37 FR 20638, Sept. 30, 1972]



Sec. 410.310  Determination of relationship; wife.

    An individual will be considered to be the wife of a miner if:
    (a) The courts of the State in which such miner is domiciled (see 
Sec. 410.392) would find that such individual and the miner were 
validly married; or
    (b) The courts of the State in which such miner is domiciled (see 
Sec. 410.392) would find, under the law they would apply in determining 
the devolution of the miner's intestate personal property, that the 
individual is the miner's wife; or
    (c) Under State law, such individual has the same right she would 
have if she were the wife to share in the miner's intestate personal 
property; or
    (d)(1) Such individual went through a marriage ceremony with the 
miner resulting in a purported marriage between them and which, but for 
a legal impediment (see Sec. 410.391), would have been a valid 
marriage. However, such purported marriage shall not be considered a 
valid marriage if such individual entered into the purported marriage 
with knowledge that it was not a valid marriage, or if such individual 
and the miner were not living in the same household (see Sec. 410.393) 
in the month in which there is filed a request that the miner's benefits 
be augmented because such individual qualifies as his wife (see Sec. 
410.510(c)). The provisions of this paragraph shall not apply, however, 
if the miner's benefits are or have been augmented under Sec. 
410.510(c) because another person qualifies or has qualified as his wife 
and such other person is, or is considered to be, the wife of such miner 
under paragraph (a), (b), or (c) of this section at the time such 
request is filed.
    (2) The qualification for augmentation purposes of an individual who 
would not be considered to be the wife of such miner but for this 
paragraph (d), shall end with the month before the month in which (i) 
the Administration determines that the benefits of the miner should be 
augmented on account of another person, if such other person is (or is 
considered to be) the wife of such miner under paragraph (a), (b), or 
(c) of this section, or (ii) if the individual who previously qualified 
as a wife for purposes of Sec. 410.510(c), entered into a marriage 
valid without regard to this paragraph, with a person other than such 
miner.

[36 FR 23756, Dec. 14, 1971, as amended at 37 FR 20638, Sept. 30, 1972]



Sec. 410.311  Determination of relationship; divorced wife.

    An individual will be considered to be the divorced wife of a miner 
if her marriage to such miner has been terminated by a final divorce on 
or after the 20th anniversary of the marriage: Provided, That if she was 
married to and divorced from him more than once, she was married to him 
in each calendar year of the period beginning 20 years immediately 
before the date on which any divorce became final and ending with the 
year in which that divorce became final.

[37 FR 20638, Sept. 30, 1972]



Sec. 410.320  Determination of relationship; widow.

    An individual will be considered to be the widow of a miner if:
    (a) The courts of the State in which such miner was domiciled (see 
Sec. 410.392) at the time of his death would find that the individual 
and the miner were validly married; or
    (b) The courts of the State in which such miner was domiciled (see 
Sec. 410.392) at the time of his death would find, under the law they 
would apply in determining the devolution of the miner's intestate 
personal property, that the individual was the miner's widow; or
    (c) Under State law, such individual has the same right she would 
have as if she were the miner's widow to share in

[[Page 617]]

the miner's intestate personal property; or
    (d) Such individual went through a marriage ceremony with the miner 
resulting in a purported marriage between them and which, but for a 
legal impediment (see Sec. 410.391) would have been a valid marriage. 
However, such purported marriage shall not be considered a valid 
marriage if such individual entered into the purported marriage with 
knowledge that it was not a valid marriage, or if such individual and 
the miner were not living in the same household (see Sec. 410.393) at 
the time of the miner's death. The provisions of this paragraph shall 
not apply if another person is or has been entitled to benefits as the 
widow of the miner and such other person is, or is considered to be, the 
widow of such miner under paragraph (a), (b), or (c) of this section at 
the time such individual files her claim for benefits.

[36 FR 23756, Dec. 14, 1971, as amended at 37 FR 20638, Sept. 30, 1972]



Sec. 410.321  Determination of relationship; surviving divorced wife.

    An individual will be considered to be the surviving divorced wife 
of a deceased miner if her marriage to such miner had been terminated by 
a final divorce on or after the 20th anniversary of the marriage: 
Provided, That, if she was married to and divorced from him more than 
once, she was married to him in each calendar year of the period 
beginning 20 years immediately before the date on which any divorce 
became final and ending with the year in which that divorce became 
final.

[37 FR 20639, Sept. 30, 1972]



Sec. 410.330  Determination of relationship; child.

    As used in this section, the term beneficiary means only a widow 
entitled to benefits at the time of her death (see Sec. 410.211), or a 
miner, except where there is a specific reference to the ``father'' 
only, in which case it means only a miner. An individual will be 
considered to be the child of a beneficiary if:
    (a) The courts of the State in which such beneficiary is domiciled 
(see Sec. 410.392) would find, under the law they would apply in 
determining the devolution of the beneficiary's intestate personal 
property, that the individual is the beneficiary's child; or
    (b) Such individual is the legally adopted child of such 
beneficiary; or
    (c) Such individual is the stepchild of such beneficiary by reason 
of a valid marriage of his parent or adopting parent to such 
beneficiary; or
    (d) Such individual does not bear the relationship of child to such 
beneficiary under paragraph (a), (b), or (c) of this section, but would, 
under State law, have the same right as a child to share in the 
beneficiary's intestate personal property; or
    (e) Such individual is the natural son or daughter of a beneficiary 
but does not bear the relationship of child to such beneficiary under 
paragraph (a), (b), or (c) of this section, and is not considered to be 
the child of the beneficiary under paragraph (d) of this section, such 
individual shall nevertheless be considered to be the child of such 
beneficiary if the beneficiary and the mother or the father, as the case 
may be, of such individual went through a marriage ceremony resulting in 
a purported marriage between them which, but for a legal impediment (see 
Sec. 410.391), would have been a valid marriage.
    (f) Such individual is the natural son or daughter of a beneficiary 
but does not have the relationship of child to such beneficiary under 
paragraph (a), (b), or (c) of this section, and is not considered to be 
the child of the beneficiary under paragraph (d) or (e) of this section, 
such individual shall nevertheless be considered to be the child of such 
beneficiary if:
    (1) Such beneficiary, prior to his entitlement to benefits, has 
acknowledged in writing that the individual is his son or daughter, or 
has been decreed by a court to be the father of the individual, or he 
has been ordered by a court to contribute to the support of the 
individual (see Sec. 410.395(c)) because the individual is his son or 
daughter; or
    (2) Such beneficiary is shown by satisfactory evidence to be the 
father of the individual and was living with or contributing to the 
support of the individual at the time such beneficiary became entitled 
to benefits.

[[Page 618]]

    (g) Such individual is the natural son or daughter of a beneficiary 
but does not have the relationship of child to such beneficiary under 
paragraph (a), (b), or (c) of this section, and is not considered to be 
the child of the beneficiary under paragraph (d) or (e) of this section, 
such individual shall nevertheless be considered to be the child of such 
beneficiary for months no earlier than June 1974, if:
    (1) Such beneficiary has acknowledged in writing that the individual 
is his son or daughter, or has been decreed by a court to be the father 
of the individual, or he has been ordered by a court to contribute to 
the support of the individual (see Sec. 410.395(c)) because the 
individual is his son or daughter; and in the case of a deceased 
individual such acknowledgement, court decree, or court order was made 
before the death of such beneficiary; or
    (2) Such beneficiary is shown by satisfactory evidence to be the 
father of the individual and was living with or contributing to the 
support of the individual at the time such request for benefits is made.

[36 FR 23756, Dec. 14, 1971, as amended at 37 FR 20639, Sept. 30, 1972; 
41 FR 33550, Aug. 10, 1976]



Sec. 410.340  Determination of relationship; parent, brother, or sister.

    An individual will be considered to be the parent, brother, or 
sister of a miner if the courts of the State in which such miner was 
domiciled (see Sec. 410.392) at the time of his death would find, under 
the law they would apply in determining the devolution of the miner's 
intestate personal property, that the individual is the miner's parent, 
brother, or sister. Where, under such law, the individual does not bear 
the relationship to the miner of parent, brother, or sister, but would, 
under State law, have the same status (i.e., right to share in the 
miner's intestate personal property) as a parent, brother, or sister, 
the individual will be deemed to be such. An individual will be 
considered to be the parent, brother, or sister of a miner if the 
individual is the stepparent, stepbrother, stepsister, half brother, or 
half sister of the miner, or is the parent, brother, or sister of the 
miner by adoption.

[37 FR 20639, Sept. 30, 1972]



Sec. 410.350  Determination of dependency; wife.

    An individual who is the miner's wife (see Sec. 410.310) will be 
determined to be dependent upon the miner if:
    (a) She is a member of the same household as the miner (see Sec. 
410.393); or
    (b) She is receiving regular contributions from the miner for her 
support (see Sec. 410.395(c)); or
    (c) The miner has been ordered by a court to contribute to her 
support (see Sec. 410.395(e)); or
    (d) She is the natural mother of the son or daughter of the miner; 
or
    (e) She was married to the miner (see Sec. 410.310) for a period of 
not less than 1 year.

[37 FR 20639, Sept. 30, 1972]



Sec. 410.351  Determination of dependency; divorced wife.

    An individual who is the miner's divorced wife (see Sec. 410.311) 
will be determined to be dependent upon the miner if:
    (a) She is receiving at least one-half of her support from the miner 
(see Sec. 410.395(g)); or
    (b) She is receiving substantial contributions from the miner 
pursuant to a written agreement (see Sec. 410.395 (c) and (f)); or
    (c) There is in effect a court order for substantial contributions 
to her support to be furnished by such miner (see Sec. 410.395 (c) and 
(e)).

[37 FR 20639, Sept. 30, 1972]



Sec. 410.360  Determination of dependency; widow.

    (a) General. An individual who is the miner's widow (see Sec. 
410.320) will be determined to have been dependent on the miner if, at 
the time of the miner's death:
    (1) She was living with the miner (see Sec. 410.393); or
    (2) She was dependent upon the miner for support or the miner has 
been ordered by a court to contribute to her support (see Sec. 
410.395); or

[[Page 619]]

    (3) She was living apart from the miner because of his desertion or 
other reasonable cause; or
    (4) She is the natural mother of his son or daughter; or
    (5) She had legally adopted his son or daughter while she was 
married to him and while such son or daughter was under the age of 18; 
or
    (6) He had legally adopted her son or daughter while she was married 
to him and while such son or daughter was under the age of 18; or
    (7) She was married to him at the time both of them legally adopted 
a child under the age of 18; or
    (8) She was married to him for a period of not less than 9 months 
immediately prior to the day on which he died (but see paragraph (b) of 
this section).
    (b) Waiver of 9-month requirement--(1) General. Except as provided 
in paragraph (b)(3) of this section, the requirement in paragraph (a)(8) 
of this section that the surviving spouse of a miner must have been 
married to him for a period of not less than 9 months immediately prior 
to the day on which he died in order to qualify as such miner's widow, 
shall be deemed to be satisfied where such miner dies within the 
applicable 9-month period, if his death:
    (i) Is accidental (as defined in paragraph (b)(2) of this section), 
or
    (ii) Occurs in line of duty while he is a member of a uniformed 
service serving on active duty (as defined in Sec. 404.1013 (f) (2) and 
(3) of this chapter), and such surviving spouse was married to such 
miner for a period of not less than 3 months immediately prior to the 
day on which he died.
    (2) Accidental death. For purposes of paragraph (b)(1)(i) of this 
section, the death of a miner is accidental if such individual receives 
bodily injuries solely through violent, external, and accidental means 
and, as a direct result of the bodily injuries and independently of all 
other causes, loses his life not later than 3 months after the day on 
which he receives such bodily injuries. The term accident means an event 
that was unpremeditated and unforeseen from the standpoint of the 
deceased individual. To determine whether the death of an individual 
did, in fact, result from an accident the Administration will consider 
all the circumstances surrounding the casualty. An intentional and 
voluntary suicide will not be considered to be death by accident; 
however, suicide by an individual who is so insane as to be incapable of 
acting intentionally and voluntarily will be considered to be death by 
accident. In no event will the death of an individual resulting from 
violent and external causes be considered a suicide unless there is 
direct proof that the fatal injury was self-inflicted.
    (3) Applicability. The provisions of this paragraph shall not apply 
if the Administration determines that at the time of the marriage 
involved, the miner could not reasonably have been expected to live for 
9 months.

[37 FR 20639, Sept. 30, 1972]



Sec. 410.361  Determination of dependency; surviving divorced wife.

    An individual who is the miner's surviving divorced wife (see Sec. 
410.321) will be determined to have been dependent on the miner if, for 
the month preceding the month in which the miner died:
    (a) She was receiving at least one-half of her support from the 
miner (see Sec. 410.395(g)); or
    (b) She was receiving substantial contributions from the miner 
pursuant to a written agreement (see Sec. 410.395 (c) and (f)); or
    (c) There was in effect a court order for substantial contributions 
to her support to be furnished by such miner (see Sec. 410.395 (c) and 
(e)).

[37 FR 20639, Sept. 30, 1972]



Sec. 410.370  Determination of dependency; child.

    For purposes of augmenting the benefits of a miner or widow (see 
Sec. 410.510 (c)), the term beneficiary as used in this section means 
only a miner or widow entitled to benefits (see Sec. Sec. 410.201 and 
410.210); or, for purposes of an individual's entitlement to benefits as 
a surviving child (see Sec. 410.212), the term beneficiary as used in 
this section means only a deceased miner (see Sec. 410.200) or a 
deceased widow who was entitled to benefits for the month prior to the 
month of her death (see Sec. Sec. 410.210 and 410.211). An individual 
who is the

[[Page 620]]

beneficiary's child (see Sec. 410.330) will, as applicable, be 
determined to be, or to have been, dependent on the beneficiary, if the 
child:
    (a) Is unmarried; and
    (b)(1) Is under 18 years of age; or
    (2) Is 18 years of age or older and is under a disability as defined 
in section 223(d) of the Social Security Act, 42 U.S.C. 423(d) (see 
subpart P of part 404 of this chapter). For purposes of entitlement to 
benefits as a surviving child (see Sec. 410.212), such disability must 
have begun:
    (i) Before the child attained age 22; however, no entitlement to 
child's benefits may be established for any month before January 1973, 
based on a disability which began after attainment of age 18; or
    (ii) In the case of a student, before he ceased to be a student (see 
paragraph (c) of this section); or
    (3) Is 18 years of age or older and is a student.
    (c)(1) The term student means a full-time student as defined in 
section 202(d)(7) of the Social Security Act, 42 U.S.C. 402(d)(7) (see 
Sec. 404.320(c) of this chapter), or an individual under 23 years of 
age who has not completed 4 years of education beyond the high school 
level and who is regularly pursuing a full-time course of study or 
training at an institution which is:
    (i) A school, college, or university operated or directly supported 
by the United States, or by a State or local government or political 
subdivision thereof; or
    (ii) A school, college, or university which has been accredited by a 
State or by a State-recognized or nationally recognized accrediting 
agency or body; or
    (iii) A school, college, or university not so accredited but whose 
credits are accepted, on transfer, by at least three institutions which 
are so accredited, for credit on the same basis as if transferred from 
an institution so accredited; or
    (iv) A technical, trade, vocational, business, or professional 
school accredited or licensed by the Federal, or a State government or 
any political subdivision thereof, providing courses of not less than 3 
months' duration that prepare the student for a livelihood in a trade, 
industry, vocation, or profession.
    (2) A student will be considered to be ``pursuing a full-time course 
of study or training at an institution'' if he is enrolled in a 
noncorrespondence course and is carrying a subject load which is 
considered full time for day students under the institution's standards 
and practices. However, a student will not be considered to be 
``pursuing a full-time course of study or training'' if he is enrolled 
in a course of study or training of less than 13 school weeks' duration. 
A student beginning or ending a full-time course of study or training in 
part of any month will be considered to be pursuing such course for the 
entire month.
    (3) A child is deemed not to have ceased to be a student:
    (i) During any interim between school years, if the interim does not 
exceed 4 months and he shows to the satisfaction of the Administration 
that he has a bona fide intention of continuing to pursue a full-time 
course of study or training during the semester or other enrollment 
period immediately after the interim; or
    (ii) During periods of reasonable duration during which, in the 
judgment of the Administration, he is prevented by factors beyond his 
control from pursuing his education.
    (4) A student who completes 4 years of education beyond the high 
school level, or whose 23rd birthday occurs during a semester or other 
enrollment period in which he is pursuing a full-time course of study or 
training shall continue to be considered a student for as long as he 
otherwise qualifies under this section until the end of such period.

[37 FR 20639, Sept. 30, 1972, as amended at 41 FR 7091, Feb. 17, 1976]



Sec. 410.380  Determination of dependency; parent, brother, or sister.

    An individual who is the miner's parent, brother, or sister (see 
Sec. 410.340) will be determined to have been dependent on the miner 
if, during the 1-year period immediately prior to such miner's death:
    (a) Such individual and the miner were living in the same household 
(see Sec. 410.393); and

[[Page 621]]

    (b) Such individual was totally dependent on the miner for support 
(see Sec. 410.395(h)).

[37 FR 20640, Sept. 30, 1972]



Sec. 410.390  Time of determinations.

    (a) Relationship and dependency of wife or child. With respect to 
the wife or child of a miner entitled to benefits, and with respect to 
the child of a widow entitled to benefits, the determination as to 
whether an individual purporting to be a wife or child is related to or 
dependent upon such miner or widow shall be based on the facts and 
circumstances with respect to the period of time as to which such issue 
of relationship or dependency is material. (See, for example, Sec. 
410.510(c).)
    (b) Relationship and dependency of widow. The determination as to 
whether an individual purporting to be the widow of a miner was related 
to or dependent upon such miner is made after such individual 
effectively files a claim for benefits (see Sec. 410.227) as a widow. 
Such determination is based on the facts and circumstances with respect 
to the time of the miner's death (except as provided in Sec. 
410.320(d)). A prior determination that such individual was determined 
to be, or not to be, the wife of such miner, pursuant to Sec. Sec. 
410.310 and 410.350, for purposes of augmenting the miner's benefits for 
a certain period (see Sec. 410.510(c)), is not determinative of the 
issue of whether the individual is the widow of such miner or of whether 
she was dependent on such miner.
    (c) Relationship and dependency of surviving divorced wife. The 
determination as to whether an individual purporting to be a surviving 
divorced wife of a miner was related to or dependent upon such miner is 
made when such individual effectively files a claim for benefits (see 
Sec. 410.227) as a surviving divorced wife. Such determination is made 
with respect to the time of the miner's death. A prior determination 
that such individual was, or was not, the divorced wife of such miner, 
pursuant to Sec. Sec. 410.311 and 410.351, for purposes of augmenting 
the miner's benefits for a certain period (see Sec. 410.510(c)), is not 
determinative of the issue of whether the individual is the surviving 
divorced wife of such miner or of whether she was dependent on such 
miner.

[37 FR 20640, Sept. 30, 1972]



Sec. 410.391  Legal impediment.

    For purposes of this subpart C, legal impediment means an impediment 
resulting from the lack of dissolution of a previous marriage or 
otherwise arising out of such previous marriage or its dissolution, or 
resulting from a defect in the procedure followed in connection with the 
purported marriage ceremony--for example, the solemnization of a 
marriage only through a religious ceremony in a country which requires a 
civil ceremony for a valid marriage.

[36 FR 23756, Dec. 14, 1971]



Sec. 410.392  Domicile.

    (a) For purposes of this subpart C, the term domicile means the 
place of an individual's true, fixed, and permanent home to which, 
whenever he is absent, he has the intention of returning.
    (b) The domicile of a deceased miner or widow is determined as of 
the time of his or her death.
    (c) The domicile or a change in domicile of a beneficiary or other 
individual is determined with respect to the period or periods of time 
as to which the issue of domicile is material.
    (d) If an individual was not domiciled in any State at the pertinent 
time, the law of the District of Columbia is applied as if such 
individual were then domiciled there.

[36 FR 23756, Dec. 14, 1971, as amended at 37 FR 20640, Sept. 30, 1972]



Sec. 410.393  ``Member of the same household''; ``living with''; ``living 
in the same household''; and ``living in the miner's household''.

    (a) Defined. (1) The term member of the same household as used in 
section 402(a)(2) of the Act (with respect to a wife); the term living 
with as used in section 402(e) of the Act (with respect to a widow); and 
the term living in the same household as used in Sec. Sec. 410.310(d) 
and 410.320(d) (with respect to certain wives and widows, respectively), 
mean that a husband and wife were customarily living together as husband 
and wife in the same place of abode.

[[Page 622]]

    (2) The term living in the miner's household as used in section 
412(a)(5) of the Act (with respect to a parent, brother, or sister (see 
Sec. 410.380)), means that the miner and such parent, brother, or 
sister, were sharing the same residence.
    (b) Temporary absence. The temporary absence from the same residence 
of either the miner, or his wife, parent, brother, or sister (as the 
case may be), does not preclude a finding that one was living with the 
other, or that they were members of the same household, etc. The absence 
of one such individual from the residence in which both had customarily 
lived shall, in the absence of evidence to the contrary, be considered 
temporary;
    (1) If such absence was due to service in the Armed Forces of the 
United States; or
    (2) If the period of absence from his or her residence did not 
exceed 6 months, and neither individual was outside the United States, 
and the absence was due to business or employment reasons, or because of 
confinement in a penal institution or in a hospital, nursing home, or 
other curative institution; or
    (3) In any other case, if the evidence establishes that despite such 
absence they nevertheless reasonably expected to resume physically 
living together at some time in the reasonably near future.
    (c) Death during absence. Where the death of one of the parties 
occurred while away from the residence for treatment or care of an 
illness or an injury (e.g., in a hospital), the fact that the death was 
foreseen as possible or probable does not in and of itself preclude a 
finding that the parties were ``living with'' one another or were 
``member[s] of the same household'' etc. at the time of death.
    (d) Absences other than temporary. In situations other than those 
described in paragraphs (b) and (c) of this section, the absence shall 
not be considered temporary, and the parties may not be found to be 
``living with'' one another or to be ``member[s] of the same household'' 
etc. A finding of temporary absence would not be justified where one of 
the parties was committed to a penal institution for life or for a 
period exceeding the reasonable life expectancy of either, or was under 
a sentence of death; or where the parties had ceased to live in the same 
place of abode because of marital or family difficulties and had not 
resumed living together before death.
    (e) Relevant period of time. (1) The determination as to whether a 
widow had been ``living with'' her husband shall be based upon the facts 
and circumstances as of the time of death of the miner.
    (2) The determination as to whether a wife is a ``member of the same 
household'' as her husband shall be based upon the facts and 
circumstances with respect to the period or periods of time as to which 
the issue of membership in the same household is material. (See Sec. 
410.510(c).)
    (3) The determination as to whether a parent, brother, or sister was 
``living in the miner's household'' shall take account only of the 1-
year period immediately prior to the miner's death. (See Sec. 410.380.)

[37 FR 20640, Sept. 30, 1972]



Sec. 410.394  [Reserved]



Sec. 410.395  Contributions and support.

    (a) Support defined. The term support includes food, shelter, 
clothing, ordinary medical expenses, and other ordinary and customary 
items for the maintenance of the person supported.
    (b) Contributions defined. The term contributions refers to 
contributions actually provided by the contributor from his own 
property, or the use thereof, or by the use of his own credit.
    (c) Regular contributions and substantial contributions defined. The 
terms regular contributions and substantial contributions mean 
contributions that are customary and sufficient to constitute a material 
factor in the cost of the individual's support.
    (d) Contributions and community property. When a wife receives, and 
uses for her support, income from her services or property and such 
income, under applicable State law, is the community property of herself 
and the miner, no part of such income is a contribution by the miner to 
his wife's support regardless of any legal interest the miner may have 
therein. However, when a

[[Page 623]]

wife receives, and uses for her support, income from the services and 
the property of the miner and, under applicable State law, such income 
is community property, all of such income is considered to be a 
contribution by the miner to his wife's support.
    (e) Court order for support defined. References to support orders in 
Sec. Sec. 410.330 (f)(1), 410.350(c), and 410.360(b) mean any court 
order, judgment, or decree of a court of competent jurisdiction which 
requires regular contributions that are a material factor in the cost of 
the individual's support and which is in effect at the applicable time. 
If such contributions are required by a court order, this condition is 
met whether or not the contributions were actually made.
    (f) Written agreement defined. The term written agreement in the 
phrase substantial contributions * * * pursuant to a written agreement 
(see Sec. Sec. 410.351 (b) and 410.361(b)) means an agreement signed by 
the miner providing for substantial contributions by him for the 
individual's support. It must be in effect at the applicable time but it 
need not be legally enforceable.
    (g) One-half support defined. The term one-half support means that 
the miner made regular contributions, in cash or in kind, to the support 
of a divorced wife (see Sec. 410.351(a)), or of a surviving divorced 
wife (see Sec. 410.361 (a)), at the specified time or for the specified 
period, and that the amount of such contributions equaled or exceeded 
one-half the total cost of such individual's support at such time or 
during such period.
    (h) Totally dependent for support defined. The term totally 
dependent on the miner for support as used in Sec. 410.380(b), means 
that such miner made regular contributions to the support of his parent, 
brother, or sister, as the case may be, and that the amount of such 
contributions at least equaled the total cost of such individual's 
support.

[37 FR 20641, Sept. 30, 1972]



        Subpart D_Total Disability or Death Due to Pneumoconiosis

    Authority: Sec. 702(a)(5) of the Social Security Act (42 U.S.C. 
902(a)(5)), secs. 401-426, 83 Stat. 792, as amended, 86 Stat. 150; 30 
U.S.C. 901 et. seq.

    Source: 37 FR 20641, Sept. 30, 1972, unless otherwise noted.



Sec. 410.401  Scope of subpart D.

    (a) General. This subpart establishes the standards for determining 
whether a coal miner is totally disabled due to pneumoconiosis, whether 
he was totally disabled due to pneumoconiosis at the time of his death, 
or whether his death was due to pneumoconiosis.
    (b) Pneumoconiosis defined. Pneumoconiosis means:
    (1) A chronic dust disease of the lung arising out of employment in 
the Nation's coal mines, and includes coal workers' pneumoconiosis, 
anthracosilicosis, anthracosis, anthrosilicosis, massive pulmonary 
fibrosis, progressive massive fibrosis, silicosis, or 
silicotuberculosis, arising out of such employment. For purposes of this 
subpart, the term also includes the following conditions that may be the 
basis for application of the statutory presumption of disability or 
death due to pneumoconiosis under the circumstances prescribed in 
section 411 (c) of the Act;
    (2) Any other chronic respiratory or pulmonary impairment when the 
conditions are met for the application of the presumption described in 
Sec. 410.414(b) or Sec. 410.454(b), and
    (3) Any respirable disease when the conditions are met for the 
application of the presumption described in Sec. 410.462. The 
provisions for determining that a miner is or was totally disabled due 
to pneumoconiosis or its sequelae are included in Sec. Sec. 410.410 
through 410.430 and in the appendix following this subpart D. The 
provisions for determining that a miner's death was due to 
pneumoconiosis are included in Sec. Sec. 410.450 through 410.462. 
Certain related provisions of general application are included in 
Sec. Sec. 410.470 through 410.476.
    (c) Relation to the Social Security Act. Section 402(f) of the Act, 
as amended, 30 U.S.C. 902(f), provides that regulations defining total 
disability ``shall not provide more restrictive criteria than those 
applicable under section 223(d) of the Social Security Act.'' Section 
413(b) of the Act, 30 U.S.C. 923(b), also provides, in pertinent part, 
that in

[[Page 624]]

``carrying out the provisions of this part [that is, part B of title IV 
of the Act], the Commissioner shall to the maximum extent feasible (and 
consistent with the provisions of this part) utilize the * * * 
procedures he uses in determining entitlement to disability insurance 
benefits under section 223 of the Social Security Act * * *.''

[37 FR 20641, Sept. 30, 1972, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.410  Total disability due to pneumoconiosis, including statutory 
presumption.

    (a) Benefits are provided under the Act to coal miners ``who are 
totally disabled due to pneumoconiosis arising out of employment in one 
or more of the Nation's coal mines,'' and to the eligible survivors of 
miners who are determined to have been totally disabled due to 
pneumoconiosis at the time of their death. (For benefits to the eligible 
survivors of miners whose deaths are determined to have been due to 
pneumoconiosis, see Sec. 410.450.)
    (b) To establish entitlement to benefits on the basis of a coal 
miner's total disability due to pneumoconiosis, a claimant must submit 
the evidence necessary to establish: (1) That he is a coal miner, that 
he is totally disabled due to pneumoconiosis, and that his 
pneumoconiosis arose out of employment in the Nation's coal mines; or 
(2) that the deceased individual was a miner, that he was totally 
disabled due to pneumoconiosis at the time of his death, and that his 
pneumoconiosis arose out of employment in the Nation's coal mines.
    (c) Total disability is defined in Sec. 410.412; the basic 
provision on determining the existence of pneumoconiosis is in Sec. 
410.414; and the requirement that the pneumoconiosis must have arisen 
out of coal mine employment is in Sec. 410.416. The statutory 
presumptions with respect to the burden of proving the foregoing are in 
Sec. Sec. 410.414(b), 410.416(a), and 410.418, and the provision for 
determining the existence of total disability when the presumption in 
Sec. 410.418 does not apply is included in Sec. 410.422.



Sec. 410.412  ``Total disability'' defined.

    (a) A miner shall be considered totally disabled due to 
pneumoconiosis if:
    (1) His pneumoconiosis prevents him from engaging in gainful work in 
the immediate area of his residence requiring the skills and abilities 
comparable to those of any work in a mine or mines in which he 
previously engaged with some regularity and over a substantial period of 
time (that is, ``comparable and gainful work''; see Sec. Sec. 410.424 
through 410.426); and
    (2) His impairment can be expected to result in death, or has lasted 
or can be expected to last for a continuous period of not less than 12 
months.
    (b) A miner shall be considered to have been totally disabled due to 
pneumoconiosis at the time of his death, if at the time of his death:
    (1) His pneumoconiosis prevented him from engaging in gainful work 
in the immediate area of his residence requiring the skills and 
abilities comparable to those of any work in a mine or mines in which he 
previously engaged with some regularity and over a substantial period of 
time (that is, ``comparable and gainful work''; see Sec. Sec. 410.424 
through 410.426); and
    (2) His impairment was expected to result in death, or it lasted or 
was expected to last for a continuous period of not less than 12 months.



Sec. 410.414  Determining the existence of pneumoconiosis, including 
statutory presumption.

    (a) General. A finding of the existence of pneumoconiosis as defined 
in Sec. 410.110(o)(1) may be made under the provisions of Sec. 410.428 
by:
    (1) Chest roentgenogram (X-ray); or
    (2) Biopsy; or
    (3) Autopsy.
    (b) Presumption relating to respiratory or pulmonary impairment. (1) 
Even though the existence of pneumoconiosis is not established as 
provided in paragraph (a) of this section, if other evidence 
demonstrates the existence of a totally disabling chronic respiratory or 
pulmonary impairment (see Sec. Sec. 410.412, 410.422, and 410.426), it 
may be presumed, in the absence of evidence to the contrary (see 
paragraph (b)(2) of this section), that a miner is totally

[[Page 625]]

disabled due to pneumoconiosis, or that a miner was totally disabled due 
to pneumoconiosis at the time of his death.
    (2) This presumption may be rebutted only if it is established that 
the miner does not, or did not, have pneumoconiosis, or that his 
respiratory or pulmonary impairment did not arise out of, or in 
connection with, employment in a coal mine.
    (3) The provisions of this paragraph shall apply where a miner was 
employed for 15 or more years in one or more of the Nation's underground 
coal mines; in one or more of the Nation's other coal mines where the 
environmental conditions were substantially similar to those in an 
underground coal mine; or in any combination of both.
    (4) However, where the evidence shows a work history reflecting many 
years of such coal mine employment (although less than 15), as well as a 
severe lung impairment, such evidence may be considered, in the exercise 
of sound judgment, to establish entitlement in such case, provided that 
a mere showing of a respiratory or pulmonary impairment shall not be 
sufficient to establish such entitlement.
    (c) Other relevant evidence. Even though the existence of 
pneumoconiosis is not established as provided in paragraph (a) or (b) of 
this section, a finding of total disability due to pneumoconiosis may be 
made if other relevant evidence establishes the existence of a totally 
disabling chronic respiratory or pulmonary impairment, and that such 
impairment arose out of employment in a coal mine. As used in this 
paragraph, the term other relevant evidence includes medical tests such 
as blood gas studies, electrocardiogram, pulmonary function studies, or 
physical performance tests, and any medical history, evidence submitted 
by the miner's physician, his spouse's affidavits, and in the case of a 
deceased miner, other appropriate affidavits of persons with knowledge 
of the individual's physical condition, and other supportive materials. 
In any event, no claim for benefits under part B of title IV of the Act 
shall be denied solely on the basis of a negative chest roentgenogram 
(X-ray).



Sec. 410.416  Determining origin of pneumoconiosis, including statutory 
presumption.

    (a) If a miner was employed for 10 or more years in the Nation's 
coal mines, and is suffering or suffered from pneumoconiosis, it will be 
presumed, in the absence of persuasive evidence to the contrary, that 
the pneumoconiosis arose out of such employment.
    (b) In any other case, a miner who is suffering or suffered from 
pneumoconiosis, must submit the evidence necessary to establish that the 
pneumoconiosis arose out of employment in the Nation's coal mines. (See 
Sec. 410.110 (h), (i), (j), (k), (l), and (m).)



Sec. 410.418  Irrebuttable presumption of total disability due to 
pneumoconiosis.

    There is an irrebuttable presumption that a miner is totally 
disabled due to pneumoconiosis, or that a miner was totally disabled due 
to pneumoconiosis at the time of his death, if he is suffering or 
suffered from a chronic dust disease of the lung which:
    (a) When diagnosed by chest roentgenogram (X-ray), yields one or 
more large opacities (greater than 1 centimeter in diameter) and would 
be classified in Category A, B, or C (that is, as complicated 
pneumoconiosis), in:
    (1) The ILO-U/C International Classification of Radiographs of 
Pneumoconioses, 1971, or
    (2) The International Classification of the Radiographs of the 
Pneumoconioses of the International Labour Office, Extended 
Classification (1968) (which may be referred to as the ``ILO 
Classification (1968)''), or
    (3) The Classification of the Pneumoconiosis of the Union 
Internationale Contra Cancer/Cincinnati (1968) (which may be referred to 
as the ``UICC/Cincinnati (1968) Classification''); or
    (b) When diagnosed by biopsy or autopsy, yields massive lesions in 
the lung. The report of biopsy or autopsy will be accepted as evidence 
of complicated pneumoconiosis if the histological findings show simple 
pneumoconiosis and progressive massive fibrosis; or
    (c) When established by diagnoses by means other than those 
specified in paragraphs (a) and (b) of this section,

[[Page 626]]

would be a condition which could reasonably be expected to yield the 
results described in paragraph (a) or (b) of this section had diagnoses 
been made as therein prescribed; Provided, however, That any diagnoses 
made under this paragraph shall accord with generally accepted medical 
procedures for diagnosing pneumoconiosis.



Sec. 410.422  Determining total disability: General criteria.

    (a) A determination of total disability due to pneumoconiosis is 
made in accordance with this section when a miner cannot be presumed to 
be totally disabled due to pneumoconiosis (or to have been totally 
disabled due to pneumoconiosis at the time of his death), under the 
provisions of Sec. 410.418. In addition, when a miner has (or had) a 
chronic respiratory or pulmonary impairment, a determination of whether 
or not such impairment is (or was) totally disabling is also made in 
accordance with this section for purposes of Sec. 410.414(b).
    (b) A determination of total disability may not be made for purposes 
of this part unless pneumoconiosis is (or is presumed to be) the 
impairment involved.
    (c) Whether or not the pneumoconiosis in a particular case renders 
(or rendered) a miner totally disabled, as defined in Sec. 410.412, is 
determined from all the facts of that case. Primary consideration is 
given to the medical severity of the individual's pneumoconiosis (see 
Sec. 410.424). Consideration is also given to such other factors as the 
individual's age, education, and work experience (see Sec. 410.426).



Sec. 410.424  Determining total disability: Medical criteria only.

    (a) Medical considerations alone shall justify a finding that a 
miner is (or was) totally disabled where his impairment is one that 
meets (or met) the duration requirement in Sec. 410.412(a)(2) or Sec. 
410.412(b)(2), and is listed in the appendix to this subpart, or if his 
impairment is medically the equivalent of a listed impairment. However, 
medical considerations alone shall not justify a finding that an 
individual is (or was) totally disabled if other evidence rebuts such a 
finding, e.g., the individual is (or was) engaged in comparable and 
gainful work (see Sec. 410.412).
    (b) An individual's impairment shall be determined to be medically 
the equivalent of an impairment listed in the appendix to this subpart 
only if the medical findings with respect thereto are at least 
equivalent in severity and duration to the listed findings of the listed 
impairment. Any decision as to whether an individual's impairment is 
medically the equivalent of an impairment listed in the appendix to this 
subpart, shall be based on medically accepted clinical and laboratory 
diagnostic techniques, including a medical judgment furnished by one or 
more physicians designated by the Administration, relative to the 
question of medical equivalence.



Sec. 410.426  Determining total disability: Age, education, and work 
experience criteria.

    (a) Pneumoconiosis which constitutes neither an impairment listed in 
the appendix to this subpart (see Sec. 410.424), nor the medical 
equivalent thereof, shall nevertheless be found totally disabling if 
because of the severity of such impairment, the miner is (or was) not 
only unable to do his previous coal mine work, but also cannot (or could 
not), considering his age, his education, and work experience, engage in 
any other kind of comparable and gainful work (see Sec. 410.412(a)(1)) 
available to him in the immediate area of his residence. A miner shall 
be determined to be under a disability only if his pneumoconiosis is (or 
was) the primary reason for his inability to engage in such comparable 
and gainful work. Medical impairments other than pneumoconiosis may not 
be considered.
    The following criteria recognize that an impairment in the transfer 
of oxygen from the lung alveoli to cellular level can exist in an 
individual even though his chest roentgenogram (X-ray) or ventilatory 
function tests are normal.
    (b) Subject to the limitations in paragraph (a) of this section, 
pneumoconiosis shall be found disabling if it is established that the 
miner has (or had) a respiratory impairment because of pneumoconiosis 
demonstrated on the

[[Page 627]]

basis of a ventilatory study in which the maximum voluntary ventilation 
(MVV) or maximum breathing capacity (MBC), and 1-second forced 
expiratory volume (FEV1), are equal to or less than the 
values specified in the following table or by a medically equivalent 
test:

------------------------------------------------------------------------
                                                   MVV (MBC)
                                                   equal to   FEV1 equal
                 Height (inches)                    or less   to or less
                                                   than L./     than I.
                                                     Min.
------------------------------------------------------------------------
57 or less......................................          52         1.4
58..............................................          53         1.4
59..............................................          54         1.4
60..............................................          55         1.5
61..............................................          56         1.5
62..............................................          57         1.5
63..............................................          58         1.5
64..............................................          59         1.6
65..............................................          60         1.6
66..............................................          61         1.6
67..............................................          62         1.7
68..............................................          63         1.7
69..............................................          64         1.8
70..............................................          65         1.8
71..............................................          66         1.8
72..............................................          67         1.9
73 or more......................................          68         1.9
------------------------------------------------------------------------

    (c) Where the values specified in paragraph (b) of this section are 
not met, pneumoconiosis may nevertheless be found disabling if a 
physical performance test establishes a chronic respiratory or pulmonary 
impairment which is medically the equivalent of the values specified in 
the table in paragraph (b) of this section. Any decision with respect to 
such medical equivalence shall be based on medically accepted clinical 
and laboratory diagnostic techniques including a medical judgment 
furnished by one or more physicians designated by the Administration.
    (d) Where a ventilatory study and/or a physical performance test is 
medically contraindicated, or cannot be obtained, or where evidence 
obtained as a result of such tests does not establish that the miner is 
totally disabled, pneumoconiosis may nevertheless be found totally 
disabling if other relevant evidence (see Sec. 410.414(c)) establishes 
that the miner has (or had) a chronic respiratory or pulmonary 
impairment, the severity of which prevents (or prevented) him not only 
from doing his previous coal mine work, but also, considering his age, 
his education, and work experience, prevents (or prevented) him from 
engaging in comparable and gainful work.
    (e) When used in this section, the term age refers to chronological 
age and the extent to which it affects the miner's capacity to engage in 
comparable and gainful work.
    (f) When used in this section, the term education is used in the 
following sense: Education and training are factors in determining the 
employment capacity of a miner. Lack of formal schooling, however, is 
not necessarily proof that a miner is an un educated person. The kinds 
of responsibilities with which he was charged when working may indicate 
ability to do more than unskilled work even though his formal education 
has been limited.



Sec. 410.428  X-ray, biopsy, and autopsy evidence of pneumoconiosis.

    (a) A finding of the existence of pneumoconiosis as defined in Sec. 
410.110(o)(1) may be made under the provisions of Sec. 410.414(a) if:
    (1) A chest roentgenogram (X-ray) establishes the existence of 
pneumoconiosis classified as Category 1, 2, 3, A, B, or C according to:
    (i) The ILO-U/C International Classification of Radiographs of 
Pneumoconioses, 1971; or
    (ii) The International Classification of Radiographs of the Pneumoco 
nioses of the International Labour Office, Extended Classification 
(1968); or
    (iii) The Classification of the Pneumoconioses of the Union 
Internationale Contra Cancer/Cincinnati (1968).


A chest roentgenogram (X-ray) classified as Category Z under the ILO 
Classification (1958) or Short Form (1968) will be reclassified as 
Category 0 or Category 1 and only the latter accepted as evidence of 
pneumoconiosis. A chest roentgenogram (X-ray) classified under any of 
the foregoing classifications as Category 0, including subcategories o/-
, o/o, or o/1 under the UICC/Cincinnati (1968) Classification, is not 
accepted as evidence of pneumoconiosis; or
    (2) An autopsy shows the existence of pneumoconiosis, or

[[Page 628]]

    (3) A biopsy (other than a needle biopsy) shows the existence of 
pneumoconiosis. Such biopsy would not be expected to be performed for 
the sole purpose of diagnosing pneumoconiosis. Where a biopsy is 
performed for other purposes, however (e.g., in connection with a lung 
resection), the report thereof will be considered in determining the 
existence of pneumoconiosis.
    (b) The roentgenogram shall be of suitable quality for proper 
classification of the pneumoconioses and conform to accepted medical 
standards. It should represent a posterior-anterior view of the chest, 
and such other views as the Administration may require, taken at a 
preferred distance of 6 feet (a minimum of 5 feet is required) between 
the focal point and the film on a 14 x 17 inch or 14 x 14 inch X-ray 
film. Additional films or views should be obtained, if necessary, to 
provide a suitable roentgenogram (X-ray) for proper classification 
purposes.
    (c) A report of autopsy or biopsy shall include a detailed gross 
(macroscopic) and microscopic description of the lungs or visualized 
portion of a lung. If an operative procedure has been performed to 
obtain a portion of a lung, the evidence should include a copy of the 
operative note and the pathology report of the gross and microscopic 
examination of the surgical specimen. If any autopsy has been performed, 
the evidence should include a complete copy of the autopsy report.



Sec. 410.430  Ventilatory studies.

    Spirometric tests to measure ventilatory function must be expressed 
in liters or liters per minute. The reported maximum voluntary 
ventilation (MVV) or maximum breathing capacity (MBC) and 1-second 
forced expiratory volume (FEV1) should represent the largest 
of at least three attempts. The MVV or the MBC reported should represent 
the observed value and should not be calculated from FEV1. 
The three appropriately labeled spirometric tracings, showing distance 
per second on the abscissa and the distance per liter on the ordinate, 
must be incorporated in the file. The paper speed to record the 
FEV1 should be at least 20 millimeters (mm.) per second. The 
height of the individual must be recorded. Studies should not be 
performed during or soon after an acute respiratory illness. If wheezing 
is present on auscultation of the chest, studies must be performed 
following administration of nebulized broncho-dilator unless use of the 
later is contraindicated. A statement shall be made as to the 
individual's ability to understand the directions, and cooperate in 
performing the tests. If the tests cannot be completed the reason for 
such failure should be explained.



Sec. 410.432  Cessation of disability.

    (a) Where it has been determined that a miner is totally disabled 
under Sec. 410.412, such disability shall be found to have ceased in 
the month in which his impairment, as established by medical or other 
relevant evidence, is no longer of such severity as to prevent him from 
engaging in comparable and gainful work.
    (b) Except where a finding is made as specified in paragraph (a) of 
this section which results in an earlier month of cessation, if a miner 
is requested to furnish necessary medical or other evidence or to 
present himself for a necessary medical examination by a date specified 
in the request or a date extended at the miner's request for good cause, 
and the miner fails to comply with such request, the disability may be 
found to have ceased in the month within which the date for compliance 
falls, unless the Administration determines that there is a good cause 
for such failure.
    (c) Before a determination is made that a miner's disability has 
ceased, such miner shall be given notice and an opportunity to present 
evidence including that from medical sources of his own choosing and 
arguments and contention that his disability has not ceased.



Sec. 410.450  Death due to pneumoconiosis, including statutory presumption.

    Benefits are provided under the Act to the eligible survivor of a 
coal miner who was entitled to benefits at the time of his death, or 
whose death is determined to have been due to pneumoconiosis. (For 
benefits to the eligible survivors of a miner who is determined

[[Page 629]]

to have been totally disabled due to pneumoconiosis at the time of his 
death, regardless of the cause of death, see Sec. Sec. 410.410 through 
410.430.) Except as otherwise provided in Sec. Sec. 410.454 through 
410.462, the claimant must submit the evidence necessary to establish 
that the miner's death was due to pneumoconiosis and that the 
pneumoconiosis arose out of employment in the Nation's coal mines.



Sec. 410.454  Determining the existence of pneumoconiosis, including 
statutory presumption--survivor's claim.

    (a) Medical findings. A finding of the existence of pneumoconiosis 
as defined in Sec. 410.110(o)(1) may be made under the provisions of 
Sec. 410.428 by:
    (1) Chest roentgenogram; or
    (2) Biopsy; or
    (3) Autopsy.
    (b) Presumption relating to respiratory or pulmonary impairment--
survivor's claim. (1) Even though the existence of pneumoconiosis is not 
established as provided in paragraph (a) of this section, if other 
evidence demonstrates the existence of a chronic respiratory or 
pulmonary impairment from which the miner was totally disabled (see 
Sec. 410.412) prior to his death, it will be presumed in the absence of 
evidence to the contrary (see paragraph (b)(2) of this section) that the 
death of the miner was due to pneumoconiosis.
    (2) This presumption may be rebutted only if it is established that 
the miner did not have pneumoconiosis, or that his respiratory or 
pulmonary impairment did not arise out of, or in connection with, 
employment in a coal mine.
    (3) The provisions of this paragraph shall apply where a miner was 
employed for 15 or more years in one or more of the Nation's underground 
coal mines; in one or more of the Nation's other coal mines where the 
environmental conditions were substantially similar to those in an 
underground coal mine; or in any combination of both.
    (4) However, where the evidence shows a work history reflecting many 
years of such coal mine employment (although less than 15) as well as a 
severe lung impairment, such evidence may be considered, in the exercise 
of sound judgment, to establish entitlement in such case: Provided, That 
a mere showing of a respiratory or pulmonary impairment shall not be 
sufficient to establish such entitlement.
    (c) Other relevant evidence. Even though the existence of 
pneumoconiosis is not established as provided in paragraph (a) or (b) of 
this section, a finding of death due to pneumoconiosis may be made if 
other relevant evidence establishes the existence of a totally disabling 
chronic respiratory or pulmonary impairment, and that such impairment 
arose out of employment in a coal mine. As used in this paragraph, the 
term other relevant evidence includes medical tests such as blood gas 
studies, electrocardiogram, pulmonary function studies, or physical 
performance tests, and any medical history, evidence submitted by the 
miner's physician, his spouse's affidavits, and in the case of a 
deceased miner, other appropriate affidavits of persons with knowledge 
of the individual's physical condition, and other supportive materials. 
In any event, no claim for benefits under part B of title IV of the Act 
shall be denied solely on the basis of a negative chest roentgenogram 
(X-ray).



Sec. 410.456  Determining origin of pneumoconiosis, including statutory 
presumption--survivor's claim.

    (a) If a miner was employed for 10 years or more in the Nation's 
coal mines, and suffered from pneumoconiosis, it will be presumed, in 
the absence of persuasive evidence to the contrary, that the pneumoco 
niosis arose out of such employment.
    (b) In any other case, the claimant must submit the evidence 
necessary to establish that the pneumoconiosis from which the deceased 
miner suffered, arose out of employment in the Nation's coal mines. (See 
Sec. 410.110 (h), (i), (j), (k), (l), and (m).)



Sec. 410.458  Irrebuttable presumption of death due to 
pneumoconiosis--survivor's claim.

    There is an irrebuttable presumption that the death of a miner was 
due to pneumoconiosis if he suffered from a chronic dust disease of the 
lung which meets the requirements of Sec. 410.418.

[[Page 630]]



Sec. 410.462  Presumption relating to respirable disease.

    (a) Even though the existence of pneumoconiosis as defined in Sec. 
410.110 (o)(1) is not established as provided in Sec. 410.454(a), if a 
deceased miner was employed for 10 years or more in the Nation's coal 
mines and died from a respirable disease, it will be presumed, in the 
absence of evidence to the contrary, that his death was due to 
pneumoconiosis arising out of employment in a coal mine.
    (b) Death will be found due to a respirable disease when death is 
medically ascribed to a chronic dust disease, or to another chronic 
disease of the lung. Death will not be found due to a respirable disease 
where the disease reported does not suggest a reasonable possibility 
that death was due to pneumoconiosis. Where the evidence establishes 
that a deceased miner suffered from pneumoconiosis or a respirable 
disease and death may have been due to multiple causes, death will be 
found due to pneumoconiosis if it is not medically feasible to 
distinguish which disease caused death or specifically how much each 
disease contributed to causing death.



Sec. 410.470  Determination by nongovernmental organization or other 
governmental agency.

    The decision of any nongovernmental organization or any other 
governmental agency that an individual is, or is not, disabled for 
purposes of any contract, schedule, regulation, or law, or that his 
death was or was not due to a particular cause, shall not be 
determinative of the question of whether or not an individual is totally 
disabled due to pneumoconiosis, or was totally disabled due to 
pneumoconiosis. As used in this section, the term other governmental 
agency includes the Administration with respect to a determination or 
decision relating to entitlement to disability insurance benefits under 
section 223 of the Social Security Act, since the requirements for 
entitlement under the latter Act differ from those relating to benefits 
under this part. However, a final determination or decision that an 
individual is disabled for purposes of section 223 of the Social 
Security Act where the cause of such disability is pneumoconiosis, shall 
be binding on the Administration on the issue of disability with respect 
to claims under this part.



Sec. 410.471  Conclusion by physician regarding miner's disability or death.

    The function of deciding whether or not an individual is totally 
disabled due to pneumoconiosis, or was totally disabled due to 
pneumoconiosis at the time of his death, or that his death was due to 
pneumoconiosis, is the responsibility of the Administration. A statement 
by a physician that an individual is, or is not, disabled, permanently 
disabled, totally disabled, totally and permanently disabled, unable to 
work, or a statement of similar import, being a conclusion upon the 
ultimate issue to be decided by the Administration, shall not be 
determinative of the question of whether or not an individual is under a 
disability. However, all statements and other evidence (including 
statements of the miner's physician) shall be considered in adjudicating 
a claim. In considering statements of the miner's physician, appropriate 
account shall be taken of the length of time he treated the miner.



Sec. 410.472  Consultative examinations.

    Upon reasonable notice of the time and place thereof, any individual 
filing a claim alleging to be totally disabled due to pneumoconiosis 
shall present himself for and submit to reasonable physical examinations 
or tests, at the expense of the Administration, by a physician or other 
professional or technical source designated by the Administration or the 
State agency authorized to make determinations as to disability. If any 
such individual fails or refuses to present himself for any examination 
or test, such failure or refusal, unless the Administration determines 
that there is good cause therefor, may be a basis for determining that 
such individual is not totally disabled. Religious or personal scruples 
against medical examination or test shall not excuse an individual from 
presenting himself for a medical examination or test. Any claimant may 
request that such test be performed by a

[[Page 631]]

physician or other professional or technical source of his choice, the 
reasonable expense of which shall be borne by the Administration (see 
Sec. 410.240(h)). However, granting such request does not preclude the 
Administration from requiring that additional or supplemental tests be 
conducted by a physician or other professional or technical source 
designated by the Administration.



Sec. 410.473  Evidence of continuation of disability.

    An individual who has been determined to be totally disabled due to 
pneumoconiosis, upon reasonable notice, shall, if requested to do so 
(e.g., where there is an issue about the validity of the original 
adjudication of disability) present himself for and submit to 
examinations or tests as provided in Sec. 410.472, and shall submit 
medical reports and other evidence necessary for the purposes of 
determining whether such individual continues to be under a disability.



Sec. 410.474  Place and manner of submitting evidence.

    Evidence in support of a claim for benefits based on disability 
shall be filed in the manner and at the place or places prescribed in 
subpart B of this part, or where appropriate, at the office of a State 
agency authorized under agreement with the Commissioner to make 
determinations as to disability under title II of the Social Security 
Act, or with an employee of such State agency authorized to accept such 
evidence at a place other than such office.

[37 FR 20641, Sept. 30, 1972, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.475  Failure to submit evidence.

    An individual shall not be determined to be totally disabled unless 
he furnishes such medical and other evidence thereof as is reasonably 
required to establish his claim. Religious or personal scruples against 
medical examinations, tests, or treatment shall not excuse an individual 
from submitting evidence of disability.



Sec. 410.476  Responsibility to give notice of event which may affect a 
change in disability status.

    An individual who is determined to be totally disabled due to 
pneumoco niosis shall notify the Administration promptly if:
    (a) His respiratory or pulmonary condition improves; or
    (b) He engages in any gainful work or there is an increase in the 
amount of such work or his earnings therefrom.



Sec. 410.490  Interim adjudicatory rules for certain part B claims filed 

by a miner before July 1, 1973, or by a survivor where the miner died 
before January 1, 1974.

    (a) Basis for rules. In enacting the Black Lung Act of 1972, the 
Congress noted that adjudication of the large backlog of claims 
generated by the earlier law could not await the establishment of 
facilities and development of medical tests not presently available to 
evaluate disability due to pneumoconiosis, and that such claims must be 
handled under present circumstances in the light of limited medical 
resources and techniques. Accordingly, the Congress stated its 
expectancy that the Commissioner would adopt such interim evidentiary 
rules and disability evaluation criteria as would permit prompt and 
vigorous processing of the large backlog of claims consistent with the 
language and intent of the 1972 amendments and that such rules and 
criteria would give full consideration to the combined employment 
handicap of disease and age and provide for the adjudication of claims 
on the basis of medical evidence other than physical performance tests 
when it is not feasible to provide such tests. The provisions of this 
section establish such interim evidentiary rules and criteria. They take 
full account of the congressional expectation that in many instances it 
is not feasible to require extensive pulmonary function testing to 
measure the total extent of an individual's breathing impairment, and 
that an impairment in the transfer of oxygen from the lung alveoli to 
cellular level can exist in an individual even though his chest 
roentgenogram (X-ray) or ventilatory function tests are normal.

[[Page 632]]

    (b) Interim presumption. With respect to a miner who files a claim 
for benefits before July 1, 1973, and with respect to a survivor of a 
miner who dies before January 1, 1974, when such survivor timely files a 
claim for benefits, such miner will be presumed to be totally disabled 
due to pneumoconiosis, or to have been totally disabled due to 
pneumoconiosis at the time of his death, or his death will be presumed 
to be due to pneumoconiosis, as the case may be, if:
    (1) One of the following medical requirements is met:
    (i) A chest roentgenogram (X-ray), biopsy, or autopsy establishes 
the existence of pneumoconiosis (see Sec. 410.428); or
    (ii) In the case of a miner employed for at least 15 years in 
underground or comparable coal mine employment, ventilatory studies 
establish the presence of a chronic respiratory or pulmonary disease 
(which meets the requirements for duration in Sec. 410.412(a)(2)) as 
demonstrated by values which are equal to or less than the values 
specified in the following table:

------------------------------------------------------------------------
                                                       Equal to or less
                                                            than--
                                                     -------------------
                                                        FEV1       MVV
------------------------------------------------------------------------
67 or less...............................       2.3        92
68.......................................       2.4        96
69.......................................       2.4        96
70.......................................       2.5       100
71.......................................       2.6       104
72.......................................       2.6       104
73 or more...............................       2.7       108
------------------------------------------------------------------------

    (2) The impairment established in accordance with paragraph (b)(1) 
of this section arose out of coal mine employment (see Sec. Sec. 
410.416 and 410.456).
    (3) With respect to a miner who meets the medical requirements in 
paragraph (b)(1)(ii) of this section, he will be presumed to be totally 
disabled due to pneumoconiosis arising out of coal mine employment, or 
to have been totally disabled at the time of his death due to 
pneumoconiosis arising out of such employment, or his death will be 
presumed to be due to pneumoconiosis arising out of such employment, as 
the case may be, if he has at least 10 years of the requisite coal mine 
employment.
    (c) Rebuttal of presumption. The presumption in paragraph (b) of 
this section may be rebutted if:
    (1) There is evidence that the individual is, in fact, doing his 
usual coal mine work or comparable and gainful work (see Sec. 
410.412(a)(1)), or
    (2) Other evidence, including physical performance tests (where such 
tests are available and their administration is not contraindicated), 
establish that the individual is able to do his usual coal mine work or 
comparable and gainful work (see Sec. 410.412(a)(1)).
    (d) Application of presumption on readjudication. Any claim 
initially adjudicated under the rules in this section will, if the claim 
is for any reason thereafter readjudicated, be readjudicated under the 
same rules.
    (e) Failure of miner to qualify under presumption in paragraph (b) 
of this section. Where it is not established on the basis of the 
presumption in paragraph (b) of this section that a miner is (or was) 
totally disabled due to pneumoconiosis, or was totally disabled due to 
pneumoconiosis at the time of his death, or that his death was due to 
pneumoconiosis, the claimant may nevertheless establish the requisite 
disability or cause of death of the miner under the rules set out in 
Sec. Sec. 410.412 to 410.462.

[37 FR 20641, Sept. 30, 1972, as amended at 62 FR 38453, July 18, 1997]

                    Appendix to Subpart D of Part 410

    A miner with pneumoconiosis who meets or met one of the following 
sets of medical specifications, may be found to be totally disabled due 
to pneumoconiosis at the pertinent time, in the absence of evidence 
rebutting such finding:
    (1) Arterial oxygen tension at rest (sitting or standing) or during 
exercise and simultaneously determined arterial PCO2 equal 
to, or less than, the values specified in the following table:

------------------------------------------------------------------------
                                                            Arterial PO2
                                                             equal to or
                  Arterial PCO2 (mm. Hg)                      less than
                                                              (mm. Hg)
------------------------------------------------------------------------
30 or below...............................................            65
31........................................................            64
32........................................................            63
33........................................................            62
34........................................................            61
35........................................................            60
36........................................................            59
37........................................................            58

[[Page 633]]

 
38........................................................            57
39........................................................            56
40 or above...............................................            55
------------------------------------------------------------------------

or

    (2) Cor pulmonale with right-sided congestive failure as evidenced 
by peripheral edema and liver enlargement, with:
    (A) Right ventricular enlargement or outflow tract prominence on X-
ray or fluoroscopy; or
    (B) ECG showing QRS duration less than 0.12 second and R of 5 mm. or 
more in V1 and R/S of 1.0 or more in V1 and 
transition zone (decreasing R/S) left of V1;
or

    (3) Congestive heart failure with signs of vascular congestion such 
as hepatomegaly or peripheral or pulmonary edema, with:
    (A) Cardio-thoracic ratio of 55 percent or greater, or equivalent 
enlargement of the transverse diameter of the heart, as shown on 
teleroentgenogram (6-foot film); or
    (B) Extension of the cardiac shadow (left ventricle) to the 
vertebral column on lateral chest roentgenogram and total of S in 
V1 or V2 and R in V5 or V6 
of 35 mm. or more on ECG.



                      Subpart E_Payment of Benefits

    Authority: Sec. 702(a)(5) of the Social Security Act (42 U.S.C. 
902(a)(5)), secs. 411(a), 412 (a) and (b), 413(b), 426(a), and 508, 83 
Stat. 793; 30 U.S.C. 921(a), 922 (a) and (b), 923(b), 936(a), and 957; 
sec. 410.565 also issued under sec. 3, 80 Stat. 309, 31 U.S.C. 952, 
unless otherwise noted.

    Source: 36 FR 23758, Dec. 14, 1971, unless otherwise noted.



Sec. 410.501  Payment periods.

    Benefits are paid to beneficiaries during entitlement for payment 
periods consisting of full calendar months.



Sec. 410.505  Payees.

    (a) General. Benefits may be paid as appropriate, to a beneficiary 
(see Sec. 410.110(r)), to a qualified dependent (see Sec. 410.511), or 
to a representative payee on behalf of a beneficiary or dependent (see 
Sec. 410.581ff). Also where an amount is payable under part B of title 
IV of the Act for any month to two or more individuals who are members 
of the same family, the Social Security Administration may, in its 
discretion, certify to any two or more of such individuals joint payment 
of the total benefits payable to them for such month.
    (b) Joint payee dies before cashing check. Where a check has been 
issued for joint payment to an individual and spouse residing in the 
same household and one of them dies before the check is cashed, the 
Social Security Administration may give the survivor permission to cash 
the check. The permission is carried out by stamping the face of the 
check. An official of the Social Security Administration or the Treasury 
Disbursing Office must sign and name the survivor as the payee of the 
check (see 31 CFR 360.8). Where the uncashed check is for benefits for a 
month after the month of death, authority to cash the check will not be 
given to the surviving payee unless the funds are needed to meet the 
ordinary and necessary living expenses of the surviving payee.
    (c) Adjustment or recovery of overpayment. Where a check 
representing payment of benefits to an individual and spouse residing in 
the same household is negotiated by the surviving payee in accordance 
with the authorization in paragraph (b) of this section and where the 
amount of the check exceeds the amount to which the surviving payee is 
entitled, appropriate adjustment or recovery with respect to such excess 
amount shall be made in accordance with section 204(a) of the Act (see 
subpart F of part 404).

[43 FR 34780, Aug. 7, 1978]



Sec. 410.510  Computation of benefits.

    (a) Basic rate. The benefit amount of each beneficiary entitled to a 
benefit for a month is determined, in the first instance, by computing 
the ``basic rate.'' The basic rate is equal to 50 percent of the minimum 
monthly payment to which a totally disabled Federal employee in Grade 
GS-2 would be entitled for such month under the Federal Employees' 
Compensation Act, chapter 81, title 5 U.S.C. That rate for a month is 
determined by:
    (1) Ascertaining the lowest annual rate of pay (``step 1'') for 
Grade GS-2 of the General Schedule applicable to such month (see 5 
U.S.C. 5332);

[[Page 634]]

    (2) Ascertaining the monthly rate thereof by dividing the amount 
determined in paragraph (a)(1) of this section by 12;
    (3) Ascertaining the minimum monthly payment under the Federal 
Employees' Compensation Act by multiplying the amount determined in 
paragraph (a)(2) of this section by 0.75 (that is, by 75 percent) (see 5 
U.S.C. 8112); and
    (4) Ascertaining the basic rate under the Act by multiplying the 
amount determined in paragraph (a)(3) of this section by 0.50 (that is, 
by 50 percent).
    (b) Basic benefit. When a miner or widow is entitled to benefits for 
a month for which he or she has no dependents who qualify under subpart 
C of this part, and when a surviving child of a miner or widow, or a 
parent, brother, or sister of a miner, is entitled to benefits for a 
month for which he or she is the only beneficiary entitled to benefits, 
the amount of benefits to which such beneficiary is entitled is equal to 
the basic rate as computed in accordance with this section (raised, if 
not a multiple of 10 cents, to the next higher multiple of 10 cents (see 
paragraph (d) of this section)). This amount is referred to as the basic 
benefit.
    (c) Augmented benefit. (1) When a miner or widow is entitled to 
benefits for a month for which he or she has one or more dependents who 
qualify under subpart C of this part, the amount of benefits to which 
such miner or widow is entitled is increased. This increase is referred 
to as an augmentation.
    (2) Any request to the Administration that the benefits of a miner 
or widow be augmented in accordance with this paragraph shall be in 
writing on such form and in accordance with such instructions as are 
prescribed by the Administration. Such request shall be filed with the 
Administration in accordance with those provisions of subpart B of this 
part dealing with the filing of claims as if such request were a claim 
for benefits, and as if such dependent were the beneficiary referred to 
therein. (See Sec. 410.220(f).) Ordinarily, such request is made as 
part of the claim of the miner or widow for benefits.
    (3) The benefits of a miner or widow are augmented to take account 
of a particular dependent beginning with the first month in which such 
dependent satisfies the conditions set forth in subpart C of this part, 
and continues to be augmented through the month before the month in 
which such dependent ceases to satisfy the conditions set forth in 
subpart C of this part, except in the case of a child who qualifies as a 
dependent because he is a student (see Sec. 410.370(c)). In the latter 
case such benefits continue to be augmented through the month before the 
first month during no part of which he qualifies as a student.
    (4) The basic rate is augmented by 50 percent for one such 
dependent, 75 percent for two such dependents, and 100 percent for three 
or more such dependents (see paragraph (d) of this section).
    (d) Benefit rates for miners and widows.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           October    October    October    January
                                                                    Beginning  Beginning   1974 to    1973 to    1972 to    1972 to
                                                                     October    October   September  September  September  September    1971     1969-70
                                                                       1976       1975       1975       1974       1973       1972
--------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Miner or widow with no dependents.............................    $205.40    $196.80    $187.40    $177.60    $169.80    $161.50   $153.10   $144.50
(2) Miner or widow with one dependent.............................     308.10     295.20     281.10     266.40     254.70     242.20    229.60    216.70
(3) Miner or widow with two dependents............................     359.50     344.40     328.00     310.80     297.10     282.60    267.90    252.80
(4) Miner or widow with three or more dependents..................     410.80     393.50     374.80     355.20     339.50     322.90    306.10    288.90
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (e) Survivor benefit. (1) As used in this section, survivor means a 
surviving child of a miner or widow, or, for months beginning May 1972, 
a surviving parent, brother, or sister of a miner, who establishes 
entitlement to benefits under the provisions of subpart B of this part.
    (2) When one survivor is entitled to benefits for a month, his 
benefit is the amount specified in paragraph (d)(1) of this section; 
when two survivors are so entitled, the benefit of each is one-half

[[Page 635]]

the amount specified in paragraph (d)(2) of this section; when three 
survivors are so entitled, the benefit of each is one-third the amount 
specified in paragraph (d)(3) of this section; when four survivors are 
so entitled, the benefit of each is one-quarter of the amount specified 
in paragraph (d)(4) of this section; and when more than four survivors 
are so entitled, the benefit of each is determined by dividing the 
amount specified in paragraph (d)(4) of this section by the number of 
such survivors.
    (f) Computation and rounding. (1) Any computation prescribed by this 
section is made to the third decimal place.
    (2) Monthly benefits are payable in multiples of 10 cents. 
Therefore, a monthly payment of amounts derived under paragraph (c)(4) 
or (e)(2) of this section which is not a multiple of 10 cents is 
increased to the next higher multiple of 10 cents.
    (3) Since a fraction of a cent is not a multiple of 10 cents, such 
an amount which contains a fraction in the third decimal place is raised 
to the next higher multiple of 10 cents.
    (g) Eligibility based on the coal mine employment of more than one 
miner. Where an individual, for any month, is entitled (and/or qualifies 
as a dependent for purposes of augmentation of benefits) based on the 
disability or death due to pneumoconiosis arising out of the coal mine 
employment of more than one miner, the benefit payable to or on behalf 
of such individual shall be at a rate equal to the highest rate of 
benefits for which entitlement is established by reason of eligibility 
as a beneficiary, or by reason of his or her qualification as a 
dependent for augmentation of benefit purposes.

[37 FR 20646, Sept. 30, 1972, as amended at 39 FR 12098, Apr. 3, 1974; 
39 FR 41977, Dec. 4, 1974; 40 FR 56887, Dec. 5, 1975; 41 FR 53981, Dec. 
10, 1976]



Sec. 410.511  Certification to dependent of augmentation portion of benefit.

    (a) If the benefit of a miner or of a widow is augmented because of 
one or more dependents (see Sec. 410.510(c)), and it appears to the 
Administration that the best interest of such dependent would be served 
thereby, the Administration may certify payment of the amount of such 
augmentation (to the extent attributable to such dependents) (see 
Sec. Sec. 410.510(c) and 410.536) to such dependent directly or to a 
representing payee for the use and benefit of such dependent (see Sec. 
410.581ff).
    (b) Any request to the Administration to certify separate payment of 
the amount of an augmentation in accordance with paragraph (a) of this 
section shall be in writing on such form and in accordance with such 
instructions as are prescribed by the Administration, and shall be filed 
with the Administration in accordance with those provisions of subpart B 
of this part dealing with the filing of claims as if such requests were 
a claim for benefits (see Sec. 410.220(f)).
    (c) In determining whether it is in the best interest of such 
dependent to certify separate payment of the amount of the augmentation 
in benefits attributable to him, the Administration shall apply the 
standards pertaining to representative payment in Sec. Sec. 410.581 
through 410.590, and the instructions issued pursuant thereto.
    (d) When the Administration determines (see Sec. 410.610(m)) that 
the amount of a miner's benefit attributable to the miner's wife or 
child should be certified for separate payment to a person other than 
such miner, or that the amount of a widow's benefit attributable to such 
widow's child should be certified for separate payment to a person other 
than the widow, and the miner or widow disagrees with such determination 
and alleges that separate certification is not in the best interest of 
such dependent, the Administration shall reconsider that determination 
(see Sec. Sec. 410.622 and 410.623).
    (e) Any payment made under this section, if otherwise valid under 
the Act, is a complete settlement and satisfaction of all claims, 
rights, and interests in and to such payment.

[37 FR 20647, Sept. 30, 1972]



Sec. 410.515  Modification of benefit amounts; general.

    Under certain conditions, the amount of monthly benefits as computed 
in Sec. 410.510 must be modified to determine the amount actually to be 
paid to a beneficiary. A modification of the

[[Page 636]]

amount of a monthly benefit is required in the following instances:
    (a) Reduction. A reduction from a beneficiary's monthly benefit may 
be required because of:
    (1) In the case of benefits to a miner, parent, brother, or sister, 
the excess earnings from wages and from net earnings from self-
employment (see Sec. 410.530) of such miner, parent, brother, or 
sister, respectively; or
    (2) Failure to report earnings from work in employment and self-
employment within the prescribed period of time (see Sec. 410.530); or
    (3) The receipt by a beneficiary of payments made because of the 
disability of the miner due to pneumoconiosis under State laws relating 
to workmen's compensation (including compensation for occupational 
disease), unemployment compensation, or disability insurance (see Sec. 
410.520).
    (4) The fact that a claim for benefits from an additional 
beneficiary is filed, or that such a claim is effective for a month 
prior to the month of filing (see Sec. 410.535), or a dependent 
qualifies under subpart C of this part for an augmentation portion of 
the benefit of a miner or widow for a month for which another dependent 
has previously qualified for an augmentation (see Sec. 410.536).
    (b) Adjustment. An adjustment in a beneficiary's monthly benefit may 
be required because an overpayment or underpayment has been made to such 
beneficiary (see Sec. Sec. 410.560, 410.570, and 410.580).
    (c) Nonpayment. No benefits under this part are payable to the 
residents of a State which reduces its payments made to beneficiaries 
pursuant to certain State laws (see Sec. 410.550).
    (d) Suspension. A suspension of a beneficiary's monthly benefits may 
be required when the Administration has information indicating that 
reductions on account of the miner's excess earnings (based on criteria 
in section 203(b) of the Social Security Act, 42 U.S.C. 403(b)) may 
reasonably be expected.
    (e) ``Rounding'' of benefit amounts. Monthly benefit rates are 
payable in multiples of 10 cents. Any monthly benefit rate which, after 
all applicable computations, augmentations, and/or reductions is not a 
multiple of 10 cents, is increased to the next higher multiple of 10 
cents. Since a fraction of a cent is not a multiple of 10 cents a 
benefit rate which contains such a fraction in the third decimal is 
raised to the next higher multiple of 10 cents.

[36 FR 23758, Dec. 14, 1971, as amended at 37 FR 20647, Sept. 30, 1972; 
43 FR 34781, Aug. 7, 1978]



Sec. 410.520  Reductions; receipt of State benefit.

    (a) As used in this section, the term State benefit means a payment 
to a beneficiary made because of the disability of the miner due to 
pneumoconiosis under State laws relating to workmen's compensation 
(including compensation for occupational disease), unemployment 
compensation, or disability insurance.
    (b) Benefit payments to a beneficiary for a month are reduced (but 
not below zero) by an amount equal to any payments of State benefits 
received by such beneficiary for such month.
    (c) Where a State benefit is paid periodically but not monthly, or 
in a lump sum as a commutation of or a substitute for periodic benefits, 
the reduction under this section is made at such time or times and in 
such amounts as the Administration determines will approximate as nearly 
as practicable the reduction required under paragraph (b) of this 
section. In making such a determination, a weekly State benefit is 
multiplied by 4\1/3\ and a biweekly benefit is multiplied by 2\1/6\, to 
ascertain the monthly equivalent for reduction purposes.
    (d) Amounts paid or incurred, or to be incurred, by the individual 
for medical, legal, or related expenses in connection with his claim for 
State benefits (defined in paragraph (a) of this section) or the injury 
or occupational disease, if any, on which such award of State benefits 
(or settlement agreement) is based, are excluded in computing the 
reduction under paragraph (b) of this section, to the extent that they 
are consonant with State law. Such medical, legal, or related expenses 
may be evidenced by the State benefit award, compromise agreement, or 
court order in the State benefit proceedings, or by such other evidence 
as the Administration may require. Such other evidence may consist of:

[[Page 637]]

    (1) A detailed statement by the individual's attorney, physician, or 
the employer's insurance carrier; or
    (2) Bills, receipts, or canceled checks; or
    (3) Other clear and convincing evidence indicating the amount of 
such expenses; or
    (4) Any combination of the foregoing evidence from which the amount 
of such expenses may be determinable.

Any expenses not established by evidence required by the Administration 
will not be excluded.

[36 FR 23758, Dec. 14, 1971, as amended at 37 FR 20647, Sept. 30, 1972; 
43 FR 34781, Aug. 7, 1978]



Sec. 410.530  Reductions; excess earnings.

    Benefit payments to a miner, parent, brother, or sister are reduced 
by an amount equal to the deductions which would be made with respect to 
excess earnings under the provisions of section 203 (b), (f), (g), (h), 
(j), and (l) of the Social Security Act (42 U.S.C. 403 (b), (f), (g), 
(h), (j), and (l)), as if such benefit payments were benefits payable 
under section 202 of the Social Security Act (42 U.S.C. 402). (See 
Sec. Sec. 404.428 through 404.456 of this chapter.)

[37 FR 20647, Sept. 30, 1972]



Sec. 410.535  Reductions; effect of an additional claim for benefits.

    Beginning with the month in which a person (other than a miner) 
files a claim and becomes entitled to benefits, the benefits of other 
persons entitled to benefits with respect to the same miner, are 
adjusted downward, if necessary, so that no more than the permissible 
amount of benefits (the maximum amount for the number of beneficiaries 
involved) will be paid. Certain claims may also be effective 
retroactively for benefits for months before the month of filing (see 
Sec. 410.226). For any month before the month of filing, however, 
otherwise correct benefits that have been previously certified by the 
Administration for payment to other persons with respect to the same 
miner may not be changed. Rather, the benefits of the person filing a 
claim in the later month is reduced for each month of the retroactive 
period to the extent that may be necessary so that the earlier and 
otherwise correct payment to some other person is not made erroneous. 
That is, for each month of the retroactive period, the amount payable to 
the person filing the later claim is the difference, if any, between (a) 
the total amount of benefits actually certified for payment to other 
persons for that month and (b) the permissible amount of benefits (the 
maximum amount for the number of beneficiaries involved) payable for 
that month to all persons, including the person filing later.

[37 FR 20647, Sept. 30, 1972]



Sec. 410.536  Reductions; effect of augmentation of benefits based on 
subsequent qualification of individual.

    (a) Ordinarily, a written request that the benefits of a miner or 
widow be augmented on account of a qualified dependent (see Sec. 
410.510(c)) is made as part of the claim for benefits filed by such 
miner or widow. However, it may also be made thereafter.
    (b) In the latter case, beginning with the month in which such a 
request is filed on account of a particular dependent and in which such 
dependent qualifies for augmentation purposes under subpart C of this 
part, the augmented benefits attributable to other qualified dependents 
(with respect to the same miner or widow), if any, are adjusted 
downward, if necessary, so that the permissible amount of augmented 
benefits (the maximum amount for the number of dependents involved) will 
not be exceeded.
    (c) Where, based on the entitlement to benefits of a miner or widow, 
a dependent would have qualified for augmentation purposes for a prior 
month of such miner's or widow's entitlement had such request been filed 
in such prior month, such request is effective for such prior month. For 
any month before the month of filing such request, however, otherwise 
correct benefits previously certified by the Administration may not be 
changed. Rather, the amount of the augmented benefit attributable to the 
dependent filing such request in the later month is reduced for each 
month of the retroactive period to the extent that may be necessary, so 
that no earlier payment for

[[Page 638]]

some other dependent is made erroneous. This means that for each month 
of the retroactive period, the amount payable to the dependent filing 
the later augmentation request is the difference, if any, between (1) 
the total amount of augmented benefits certified for payment for other 
dependents for that month, and (2) the permissible amount of augmented 
benefits (the maximum amount for the number of dependents involved) 
payable for that month for all dependents, including the dependent 
filing later.

[37 FR 20647, Sept. 30, 1972]



Sec. 410.540  Reductions; more than one reduction event.

    If a reduction for receipt of State benefits (see Sec. 410.520) and 
a reduction on account of excess earnings (see Sec. 410.530) are 
chargeable to the same month, the benefit for such month is first 
reduced (but not below zero) by the amount of the State benefits (as 
determined in accordance with Sec. 410.520(c)), and the remainder of 
the benefit for such month, if any, is then reduced (but not below zero) 
by the amount of excess earnings chargeable to such month.



Sec. 410.550  Nonpayment of benefits to residents of certain States.

    No benefit shall be paid under this part to the residents of any 
State which, after December 30, 1969, reduces the benefits payable to 
persons eligible to receive benefits under this part, under its State 
laws which are applicable to its general work force with regard to 
workmen's compensation (including compensation for occupational 
disease), unemployment compensation, or disability insurance benefits 
which are funded in whole or in part out of employer contributions.



Sec. 410.560  Overpayments.

    (a) General. As used in this subpart the term overpayment includes a 
payment where no amount is payable under part B of title IV of the Act; 
a payment in excess of the amount due under part B or part C of title IV 
of the Act; a payment resulting from the failure to reduce benefits 
under section 412(b) of the Act (see Sec. Sec. 410.520 and 410.530); a 
payment to a resident of a State whose residents are not eligible for 
payment (see Sec. 410.550); a payment of past due benefits to an 
individual where such payment had not been reduced by the amount of 
attorney's fees payable directly to an attorney (see Sec. 410.686(d)); 
and a payment resulting from the failure to terminate benefits of an 
individual no longer entitled thereto. As used in this section, the term 
beneficiary includes a qualified dependent for augmentation purposes and 
the term benefit includes the amount of augmented benefits attributable 
to a particular dependent (see Sec. 410.510(c)).
    (b) Overpaid beneficiary is living. If the beneficiary to whom an 
overpayment was made is, at the time of a determination of such 
overpayment, entitled to benefits, or at any time thereafter becomes so 
entitled, no benefit for any month is payable to such individual, except 
as provided in paragraph (c) of this section, until an amount equal to 
the amount of the overpayment has been withheld or refunded.
    (c) Adjustment by withholding part of a monthly benefit. Adjustment 
under paragraph (b) of this section may be effected by withholding a 
part of the monthly benefit payable to a beneficiary where it is 
determined that:
    (1) Withholding the full amount each month would deprive the 
beneficiary of income required for ordinary and necessary living 
expenses;
    (2) The overpayment was not caused by the beneficiary's 
intentionally false statement or representation, or willful concealment 
of, or deliberate failure to furnish, material information; and
    (3) Recoupment can be effected in an amount of not less than $10 a 
month and at a rate which would not extend the period of adjustment 
beyond 3 years after the initiation of the adjustment action.
    (d) Overpaid beneficiary dies before adjustment. If an overpaid 
beneficiary dies before adjustment is completed under the provisions of 
paragraph (b) of this section, the overpayment may be recovered 
through--
    (1) Repayment by the estate of the deceased overpaid beneficiary;
    (2) Withholding benefit amounts due the estate of the deceased 
overpaid beneficiary;

[[Page 639]]

    (3) Withholding benefit amounts due any other individual because of 
the black lung disease of the miner; or
    (4) Any combination of the methods described in this paragraph.

(Sec. 204, Social Security Act, as amended, and sec. 413, Federal Coal 
Mine Health and Safety Act of 1969, as amended; 49 Stat. 624, as amended 
and 83 Stat. 793 (42 U.S.C. 404 and 30 U.S.C. 921, 923))

[36 FR 23758, Dec. 14, 1971, as amended at 46 FR 39588, Aug. 4, 1981; 47 
FR 43674, Oct. 4, 1982]



Sec. 410.561  Notice of right to waiver consideration.

    Whenever an initial determination is made that more than the correct 
amount of payment has been made, and we seek adjustment or recovery of 
the overpayment, the individual from whom we are seeking adjustment or 
recovery is immediately notified. The notice includes:
    (a) The overpayment amount and how and when it occurred;
    (b) A request for full, immediate refund, unless the overpayment can 
be withheld from the next month's benefit;
    (c) The proposed adjustment of benefits if refund is not received 
within 30 days after the date of the notice and adjustment of benefits 
is available;
    (d) An explanation of the availability of a different rate of 
withholding when full withholding is proposed, installment payments when 
refund is requested and adjustment is not currently available, and/or 
cross-program recovery when refund is requested and the individual is 
receiving another type of payment from SSA (language about cross-program 
recovery is not included in notices sent to individuals in jurisdictions 
where this recovery option is not available);
    (e) An explanation of the right to request waiver of adjustment or 
recovery and the automatic scheduling of a file review and pre-
recoupment hearing (commonly referred to as a personal conference) if a 
request for waiver cannot be approved after initial paper review;
    (f) An explanation of the right to request reconsideration of the 
fact and/or amount of the overpayment determination;
    (g) Instructions about the availability of forms for requesting 
reconsideration and waiver;
    (h) An explanation that if the individual does not request waiver or 
reconsideration within 30 days of the date of the overpayment notice, 
adjustment or recovery of the overpayment will begin;
    (i) A statement that an SSA office will help the individual complete 
and submit forms for appeal or waiver requests; and
    (j) A statement that the individual receiving the notice should 
notify SSA promptly if reconsideration, waiver, a lesser rate of 
withholding, repayment by installments or cross-program adjustment is 
wanted.

[61 FR 56132, Oct. 31, 1996]



Sec. 410.561a  When waiver may be applied and how to process the request.

    (a) There shall be no adjustment or recovery in any case where an 
overpayment under part B of title IV of the Act has been made to an 
individual who is without fault if adjustment or recovery would either 
defeat the purpose of title IV of the Act, or be against equity and good 
conscience.
    (b) If an individual requests waiver of adjustment or recovery of an 
overpayment made under part B of title IV within 30 days after receiving 
a notice of overpayment that contains the information in Sec. 410.561, 
no adjustment or recovery action will be taken until after the initial 
waiver determination is made. If the individual requests waiver more 
than 30 days after receiving the notice of overpayment, SSA will stop 
any adjustment or recovery actions until after the initial waiver 
determination is made.
    (c) When waiver is requested, the individual gives SSA information 
to support his/her contention that he/she is without fault in causing 
the overpayment (see Sec. 410.561b), and that adjustment or recovery 
would either defeat the purposes of this subpart (see Sec. 410.561c) or 
be against equity and good conscience (see Sec. 410.561d). That 
information, along with supporting documentation, is reviewed to 
determine if waiver can be approved. If waiver cannot be approved after 
this review, the

[[Page 640]]

individual is notified in writing and given the dates, times and place 
of the file review and personal conference; the procedure for reviewing 
the claims file prior to the personal conference; the procedure for 
seeking a change in the scheduled dates, times, and/or place; and all 
other information necessary to fully inform the individual about the 
personal conference. The file review is always scheduled at least 5 days 
before the personal conference.
    (d) At the file review, the individual and the individual's 
representative have the right to review the claims file and applicable 
law and regulations with the decisionmaker or another SSA representative 
who is prepared to answer questions. We will provide copies of material 
related to the overpayment and/or waiver from the claims file or 
pertinent sections of the law or regulations that are requested by the 
individual or the individual's representative.
    (e) At the personal conference, the individual is given the 
opportunity to:
    (1) Appear personally, testify, cross-examine any witnesses, and 
make arguments;
    (2) Be represented by an attorney or other representative (see Sec. 
410.684), although the individual must be present at the conference; and
    (3) Submit documents for consideration by the decisionmaker.
    (f) At the personal conference, the decisionmaker:
    (1) Tells the individual that the decisionmaker was not previously 
involved in the issue under review, that the waiver decision is solely 
the decisionmaker's, and that the waiver decision is based only on the 
evidence or information presented or reviewed at the conference;
    (2) Ascertains the role and identity of everyone present;
    (3) Indicates whether or not the individual reviewed the claims 
file;
    (4) Explains the provisions of law and regulations applicable to the 
issue;
    (5) Briefly summarizes the evidence already in file which will be 
considered;
    (6) Ascertains from the individual whether the information presented 
is correct and whether he/she fully understands it;
    (7) Allows the individual and the individual's representative, if 
any, to present the individual's case;
    (8) Secures updated financial information and verification, if 
necessary;
    (9) Allows each witness to present information and allows the 
individual and the individual's representative to question each witness;
    (10) Ascertains whether there is any further evidence to be 
presented;
    (11) Reminds the individual of any evidence promised by the 
individual which has not been presented;
    (12) Lets the individual and the individual's representative, if 
any, present any proposed summary or closing statement;
    (13) Explains that a decision will be made and the individual will 
be notified in writing; and
    (14) Explains repayment options and further appeal rights in the 
event the decision is adverse to the individual.
    (g) SSA issues a written decision to the individual (and his/her 
representative, if any) specifying the findings of fact and conclusions 
in support of the decision to approve or deny waiver and advising of the 
individual's right to appeal the decision. If waiver is denied, 
adjustment or recovery of the overpayment begins even if the individual 
appeals.
    (h) If it appears that the waiver cannot be approved, and the 
individual declines a personal conference or fails to appear for a 
second scheduled personal conference, a decision regarding the waiver 
will be made based on the written evidence of record. Reconsideration is 
then the next step in the appeals process (but see Sec. 410.630(c)).

[61 FR 56132, Oct. 31, 1996]



Sec. 410.561b  Fault.

    Fault as used in without fault (see Sec. 410.561a) applies only to 
the individual. Although the Administration may have been at fault in 
making the overpayment, that fact does not relieve the overpaid 
individual or any other individual from whom the Administration seeks to 
recover the overpayment from liability for repayment if such individual 
is not without fault. In determining whether an individual is at fault, 
the Administration will consider all pertinent circumstances, including

[[Page 641]]

his age, intelligence, education, and physical and mental condition. 
What constitutes fault (except for reduction overpayments (see Sec. 
410.561e)) on the part of the overpaid individual or on the part of any 
other individual from whom the Administration seeks to recover the 
overpayment depends upon whether the facts show that the incorrect 
payment to the individual resulted from:
    (a) An incorrect statement made by the individual which he knew or 
should have known to be incorrect; or
    (b) Failure to furnish information which he knew or should have 
known to be material; or
    (c) With respect to the overpaid individual only, acceptance of a 
payment which he either knew or could have been expected to know was 
incorrect.

[37 FR 20648, Sept. 30, 1972]



Sec. 410.561c  Defeat the purpose of title IV.

    (a) General. Defeat the purpose of title IV for purposes of this 
subpart, means defeat the purpose of benefits under this title, i.e., to 
deprive a person of income required for ordinary and necessary living 
expenses. This depends upon whether the person has an income or 
financial resources sufficient for more than ordinary and necessary 
needs, or is dependent upon all of his current benefits for such needs. 
An individual's ordinary and necessary expenses include:
    (1) Fixed living expenses, such as food and clothing, rent, mortgage 
payments, utilities, maintenance, insurance (e.g., life, accident, and 
health insurance including premiums for supplementary medical insurance 
benefits under title XVIII of the Social Security Act), taxes, 
installment payments, etc.;
    (2) Medical, hospitalization, and other similar expenses;
    (3) Expenses for the support of others for whom the individual is 
legally responsible; and
    (4) Other miscellaneous expenses which may reasonably be considered 
as part of the individual's standard of living.
    (b) When adjustment or recovery will defeat the purpose of title IV. 
Adjustment or recovery will defeat the purposes of title IV in (but is 
not limited to) situations where the person from whom recovery is sought 
needs substantially all of his current income (including black lung 
benefits) to meet current ordinary and necessary living expenses.

[37 FR 20648, Sept. 30, 1972]



Sec. 410.561d  Against equity and good conscience; defined.

    Against equity and good conscience means that adjustment or recovery 
of an incorrect payment will be considered inequitable if an individual, 
because of a notice that such payment would be made or by reason of the 
incorrect payment, relinquished a valuable right (example 1); or changed 
his position for the worse (example 2). In reaching such a 
determination, the individual's financial circumstances are irrelevant.
    Example 1. After being awarded benefits, an individual resigned from 
employment on the assumption he would receive regular monthly benefit 
payments. It was discovered 3 years later than (due to Administration 
error) his award was erroneous because he did not have pneumoconiosis. 
Due to his age, the individual was unable to get his job back, and could 
not get any other employment. In this situation, recovery or adjustment 
of the incorrect payments would be against equity and good conscience 
because the individual gave up a valuable right.
    Example 2. A widow, having been awarded benefits for herself and 
daughter, entered her daughter in college because the monthly benefits 
made this possible. After the widow and her daughter received payments 
for almost a year, the deceased worker was found not to have had 
pneumoconiosis and all payments to the widow and child were incorrect. 
The widow has no other funds with which to pay the daughter's college 
expenses. Having entered the daughter in college and thus incurred a 
financial obligation toward which the benefits had been applied, she was 
in a worse position financially than if she and her daughter had never 
been entitled to benefits. In this situation, the recovery of the 
incorrect payments would be inequitable.

[37 FR 20648, Sept. 30, 1972]



Sec. 410.561e  When an individual is ``without fault'' in a 
reduction-overpayment.

    Except as provided in Sec. 410.561g, or elsewhere in this subpart, 
an individual will be considered without fault in accepting a payment 
which is incorrect

[[Page 642]]

because he failed to report an event relating to excess earnings 
specified in section 203(b) of the Social Security Act, or which is 
incorrect because a reduction in his benefits equal to the amount of a 
deduction required under section 203(b) of the Social Security Act is 
necessary (see Sec. 410.530), if it is shown that such failure to 
report or such acceptance of the overpayment was due to one of the 
following circumstances:
    (a) Reasonable belief that only his net cash earnings (``take-home'' 
pay) are included in determining the annual earnings limitation or the 
monthly earnings limitation under section 203(f) of the Social Security 
Act (see Sec. 410.530).
    (b) Reliance upon erroneous information from an official source 
within the Social Security Administration (or other governmental agency 
which the individual had reasonable cause to believe was connected with 
the administration of benefits under part B of title IV of the Act) with 
respect to the interpretation of a pertinent provision of the Act or 
regulations pertaining thereto. For example, this circumstance could 
occur where the individual is misinformed by such source as to the 
interpretation of a provision in the Act or regulations relating to 
reductions.
    (c) The beneficiary's death caused the earnings limit applicable to 
his earnings for purposes of reduction and the charging of excess 
earnings to be reduced below $1,680 for a taxable year.
    (d) Reasonable belief that in determining, for reduction purposes, 
his earnings from employment and/or net earnings from self-employment in 
the taxable year in which he became entitled to benefits, earnings in 
such year prior to such entitlement would be excluded. However, this 
provision does not apply if his earnings in the taxable year, beginning 
with the first month of entitlement, exceeded the earnings limitation 
amount for such year.
    (e) Unawareness that his earnings were in excess of the earnings 
limitation applicable to the imposition of reductions and the charging 
of excess earnings or that he should have reported such excess where 
these earnings were greater than anticipated because of:
    (1) Retroactive increases in pay, including backpay awards;
    (2) Work at a higher pay rate than realized;
    (3) Failure of the employer of an individual unable to keep accurate 
rec ords to restrict the amount of earnings or the number of hours 
worked in accordance with a previous agreement with such individual;
    (4) The occurrence of five Saturdays (or other workdays, e.g., five 
Mondays) in a month and the earnings for the services on the fifth 
Saturday or other workday caused the reductions.
    (f) The continued issuance of benefit checks to him after he sent 
notice to the Administration of the event which caused or should have 
caused the reductions provided that such continued issuance of checks 
led him to believe in good faith that he was entitled to checks 
subsequently received.
    (g) Lack of knowledge that bonuses, vacation pay, or similar 
payments, constitute earnings for purposes of the annual earnings 
limitation.
    (h) Reasonable belief that earnings in excess of the earnings 
limitation amount for the taxable year would subject him to reductions 
only for months beginning with the first month in which his earnings 
exceeded the earnings limitation amount. However, this provision is 
applicable only if he reported timely to the Administration during the 
taxable year when his earnings reached the applicable limitation amount 
for such year.
    (i) Reasonable belief that earnings from employment and/or net 
earnings from self-employment after the attainment of age 72 in the 
taxable year in which he attained age 72 would not cause reductions with 
respect to benefits payable for months in that taxable year prior to the 
attainment of age 72.
    (j) Reasonable belief by an individual entitled to benefits that 
earnings from employment and/or net earnings from self-employment after 
the termination of entitlement in the taxable year in which the 
termination event occurred would not cause reductions with respect to 
benefits payable for months in that taxable year prior to the month in 
which the termination event occurred.

[[Page 643]]

    (k) Failure to understand the deduction provisions of the Social 
Security Act or the occurrence of unusual or unavoidable circumstances 
the nature of which clearly shows that the individual was unaware of a 
violation of such reduction provisions. However, these provisions do not 
apply unless he made a bona fide attempt to restrict his annual earnings 
or otherwise comply with the reduction provisions of the Act.

[37 FR 20648, Sept. 30, 1972]



Sec. 410.561f  When an individual is ``without fault'' in an entitlement 
overpayment.

    A benefit payment under part B of title IV of the Act to or on 
behalf of an individual who fails to meet one or more requirements for 
entitlement to such payment or the payment exceeds the amount to which 
he is entitled, constitutes an entitlement overpayment. Where an 
individual or other person on behalf of an individual accepts such 
overpayment because of reliance on erroneous information from an 
official source within the Administration (or other governmental agency 
which the individual had reasonable cause to believe was connected with 
the administration of benefits under part B of title IV of the Act) with 
respect to the interpretation of a pertinent provision of the Act or 
regulations pertaining thereto, such individual, in accepting such 
overpayment, will be deemed to be without fault.

[37 FR 20649, Sept. 30, 1972]



Sec. 410.561g  When an individual is at ``fault'' in a reduction-overpayment.

    (a) Degree of care. An individual will not be without fault if the 
Administration has evidence in its possession which shows either a lack 
of good faith or failure to exercise a high degree of care in 
determining whether circumstances which may cause reductions from his 
benefits should be brought to the attention of the Administration by an 
immediate report or by return of a benefit check. The high degree of 
care expected of an individual may vary with the complexity of the 
circumstances giving rise to the overpayment and the capacity of the 
particular payee to realize that he is being overpaid. Accordingly, 
variances in the personal circumstances and situations of individual 
payees are to be considered in determining whether the necessary degree 
of care has been exercised by an individual to warrant a finding that he 
was without fault in accepting a ``reduction-overpayment.''
    (b) Subsequent reduction-overpayments. An individual will not be 
without fault where, after having been exonerated for a ``reduction-
overpayment'' and after having been advised of the correct 
interpretation of the reduction provision, he incurs another 
``reduction-overpayment'' under the same circumstances as the first 
overpayment.

[37 FR 20649, Sept. 30, 1972]



Sec. 410.561h  When adjustment or recovery of an overpayment will be 
waived.

    (a) Adjustment or recovery deemed ``against equity and good 
conscience.'' In the situations described in Sec. Sec. 410.561e (a), 
(b), and (c), and 410.561f, adjustment or recovery will be waived since 
it will be deemed such adjustment or recovery is ``against equity and 
good conscience.'' Adjustment or recovery will also be deemed ``against 
equity and good conscience'' in the situation described in Sec. 
410.561e(d), but only as to a month in which the individual's earnings 
from wages do not exceed the total monthly benefits affected for that 
month.
    (b) Adjustment or recovery considered to ``defeat the purpose of 
title IV'' or be ``against equity and good conscience'' under certain 
circumstances. In the situation described in Sec. 410.561e(d) (except 
in the case of an individual whose monthly earnings from wages in 
employment do not exceed the total monthly benefits affected for a 
particular month), and in the situations described in Sec. 410.561e (e) 
through (k), adjustment or recovery shall be waived only where the 
evidence establishes that adjustment or recovery would work a financial 
hardship (see Sec. 410.561c) or would otherwise be inequitable (see 
Sec. 410.561d).

[37 FR 20649, Sept. 30, 1972]

[[Page 644]]



Sec. 410.563  Liability of a certifying officer.

    No certifying or disbursing officer shall be held liable for any 
amount certified or paid by him to any individual:
    (a) Where adjustment or recovery of such amount is waived under 
section 204(b) of the Social Security Act; or
    (b) Where adjustment under section 204(a) of the Social Security Act 
is not completed prior to the death of all individuals against whose 
benefits or lump sums reductions are authorized; or
    (c) Where a claim for recovery of an overpayment is compromised or 
collection or adjustment action is suspended or terminated pursuant to 
the Federal Claims Collection Act of 1966 (31 U.S.C. 951-953) (see Sec. 
410.565).

[37 FR 20649, Sept. 30, 1972]



Sec. 410.565  Collection and compromise of claims for overpayment.

    (a) General effect of the Federal Claims Collection Act of 1966. 
Claims by the Administration against an individual for recovery of 
overpayments under part B of title IV of the Act, not exceeding the sum 
of $20,000, exclusive of interest, may be compromised, or collection 
suspended or terminated where such individual or his estate does not 
have the present or prospective ability to pay the full amount of the 
claim within a reasonable time (see paragraph (c) of this section) or 
the cost of collection is likely to exceed the amount of recovery (see 
paragraph (d) of this section) except as provided under paragraph (b) of 
this section.
    (b) When there will be no compromise, suspension or termination of 
collection of a claim for overpayment--(1) Overpaid individual alive. In 
any case where the overpaid individual is alive, a claim for overpayment 
will not be compromised, nor will there be suspension or termination of 
collection of the claim by the Administration if there is an indication 
of fraud, the filing of a false claim, or misrepresentation on the part 
of such individual or on the part of any other party having an interest 
in the claim.
    (2) Overpaid individual deceased. In any case where the overpaid 
individual is deceased (i) a claim for overpayment in excess of $5,000 
will not be compromised, nor will there be suspension or termination of 
collection of the claim by the Administration if there is an indication 
of fraud: The filing of a false claim, or misrepresentation on the part 
of such deceased individual, and (ii) a claim for overpayment regardless 
of the amount will not be compromised, nor will there be suspension or 
termination of collection of the claim by the Administration if there is 
an indication that any person other than the deceased overpaid 
individual had a part in the fraudulent action which resulted in the 
overpayment.
    (c) Inability to pay claim for recovery of overpayment. In 
determining whether the overpaid individual is unable to pay a claim for 
recovery of an overpayment under part B of title IV of the Act, the 
Administration will consider such individual's age, health, present and 
potential income (including inheritance prospects), assets (e.g., real 
property, savings account), possible concealment or improper transfer of 
assets, and assets or income of such individual which may be available 
in enforced collection proceedings. The Administration will also 
consider exemptions available to such individual under the pertinent 
State or Federal law in such proceedings. In the event the overpaid 
individual is deceased, the Administration will consider the available 
assets of the estate, taking into account any liens or superior claims 
against the estate.
    (d) Cost of collection or litigative probabilities. Where the 
probable costs of recovering an overpayment under part B of title IV of 
the Act would not justify enforced collection proceedings for the full 
amount of the claim or there is doubt concerning the Administration's 
ability to establish its claim as well as the time which it will take to 
effect such collection, a compromise or settlement for less than the 
full amount will be considered.
    (e) Amount of compromise. The amount to be accepted in compromise of 
a claim for overpayment under part B of title IV of the Act shall bear a 
reasonable relationship to the amount which can be recovered by enforced 
collection proceedings giving due consideration to the exemptions 
available to the

[[Page 645]]

overpaid individual under State or Federal law and the time which such 
collection will take.
    (f) Payment. Payment of the amount which the Administration has 
agreed to accept as a compromise in full settlement of a claim for 
recovery of an overpayment under part B of title IV of the Act must be 
made within the time and in the manner set by the Administration. A 
claim for such recovery of the overpayment shall not be considered 
compromised or settled until the full payment of the compromised amount 
has been made within the time and manner set by the Administration. 
Failure of the overpaid individual or his estate to make such payment as 
provided shall result in reinstatement of the full amount of the 
overpayment less any amounts paid prior to such default.



Sec. 410.570  Underpayments.

    (a) General. As used in this subpart, the term underpayment includes 
a payment in an amount less than the amount of the benefit due for such 
month, and nonpayment where some amount of such benefits are payable.
    (b) Underpaid individual is living. If an individual to whom an 
underpayment is due is living, the amount of such underpayment will be 
paid to such individual either in a single payment (if he is not 
entitled to a monthly benefit) or by increasing one or more monthly 
benefit payments to which such individual is or becomes entitled.
    (c) Underpaid individual dies before adjustment of underpayment. If 
an individual to whom an underpayment is due dies before receiving 
payment or negotiating a check or checks representing such payment, such 
underpayment will be distributed to the living person (or persons) in 
the highest order of priority as follows:
    (1) The deceased individual's surviving spouse who was either:
    (i) Living in the same household (as defined in Sec. 410.393) with 
the deceased individual at the time of such individual's death, or
    (ii) In the case of a deceased miner, entitled for the month of 
death to widow's black lung benefits.
    (2) In the case of a deceased miner or widow, his or her child 
entitled to benefits as the surviving child of such miner or widow for 
the month in which such miner or widow died (if more than one such 
child, in equal shares to each such child). As used in this 
subparagraph, ``entitled to benefits as a surviving child'' refers to 
the benefit described in Sec. 410.212, and not to the payment described 
in Sec. 410.510(c).
    (3) In the case of a deceased miner, his parent entitled to benefits 
as the surviving parent of such miner for the month in which such miner 
died (if more than one such parent, in equal shares to each such 
parent).
    (4) The surviving spouse of the deceased individual who does not 
qualify under paragraph (c)(1) of this section.
    (5) The child or children of the deceased individual who do not 
qualify under paragraph (c)(2) of this section (if more than one such 
child, in equal shares to each such child).
    (6) The parent or parents of the deceased individual who do not 
qualify under paragraph (c)(3) of this section (if more than one such 
parent, in equal shares to each such parent).
    (7) The legal representative of the estate of the deceased 
individual as defined in paragraph (e) of this section.
    (d) Person qualified to receive underpayment dies before receiving 
payment. In the event that a person who is otherwise qualified to 
receive an underpayment under the provisions of paragraph (c) of this 
section, dies before receiving payment or before negotiating the check 
or checks representing such payment, his share of the underpayment will 
be divided among the remaining living person(s) in the same order of 
priority. In the event that there is (are) no other such person(s), the 
underpayment will be paid to the living person(s) in the next lower 
order of priority under paragraph (c) of this section.
    (e) Definition of legal representative. The term legal 
representative, for the purpose of qualifying to receive an 
underpayment, generally means the executor or the administrator of the 
estate of the deceased beneficiary. However, it may also include an 
individual, institution, or organization acting on behalf of an 
unadministered estate:

[[Page 646]]

Provided, The person can give the Administration good acquittance (as 
defined in paragraph (f) of this section). The following persons may 
qualify as legal representative for purposes of this section, provided 
they can give the Administration good acquittance:
    (1) A person who qualifies under a State's ``small estate'' statute; 
or
    (2) A person resident in a foreign country who, under the laws and 
customs of that country, has the right to receive assets of the estate; 
or
    (3) A public administrator; or
    (4) A person who has the authority, under applicable law, to collect 
the assets of the estate of the deceased beneficiary.
    (f) Definition of good acquittance. A person is considered to give 
the Admini- stration good acquittance when payment to that person will 
release the Administration from further liability for such payment.

[36 FR 23758, Dec. 14, 1971, as amended at 37 FR 20650, Sept. 30, 1972]



Sec. 410.580  Relation to provisions for reductions or increases.

    The amount of an overpayment or underpayment is the difference 
between the amount actually paid to the beneficiary and the amount of 
the payment to which the beneficiary was actually entitled. Such 
overpayment or underpayment, for example, would be equal to the 
difference between the amount of a benefit in fact paid to the 
beneficiary and the amount of such benefit as reduced under section 
412(b) of the Act, as increased pursuant to section 412(a)(1), or as 
augmented under section 412(a)(3), of the Act. In effecting an 
adjustment with respect to an overpayment, no amount can be considered 
as having been withheld from a particular benefit which is in excess of 
the amount of such benefit as so reduced. Overpayments and underpayments 
simultaneously outstanding on account of the same beneficiary are first 
adjusted against one another before adjustment pursuant to the other 
provisions of this subpart.



Sec. 410.581  Payments on behalf of an individual.

    When it appears to the Administration that the interest of a 
beneficiary entitled to a payment under part B of title IV of the Act 
would be served thereby, certification of payment may be made by the 
Administration, regardless of the legal competency or incompetency of 
the beneficiary entitled thereto, either for direct payment to such 
beneficiary, or for his use and benefit to a relative or some other 
person as the ``representative payee'' of the beneficiary. When it 
appears that an individual who is receiving benefit payments may be 
incapable of managing such payments in his own interest, the 
Administration shall, if such individual is age 18 or over and has not 
been adjudged legally incompetent, continue payments to such individual 
pending a determination as to his capacity to manage benefit payments 
and the selection of a representative payee. As used in Sec. Sec. 
410.581 through 410.590, the term beneficiary includes the dependent of 
a miner or widow who could qualify for certification of separate payment 
of an augmentation portion of such miner's or widow's benefits (see 
Sec. Sec. 410.510(c) and 410.511).

[37 FR 20650, Sept. 30, 1972]



Sec. 410.582  Submission of evidence by representative payee.

    Before any amount shall be certified for payment to any relative or 
other person as representative payee for and on behalf of a beneficiary, 
such relative or other person shall submit to the Administration such 
evidence as it may require of his relationship to, or his responsibility 
for the care of, the beneficiary on whose behalf payment is to be made, 
or of his authority to receive such payment. The Administration may, at 
any time thereafter, require evidence of the continued existence of such 
relationship, responsibility, or authority. If any such relative or 
other person fails to submit the required evidence within a reasonable 
period of time after it is requested, no further payments shall be 
certified to him on behalf of the beneficiary unless for good cause 
shown, the default of such relative or other person is excused by the 
Administration, and the required evidence is thereafter submitted.

[37 FR 20650, Sept. 30, 1972]

[[Page 647]]



Sec. 410.583  Responsibility of representative payee.

    A relative or other person to whom certification of payment is made 
on behalf of a beneficiary as representative payee shall, subject to 
review by the Administration and to such requirements as it may from 
time to time prescribe, apply the payments certified to him on behalf of 
a beneficiary only for the use and benefit of such beneficiary in the 
manner and for the purposes determined by him to be in the beneficiary's 
best interest.

[37 FR 20650, Sept. 30, 1972]



Sec. 410.584  Use of benefits for current maintenance.

    Payments certified to a relative or other person on behalf of a 
beneficiary shall be considered as having been applied for the use and 
benefit of the beneficiary when they are used for the beneficiary's 
current maintenance. Where a beneficiary is receiving care in an 
institution (see Sec. 410.586), current maintenance shall include the 
customary charges made by the institution to individuals it provides 
with care and services like those it provides the beneficiary and 
charges made for current and foreseeable needs of the beneficiary which 
are not met by the institution.

[37 FR 20650, Sept. 30, 1972]



Sec. 410.585  Conservation and investment of payments.

    Payments certified to a relative or other person on behalf of a 
beneficiary which are not needed for the current maintenance of the 
beneficiary except as they may be used pursuant to Sec. 410.587, shall 
be conserved or invested on the beneficiary's behalf. Preferred 
investments are U.S. Savings Bonds, but such funds may also be invested 
in accordance with the rules applicable to investment of trust estates 
by trustees. For example, surplus funds may be deposited in an interest- 
or dividend-bearing account in a bank or trust company, in a savings and 
loan association, or in a credit union, if the account is either 
federally insured or is otherwise insured in accordance with State law 
requirements. Surplus funds deposited in an interest- or dividend-
bearing account in a bank or trust company, in a savings and loan 
association, or in a credit union, must be in a form of account which 
clearly shows that the representative payee has only a fiduciary, and 
not a personal, interest in the funds. The preferred forms of such 
accounts are as follows:
------------------------ (Name of beneficiary) by ----------------------
--, (Name of representative payee) representative payee; or ------------
------------ (Name of beneficiary) by ------------------------, (Name of 
representative payee) trustee.
    U.S. Savings Bonds purchased with surplus funds by a representative 
payee for a minor should be registered as follows:
------------------------ (Name of beneficiary) -------------------- 
(Social Security No.), a minor, for whom -------------------- (Name of 
payee) is representative payee for black lung benefits.
    U.S. Savings Bonds purchased with surplus funds by a representative 
payee for an incapacitated adult beneficiary should be registered as 
follows:
------------------------, (Name of beneficiary) -------------------- 
(Social Security No.), for whom ------------------ (Name of payee) is 
representative payee for black lung benefits.

A representative payee who is the legally appointed guardian or 
fiduciary of the beneficiary may also register U.S. Savings Bonds 
purchased with funds from the payment of benefits under part B of title 
IV in accordance with applicable regulations of the U.S. Treasury 
Department (31 CFR 315.5 through 315.8). Any other approved investment 
of the beneficiary's funds made by the representative payee must clearly 
show that the payee holds the property in trust for the beneficiary.

[41 FR 17892, Apr. 29, 1976]



Sec. 410.586  Use of benefits for beneficiary in institution.

    Where a beneficiary is confined in a Federal, State, or private 
institution because of mental or physical incapacity, the relative or 
other person to whom payments are certified on behalf of the beneficiary 
shall give highest priority to expenditure of the payments for the 
current maintenance needs of the beneficiary, including the customary 
charges made by the institution (see Sec. 410.584) in providing care 
and maintenance. It is considered in the best interest of the 
beneficiary for

[[Page 648]]

the relative or other person to whom payments are certified on the 
beneficiary's behalf to allocate expenditure of the payments so 
certified in a manner which will facilitate the beneficiary's earliest 
possible rehabilitation or release from the institution or which 
otherwise will help him live as normal a life as practicable in the 
institutional environment.

[37 FR 20651, Sept. 30, 1972]



Sec. 410.587  Support of legally dependent spouse, child, or parent.

    If current maintenance needs of a beneficiary are being reasonably 
met, a relative or other person to whom payments are certified as 
representative payee on behalf of the beneficiary may use part of the 
payment so certified for the support of the legally dependent spouse, a 
legally dependent child, or a legally dependent parent of the 
beneficiary.

[37 FR 20651, Sept. 30, 1972]



Sec. 410.588  Claims of creditors.

    A relative or other person to whom payments under part B of title IV 
of the Act are certified as representative payee on behalf of a 
beneficiary may not be required to use such payments to discharge an 
indebtedness of the beneficiary which was incurred before the first 
month for which payments are certified to a relative or other person on 
the beneficiary's behalf. In no case, however, may such payee use such 
payments to discharge such indebtedness of the beneficiary unless the 
current and reasonably foreseeable future needs of the beneficiary are 
otherwise provided for.

[37 FR 20651, Sept. 30, 1972]



Sec. 410.589  Accountability.

    A relative or other person to whom payments are certified as 
representative payee on behalf of a beneficiary shall submit a written 
report in such form and at such times as the Administration may require, 
accounting for the payments certified to him on behalf of the 
beneficiary unless such payee is a court-appointed fiduciary and, as 
such, is required to make an annual accounting to the court, in which 
case a true copy of each such account filed with the court may be 
submitted in lieu of the accounting form prescribed by the 
Administration. If any such relative or other person fails to submit the 
required accounting within a reasonable period of time after it is 
requested, no further payments shall be certified to him on behalf of 
the beneficiary unless for good cause shown, the default of such 
relative or other person is excused by the Administration, and the 
required accounting is thereafter submitted.

[37 FR 20651, Sept. 30, 1972]



Sec. 410.590  Transfer of accumulated benefit payments.

    A representative payee who has conserved or invested funds from 
payments under part B of title IV of the Act certified to him on behalf 
of a beneficiary shall, upon direction of the Administration, transfer 
any such funds (including interest earned from investment of such funds) 
to a successor payee appointed by the Administration, or, at the option 
of the Administration, shall transfer such funds, including interest, to 
the Administration for recertification to a successor payee or to the 
beneficiary.

[37 FR 20651, Sept. 30, 1972]



Sec. 410.591  Eligibility for services and supplies under part C of title 
IV of the act.

    The Social Security Administration will notify each miner entitled 
to benefits on the basis of a claim filed under part B of the title IV 
of the Act of his or her possible eligibility for medical services and 
supplies under part C of title IV of the Act. Application for medical 
benefits under part C will not jeopardize a person's eligibility for 
part B benefits, regardless of the outcome of the claim for part C 
benefits. The DOL regulations covering the time period in which the 
miner must file with DOL for these benefits are published at 20 CFR part 
725.

(Sec. 411, Federal Coal Mine Health and Safety Act of 1969, as amended; 
85 Stat. 793, 30 U.S.C. 921)

[43 FR 34781, Aug. 7, 1978]

[[Page 649]]



     Subpart F_Determinations of Disability, Other Determinations, 
  Administrative Review, Finality of Decisions, and Representation of 
                                 Parties

    Authority: Sec. 702(a)(5) of the Social Security Act (42 U.S.C. 
902(a)(5)); 30 U.S.C. 923(b), 936(a), 956, and 957.

    Source: 36 FR 23760, Dec. 14, 1971, unless otherwise noted.



Sec. 410.601  Determinations of disability.

    (a) By State agencies. In any State which has entered into an 
agreement with the Commissioner to provide determinations as to whether 
a miner is under a total disability (as defined in Sec. 410.412) due to 
pneumoconiosis (as defined in Sec. 410.110(n)). Determinations as to 
the date total disability began, and as to the date total disability 
ceases, shall be made by the State agency or agencies designated in such 
agreement on behalf of the Commissioner for all individuals in such 
State, or for such class or classes of individuals in the State as may 
be designated in the agreement.
    (b) By the Administration. Determinations as to whether a miner is 
under a total disability (as defined in Sec. 410.412) due to 
pneumoconiosis (as defined in Sec. 410.110(n)), as to the date the 
total disability began, and as to the date the total disability ceases, 
shall be made by the Administration on behalf of the Commissioner. The 
Administration shall make such determinations for individuals in any 
State which has not entered into an agreement to make such 
determinations, for any class or classes of individuals to which such an 
agreement is not applicable, or for any individuals outside the United 
States. In addition, all other determinations as to entitlement to and 
the amounts of benefits shall be made by the Administration on behalf of 
the Commissioner.
    (c) Review by Administration of State agency determinations. The 
Administration may review a determination made by a State agency that a 
miner is under a total disability and, as a result of such review, may 
determine that such individual is not under a total disability, or that 
the total disability began on a date later than that determined by the 
State agency, or that the total disability ceased on a date earlier than 
that determined by the State agency.
    (d) Initial determinations as to entitlement or termination of 
entitlement. After any determination as to whether an individual is 
under a total disability or has ceased to be under a total disability, 
the Administration shall make an initial determination (see Sec. 
410.610) with respect to entitlement to benefits.
    (e) Simultaneous claims. The adjudication of any claim under this 
part shall not be delayed for the adjudication of any other benefit 
claim by the same individual pending before the Administration.

[36 FR 23760, Dec. 14, 1971, as amended at 37 FR 20651, Sept. 30, 1972; 
62 FR 38453, July 18, 1997; 65 FR 16814, Mar. 30, 2000]



Sec. 410.610  Administrative actions that are initial determinations.

    (a) Entitlement to benefits. The Administration, subject to the 
limitations of a Federal-State agreement pursuant to section 413(b) of 
the Act (see Sec. 410.601 (a)), shall make findings, setting forth the 
pertinent facts and conclusions, and an initial determination with 
respect to entitlement to benefits of any individual who has filed a 
claim for benefits. The determination shall include the amount, if any, 
to which the individual is entitled and, where applicable, such amount 
as reduced (see Sec. 410.515), augmented or otherwise increased (see 
Sec. 410.510).
    (b) Modification of the amount of benefits. The Administration 
shall, under the circumstances hereafter stated in this paragraph, make 
findings, setting forth the pertinent facts and conclusions, and an 
initial determination as to whether:
    (1) There should be a reduction under section 412(b) (or section 
412(a)(5)) of the Act, and if a reduction is to be made, the amount 
thereof (see Sec. 410.515(a)); or
    (2) There has been an overpayment (see Sec. 410.560) or an 
underpayment (see Sec. 410.570) of benefits and, if so, the amount 
thereof, and the adjustment to be made by increasing or decreasing the 
monthly benefits to which a beneficiary is entitled (see Sec. 
410.515(b)), and,in the case of an underpayment

[[Page 650]]

due a deceased beneficiary, the person to whom the underpayment should 
be paid.
    (c) Termination of benefits. The Administration, subject to the 
limitations of a Federal-State agreement pursuant to section 413(b) of 
the Act (see Sec. 410.601 (a)), shall, with respect to a beneficiary 
who has been determined to be entitled to benefits, make findings, 
setting forth the pertinent facts and conclusions, and an initial 
determination as to whether, under the applicable provisions of part B 
of title IV of the Act, such beneficiary's entitlement to benefits has 
ended and, if so, the effective date of such termination.
    (d) Reinstatement of benefits. The Administration shall, with 
respect to a beneficiary whose benefits have been determined to have 
ended under paragraph (c) of this section, make findings, setting forth 
the pertinent facts and conclusions, and an initial determination as to 
whether the individual is entitled to a reinstatement of benefits thus 
ended, and if so, the effective date of such reinstatement. Such 
findings of fact and determination shall be made whenever a party makes 
a written request for reinstatement or whenever evidence is received 
which justifies such reinstatement (see for example Sec. Sec. 410.671 
through 410.673).
    (e) Augmentation of benefits. The Administration shall make 
findings, setting forth the pertinent facts and conclusions, and an 
initial determination, as to whether a beneficiary has or continues to 
have dependents who, at the appropriate time, qualify under the 
relationship, dependency, and other applicable requirements of subpart C 
of this part, for purposes of entitling such beneficiary to an 
augmentation of his benefits pursuant to Sec. 410.510(b).
    (f) Other increases in benefit amounts. The Administration shall 
make findings, setting forth the pertinent facts and conclusions, and an 
initial determination, as to whether a beneficiary is entitled to an 
increase in benefits (other than an augmentation) pursuant to section 
412(a) of the Act.
    (g) Applicant's failure to submit evidence. If an individual fails 
to submit in support of his claim for benefits or request for 
augmentation or other increase of benefits, such evidence as may be 
requested by the Administration pursuant to Sec. 410.240 or any 
provision of the Act, the Administration may make an initial 
determination disallowing the individual's claim or his request for such 
augmentation or other increase. The initial determination, however, 
shall specify the conditions of entitlement to benefits or to an 
augmentation or other increase of benefits that the individual has 
failed to satisfy because of his failure to submit the requested 
evidence (see Sec. 410.240).
    (h) Failure to file or prosecute claim under applicable State 
workmen's compensation law. The Administration shall make findings, 
setting forth the pertinent facts and conclusions, and an initial 
determination, as to whether an individual has failed to file or to 
prosecute a claim under the applicable State workmen's compensation law 
pursuant to Sec. 410.219.
    (i) Withdrawal of claim or cancellation of withdrawal request. When 
a request for withdrawal of a claim, or a request for cancellation of a 
``request for withdrawal'' of a claim, is denied by the Administration, 
the Administration shall make findings setting forth the pertinent facts 
and conclusions and an initial determination of denial.
    (j) Request for reimbursement for medical expenses--amount in 
controversy $100 or more. The Administration shall, with respect to a 
claimant who requests reimbursement for medical expenses (see Sec. 
410.240(h)), make findings, setting forth the pertinent facts and 
conclusions and, where the amount in controversy is $100 or more, an 
initial determination as to whether and the extent to which the expenses 
for which the reimbursement request is made are medical expenses 
reasonably incurred by the claimant in establishing his claim. (Also see 
Sec. 410.615(e).)
    (k) Waiver of adjustment or recovery of monthly benefits. The 
Administration shall make findings, setting forth the pertinent facts 
and conclusions, and an initial determination as to whether there shall 
be no adjustment or recovery where an overpayment with respect to an 
individual has been made (see Sec. 410.561).
    (l) Need for representative payment. The Social Security 
Administration

[[Page 651]]

shall make findings, setting forth the pertinent facts and conclusions 
and an initial determination in accordance with section 205(j) of the 
Social Security Act (42 U.S.C. 405(j)), as to:
    (1) Whether representative payment shall serve the interests of an 
individual by reason of his incapacity to manage his benefit payments 
(see Sec. 410.581) except that findings as to incapacity with respect 
to an individual under age 18 or with respect to an individual adjudged 
legally incompetent shall not be considered initial determinations; and,
    (2) Who shall be appointed or continued as representative payee on 
behalf of a beneficiary under this part.
    (m) Separate certification of payment to dependent. Where the 
benefit of a miner or of a widow is increased (``augmented'') because he 
or she has a qualified dependent (see Sec. 410.510(c)), and it appears 
to the Administration that it would be in the best interest of any such 
dependent to have the amount of the augmentation (to the extent 
attributable to such dependent) certified separately to such dependent 
(see Sec. 410.511(a)) or to a representative payee on his behalf (see 
Sec. 410.581), the Administration shall make findings, setting forth 
the pertinent facts and conclusions, and an initial determination, as to 
whether separate payment of an augmented amount should be certified (see 
Sec. 410.511(a)).
    (n) Support of parent, brother, or sister. The Administration shall 
make findings, setting forth the pertinent facts and conclusions, and an 
initial determination, as to whether a parent, brother, or sister, meets 
the requirements for support from the miner set forth in the pertinent 
provisions of section 412(a)(5) of the Act and whether proof of support 
was submitted to the Administration within the time limits set forth in 
the Act or under the provisions described in Sec. 410.214(d).

[36 FR 23760, Dec. 14, 1971, as amended at 37 FR 20651, Sept. 30, 1972; 
41 FR 30114, July 22, 1976]



Sec. 410.615  Administrative actions that are not initial determinations.

    Administrative actions which shall not be considered initial 
determinations, but which may receive administrative review include, but 
are not limited to, the following:
    (a) The suspension of benefits pursuant to the criteria in section 
203(h)(3) of the Social Security Act (42 U.S.C. 403 (h)(3)), pending 
investigation and determination of any factual issue as to the 
applicability of a reduction under section 412(b) of the Act equivalent 
to the amount of a deduction because of excess earnings under section 
203(b) of the Social Security Act (42 U.S.C. 403(b)) (see Sec. Sec. 
410.515(d) and 410.530).
    (b) The denial of an application to be made representative payee for 
and on behalf of a beneficiary under part B of title IV of the Act (see 
Sec. 410.581).
    (c) The certification of any two or more individuals of the same 
family for joint payment of the total benefits payable to such 
individuals (see Sec. 410.505).
    (d) The withholding by the Administration in any month, for the 
purpose of recovering an overpayment, of less than the full amount of 
benefits otherwise payable in that month (see Sec. 410.560(c)).
    (e) The authorization approving or regulating the amount of the fee 
that may be charged or received by a representative for services before 
the Administration (see Sec. 410.686b(e)).
    (f) The disqualification or suspension of an individual from acting 
as a representative in a proceeding before the Administration (see Sec. 
410.688).
    (g) The determination by the Administration under the authority of 
the Federal Claims Collection Act (31 U.S.C. 951-953) not to compromise 
a claim for overpayment under part B of title IV of the Act, or not to 
suspend or terminate collection of such a claim, or the determination to 
compromise such a claim, including the compromise amount and the time 
and manner of payment (see Sec. 410.565).
    (h) Where the amount in controversy is less than $100, the denial of 
a request for reimbursement of medical expenses (see Sec. 410.240(h)) 
which are claimed to have been incurred by the claimant in establishing 
his claim for benefits, or the approval of such request for 
reimbursement in an amount less than the amount requested. (Also see 
Sec. 410.610(j).)

[[Page 652]]

    (i) The determination by the Social Security Administration that an 
individual is not qualified for use of the expedited appeals process, as 
provided in Sec. 410.629a.
    (j) The denial by the Administration of a request to readjudicate a 
claim and apply an Acquiescence Ruling.

[37 FR 20651, Sept. 30, 1972, as amended at 40 FR 53387, Nov. 18, 1975; 
41 FR 30114, July 22, 1976; 55 FR 1019, Jan. 11, 1990]



Sec. 410.620  Notice of initial determination.

    Written notice of an initial determination shall be mailed to the 
party to the determination at his last known address, except that no 
such notice shall be required in the case of a determination that a 
party's entitlement to benefits has ended because of such party's death 
(see Sec. 410.610(c)). If the initial determination disallows, in whole 
or in part, the claim of a party, or if the initial determination is to 
the effect that a party's entitlement to benefits has ended, or that a 
reduction or adjustment is to be made in benefits, the notice of the 
determination sent to the party shall state the specific reasons for the 
determination. Such notice shall also inform the party of the right to 
reconsideration (see Sec. 410.623). Where more than the correct amount 
of payment has been made, see Sec. 410.561.

[37 FR 20652, Sept. 30, 1972]



Sec. 410.621  Effect of initial determination.

    The initial determination shall be final and binding upon the party 
or parties to such determination unless it is reconsidered in accordance 
with Sec. Sec. 410.623 through 410.629, or it is revised in accordance 
with Sec. 410.671.



Sec. 410.622  Reconsideration and hearing.

    Any party who is dissatisfied with an initial determination may 
request that the Administration reconsider such determination, as 
provided in Sec. 410.623. If a request for reconsideration is filed, 
such action shall not constitute a waiver of the right to a hearing 
subsequent to such reconsideration if the party requesting such 
reconsideration is dissatisfied with the determination of the 
Administration made on such reconsideration; and a request for a hearing 
may thereafter be filed, as is provided in Sec. 410.630.



Sec. 410.623  Reconsideration; right to reconsideration.

    (a) We shall reconsider an initial determination if a written 
request for reconsideration is filed, as provided in Sec. 410.624, by 
or for the party to the initial determination (see Sec. 410.610). We 
shall also reconsider an initial determination if a written request for 
reconsideration is filed, as provided in Sec. 410.624, by an individual 
as a widow, child, parent, brother, sister, or representative of a 
decedent's estate, who makes a showing in writing that his or her rights 
with respect to benefits may be prejudiced by such determination.
    (b) Reconsideration is the first step in the administrative review 
process that we provide for an individual dissatisfied with the initial 
determination, except that we provide the opportunity for a hearing 
before an administrative law judge as the first step for those 
situations described in Sec. Sec. 410.630 (b) and (c), where an 
individual appeals an initial determination denying waiver of adjustment 
or recovery of an overpayment (see Sec. 410.561a).

[61 FR 56133, Oct. 31, 1996]



Sec. 410.624  Time and place of filing request.

    The request for reconsideration shall be made in writing and filed 
at an office of the Social Security Administration within 60 days after 
the date of receipt of notice of the initial determination, unless such 
time is extended as specified in Sec. 410.668. For purposes of this 
section, the date of receipt of notice of the initial determination 
shall be presumed to be 5 days after the date of such notice, unless 
there is a reasonable showing to the contrary.

[41 FR 47918, Nov. 1, 1976]



Sec. 410.625  Parties to the reconsideration.

    The parties to the reconsideration shall be the person who was the 
party to the initial determination (see Sec. 410.610) and any other 
person referred to in Sec. 410.623 upon whose request the initial 
determination is reconsidered.

[[Page 653]]



Sec. 410.626  Notice of reconsideration.

    If the request for reconsideration is filed by a person other than 
the party to the initial determination, the Administration shall, before 
such reconsideration, mail a written notice to such party at his last 
known address, informing him that the initial determination is being 
reconsidered. In addition, the Administration shall give such party a 
reasonable opportunity to present such evidence and contentions as to 
fact or law as he may desire relative to the determination.



Sec. 410.627  Reconsidered determination.

    When a request for reconsideration has been filed, as provided in 
Sec. Sec. 410.623 and 410.624, the Administration or the State agency, 
as appropriate (see Sec. 410.601), shall reconsider the determination 
with respect to disability or the initial determination in question and 
the findings upon which it was based; and upon the basis of the evidence 
considered in connection with the initial determination and whatever 
other evidence is submitted by the parties or is otherwise obtained, the 
Administration shall make a reconsidered determination affirming or 
revising, in whole or in part, the findings and determination in 
question.



Sec. 410.628  Notice of reconsidered determination.

    Written notice of the reconsidered determination shall be mailed by 
the Social Security Administration to the parties at their last known 
addresses. The reconsidered determination shall state the specific 
reasons therefor and inform the parties of their right to a hearing (see 
Sec. 410.630), or, if appropriate, inform the parties of the 
requirements for use of the expedited appeals process (see Sec. 
410.629a).

[40 FR 53387, Nov. 18, 1975]



Sec. 410.629  Effect of a reconsidered determination.

    The reconsidered determination shall be final and binding upon all 
parties to the reconsideration unless a hearing is requested in 
accordance with Sec. 410.631 and a decision rendered or unless such 
determination is revised in accordance with Sec. 410.671, or unless the 
expedited appeals process is used in accordance with Sec. 410.629a.

[40 FR 53388, Nov. 18, 1975]



Sec. 410.629a  Expedited appeals process; conditions for use of such process.

    In cases in which a reconsideration determination has been made or a 
higher level of appeal has been reached, an expedited appeals process 
may be used in lieu of the hearing and Appeals Council review, if the 
following conditions are met:
    (a) A reconsideration determination has been made by the 
Commissioner; and
    (b) The individual is a party referred to in Sec. 410.629c; and
    (c) The individual has filed a written request for the expedited 
appeals process; and
    (d) The individual has alleged, and the Commissioner agrees, that 
the only factor precluding a favorable determination with respect to a 
matter referred to in Sec. 410.610, is a statutory provision which the 
individual alleges to be unconstitutional; and
    (e) Where more than one individual is a party referred to in Sec. 
410.629c, each and every party concurs in the request for the expedited 
appeals process.

[40 FR 53388, Nov. 18, 1975, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.629b  Expedited appeals process; place and time of filing request.

    (a) Place of filing request. The request for the expedited appeals 
process must be made in writing and filed:
    (1) At an office of the Social Security Administration; or
    (2) With a presiding officer.
    (b) Time of filing request. The request for the expedited appeals 
process must be filed at one of the following times:
    (1) No later than 60 days after the date of receipt of notice of the 
reconsidered determination, unless the time is extended in accordance 
with the standards set out in Sec. 410.669 of this chapter. For 
purposes of this paragraph, the date of receipt of notice of the 
reconsidered determination shall be presumed to be 5 days after the date 
of such notice, unless there is a reasonable showing to the contrary; or
    (2) If a request for hearing has been timely filed (see Sec. 
410.631), at any time

[[Page 654]]

prior to the individual's receipt of notice of the presiding officer's 
decision; or
    (3) Within 60 days after the date of receipt of notice of the 
presiding officer's decision or dismissal, unless the time is extended 
in accordance with the standards set out in Sec. 410.669 of this 
chapter. For purposes of this paragraph (b)(3), the date of receipt of 
notice of the presiding officer's decision or dismissal shall be 
presumed to be 5 days after the date of such notice, unless there is a 
reasonable showing to the contrary; or
    (4) If a request for review by the Appeals Council has been timely 
filed (see Sec. 410.661), at any time prior to receipt by such 
individual of notice of the Appeals Council's final action.

[40 FR 53388, Nov. 18, 1975, as amended at 41 FR 47918, Nov. 1, 1976]



Sec. 410.629c  Expedited appeals process; parties.

    The parties to the expedited appeals process shall be the person or 
persons who were parties to the reconsideration determination in 
question and, if appropriate, parties to the hearing.

[40 FR 53388, Nov. 18, 1975]



Sec. 410.629d  Expedited appeals process; agreement requirements.

    (a)(1) An authorized representative of the Commissioner shall, if he 
determines that all conditions for the use of the expedited appeals 
process are met (see Sec. 410.629), prepare an agreement for signature 
of the party (parties) and an authorized representative of the 
Commissioner.
    (2)(i) Where a request for hearing has been filed, but prior to 
issuance of a decision a request for the expedited appeals process is 
filed, the Chief Administrative Law Judge of the Bureau of Hearings and 
Appeals, or his designee, shall determine if the conditions required for 
entering an agreement are met.
    (ii) Where a hearing decision was the last action, or where a 
request for review is pending before the Appeals Council, and a request 
for the expedited appeals process is filed, the Chairman or Deputy 
Chairman of the Appeals Council, or the Chairman's designee, shall 
determine if the conditions required for an agreement are met.
    (b) An agreement with respect to the expedited appeals process shall 
provide that:
    (1) The facts involved in the claim are not in dispute; and
    (2) Except as indicated in paragraph (b)(3) of this section, the 
Commissioner's interpretation of the law is not in dispute; and
    (3) The sole issue(s) in dispute is the application of a statutory 
provision(s) which is described therein and which is alleged to be 
unconstitutional by the party requesting use of such process; and
    (4) Except for the provision challenged, the right(s) of the party 
is established; and
    (5) The determination or decision made by the Commissioner is final 
for purposes of section 205(g) of the Act.

[40 FR 53388, Nov. 18, 1975, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.629e  Expedited appeals process; effect of agreement.

    The agreement described in Sec. 410.629d, when signed, shall 
constitute a waiver by the parties and the Commissioner with respect to 
the need of the parties to pursue the remaining steps of the 
administrative appeals process, and the period for filing a civil action 
in a district court of the United States, as provided in section 205(g) 
of the Social Security Act, shall begin as of the date of receipt of 
notice by the party (parties) that the agreement has been signed by the 
authorized representative of the Commissioner. Any civil action under 
the expedited appeals process must be filed within 60 days after the 
date of receipt of notice (a signed copy of the agreement will be mailed 
to the party (parties) and will constitute notice) that the agreement 
has been signed by the Commissioner's authorized representative. For 
purposes of this section, the date of receipt of notice of signing shall 
be presumed to be 5 days after the date of the notice, unless there is a 
reasonable showing to the contrary.

[49 FR 46369, Nov. 26, 1984, as amended at 62 FR 38453, July 18, 1997]

[[Page 655]]



Sec. 410.629f  Effect of a request that does not result in agreement.

    If a request for the expedited appeals process does not meet all the 
conditions for the use of the process, the Commissioner shall so advise 
the party (parties) and shall treat the request as a request for 
reconsideration, a hearing, or Appeals Council review, whichever is 
appropriate.

[40 FR 53388, Nov. 18, 1975, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.630  Hearing; right to hearing.

    An individual referred to in Sec. 410.632 or Sec. 410.633 who has 
filed a written request for a hearing under the provisions in Sec. 
410.631 has a right to a hearing if:
    (a) An initial determination and reconsideration of the 
determination have been made by the Social Security Administration 
concerning a matter designated in Sec. 410.610;
    (b) An initial determination denying waiver of adjustment of 
recovery of an overpayment based on a personal conference has been made 
by the Social Security Administration (see Sec. 410.561a); or
    (c) An initial determination denying waiver of adjustment or 
recovery of an overpayment based on a review of the written evidence of 
record has been made by the Social Security Administration (see Sec. 
410.561a) and the determination was made concurrent with, or subsequent 
to, our reconsideration determination regarding the underlying 
overpayment but before an administrative law judge holds a hearing.

[61 FR 56133, Oct. 31, 1996]



Sec. 410.631  Time and place of filing request.

    The request for hearing shall be made in writing and filed at an 
office of the presiding officer, or the Appeals Council. Except where 
the time is extended as provided in Sec. 410.669, the request for 
hearing must be filed:
    (a) Within 60 days after the date of receipt of notice of the 
reconsidered determination by such individual. For purposes of this 
section, the date of receipt of notice of the reconsidered 
determinations shall be presumed to be 5 days after the date of such 
notice, unless there is a reasonable showing to the contrary; or
    (b) Where an effective date (not more than 30 days later than the 
date of mailing) is expressly indicated in such notice, within 60 days 
after such effective date.

[41 FR 47918, Nov. 1, 1976]



Sec. 410.632  Parties to a hearing.

    The parties to a hearing shall be the person or persons who were 
parties to the initial determination in question and the 
reconsideration. Any other individual may be made a party if such 
individual's rights with respect to benefits may be prejudiced by the 
decision, upon notice given to him by the Administrative Law Judge to 
appear at the hearing or otherwise present such evidence and contentions 
as to fact or law as he may desire in support of his interest.



Sec. 410.633  Additional parties to the hearing.

    The following individuals, in addition to those named in Sec. 
410.632, may also be parties to the hearing. A widow, child, parent, 
brother, sister, or representative of a decedent's estate, who makes a 
showing in writing that such individual's rights with respect to 
benefits may be prejudiced by any decision that may be made, may be a 
party to the hearing.

[37 FR 20652, Sept. 30, 1972]



Sec. 410.634  Administrative Law Judge.

    The hearing provided for in this subpart F shall, except as herein 
provided, be conducted by an Administrative Law Judge designated by the 
Deputy Commissioner for Programs and Policy, or his or her designee. In 
an appropriate case, the Deputy Commissioner may designate another 
Administrative Law Judge or a member or members of the Appeals Council 
to conduct a hearing, in which case the provisions of this subpart F 
governing the conduct of a hearing by an Administrative Law Judge shall 
be applicable thereto.

[36 FR 23760, Dec. 14, 1971, as amended at 62 FR 38453, July 18, 1997]

[[Page 656]]



Sec. 410.635  Disqualification of Administrative Law Judge.

    No Administrative Law Judge shall conduct a hearing in a case in 
which he is prejudiced or partial with respect to any party, or where he 
has any interest in the matter pending for decision before him. Notice 
of any objection which a party may have to the Administrative Law Judge 
who will conduct the hearing, shall be made by such party at his 
earliest opportunity. The Administrative Law Judge shall consider such 
objection and shall, in his discretion, either proceed with the hearing 
or withdraw. If the Administrative Law Judge withdraws, another 
Administrative Law Judge shall be designated by the Deputy Commissioner 
for Programs and Policy, or his or her designee to conduct the hearing. 
If the Administrative Law Judge does not withdraw, the objecting party 
may, after the hearing, present his objections to the Appeals Council, 
as provided in Sec. Sec. 410.660 through 410.664 as reasons why the 
Administrative Law Judge's decision should be revised or a new hearing 
held before another Administrative Law Judge.

[36 FR 23760, Dec. 14, 1971, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.636  Time and place of hearing.

    The Administrative Law Judge (formerly called ``hearing examiner'') 
shall fix a time and a place within the United States for the hearing, 
written notice of which, unless waived by a party, shall be mailed to 
the parties at their last known addresses or given to them by personal 
service, not less than 10 days prior to such time. As used in this 
section and in Sec. 410.647, the United States means the 50 States, the 
District of Columbia, the Commonwealth of Puerto Rico, and the Virgin 
Islands. Written notice of the objections of any party to the time and 
place fixed for a hearing shall be filed by the objecting party with the 
Administrative Law Judge at the earliest practicable opportunity (before 
the time set for such hearing). Such notice shall state the reasons for 
the party's objection and his choice as to the time and place within the 
United States for the hearing. The Administrative Law Judge may, for 
good cause, fix a new time and/or place within the United States for the 
hearing.

[37 FR 20652, Sept. 30, 1972]



Sec. 410.637  Hearing on new issues.

    At any time after a request for hearing has been made, as provided 
in Sec. 410.631, but prior to the mailing of notice of the decision, 
the Administrative Law Judge may, in his discretion, either on the 
application of a party or his own motion, in addition to the matters 
brought before him by the request for hearing, give notice that he will 
also consider any specified new issue (see Sec. 410.610) whether 
pertinent to the same or a related matter, and whether arising 
subsequent to the request for hearing, which may affect the rights of 
such party to benefits under this part even though the Administration 
has not made an initial and reconsidered determination with respect to 
such new issue: Provided, That notice of the time and place of the 
hearing on any new issue shall, unless waived, be given to the parties 
within the time and manner specified in Sec. 410.636: And provided 
further, That the determination involved is not one within the 
jurisdiction of a State agency under a Federal-State agreement entered 
into pursuant to section 413(b) of the Act. Upon the giving of such 
notice, the Administrative Law Judge shall, except as otherwise 
provided, proceed to hearing on such new issue in the same manner as he 
would on an issue on which an initial and reconsidered determination has 
been made by the Administration and a hearing requested with respect 
thereto by a party entitled to such hearing.



Sec. 410.638  Change of time and place for hearing.

    The Administrative Law Judge may change the time and place for the 
hearing, either on his own motion or for good cause shown by a party. 
The Administrative Law Judge may adjourn or postpone the hearing, or he 
may reopen the hearing for the receipt of additional evidence at any 
time prior to the mailing of notice to the party of the decision in the 
case. Reasonable notice shall be given to the parties of any change in 
the time or place of

[[Page 657]]

hearing or of an adjournment or a reopening of the hearing.



Sec. 410.639  Subpenas.

    When reasonably necessary for the full presentation of a case, an 
Administrative Law Judge (formerly called ``hearing examiner'') or a 
member of the Appeals Council, may, either upon his own motion or upon 
the request of a party, issue subpenas for the attendance and testimony 
of witnesses and for the production of books, records, correspondence, 
papers, or other documents which are relevant and material to any matter 
in issue at the hearing. Parties who desire the issuance of a subpena 
shall, not less than 5 days prior to the time fixed for the hearing, 
file with the Administrative Law Judge or at a district office of the 
Administration a written request therefor, designating the witnesses or 
documents to be produced, and describing the address or location thereof 
with sufficient particularity to permit such witnesses or documents to 
be found. The request for a subpena shall state the pertinent facts 
which the party expects to establish by such witnesses or documents and 
whether such facts could be established by other evidence without the 
use of a subpena. Subpenas, as provided for above, shall be issued in 
the name of the Commissioner, and the Administration shall pay the cost 
of the issuance and the fees and mileage of any witness so subpenaed, as 
provided in section 205(d) of the Social Security Act.

[37 FR 20652, Sept. 30, 1972, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.640  Conduct of hearing.

    Hearings shall be open to the parties and to such other persons as 
the Administrative Law Judge deems necessary and proper. The 
Administrative Law Judge shall inquire fully into the matters at issue 
and shall receive in evidence the testimony of witnesses and any 
documents which are relevant and material to such matters. If the 
Administrative Law Judge believes that there is relevant and material 
evidence available which has not been presented at the hearing, the 
Administrative Law Judge may adjourn the hearing or, at any time prior 
to the mailing of notice of the decision, reopen the hearing for the 
receipt of such evidence. The order in which evidence and allegations 
shall be presented and the procedure at the hearing generally, except as 
these regulations otherwise expressly provide, shall be in the 
discretion of the Administrative Law Judge and of such nature as to 
afford the parties a reasonable opportunity for a fair hearing.



Sec. 410.641  Evidence.

    Evidence may be received at the hearing even though inadmissible 
under rules of evidence applicable to court procedures.



Sec. 410.642  Witnesses.

    Witnesses at the hearing shall testify under oath or affirmation or 
as directed by the Administrative Law Judge, unless they are excused by 
the Administrative Law Judge for cause. The Administrative Law Judge may 
examine the witnesses and shall allow the parties or their 
representatives to do so. If the Administrative Law Judge conducts the 
examination of a witness, he may allow the parties to suggest matters as 
to which they desire the witness to be questioned, and the 
Administrative Law Judge shall question the witness with respect to such 
matters if they are relevant and material to any issue pending for 
decision before him.



Sec. 410.643  Oral argument and written allegations.

    The parties, upon their request, shall be allowed a reasonable time 
for the presentation of oral argument or for the filing of briefs or 
other written statements of allegations as to facts or law. Where there 
is more than one party to the hearing, copies of any brief or other 
written statement shall be filed in sufficient number that they may be 
made available to any party.



Sec. 410.644  Record of hearing.

    A complete record of the proceedings at the hearing shall be made. 
The record shall be transcribed in any case which is certified to the 
Appeals Council without decision by the Administrative Law Judge (see 
Sec. Sec. 410.654 and 410.657 to 410.659 inclusive), in any case

[[Page 658]]

where a civil action is commenced against the Commissioner (see Sec. 
410.666), or in any other case when directed by the Administrative Law 
Judge or the Appeals Council.

[36 FR 23760, Dec. 14, 1971, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.645  Joint hearings.

    When two or more hearings are to be held, and the same or 
substantially similar evidence is relevant and material to the matters 
in issue at each such hearing, the Administrative Law Judge (formerly 
called ``hearing examiner'') may fix the same time and place for each 
hearing and conduct all such hearings jointly. However, where there is 
no common issue of law or fact involved in two or more hearings and any 
party objects to a joint hearing, a joint hearing may not be held. Where 
joint hearings are held, a single record of the proceedings shall be 
made and the evidence introduced in one case may be considered as 
introduced in the others, and a separate or joint decision shall be 
made, as appropriate.

[37 FR 20652, Sept. 30, 1972]



Sec. 410.646  Consolidated issues.

    When one or more additional issues are raised by the Administrative 
Law Judge pursuant to Sec. 410.637, such issues may, in the discretion 
of the Administrative Law Judge, be consolidated for hearing and 
decision with other issues pending before him upon the same request for 
a hearing, whether or not the same or substantially similar evidence is 
relevant and material to the matters in issue. A single decision may be 
made upon all such issues.



Sec. 410.647  Waiver of right to appear and present evidence.

    (a) General. Any party to a hearing shall have the right to appear 
before the Administrative Law Judge (formerly called ``hearing 
examiner''), personally or by representative, and present evidence and 
contentions. If all parties are unwilling, unable, or waive their right 
to appear before the Administrative Law Judge, personally or by 
representative, it shall not be necessary for the Administrative Law 
Judge to conduct an oral hearing as provided in Sec. Sec. 410.636 to 
410.646, inclusive. A waiver of the right to appear and present evidence 
and allegations as to facts and law shall be made in writing and filed 
with the Administrative Law Judge. Such waiver may be withdrawn by a 
party at any time prior to the mailing of notice of the decision in the 
case. Even though all of the parties have filed a waiver of the right to 
appear and present evidence and contentions at a hearing before the 
Administrative Law Judge, the Administrative Law Judge may, 
nevertheless, give notice of a time and place and conduct a hearing as 
provided in Sec. Sec. 410.636 to 410.646, inclusive, if he believes 
that the personal appearance and testimony of the party or parties would 
assist him to ascertain the facts in issue in the case.
    (b) Record as basis for decision. Where all of the parties have 
waived their right to appear in person or through a representative and 
the Administrative Law Judge does not schedule an oral hearing, the 
decision shall be based on the record. Where a party residing outside 
the United States at a place not readily accessible to the United States 
does not indicate that he wishes to appear in person or through a 
representative before an Administrative Law Judge, and there are no 
other parties to the hearing who wish to appear, the Administrative Law 
Judge may decide the case on the record. In any case where the decision 
is to be based on the record, the Administrative Law Judge shall make a 
record of the relevant written evidence, including applications, written 
statements, certificates, affidavits, reports, and other documents which 
were considered in connection with the initial determination and 
reconsideration, and whatever additional relevant and material evidence 
the party or parties may present in writing for consideration by the 
Administrative Law Judge. Such documents shall be considered as all of 
the evidence in the case.

[37 FR 20652, Sept. 30, 1972]



Sec. 410.648  Dismissal of request for hearing; by application of party.

    With the approval of the Administrative Law Judge at any time prior 
to the mailing of notice of the decision, a

[[Page 659]]

request for a hearing may be withdrawn or dismissed upon the application 
of the party or parties filing the request for such hearing. A party may 
request a dismissal by filing a written notice of such request with the 
Administrative Law Judge or orally stating such request at the hearing.



Sec. 410.649  Dismissal by abandonment of party.

    With the approval of the Administrative Law Judge, a request for 
hearing may also be dismissed upon its abandonment by the party or 
parties who filed it. A party shall be deemed to have abandoned a 
request for hearing if neither the party nor his representative appears 
at the time and place fixed for the hearing and either (a) prior to the 
time for hearing such party does not show good cause as to why neither 
he nor his representative can appear or (b) within 10 days after the 
mailing of a notice to him by the Administrative Law Judge to show 
cause, such party does not show good cause for such failure to appear 
and failure to notify the Administrative Law Judge prior to the time 
fixed for hearing that he cannot appear.



Sec. 410.650  Dismissal for cause.

    The presiding officer may, on his own motion, dismiss a hearing 
request, either entirely or as to any stated issue, under any of the 
following circumstances:
    (a) Res judicata. Where there has been a previous determination or 
decision by the Commissioner with respect to the rights of the same 
party on the same facts pertinent to the same issue or issues which has 
become final either by judicial affirmance or, without judicial 
consideration, upon the claimant's failure timely to request 
reconsideration, hearing, or review, or to commence a civil action with 
respect to such determination or decision (see Sec. Sec. 410.624, 
410.631, 410.661, and 410.666).
    (b) No right to hearing. Where the party requesting a hearing is not 
a proper party under Sec. 410.632 or Sec. 410.633 or does not 
otherwise have a right to a hearing under Sec. 410.630. This would 
include, but is not limited to, an individual claiming as a 
representative payee appointed pursuant to Sec. 410.581 (see Sec. 
410.615).
    (c) Hearing request not timely filed. Where the party has failed to 
file a hearing request timely pursuant to Sec. 410.631 and the time for 
filing such request has not been extended as provided in Sec. 410.669.
    (d) Death of party. Where the party who filed the hearing request 
dies and there is no information before the presiding officer or the 
Social Security Administration showing that an individual who is not a 
party may be prejudiced by the Social Security Administration's 
determination which is the subject of the request for hearing: Provided; 
That if, within 60 days after the date notice of such dismissal is 
mailed to the original party at his last known address any such other 
individual states in writing that he desires a hearing on such claim and 
shows that he may be prejudiced by the Social Security Administration's 
initial determination, then the dismissal of the request for hearing 
shall be vacated.

[36 FR 23760, Dec. 14, 1971, as amended at 37 FR 20653, Sept. 30, 1972; 
41 FR 54753, Dec. 15, 1976; 62 FR 38453, July 18, 1997]



Sec. 410.651  Notice of dismissal and right to request review thereon.

    Notice of the Administrative Law Judge's dismissal action shall be 
given to the parties or mailed to them at their last known addresses. 
Such notice shall advise the parties of their right to request review of 
the dismissal action by the Appeals Council (see Sec. 410.660).



Sec. 410.652  Effect of dismissal.

    The dismissal of a request for hearing shall be final and binding 
unless vacated (see Sec. 410.653).



Sec. 410.653  Vacation of dismissal of request for hearing.

    A presiding officer or the Appeals Council may, on request of the 
party and for good cause shown, vacate any dismissal of a request for 
hearing at any time within 60 days after the date of receipt of the 
notice of dismissal by the party requesting the hearing at his last 
known address. For purposes of this section, the date of receipt of the 
dismissal notice shall be presumed to

[[Page 660]]

be 5 days after the date of such notice, unless there is a reasonable 
showing to the contrary. In any case where a presiding officer has 
dismissed the hearing request, the Appeals Council may, on its own 
motion, within 60 days after the mailing of such notice, review such 
dismissal and may, in its discretion vacate such dismissal.

[41 FR 54753, Dec. 15, 1976]



Sec. 410.654  Administrative Law Judge's decision or certification to 
Appeals Council.

    As soon as practicable after the close of a hearing, the 
Administrative Law Judge, except as herein provided, shall make a 
decision in the case or certify the case with a recommended decision to 
the Appeals Council for decision (see Sec. Sec. 410.657 through 
410.659). If the Administrative Law Judge makes a decision in the case, 
such decision shall be based upon the evidence adduced at the hearing 
(Sec. Sec. 410.636 through 410.646, inclusive) or otherwise included in 
the hearing record (see Sec. 410.647). The decision shall be made in 
writing and contain findings of fact and a statement of reasons. A copy 
of the decision shall be mailed to the parties at their last known 
addresses.



Sec. 410.655  Effect of Administrative Law Judge's decision.

    The decision of the Administrative Law Judge provided for in Sec. 
410.654, shall be final and binding upon all parties to the hearing 
unless it is reviewed by the Appeals Council (see Sec. Sec. 410.663 
through 410.665) or unless it is revised in accordance with Sec. 
410.671, or unless the expedited appeals process is used, in accordance 
with Sec. 410.629a. If a party's request for review of the 
Administrative Law Judge's decision is denied (see Sec. 410.662) or is 
dismissed (see Sec. 410.667), such decision shall be final and binding 
upon all parties to the hearing unless a civil action is filed in a 
district court of the United States, as is provided in section 205(g) of 
the Social Security Act, as incorporated in the Federal Coal Mine Health 
and Safety Act by section 413(b) of that Act (see Sec. 410.670a), or 
unless the decision is revised in accordance with Sec. 410.671.

[40 FR 53388, Nov. 18, 1975]



Sec. 410.656  Removal of hearing to Appeals Council.

    The Appeals Council on its own motion may remove to itself any 
request for hearing pending before an Administrative Law Judge. The 
hearing on any matter so removed to the Appeals Council shall be 
conducted in accordance with the requirements of Sec. Sec. 410.637 to 
410.653, inclusive. Notice of such removal shall be mailed to the 
parties at their last known addresses.



Sec. 410.657  Appeals Council proceedings on certification and review; 

procedure before Appeals Council on certification by the Administrative 
Law Judge.

    When a case has been certified to the Appeals Council by an 
Administrative Law Judge with his recommended decision (see Sec. 
410.654), the Administrative Law Judge shall mail notice of such action 
to the parties at their last known addresses. The parties shall be 
notified of their right to file with the Appeals Council within 10 days 
from the date of mailing of the recommended decision, briefs or other 
written statements of exceptions or allegations as to applicable fact 
and law, except in the case of suspension or disqualification (see Sec. 
410.694(b)). Upon request of any party made within such 10-day period, a 
10-day extension of time for filing such briefs or statements shall be 
granted and, upon a showing of good cause, such 10-day period may be 
extended, as appropriate. Where there is more than one party, copies of 
such briefs or written statements shall be filed in sufficient number 
that they may be made available to any party requesting a copy or any 
other party designated by the Appeals Council. Copies or a statement of 
the contents of the documents or other written evidence received in 
evidence in the hearing record, and a copy of the transcript of oral 
evidence adduced at the hearing, if any, or a condensed statement 
thereof shall be made available to any party upon request, upon payment 
of the cost, or if such cost is not readily determinable, the estimated 
amount thereof, unless, for good cause shown, such payment is waived. 
When a case has been certified to the Appeals Council by an 
Administrative Law Judge for decision any

[[Page 661]]

party shall be given, upon his request, a reasonable opportunity to 
appear before the Appeals Council for the purpose of presenting oral 
argument.



Sec. 410.658  Evidence in proceeding before Appeals Council.

    Evidence in addition to that admitted into the hearing record by the 
Administrative Law Judge may not be received as evidence except where it 
appears to the Appeals Council that such additional evidence may affect 
its decision. If no additional material is presented, but such evidence 
is available and may affect its decision, the Appeals Council shall 
receive such evidence or designate an Administrative Law Judge or member 
of the Appeals Council before whom the evidence shall be introduced. 
Before such additional evidence is received, notice that evidence will 
be received with respect to certain matters shall be mailed to the 
parties, unless such notice is waived, at their last known addresses, 
and the parties shall be given a reasonable opportunity to present 
evidence which is relevant and material to such matters. When the 
additional evidence is presented to an Administrative Law Judge or a 
member of the Appeals Council, a transcript or a condensed statement of 
such evidence shall be made available to any party upon request, upon 
payment of the cost, or if such cost is not readily determinable, the 
estimated amount thereof, unless, for good cause shown, such payment is 
waived.



Sec. 410.659  Decision of Appeals Council.

    The decision of the Appeals Council, when a case has been certified 
to it by an Administrative Law Judge along with his recommended 
decision, shall be made in accordance with the provisions of Sec. 
410.665.



Sec. 410.660  Right to request review of Administrative Law Judge's 
decision or dismissal.

    If an Administrative Law Judge has made a decision, as provided in 
Sec. 410.654, or dismissed a request for hearing, as provided in 
Sec. Sec. 410.648 through 410.650, any party thereto may request the 
Appeals Council to review such decision or dismissal.



Sec. 410.661  Time and place of filing request.

    The request for review shall be made in writing and filed with an 
office of the Social Security Administration, or with a presiding 
officer, or the Appeals Council. Such request shall be accompanied by 
whatever documents or other evidence the party desires the Appeals 
Council to consider in its review. The request for review must be filed 
within 60 days after the date of receipt of notice of the presiding 
officer's decision or dismissal, unless the time is extended as provided 
in Sec. 410.669. For purposes of this section, the date of receipt of 
notice of the presiding officer's decision or dismissal shall be 
presumed to be 5 days after the date of such notice, unless there is a 
reasonable showing to the contrary.

[41 FR 54753, Dec. 15, 1976]



Sec. 410.662  Action by Appeals Council on review.

    The Appeals Council may dismiss (see Sec. 410.667) or, in its 
discretion, deny or grant a party's request for review of a presiding 
officer's decision, or may, on its own motion, within 60 days after the 
date of the notice of such decision, reopen such decision for review or 
for the purpose of dismissing the party's request for hearing for any 
reason for which it could have been dismissed by the presiding officer 
(see Sec. Sec. 410.648 through 410.650). Notice of the action by the 
Appeals Council shall be mailed to the party at his last known address.

[41 FR 54753, Dec. 15, 1976]



Sec. 410.663  Procedure before Appeals Council on review.

    (a) Availability of documents or other written statements. Whenever 
the Appeals Council determines to review a presiding officer's decision 
(except when the case is remanded to a presiding officer in accordance 
with Sec. 410.665), the Appeals Council shall make available to any 
party upon request, copies or a statement of the contents of the 
documents or other written evidence upon which the presiding officer's 
decision was based, and a copy of the transcript of oral evidence, if 
any, or a condensed statement thereof, upon payment of the cost, or if 
such

[[Page 662]]

cost is not readily determinable, the estimated amount thereof, unless 
for good cause shown, such payment is waived.
    (b) Filing briefs or other written statements. The parties shall be 
given, upon request, a reasonable opportunity to file briefs or other 
written statements of allegations as to fact and law. Copies of each 
brief or other written statements, where there is more than one party, 
shall be filed in sufficient number that they may be made available to 
any party requesting a copy and to any other party designated by the 
Appeals Council.
    (c) Appearance to present oral argument. Any party may request an 
appearance before the Appeals Council for the purpose of presenting oral 
argument. Such request shall be granted where the Appeals Council 
determines that a significant question of law or policy is presented or 
where the Appeals Council is of the opinion that such oral argument 
would be beneficial in rendering a proper decision in the case. Where 
the request for appearance is granted, the party will be notified of the 
time and place for the appearance at least 10 days prior to the date of 
the scheduled appearance.

[41 FR 53790, Dec. 9, 1976]



Sec. 410.664  Evidence admissible on review.

    (a) Admissibility of additional evidence. Evidence in addition to 
that introduced at the hearing before the presiding officer, or 
documents before the presiding officer where such hearing was waived 
(see Sec. 410.647), may not be admitted except where it appears to the 
Appeals Council that such evidence is relevant and material to an issue 
before it and thus may affect its decision.
    (b) Receipt of evidence by Presiding Officer. Where the Appeals 
Council determines that additional evidence is needed for a sound 
decision, it will remand the case to a presiding officer for receipt of 
the evidence, further proceedings, and a new decision, except where the 
Appeals Council can obtain the evidence more expeditiously and the 
rights of the claimant will not be adversely affected.
    (c) Receipt of evidence by Appeals Council. Where the Appeals 
Council obtains the evidence itself, before such evidence is admitted 
into the record, notice that evidence will be received with respect to 
certain issues shall be mailed to the parties, unless such notice is 
waived, at their last known addresses, and the parties shall be given a 
reasonable opportunity to comment thereon and to present evidence which 
is relevant and material to such issues.
    (d) Copies of evidence. When additional evidence is presented to a 
presiding officer or to the Appeals Council, a transcript or a condensed 
statement of such evidence shall be made available to any party upon 
request, upon payment of the cost, or if such cost is not readily 
determinable, the estimated amount thereof, unless, for good cause 
shown, such payment is waived.

[41 FR 53790, Dec. 9, 1976]



Sec. 410.665  Decision by Appeals Council or remanding of case.

    (a) General. If a case is certified to the Appeals Council by an 
Administrative Law Judge (see Sec. 410.654), the Appeals Council shall 
make a decision. If the Appeals Council decides to review an 
Administrative Law Judge's decision as provided in Sec. 410.662, the 
Appeals Council may, upon such review, affirm, modify, or reverse the 
decision of the Administrative Law Judge, or vacate such decision and 
remand the case to an Administrative Law Judge either for rehearing and 
the issuance of a decision thereon or to take further testimony in the 
case and return it to the Appeals Council with a recommended decision 
for decision by the Appeals Council. Where a case has been remanded by a 
court for further consideration, the Appeals Council may proceed then to 
make the decision or it may in turn remand the case to an Administrative 
Law Judge with directions to return the case upon completion of the 
necessary action to the Appeals Council with a recommended decision for 
decision by the Appeals Council.
    (b) Case remanded to an Administrative Law Judge. Where a case is 
remanded to an Administrative Law Judge, he shall initiate such 
additional proceedings and take such other action (under Sec. Sec. 
410.632 through 410.655) as is directed

[[Page 663]]

by the Appeals Council in its order of remand. The Administrative Law 
Judge may take any additional action not inconsistent with the order of 
remand. Upon completion of all action called for by the order of remand 
and any other action initiated by the Administrative Law Judge, the 
Administrative Law Judge shall promptly (1) issue a decision in writing 
which contains findings of fact and a statement of reasons, or (2) when 
so directed by the Appeals Council, return the case with his recommended 
decision to the Appeals Council for its decision. A copy of the decision 
shall be mailed to each party at his last known address. When a 
recommended decision is issued, the Administrative Law Judge shall also 
notify each party of his right to file with the Appeals Council within 
10 days from the the date of mailing of the recommended decision, briefs 
or other written statements of exceptions and allegations as to 
applicable fact and law, except in the case of suspension or 
disqualification (see Sec. 410.694(b)). Upon request of any party made 
within such 10-day period, a 10-day extension of time for filing such 
briefs or statements shall be granted and, upon a showing of good cause, 
such 10-day period may be extended, as appropriate.
    (c) Decision by Appeals Council. A decision of the Appeals Council 
shall be based upon the evidence received into the hearing record and 
such further evidence as the Appeals Council may receive as provided in 
Sec. Sec. 410.657, 410.658, 410.663, and 410.664. This decision shall 
be made in writing and contain findings of fact, and a statement of 
reasons. A copy of the decision shall be mailed to each party at his 
last known address.



Sec. 410.666  Effect of Appeals Council's decision or refusal to review.

    The Appeals Council may deny a party's request for review or it may 
grant review and either affirm or reverse the Administrative Law Judge's 
decision. The decision of the Appeals Council, or the decision of the 
Administrative Law Judge where the request for review of such decision 
is denied (see Sec. 410.662), shall be final and binding upon all 
parties to the hearing unless a civil action is filed in a district 
court of the United States under the provisions of section 205(g) of the 
Social Security Act, as incorporated by section 413(b) of the Act (see 
Sec. 410.670a), or unless the decision is revised under the provisions 
described in Sec. 410.671.

[37 FR 20653, Sept. 30, 1972]



Sec. 410.667  Dismissal by Appeals Council.

    The Appeals Council may dismiss a request for review or proceedings 
before it under any of the following circumstances:
    (a) Upon request of party. Proceedings pending before the Appeals 
Council may, with the approval of the Appeals Council, be discontinued 
and dismissed upon written application of the party or parties who filed 
the request for review to withdraw such request.
    (b) Death of party. Proceedings before the Appeals Council, whether 
on request for review or review on the motion of the Appeals Council, 
may be dismissed upon the death of a party only if the record 
affirmatively shows that there is no prejudiced individual who wishes to 
continue the action.
    (c) Request for review not timely filed. A request for review of a 
decision by an Administrative Law Judge shall be dismissed where the 
party has failed to file a request for review within the time specified 
in Sec. 410.661 and the time for filing such request has not been 
extended as provided in Sec. 410.669.



Sec. 410.668  Extension of time to request reconsideration.

    If a party to an initial determination desires to file a request for 
reconsideration after the time for filing such request has passed (see 
Sec. 410.624), such party may file a petition with the Administration 
for an extension of time for the filing of such request. Such petition 
shall be in writing and shall state the reasons why the request for 
reconsideration was not filed within the required time. For good cause 
shown, the component of the Administration which has jurisdiction over 
the proceedings (see Sec. 410.601) may extend the time for filing the 
request for reconsideration.

[[Page 664]]



Sec. 410.669  Extension of time to request hearing or review or begin 
civil action.

    (a) General. Any party to a reconsidered determination, a decision 
of an Administrative Law Judge (formerly called hearing examiner), or a 
decision of the Appeals Council (resulting from an initial determination 
as described in Sec. 410.610), may petition for an extension of time 
for filing a request for hearing or review or for commencing a civil 
action in a district court of the United States, although the time for 
filing such request or commencing such action (see Sec. Sec. 410.631 
and 410.661 and section 205(g) of the Social Security Act as 
incorporated by section 413(b) of the Act), has passed. If an extension 
of the time fixed by Sec. 410.631 for requesting a hearing before an 
Administrative Law Judge is sought, the petition may be filed with an 
Administrative Law Judge. In any other case, the petition shall be filed 
with the Appeals Council. The petition shall be in writing and shall 
state the reasons why the request or action was not filed within the 
required time. For good cause shown, an Administrative Law Judge or the 
Appeals Council, as the case may be, may extend the time for filing such 
request or action.
    (b) Where civil action commenced against wrong defendant. If a party 
to a decision of the Appeals Council, or to a decision of the 
Administrative Law Judge where the request for review of such decision 
is denied (see Sec. 410.662), timely commences a civil action in a 
district court as provided by section 205(g) of the Social Security Act 
as incorporated by section 413(b) of the Act, but names as defendant the 
United States or any agency, officer, or employee thereof instead of the 
Commissioner either by name or by official title, and causes process to 
be served in such action as required by the Federal Rules of Civil 
Procedure, the Administration shall mail notice to such party that he 
has named the incorrect defendant in such action; and the time within 
which such party may commence the civil action pursuant to section 
205(g) of the Social Security Act against the Commissioner shall be 
deemed to be extended to and including the 60th day following the date 
of mailing of such notice.

[37 FR 20653, Sept. 30, 1972, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.670  Review by Appeals Council.

    Where an Administrative Law Judge has determined the matter of 
extending the time for filing such request (whether he has allowed or 
denied the request for such extension), the Appeals Council on its own 
motion may review such determination and either affirm or reverse it. In 
connection with this review, the Appeals Council may consider whatever 
additional evidence relevant to this request a party may wish to 
present.



Sec. 410.670a  Judicial review.

    A civil action may be commenced in a district court of the United 
States with respect to a decision of the Appeals Council, or to a 
decision of the Administrative Law Judge (formerly called hearing 
examiner) where the request for review of such decision is denied by the 
Appeals Council, as provided in section 205 (g) and (h) of the Social 
Security Act, as incorporated by section 413(b) of the Act.

[37 FR 20653, Sept. 30, 1972]



Sec. 410.670b  Interim provision for the adjudication of certain claims 
filed prior to May 19, 1972.

    (a) General. Section 6 of the Black Lung Benefits Act of 1972 added 
a section 431 to title IV of the Federal Coal Mine Health and Safety Act 
of 1969 which requires the Commissioner to review, under the terms of 
the 1972 amendments, all claims for benefits which were filed prior to 
May 19, 1972 (the date of enactment of the 1972 amendments), and which 
were either pending before the Administration on that date, or which had 
been previously disallowed. Therefore, notwithstanding any other 
provision of this subpart, and in keeping with the objective of 
providing for effective and expeditious processing of the large backlog 
of claims that have to be reexamined under the 1972 amendments, all such 
claims for benefits will be adjudicated under the terms of the amended 
Act in accordance with this section.

[[Page 665]]

    (b) Cases remanded by the Federal courts. (1) Those claims described 
in paragraph (a) of this section which are remanded to the Commissioner 
by the Federal courts are reviewed in the Bureau of Hearings and 
Appeals.
    (2) A decision will be rendered by an Administrative Law Judge 
(formerly called hearing examiner) in all such claims which can be 
allowed under the 1972 amendments on the evidence then of record. Such 
decision shall be considered the Administrative Law Judge's decision 
referred to in Sec. 410.654, and a party to the decision may request 
review thereof by the Appeals Council in accordance with Sec. Sec. 
410.660 and 410.661.
    (3) A copy of such Administrative Law Judge's decision shall be 
mailed to such party at his last known address. The date of mailing of 
such decision will replace the date of any prior notice of an initial 
determination for purposes of Sec. 410.672.
    (4) Those claims described in paragraph (a) of this section which 
are remanded to the Commissioner by the Federal courts and which cannot 
be allowed in the Bureau of Hearings and Appeals under the 1972 
amendments on the evidence then of record, shall be remanded to the 
Administration's Bureau of Disability Insurance for a new determination.
    (c) Claims pending in the Bureau of Hearings and Appeals. (1) Those 
claims described in paragraph (a) of this section which are pending 
before an Administrative Law Judge or the Appeals Council and which can 
be allowed under the 1972 amendments on the evidence then of record will 
be decided by an Administrative Law Judge or the Appeals Council, and 
this decision will constitute the decision referred to in Sec. 410.654 
or Sec. 410.665(c).
    (2) A copy of such Administrative Law Judge's decision shall be 
mailed to such party at his last known address. The date of mailing of 
such decision will replace the date of any prior notice of an initial 
determination for purposes of Sec. 410.672. Such claims pending before 
an Administrative Law Judge or the Appeals Council which cannot be 
allowed under the 1972 amendments on the evidence then of record shall 
be remanded to the Administration's Bureau of Disability Insurance for a 
new determination.
    (d) Claims pending in, or remanded to the Bureau of Disability 
Insurance. (1) Those claims described in paragraph (a) of this section 
in which no timely request for hearing has been filed, or in which an 
Administrative Law Judge or the Appeals Council has previously rendered 
or affirmed a decision of disallowance, or which have been remanded by 
the Bureau of Hearings and Appeals in accordance with paragraph (b) or 
(c) of this section, shall be reviewed in the Bureau of Disability 
Insurance and a new determination made.
    (2) Written notice of such determination shall be mailed to the 
party at his last known address. If such new determination is adverse to 
the party in whole or in part, the notice shall explain the basis for 
the determination. It shall also advise the party of his right to 
request further consideration of the determination by the Bureau of 
Disability Insurance if he has additional evidence or contentions as to 
fact or law to submit. The effective date of such notice shall be a date 
30 days later than the date of mailing and shall be expressly indicated 
in such notice.
    (3) Before this effective date, the party may request further 
consideration of the determination by the Bureau of Disability Insurance 
if he has additional evidence or contentions as to fact or law to 
submit. If such further consideration is requested timely, the new 
determination referred to in paragraph (d)(1) of this section shall not 
go into effect. Rather, his claim will be further considered as 
requested and a further determination made. Written notice of the latter 
determination will be mailed to the party at his last known address. If 
this determination is adverse to the party in whole or in part, the 
notice shall explain the basis for the determination. The effective date 
of such notice shall be the date of mailing.
    (4) The effective date of the determination referred to in paragraph 
(d)(2) or (d)(3) of this section shall replace the date of any prior 
notice of an initial determination for purposes of Sec. 410.672.

[[Page 666]]

    (5) A determination made as provided in paragraph (d)(1) or (d)(3) 
of this section shall be final and binding upon all parties to such 
determination unless a hearing is requested within 6 months of the 
effective date of the notice of the determination, except where a 
previously filed hearing request or request for review by the Appeals 
Council or by a court is still pending, in which case the claim will be 
referred to an Administrative Law Judge for a hearing.
    (6) Those claims described in paragraph (a) of this section in which 
no initial determination has been made shall be adjudicated under the 
1972 amendments in accordance with the other provisions of this part.

[37 FR 20653, Sept. 30, 1972, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.670c  Application of circuit court law.

    The procedures which follow apply to administrative determinations 
or decisions on claims involving the application of circuit court law.
    (a) The Administration will apply a holding in a United States Court 
of Appeals decision which it determines conflicts with its 
interpretation of a provision of the Social Security Act or regulations 
unless the Government seeks further review or the Administration 
relitigates the issue presented in the decision in accordance with 
paragraphs (c) and (d) of this section. The Administration will apply 
the holding to claims at all levels of administrative adjudication 
within the applicable circuit unless the holding, by its nature, applies 
only at certain levels of adjudication.
    (b) When the Administration determines that a United States Court of 
Appeals holding conflicts with the Administration's interpretation of a 
provision of the Social Security Act or regulations and the Government 
does not seek further review or is unsuccessful on further review, the 
Administration will issue a Social Security Acquiescence Ruling that 
describes the administrative case and the court decision, identifies the 
issue(s) involved, and explains how the Administration will apply the 
holding, including, as necessary, how the holding relates to other 
decisions within the applicable circuit. These rulings will generally be 
effective on the date of their publication in the Federal Register and 
will apply to all determinations and decisions made on or after that 
date. If the Administration makes a determination or decision between 
the date of a circuit court decision and the date an Acquiescence Ruling 
is published, the claimant may request application of the published 
ruling to the prior determination or decision. The claimant must first 
demonstrate that application of the ruling could change the prior 
determination or decision. A claimant may so demonstrate by submitting a 
statement which cites the ruling and indicates what finding or statement 
in the rationale of the prior determination or decision conflicts with 
the ruling. If the claimant can so demonstrate, the Administration will 
readjudicate the claim at the level at which it was last adjudicated in 
accordance with the ruling. Any readjudication will be limited to 
consideration of the issue(s) covered by the ruling and any new 
determination or decision on readjudication will be subject to 
administrative and judicial review in accordance with this subpart. A 
denial of a request for readjudication will not be subject to further 
administrative or judicial review. If a claimant files a request for 
readjudication within the sixty day appeal period and that request is 
denied, the Administration shall extend the time to file an appeal on 
the merits of the claim to sixty days after the date that the request 
for readjudication is denied.
    (c) After the Administration has published a Social Security 
Acquiescence Ruling to reflect a holding of a United States Court of 
Appeals on an issue, the Administration may decide under certain 
conditions to relitigate that issue within the same circuit. The 
Administration will relitigate only when the conditions specified in 
paragraphs (c) (2) and (3) of this section are met, and, in general, one 
of the events specified in paragraph (c)(1) of this section occurs.
    (1) Activating events: (i) An action by both Houses of Congress 
indicates that a court case on which an Acquiescence Ruling was based 
was decided inconsistently with congressional intent,

[[Page 667]]

such as may be expressed in a joint resolution, an appropriations 
restriction, or enactment of legislation which affects a closely 
analogous body of law;
    (ii) A statement in a majority opinion of the same circuit indicates 
that the court might no longer follow its previous decision if a 
particular issue were presented again;
    (iii) Subsequent circuit court precedent in other circuits supports 
the Administration's interpretation of the Social Security Act or 
regulations on the issue(s) in question; or
    (iv) A subsequent Supreme Court decision presents a reasonable legal 
basis for questioning a circuit court holding upon which the 
Administration bases a Social Security Acquiescence Ruling.
    (2) The General Counsel of SSA, after consulting with the Department 
of Justice, concurs that relitigation of an issue and application of the 
Administration's interpretation of the Social Security Act or 
regulations at the administrative level within the circuit would be 
appropriate.
    (3) The Administration publishes a notice in the Federal Register 
that it intends to relitigate an issue, and that it will apply its 
interpretation of the Social Security Act or regulations at the 
administrative level within the circuit. The notice will explain why the 
Administration made this decision.
    (d) When the Administration decides to relitigate an issue, it will 
provide a notice explaining its action to all affected claimants. In 
adjudicating claims subject to relitigation, decision makers throughout 
the SSA administrative review process will apply the Administration's 
interpretation of the Social Security Act and regulations, but will also 
state in written determinations or decisions how the claims would have 
been decided under the circuit standard. Claims not subject to 
relitigation will continue to be decided under the Acquiescence Ruling 
in accordance with the circuit standard. So that affected claimants can 
be readily identified and any subsequent decision of the circuit court 
or the Supreme Court can be implemented quickly and efficiently, the 
Administration will maintain a listing of all claimants who receive this 
notice and will provide them the relief ordered by the court.
    (e) The Administration will rescind as obsolete a Social Security 
Acquiescence Ruling and apply its interpretation of the Social Security 
Act or regulations by publishing a notice in the Federal Register when 
any of the following events occurs:
    (1) The Supreme Court overrules or limits a circuit court holding 
that was the basis of an Acquiescence Ruling;
    (2) A circuit court overrules or limits itself on an issue that was 
the basis of an Acquiescence Ruling;
    (3) A Federal law is enacted that removes the basis for the holding 
in a decision of a circuit court that was the subject of an Acquiescence 
Ruling; or
    (4) The Administration subsequently clarifies, modifies or revokes 
the regulation or ruling that was the subject of a circuit court holding 
that the Administration determined conflicts with its interpretation of 
the Social Security Act or regulations, or it subsequently publishes a 
new regulation(s) addressing an issue(s) not previously included in its 
regulations when that issue(s) was the subject of a circuit court 
holding that conflicted with its interpretation of the Social Security 
Act or regulations and that holding was not compelled by the statute or 
Constitution.

[55 FR 1019, Jan. 11, 1990, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.671  Revision for error or other reason; time limitation generally.

    (a) Initial, revised or reconsidered determination. Except as 
otherwise provided in Sec. 410.675, an initial, revised or reconsidered 
determination (see Sec. Sec. 410.610 and 410.627) may be revised by the 
appropriate component of the Administration having jurisdiction over the 
proceedings (Sec. 410.601), on its own motion or upon the petition of 
any party for a reason, and within the time period, prescribed in Sec. 
410.672.
    (b) Decision or revised decision of an Administrative Law Judge or 
the Appeals Council. Either upon the motion of the Administrative Law 
Judge or the Appeals Council, as the case may be, or upon the petition 
of any party to a hearing, except as otherwise provided in Sec. 
410.675, any decision of an Administrative Law Judge provided for in 
Sec. 410.654 or any revised decision may be revised by such 
Administrative Law

[[Page 668]]

Judge, or by another Administrative Law Judge if the Administrative Law 
Judge who issued the decision is unavailable, or by the Appeals Council 
for a reason and within the time period prescribed in Sec. 410.672. Any 
decision of the Appeals Council provided for in Sec. 410.665 or any 
revised decision of the Appeals Council, may be revised by the Appeals 
Council for a reason and within the time period prescribed in Sec. 
410.672. For the purpose of this paragraph (b), an Administrative Law 
Judge shall be considered to be unavailable if among other 
circumstances, such hearing examiner has died, terminated his 
employment, is on leave of absence, has had a transfer of official 
station, or is unable to conduct a hearing because of illness.



Sec. 410.672  Reopening initial, revised or reconsidered determinations 

of the Administration and decisions of an Administrative Law Judge or 
the Appeals Council; finality of determinations and decisions.

    An initial, revised or reconsidered determination of the 
Administration or a decision, or revised decision of an Administrative 
Law Judge or of the Appeals Council which is otherwise final under Sec. 
410.621, Sec. 410.629, Sec. 410.655, or Sec. 410.666 may be reopened:
    (a) Within 12 months from the date of the notice of the initial 
determination (see Sec. 410.620), to the party to such determination, 
or
    (b) After such 12-month period, but within 4 years after the date of 
the notice of the initial determination (see Sec. 410.620) to the party 
to such determination, upon a finding of good cause for reopening such 
determination or decision, or
    (c) At any time, when:
    (1) Such initial, revised, or reconsidered determination or decision 
was procured by fraud or similar fault of the claimant or some other 
person; or
    (2) An adverse claim has been filed; or
    (3) An individual previously determined to be dead, and on whose 
account entitlement of a party was established, is later found to be 
alive; or
    (4) The death of the individual on whose account a party's claim was 
denied for lack of proof of death is established--
    (i) By reason of an unexplained absence from his or her residence 
for a period of 7 years (see Sec. 410.240(g)(2)); or
    (ii) By location or identification of his or her body; or
    (5) Such initial, revised, or reconsidered determination or decision 
is unfavorable, in whole or in part, to the party thereto but only for 
the purpose of correcting clerical error or error on the face of the 
evidence on which such determination or decision was based.

[36 FR 23760, Dec. 14, 1971, as amended at 49 FR 46370, Nov. 26, 1984]



Sec. 410.673  Good cause for reopening a determination or decision.

    Good cause shall be deemed to exist where:
    (a) New and material evidence is furnished after notice to the party 
to the initial determination;
    (b) A clerical error has been made in the computation of benefits;
    (c) There is an error as to such determination or decision on the 
face of the evidence on which such determination or decision is based.



Sec. 410.674  Finality of suspension of benefit payments for entire taxable 
year because of earnings.

    Notwithstanding the provisions in Sec. 410.672, a suspension of 
benefit payments for an entire taxable year because of earnings therein, 
may be reopened only within the time period and subject to the 
conditions provided in section 203(b)(1)(B) of the Social Security Act.



Sec. 410.675  Time limitation for revising finding suspending benefit 
payments for entire taxable year because of earnings.

    No determination of the Administration or decision of an 
Administrative Law Judge or the Appeals Council shall be revised after 
the expiration of the normal period for requesting reconsideration, 
hearing or review, with respect to such determination or decision (see 
Sec. Sec. 410.624, 410.631, 410.661, and 410.666) to correct a finding 
which suspends benefit payments for an entire taxable year because of 
earnings therein, unless the correction of such finding is permitted 
under section 203(h)(1)(B) of the Social Security Act.

[[Page 669]]



Sec. 410.675a  Late completion of timely investigation.

    The Administration may revise a determination or decision after the 
applicable time period in Sec. 410.672(a) or Sec. 410.672(b) expires 
if the Administration begins an investigation to determine whether to 
revise the determination or decision before the applicable time period 
expires. The Administration may begin the investigation based either on 
a request by the party or an action by the Administration. The 
investigation is a process of gathering facts after a determination or 
decision has been reopened to determine if a revision of the 
determination or decision is applicable.
    (a) If the Administration has diligently pursued the investigation 
to its conclusion, the Administration may revise the determination or 
decision. The revision may be favorable or unfavorable to the party. 
Diligently pursued means that in light of the facts and circumstances of 
a particular case, the necessary action was undertaken and carried out 
as promptly as the circumstances permitted. Diligent pursuit will be 
presumed to have been met if the Administration concludes the 
investigation and if necessary, revises the determination or decision 
within 6 months from the date the Administration begins the 
investigation.
    (b) If the Administration has not diligently pursued the 
investigation to its conclusion, the administration will revise the 
determination or decision if a revision is applicable and if it will be 
favorable to the party. The Administration will not revise the 
determination or decision if it will be unfavorable to the party.

[49 FR 46370, Nov. 26, 1984]



Sec. 410.676  Notice of revision.

    (a) When any determination or decision is revised, as provided in 
Sec. 410.671 or Sec. 410.675, notice of such revision shall be mailed 
to the parties to such determination or decision at their last known 
addresses. The notice of revision which is mailed to the parties shall 
state the basis for the revised decision.
    (b) Where a determination of the Administration is revised under 
paragraph (a) of this section, the notice of revision shall inform the 
parties of their right to a hearing as provided in Sec. 410.678.
    (c)(1) Where an Administrative Law Judge or the Appeals Council 
proposes to revise a decision under paragraph (a) of this section and 
the revision would be based on evidence theretofore not included in the 
record on which the decision proposed to be revised was based, the 
parties shall be given notice of the proposal of the Administrative Law 
Judge or the Appeals Council, as the case may be, to revise such 
decision, and unless hearing is waived, a hearing with respect to such 
proposed revision shall be granted as provided in this subpart F.
    (2) If a revised decision is appropriate, such decision shall be 
rendered by the Administrative Law Judge or the Appeals Council, as the 
case may be, on the basis of the entire record, including the additional 
evidence. If the decision is revised by an Administrative Law Judge, any 
party thereto may request review by the Appeals Council (Sec. Sec. 
410.660 and 410.661) or the Appeals Council may review the decision on 
its own motion (Sec. 410.662).



Sec. 410.677  Effect of revised determination.

    The revision of a determination or decision shall be final and 
binding upon all parties thereto unless a party authorized to do so (see 
Sec. 410.676) files a written request for a hearing with respect to a 
revised determination in accordance with Sec. 410.678 or a revised 
decision is reviewed by the Appeals Council as provided in this subpart 
F, or such revised determination or decision is further revised in 
accordance with Sec. 410.672.



Sec. 410.678  Time and place of requesting hearing on revised determination.

    The request for hearing shall be made in writing and filed at an 
office of the Social Security Administration, or with a presiding 
officer, or the Appeals Council, within 60 days after the date of 
receipt of notice of the revised determination. Upon the filing of such 
a request, a hearing with respect to such revision shall be held (see 
Sec. Sec. 410.631 through 410.653) and a decision made in

[[Page 670]]

accordance with the provisions of Sec. 410.654. For purposes of this 
section, the date of receipt of notice of the revised determination 
shall be presumed to be 5 days after the date of such notice, unless 
there is a reasonable showing to the contrary.

[41 FR 47918, Nov. 1, 1976]



Sec. 410.679  Finality of findings with respect to other claims for 
benefits based on the disability or death of a miner.

    Findings of fact made in a determination or decision in a claim by 
one party for benefits may be revised in determining or deciding another 
claim for benefits based on the disability or death of the same miner, 
even though such findings may not be revised in the former claim because 
of the provisions of Sec. 410.672.



Sec. 410.680  Imposition of reductions.

    The imposition of reductions constitutes an initial determination 
with respect to each month for which a reduction is imposed. A finding 
that a reduction is not to be imposed is an initial determination for 
each month with respect to which the circumstances upon which such 
finding was based remain unchanged. The suspension of benefits, pending 
a determination as to the applicability of a reduction equivalent to the 
amount of a deduction because of excess earnings under section 203(b) of 
the Social Security Act shall not, however, constitute an initial 
determination (see Sec. 410.615(a)).



Sec. 410.681  Change of ruling or legal precedent.

    Good cause shall be deemed not to exist where the sole basis for 
reopening the determination or decision is a change of legal 
interpretation or administrative ruling upon which such determination or 
decision was made.



Sec. 410.682  General applicability.

    The provisions of Sec. Sec. 410.672, 410.673, and 410.679 to 
410.681, inclusive, shall be applicable notwithstanding any provisions 
to the contrary in this subpart F.



Sec. 410.683  Certification of payment; determination or decision providing 
for payment.

    When a determination or decision has been made under any provision 
of Sec. Sec. 410.610 to 410.678, inclusive, to the effect that a 
payment or payments of benefits should be made to any person, the 
Administration shall, except as hereafter provided, certify to the U.S. 
Treasury Department the name and address of the person to be paid, the 
amount of the payment or payments and the time at which such payment or 
payments should be made.



Sec. 410.683a  [Reserved]



Sec. 410.683b  Transfer or assignment.

    The Administration shall not certify any amount for payment to an 
assignee or transferee of the person entitled to such payment under the 
Act, nor shall the Administration certify such amount for payment to any 
person claiming such payment by virtue of an execution, levy, 
attachment, garnishment, or other legal process or by virtue of any 
bankruptcy or insolvency proceeding against or affecting the person 
entitled to the payment under the Act.

[37 FR 20654, Sept. 30, 1972]



Sec. 410.684  Representation of party; appointment of representative.

    A party in an action leading to an initial or reconsidered 
determination, hearing, or review, as provided in Sec. Sec. 410.610 to 
410.678, inclusive, may appoint as his representative in any such 
proceeding only an individual who is qualified under Sec. 410.685 to 
act as a representative. Where the individual appointed by a party to 
represent him is not an attorney, written notice of the appointment must 
be given, signed by the party appointing the representative, and 
accepted by the representative appointed. The notice of appointment 
shall be filed at an office of the Administration, with a hearing 
examiner, or with the Appeals Council of the Administration, as the case 
may be. Where the representative appointed is an attorney, in the 
absence of information to the contrary, his representation

[[Page 671]]

that he has such authority, shall be accepted as evidence of the 
attorney's authority to represent a party.



Sec. 410.685  Qualifications of representative.

    (a) Attorney. Any attorney in good standing who (1) is admitted to 
practice before a court of a State, territory, district or insular 
possession or before the Supreme Court of the United States or an 
inferior Federal court, (2) has not been disqualified or suspended from 
acting as a representative in proceedings before the Social Security 
Administration, and (3) is not, pursuant to any provision of law, 
otherwise prohibited from acting as a representative, may be appointed 
as a representative in accordance with Sec. 410.684.
    (b) Person other than attorney. Any person (other than an attorney 
described in paragraph (a) of this section) who (1) is of good 
character, in good repute, and has the necessary qualifications to 
enable him to render valuable assistance to an individual in connection 
with his claim, (2) has not been disqualified or suspended from acting 
as a representative in proceedings before the Social Security 
Administration, and (3) is not, pursuant to any provision of law, 
otherwise prohibited from acting as a representative, may be appointed 
as a representative in accordance with Sec. 410.684.

[36 FR 23760, Dec. 14, 1971, as amended at 37 FR 17707, Aug. 30, 1972]



Sec. 410.686  Authority of representative.

    A representative, appointed and qualified as provided in Sec. Sec. 
410.684 and 410.685, may make or give, on behalf of the party he 
represents, any request or notice relative to any proceeding before the 
Administration under part B of title IV of the Act, including 
reconsideration, hearing and review, except that such representative may 
not execute a claim for benefits, unless he is a person designated in 
Sec. 410.222 as authorized to execute a claim. A representative shall 
be entitled to present or elicit evidence and allegations as to facts 
and law in any proceeding affecting the party he represents and to 
obtain information with respect to the claim of such party to the same 
extent as such party. Notice to any party of any administrative action, 
determination, or decision, or request to any party for the production 
of evidence may be sent to the representative of such party, and such 
notice or request shall have the same force and effect as if it had been 
sent to the party represented. (For fees to representatives for services 
performed before the Administration for an individual, see Sec. 
410.686b.)

[37 FR 20654, Sept. 30, 1972]



Sec. 410.686a  Proceedings before a State or Federal court.

    (a) Representation of claimant in court proceeding. Any service 
rendered by any representative in any proceeding before any State or 
Federal court shall not be considered services in any proceeding before 
the Social Security Administration for purposes of Sec. Sec. 410.686 
and 410.686b. However, if the representative has also rendered services 
in connection with the claim in any proceeding before the 
Administration, as defined in Sec. 410.686e, he must specify what, if 
any, amount of the fee he desires to charge is for services performed 
before the Administration, and if he charges any fee for such services, 
he must file the petition and furnish all of the information required by 
Sec. 410.686c(a).
    (b) Attorney fee allowed by a Federal court. In any case where a 
Federal court in any proceeding under part B of title IV of the Act 
renders a judgment favorable to a claimant who was represented before 
the court by an attorney, and the court, pursuant to section 206(b) of 
the Social Security Act, allows to the attorney as part of its judgment 
a fee not in excess of 25 percent of the total of past-due benefits to 
which the claimant is entitled by reason of the judgment, the 
Administration may certify the amount of such fee for payment to such 
attorney out of, but not in addition to, the amount of the past-due 
benefits payable (see Sec. 410.686d(a)). No other fee may be certified 
for direct payment to such attorney for such representation.
    (c) Past-due benefits defined. The term past-due benefits as used in 
paragraph (b) of this section means the total accumulated amount of 
benefits payable under part B of title IV of the Act by reason of the 
court's judgment through the month prior to the month of the

[[Page 672]]

judgment favorable to the claimant who was represented by the attorney.

[37 FR 17707, Aug. 30, 1972]



Sec. 410.686b  Fee for services performed for an individual before the 
Social Security Administration.

    (a) General. A fee for services performed for an individual before 
the Social Security Administration in any proceeding under part B of 
title IV of the Act may be charged and received only as provided in 
paragraph (b) of this section.
    (b) Charging and receiving fee. An individual who desires to charge 
or receive a fee for services rendered for an individual in any 
proceeding under part B of title IV of the Act before the Administration 
(see Sec. 410.686e), and who is qualified under Sec. 410.685, must 
file a written petition therefor in accordance with Sec. 410.686c(a). 
The amount of the fee he may charge or receive, if any, shall be 
determined on the basis of the factors described in Sec. 410.686c(b) by 
an authorized official of the appropriate component of the 
Administration, where the services were concluded by an initial, 
reconsidered, or revised determination, or by the Bureau of Hearings and 
Appeals where there is a decision or action by a hearing examiner or the 
Appeals Council of the Social Security Administration, as the case may 
be. Every such fee which is charged or received must be approved as 
provided in this section and no fee shall be charged or received which 
is in excess of the amount so approved. This rule shall be applicable 
whether the fee is charged to or received from a party to the proceeding 
or someone else. Pursuant to section 206(a) of the Social Security Act, 
in the case of a representative qualified as an attorney under Sec. 
410.685(a), the Administration may certify the amount of such fee, 
subject to the limitations in Sec. 410.686d(b), for payment out of, but 
not in addition to, the amount of past-due benefits payable.
    (c) Past-due benefits defined. The term past-due benefits as used in 
paragraph (b) of this section means the total accumulated amount of 
benefits payable under part B of title IV of the Act by reason of the 
favorable determination through the month prior to the month such 
determination is effectuated.
    (d) Notice of fee determination. Written notice of a fee 
determination made in accordance with paragraph (b) of this section 
shall be mailed to the representative and the claimant at their last 
known addresses. Such notice shall inform the parties of the amount of 
the fee authorized, the basis of the determination, the fact that the 
Administration assumes no responsibility for payment except that 
pursuant to section 206(a) of the Social Security Act the Administration 
may certify payment to an attorney, and that each party may request an 
administrative review of the determination within 30 days of the date of 
the notice.
    (e) Administrative review of fee determination--(1) Request timely 
filed. Administrative review of a fee determination will be granted if 
either the representative or the claimant files a written request for 
such review at an office of the Social Security Administration within 30 
days after the date of the notice of the fee determination. The party 
requesting the review shall send a copy of the request to the other 
party. An authorized official of the Social Security Administration who 
did not participate in the fee determination in question will review the 
determination. Written notice of the decision made on the administrative 
review shall be mailed to the representative and the claimant at their 
last known addresses.
    (2) Request not timely filed. Where the representative or the 
claimant files a request for administrative review, in accordance with 
paragraph (e)(1) of this subsection, but files such request more than 30 
days after the date of the notice of the fee determination, the person 
making the request shall state in writing the reasons why it was not 
filed within the 30-day period. The Social Security Administration will 
grant the review only if it determines that there was good cause for not 
filing the request timely. For purposes of this section, good cause is 
defined as any circumstance or event which would prevent the 
representative or the claimant from filing the request for review within 
such 30-day period or

[[Page 673]]

would impede his efforts to do so. Examples of such circumstances 
include the following:
    (i) The representative or claimant was seriously ill or had a 
physical or mental impairment and such illness prevented him from 
contacting the Social Security Administration in person or in writing;
    (ii) There was a death or serious illness in the individual's 
family;
    (iii) Pertinent records were destroyed by fire or other accidental 
cause;
    (iv) The representative or claimant was furnished incorrect or 
incomplete information by the Social Security Administration about his 
right to request review;
    (v) The individual failed to receive timely notice of the fee 
determination;
    (vi) The individual transmitted the request to another government 
agency in good faith within such 30-day period and the request did not 
reach the Social Security Administration until after such period had 
expired.

[37 FR 17708, Aug. 30, 1972, as amended at 41 FR 10425, Mar. 11, 1976]



Sec. 410.686c  Petition for approval of fee.

    (a) Filing of petition. In accordance with Sec. 410.686b, to obtain 
approval of a fee for services performed before the Social Security 
Administration in any proceeding under the Act, a representative, upon 
completion of the proceedings in which he rendered services, must file 
at an office of the Social Security Administration a written petition 
which shall contain the following information:
    (1) The dates his services began and ended;
    (2) An itemization of services rendered by him in a proceeding under 
the Act, with the amount of time spent in hours, or parts thereof, on 
each type of service;
    (3) The amount of the fee he desires to charge for services 
performed;
    (4) The amount of fee requested or charged for services rendered in 
the same matter before any State or Federal court;
    (5) The amount and itemization of expenses incurred for which 
reimbursement has been made or is expected;
    (6) The special qualifications which enabled him to render valuable 
serv-ices to the claimant (this requirement does not apply where the 
representative is an attorney); and
    (7) A statement showing that a copy of the petition was sent to the 
person represented.
    (b) Factors considered in evaluating a petition for fee. In 
evaluating a request for approval of a fee, the purpose of the coal 
miner's benefits program--to provide a measure of economic security for 
the beneficiaries thereof--will be considered, together with the 
following factors:
    (1) The services performed (including type of service);
    (2) The complexity of the case;
    (3) The level of skill and competence required in rendition of the 
services;
    (4) The amount of time spent on the case;
    (5) The results achieved. (While consideration is always to be given 
to the amount of benefits, if any, which are payable in a case, the 
amount of fee will not be based on the amount of such benefits alone but 
on a consideration of all of the factors listed in this section. The 
benefits payable in a given claim are governed by specific statutory 
provisions and by the occurrence of termination, deduction, or 
nonpayment events specified in the law, factors which are unrelated to 
efforts of the representative. In addition, the amount of accrued 
benefits payable in a given claim is affected by the length of time that 
has elapsed since the claimant became entitled to benefits.);
    (6) The level of administrative review to which the claim was 
carried within the Social Security Administration and the level of such 
review at which the representative entered the proceedings; and
    (7) The amount of the fee requested for services rendered, excluding 
the amount of any expenses incurred, but including any amount previously 
authorized or requested.
    (c) Time limit for filing petition for approval of attorney fee. In 
order for an attorney to receive direct payment of a fee authorized by 
the Social Security Administration from a claimant's past-due benefits 
(see Sec. 410.686d(b)), the petition for approval of a fee, or written 
notice of the intent to file a petition,

[[Page 674]]

should be filed with the Social Security Administration within 60 days 
of the date the notice of the determination favorable to the claimant is 
mailed. Where no such petition is filed within 60 days after the date 
such notice is mailed, written notice shall be sent to the attorney and 
the claimant, at their last known addresses, that the Social Security 
Administration will certify for payment to the claimant all the past-due 
benefits unless the attorney files within 20 days from the date of such 
notice a written petition for approval of a fee pursuant to paragraphs 
(a) and (b) of this section, or a written request for an extension of 
time. The attorney shall send to the claimant a copy of any request for 
an extension of time. Where the petition is not filed within this time, 
or by the last day of any extension approved, the Social Security 
Administration may certify the funds for payment to the claimant. Any 
fee charged thereafter remains subject to Social Security Administration 
approval but collection of any such approved fee shall be a matter 
between the attorney and his client.

[37 FR 17708, Aug. 30, 1972; 37 FR 18525, Sept. 13, 1972, as amended at 
41 FR 10425, Mar. 11, 1976]



Sec. 410.686d  Payment of fees.

    (a) Fees allowed by a Federal court. Subject to the limitations in 
Sec. 410.686a (b), the Administration shall certify for payment direct 
to attorneys, out of past-due benefits as defined in Sec. 410.686a(c), 
the amount of fee allowed by a Federal court in a proceeding under part 
B of title IV of the Act.
    (b) Fees authorized by the Social Security Administration--(1) 
Attorneys. Except as provided in Sec. 410.686c(c), in any case where 
the Social Security Administration makes a determination favorable to a 
claimant who was represented by an attorney as defined in Sec. 
410.685(a) in a proceeding before the Social Security Administration and 
as a result of such determination past-due benefits, as defined in Sec. 
410.686b (c), are payable, the Social Security Administration shall 
certify for payment to the attorney, out of such benefits, whichever of 
the following is the smallest:
    (i) Twenty-five percent of the total of such past-due benefits;
    (ii) The amount of attorney's fee set by the Social Security 
Administration, or
    (iii) The amount agreed upon between the attorney and the claimant.
    (2) Persons other than attorneys. The Administration assumes no 
responsibility for the payment of any fee which a representative as 
defined in Sec. 410.685(b) (person other than an attorney) has been 
authorized to charge in accordance with the provisions of Sec. 410.686b 
and will not deduct such fee from benefits payable under the Act to any 
beneficiary.
    (c) Responsibility of the Social Security Administration. The Social 
Security Administration assumes no responsibility for the payment of a 
fee based on a revised determination where the request for 
administrative review was not filed timely. (See paragraph (b) of this 
section for payment of attorney fees authorized by the Social Security 
Administration.)

[37 FR 17708, Aug. 30, 1972, as amended at 41 FR 10426, Mar. 11, 1976]



Sec. 410.686e  Services rendered for an individual in a proceeding before 
the Administration under part B of title IV of the Act.

    Services rendered for an individual in a proceeding before the 
Administration under part B of title IV of the Act consist of services 
performed for an individual in connection with any claim before SSA 
under part B of title IV of the Act, including any services in 
connection with any asserted right calling for an initial or 
reconsidered determination by the Administration, and a decision or 
action by a hearing examiner or by the Appeals Council of the Bureau of 
Hearings and Appeals of the Administration, whether such determination, 
decision, or action is rendered before or after remand of a claim by a 
court. Such services include, but are not limited to, services in 
connection with a claim for benefits; a request for modification of the 
amount of benefits; the reinstatement of benefits; proof of support; and 
proof of employment as a coal miner.

[37 FR 17708, Aug. 30, 1972, as amended at 62 FR 38453, July 18, 1997]

[[Page 675]]



Sec. 410.687  Rules governing the representation and advising of claimants 
and parties.

    No attorney or other representative shall:
    (a) With intent to defraud, in any matter willfully and knowingly 
deceive, mislead, or threaten by word, circular, letter, or 
advertisement, either oral or written, or any claimant or prospective 
claimant or beneficiary with respect to benefits or any other initial or 
continued right under the Act; or
    (b) Knowingly charge or collect, or make any agreement to charge or 
collect, directly or indirectly, any fee in connection with any claim 
except under the circumstances prescribed in Sec. 410.686b, or 
knowingly charge, demand, receive, or collect for services rendered 
before a Federal court in connection with a claim under part B of title 
IV of the Act, any amount in excess of that allowed by a court as 
described in Sec. 410.686a(b).
    (c) Knowingly make or participate in the making or presentation of 
any false statement, representation, or claim as to any material fact 
affecting the right of any person to benefits under part B of title IV 
of the Act, or as to the amount of any benefits; or
    (d) Divulge, except as may be authorized by regulations now or 
hereafter prescribed by the Commissioner, any information furnished or 
disclosed to him by the Administration relating to the claim or 
prospective claim of another person (see Sec. 410.120).

[37 FR 17709, Aug. 30, 1972, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.687a  Effective date.

    The provisions of Sec. Sec. 410.686a, 410.686b, 410.686c, 410.686d, 
and 410.686e, shall be effective upon publication in the Federal 
Register (8-31-72), with respect to all claims processed thereafter, and 
shall apply to all legal services rendered in connection with those 
claims for which a fee has not been fully paid before this effective 
date, notwithstanding the fact that fee contracts for such services may 
have been entered into, or services rendered, before this effective 
date.

[37 FR 17709, Aug. 30, 1972]



Sec. 410.688  Disqualification or suspension of an individual from acting 
as a representative in proceedings before SSA.

    Whenever it appears that an individual has violated any of the rules 
in Sec. 410.687, or has been convicted of a violation under section 206 
of the Social Security Act, or has otherwise refused to comply with the 
Commissioner's rules or regulations on representation of claimants, SSA 
may institute proceedings as herein provided to suspend or disqualify 
that individual from acting as a representative in proceedings before 
SSA.

[62 FR 38453, July 18, 1997]



Sec. 410.689  Notice of charges.

    The Deputy Commissioner for Programs and Policy, or his or her 
designee, will prepare a notice containing a statement of charges that 
constitutes the basis for the proceeding against the individual. This 
notice will be delivered to the individual charged, either by certified 
or registered mail to his last known address or by personal delivery, 
and will advise the individual charged to file an answer, within 30 days 
from the date the notice was mailed, or was delivered to him personally, 
indicating why he should not be suspended or disqualified from acting as 
a representative before the SSA. This 30-day period may be extended for 
good cause shown, by the Deputy Commissioner for Programs and Policy, or 
his or her designee. The answer must be in writing under oath (or 
affirmation) and filed with the Social Security Administration, 6401 
Security Boulevard, Baltimore, MD 21235, within the prescribed time 
limitation. If an individual charged does not file an answer within the 
time prescribed, he shall not have the right to present evidence. 
However, see Sec. 410.692(g) relating to statements with respect to 
sufficiency of the evidence upon which the charges are based or 
challenging the validity of the proceedings.

[36 FR 23760, Dec. 14, 1971, as amended at 37 FR 17709, Aug. 30, 1972; 
62 FR 38453, July 18, 1997]

[[Page 676]]



Sec. 410.690  Withdrawal of charges.

    If an answer is filed or evidence is obtained that establishes, to 
the satisfaction of the Deputy Commissioner for Programs and Policy, or 
his or her designee, that reasonable doubt exists about whether the 
individual charged should be suspended or disqualified from acting as a 
representative before the Administration, the charges may be withdrawn. 
The notice of withdrawal shall be mailed to the individual charged at 
his last known address.

[36 FR 23760, Dec. 14, 1971, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.691  Referral to the Deputy Commissioner for Programs and Policy, 
or his or her designee, for hearing and decision.

    If action is not taken to withdraw the charges before the expiration 
of 15 days after the time within which an answer may be filed, the 
record of the evidence in support of the charges shall be referred to 
the Deputy Commissioner for Programs and Policy, or his or her designee, 
with a request for a hearing and a decision on the charges.

[36 FR 23760, Dec. 14, 1971, as amended at 62 FR 38453, July 18, 1997]



Sec. 410.692  Hearing on charges.

    (a) Hearing officer. Upon receipt of the notice of charges, the 
record, and the request for hearing (see Sec. 410.691), the Deputy 
Commissioner for Programs and Policy, or his or her designee, shall 
designate an Administrative Law Judge to act as a hearing officer to 
hold a hearing on the charges. No hearing officer shall conduct a 
hearing in a case in which he is prejudiced or partial with respect to 
any party or where he has any interest in the matter pending for 
decision before him. Notice of any objection which a party to the 
hearing may have to the hearing officer who has been designated to 
conduct the hearing shall be made at the earliest opportunity. The 
hearing officer shall consider the objection(s) and shall, in his 
discretion, either proceed with the hearing or withdraw. If the hearing 
officer withdraws, another hearing officer shall be designated as 
provided in this section to conduct the hearing. If the hearing officer 
does not withdraw, the objecting party may, after the hearing, present 
his objections to the Appeals Council as reason why he believes the 
hearing officer's decision should be revised or a new hearing held 
before another hearing officer.
    (b) Time and place of hearing. The hearing officer shall notify the 
individual charged and the Deputy Commissioner for Programs and Policy, 
or his or her designee, of the Administration, of the time and place for 
a hearing on the charges. The notice of the hearing shall be mailed to 
the individual charged at his last known address and to the Deputy 
Commissioner for Programs and Policy, or his or her designee, not less 
than 20 days prior to the date fixed for the hearing.
    (c) Change of time and place for hearing. The hearing officer may 
change the time and place for the hearing (see paragraph (b) of this 
section) either on his own motion or at the request of a party for good 
cause shown. The hearing officer may adjourn or postpone the hearing, or 
he may reopen the hearing for the receipt of additional evidence at any 
time prior to the mailing of notice of the decision in the case (see 
Sec. 410.693). Reasonable notice shall be given to the parties of any 
change in the time or place of hearing or of any adjournment or 
reopening of the hearing.
    (d) Parties. A person against whom charges have been preferred under 
the provisions of Sec. 410.688 shall be a party to the hearing. The 
Deputy Commissioner for Programs and Policy, or his or her designee, of 
the Administration, shall also be a party to the hearing.
    (e) Subpenas. Any party to the hearing may request the hearing 
officer or a member of the Appeals Council to issue subpenas for the 
attendance and testimony of witnesses and for the production of books, 
records, correspondence, papers, or other documents which are relevant 
and material to any matter in issue at the hearing. The hearing officer 
may on his own motion issue subpenas for the same purposes when he deems 
such action reasonably necessary for the full presentation of the facts. 
Any party who desires the issuance of a subpena shall, not less

[[Page 677]]

than 5 days prior to the time fixed for the hearing, file with the 
hearing officer a written request therefor, designating the witnesses or 
documents to be produced, and describing the address or location thereof 
with sufficient particularity to permit such witnesses or documents to 
be found. The request for a subpena shall state the pertinent facts 
which the party expects to establish by such witness or document and 
whether such facts could be established by other evidence without the 
use of a subpena. Subpenas, as provided for above, shall be issued in 
the name of the Commissioner of Social Security, and the Social Security 
Administration shall pay the cost of the issuance and the fees and 
mileage of any witness so subpenaed, as provided in section 205(d) of 
the Social Security Act.
    (f) Conduct of the hearing. The hearing shall be open to the parties 
and to such other persons as the hearing officer or the individual 
charged deems necessary or proper. The hearing officer shall inquire 
fully into the matters at issue and shall receive in evidence the 
testimony of witnesses and any documents which are relevant and material 
to such matters: Provided, however, That if the individual charged has 
filed no answer he shall have no right to present evidence but in the 
discretion of the hearing officer may appear for the purpose of 
presenting a statement of his contentions with regard to the sufficiency 
of the evidence or the validity of the proceedings upon which his 
suspension or disqualification, if it occurred, would be predicated or, 
in his discretion, the hearing officer may make or recommend a decision 
(see Sec. 410.693) on the basis of the record referred in accordance 
with Sec. 410.691. If the individual has filed an answer and if the 
hearing officer believes that there is relevant and material evidence 
available which has not been presented at the hearing, the hearing 
officer may at any time prior to the mailing of notice of the decision, 
or submittal of a recommended decision, reopen the hearing for the 
receipt of such evidence. The order in which the evidence and the 
allegations shall be presented and the conduct of the hearing shall be 
at the discretion of the hearing officer.
    (g) Evidence. Evidence may be received at the hearing, subject to 
the provision herein, even though inadmissible under the rules of 
evidence applicable to court procedure. The hearing officer shall rule 
on the admissibility of evidence.
    (h) Witnesses. Witnesses at the hearing shall testify under oath or 
affirmation. The witnesses of a party may be examined by such party or 
by his representative, subject to interrogation by the other party or by 
his representative. The hearing officer may ask such questions as he 
deems necessary. He shall rule upon any objection made by either party 
as to the propriety of any question.
    (i) Oral and written summation. The parties shall be given, upon 
request, a reasonable time for the presentation of an oral summation and 
for the filing of briefs or other written statements of proposed 
findings of fact and conclusions of law. Copies of such briefs or other 
written statements shall be filed in sufficient number that they may be 
made available to any party in interest requesting a copy and to any 
other party designated by the Appeals Council.
    (j) Record of hearing. A complete record of the proceedings at the 
hearing shall be made and transcribed in all cases.
    (k) Representation. The individual charged may appear in person and 
he may be represented by counsel or other representative.
    (l) Failure to appear. If after due notice of the time and place for 
the hearing, a party to the hearing fails to appear and fails to show 
good cause as to why he could not appear, such party shall be considered 
to have waived his right to be present at the hearing. The hearing 
officer may hold the hearing so that the party present may offer 
evidence to sustain or rebut the charges.
    (m) Dismissal of charges. The hearing officer may dismiss the 
charges in the event of the death of the individual charged.
    (n) Cost of transcript. On the request of a party, a transcript of 
the hearing before the hearing officer will be prepared and sent to the 
requesting party upon the payment of cost, or if the cost

[[Page 678]]

is not readily determinable, the estimated amount, thereof, unless for 
good cause such payment is waived.

[36 FR 23760, Dec. 14, 1971, as amended at 37 FR 17709, Aug. 30, 1972; 
62 FR 38454, July 18, 1997]



Sec. 410.693  Decision by hearing officer.

    (a) General. As soon as practicable after the close of the hearing, 
the hearing officer shall issue a decision (or certify the case with a 
recommended decision to the Appeals Council for decision under the rules 
and procedures described in Sec. Sec. 410.657 through 410.659) which 
shall be in writing and contain findings of fact and conclusions of law. 
The decision shall be based upon the evidence of record. If the hearing 
officer finds that the charges have been sustained, he shall either:
    (1) Suspend the individual for a specified period of not less than 1 
year, nor more than 5 years, from the date of the decision, or
    (2) Disqualify the individual from further practice before the 
Administration until such time as the individual may be reinstated under 
Sec. 410.699.

A copy of the decision shall be mailed to the individual charged at his 
last known address and to the Deputy Commissioner for Programs and 
Policy, or his or her designee, together with notice of the right of 
either party to request the Appeals Council to review the decision of 
the hearing officer.
    (b) Effect of hearing officer's decision. The hearing officer's 
decision shall be final and binding unless reversed or modified by the 
Appeals Council upon review (see Sec. 410.697).
    (1) If the final decision is that the individual is disqualified 
from practice before the Administration, he shall not be permitted to 
represent an individual in a proceeding before the Administration until 
authorized to do so under the provisions of Sec. 410.699.
    (2) If the final decision suspends the individual for a specified 
period of time, he shall not be permitted to represent an individual in 
a proceeding before the Administration during the period of suspension 
unless authorized to do so under the provisions of Sec. 410.699.

[36 FR 23760, Dec. 14, 1971, as amended at 62 FR 38454, July 18, 1997]



Sec. 410.694  Right to request review of the hearing officer's decision.

    (a) General. After the hearing officer has issued a decision, either 
of the parties (see Sec. 410.692) may request the Appeals Council to 
review the decision.
    (b) Time and place of filing request for review. The request for 
review shall be made in writing and filed with the Appeals Council 
within 30 days from the date of mailing the notice of the hearing 
officer's decision, except where the time is extended for good cause. 
The requesting party shall certify that a copy of the request for review 
and of any documents that are submitted therewith (see Sec. 410.695) 
have been mailed to the opposing party.



Sec. 410.695  Procedure before Appeals Council on review of hearing 
officer's decision.

    The parties shall be given, upon request, a reasonable time to file 
briefs or other written statements as to fact and law and to appear 
before the Appeals Council for the purpose of presenting oral argument. 
Any brief or other written statement of contentions shall be filed with 
the Appeals Council, and the presenting party shall certify that a copy 
has been mailed to the opposing party.



Sec. 410.696  Evidence admissible on review.

    (a) General. Evidence in addition to that introduced at the hearing 
before the hearing officer may not be admitted except where it appears 
to the Appeals Council that the evidence is relevant and material to an 
issue before it, and subject to the provisions in this section.
    (b) Individual charged filed answer. Where it appears to the Appeals 
Council that additional relevant material is available and the 
individual charged filed an answer to the charges (see Sec. 410.689), 
the Appeals Council shall require the production of such evidence and 
may designate a hearing officer or member of the Appeals Council to 
receive such evidence. Before additional evidence is admitted into the 
record, notice that evidence will be received with respect to certain 
issues shall be mailed to the parties, and each party shall be given a 
reasonable opportunity

[[Page 679]]

to comment on such evidence and to present other evidence which is 
relevant and material to the issues unless such notice is waived.
    (c) Individual charged did not file answer. Where the individual 
charged filed no answer to the charges (see Sec. 410.689), evidence in 
addition to that introduced at the hearing before the hearing officer 
may not be admitted by the Appeals Council.



Sec. 410.697  Decision by Appeals Council on review of hearing officer's 
decision.

    The decision of the Appeals Council shall be based upon evidence 
received into the hearing record (see Sec. 410.692(j)) and such further 
evidence as the Appeals Council may receive (see Sec. 410.696) and 
shall either affirm, reverse, or modify the hearing officer's decision. 
The Appeals Council, in modifying a hearing officer's decision 
suspending the individual for a specified period shall in no event 
reduce a period of suspension to less than 1 year, or in modifying a 
hearing officer's decision to disqualify an individual shall in no event 
impose a period of suspension of less than 1 year. Where the Appeals 
Council affirms or modifies a hearing officer's decision, the period of 
suspension or disqualification shall be effective from the date of the 
Appeals Council's decision. Where a period of suspension or 
disqualification is initially imposed by the Appeals Council, such 
suspension or disqualification shall be effective from the date of the 
Appeals Council's decision. The decision of the Appeals Council will be 
in writing and a copy of the decision will be mailed to the individual 
at his last known address and to the Deputy Commissioner for Programs 
and Policy, or his or her designee.

[36 FR 23760, Dec. 14, 1971, as amended at 37 FR 17709, Aug. 30, 1972; 
62 FR 38454, July 18, 1997]



Sec. 410.698  Dismissal by Appeals Council.

    The Appeals Council may dismiss a request for the review of any 
proceedings instituted under Sec. 410.688 pending before it in any of 
the following circumstances:
    (a) Upon request of party. Proceedings pending before the Appeals 
Council may be discontinued and dismissed upon written application of 
the party or parties who filed the request for review provided there is 
no party who objects to discontinuance and dismissal.
    (b) Death of party. Proceedings before the Appeals Council may be 
dismissed upon death of a party against whom charges have been 
preferred.
    (c) Request for review not timely filed. A request for review of a 
hearing officer's decision shall be dismissed when the party has failed 
to file a request for review within the time specified in Sec. 410.694 
and such time is not extended for good cause.



Sec. 410.699  Reinstatement after suspension or disqualification.

    (a) General. An individual shall be automatically reinstated to 
serve as representative before the Administration at the expiration of 
any period of suspension. In addition, after 1 year from the effective 
date of any suspension or disqualification, an individual who has been 
suspended or disqualified from acting as a representative in proceedings 
before the Administration may petition the Appeals Council for 
reinstatement prior to the expiration of a period of suspension or 
following a disqualification order. The petition for reinstatement shall 
be accompanied by any evidence the individual wishes to submit. The 
Appeals Council shall notify the Deputy Commissioner for Programs and 
Policy, or his or her designee, of the receipt of the petition and grant 
him 30 days in which to present a written report of any experiences 
which the Administration may have had with the suspended or disqualified 
individual during the period subsequent to the suspension or 
disqualification. A copy of any such report shall be made available to 
the suspended or disqualified individual.
    (b) Basis of action. A request for revocation of a suspension or a 
disqualification shall not be granted unless the Appeals Council is 
reasonably satisfied that the petitioner is not likely in the future to 
conduct himself contrary to the provisions of the rules and regulations 
of the Administration.

[[Page 680]]

    (c) Notice. Notice of the decision on the request for reinstatement 
shall be mailed to the petitioner and a copy shall be mailed to the 
Deputy Commissioner for Programs and Policy, or his or her designee.
    (d) Effect of denial. If a petition for reinstatement is denied, a 
subsequent petition for reinstatement shall not be considered prior to 
the expiration of 1 year from the date of notice of the previous denial.

[36 FR 23760, Dec. 14, 1971, as amended at 62 FR 38454, July 18, 1997]



Sec. 410.699a  Penalties for fraud.

    The penalty for any person found guilty of willfully making any 
false or misleading statement or representation for the purpose of 
obtaining any benefit or statement or payment under this part shall be:
    (a) A fine of up to $1,000, or
    (b) Imprisonment for not more than 1 year, or
    (c) Both (a) and (b).

(Sec. 411, Federal Coal Mine Health and Safety Act of 1969, as amended; 
85 Stat. 793, 30 U.S.C. 921)

[43 FR 34781, Aug. 7, 1978]



 Subpart G_Rules for the Review of Denied and Pending Claims Under the 
             Black Lung Benefits Reform Act (BLBRA) of 1977

    Authority: Sec. 702(a)(5) of the Social Security Act (42 U.S.C. 
902(a)(5)), sec. 411, 82 Stat. 793 and 30 U.S.C. 902.

    Source: 43 FR 34781, Aug. 7, 1978, unless otherwise noted.



Sec. 410.700  Background.

    (a) The Black Lung Benefits Reform Act of 1977 broadens the 
definitions of miner and pneumoconiosis and modifies the evidentiary 
requirements necessary to establish entitlement to black lung benefits. 
Section 435 of the Black Lung Benefits Reform Act of 1977 requires that 
each claimant whose claim has been denied or is pending be given the 
opportunity to have the claim reviewed under this Act. The purpose of 
the subpart G is to explain the changes and the procedures, and rules 
which are applicable with regard to the Social Security Administration's 
review of part B claims in light of the BLBRA of 1977.
    (b) Two Government agencies are responsible for the review of 
claims. The Social Security Administration, upon the request of the 
claimant, is responsible for the review of claims filed with the Social 
Security Administration under part B of title IV of the Federal Coal 
Mine Health and Safety Act of 1969, as amended, except those claims 
filed under section 415 of the Act. The Department of Labor, Office of 
Workers' Compensation Programs is responsible for the review of the 
following claims:
    (1) Claims filed under part C of title IV of the Federal Coal Mine 
Health and Safety Act of 1969, as amended;
    (2) Part B claims filed under section 415 of the Act; and
    (3) Those part B claims for which the claimant elects review by DOL. 
The Department of Labor regulations explaining the review procedures for 
these claims are published at 20 CFR part 727.

[43 FR 34781, Aug. 7, 1978, as amended at 62 FR 38454, July 18, 1997]



Sec. 410.701  Jurisdiction for determining entitlement under part B.

    In order for the Social Security Administration to approve a claim 
under this subpart G, the evidence on file must show, in a living 
miner's claim, that the miner was totally disabled due to pneumoconiosis 
prior to July 1, 1973. In a survivor's claim, the evidence must show (1) 
that the deceased miner was either totally disabled due to 
pneumoconiosis at the time of death, or that death was due to 
pneumoconiosis, and that death occurred prior to January 1, 1974, or (2) 
that the miner was entitled to part B benefits at the time of death, and 
that the survivor filed for benefits either within 6 months of such 
death or before January 1, 1974, whichever is later, regardless of when 
such death occurred.



Sec. 410.702  Definitions and terms.

    The following definitions shall apply with regard to review under 
this subpart G.
    (a) Denied Claim defined. Denied claim means: (1) Any claim that was

[[Page 681]]

filed with the Social Security Administration under part B of title IV 
of the Act; and
    (2) Entitlement to benefits was not established; and
    (3) The time limit for any further appeal has expired.
    (b) Pending Claim defined. Pending claim means: (1) Any claim that 
was filed with the Social Security Administration under part B of title 
IV of the Act; and
    (2) Entitlement to benefits has not been established; and
    (3) The time limit for any appeal has not expired or action is still 
pending on an appeal which was requested timely, or on which an 
extension of time to request appeal has been granted.
    (c) Withdrawn Claim defined. Withdrawn claim means: Any claim that 
was filed with the Social Security Administration under part B of title 
IV of the Act which has been previously withdrawn at the request of the 
claimant. This claim shall not be considered a pending or denied claim.
    (d) Pneumoconiosis defined. In addition to the definition of 
pneumoconiosis contained in Sec. Sec. 410.110(o) and 410.401(b), 
pneumoconiosis means a chronic dust disease of the lung and its 
sequelae, including respiratory and pulmonary impairments, arising out 
of coal mine employment.
    (e) Evidence on file defined. Evidence on file is information in the 
black lung claims file, in the social security title II and title XVI 
disability claims files, or in a person's earnings record, as of March 
1, 1978.
    (f) Determining total disability--the working miner. A miner shall 
be considered totally disabled when pneumoconiosis prevents the miner 
from engaging in gainful employment requiring the skills and abilities 
comparable to those of any employment in a mine or mines in which he or 
she previously engaged with some regularity and over a substantial 
period of time.
    (1) In the case of a living miner if there are changed circumstances 
of employment indicative of reduced ability to perform the miner's usual 
coal mine work, such miner's employment in a mine shall not be used as 
conclusive evidence that the miner is not totally disabled.
    (2) A deceased miner's employment in a mine at the time of death 
shall not be used as conclusive evidence that the miner was not totally 
disabled.
    (3) Any miner not totally disabled by complicated pneumoconiosis who 
has been determined to be eligible for benefits as a result of a claim 
filed while the miner is engaged in coal mine employment shall be 
entitled to such benefits if his or her employment terminates within one 
year after the date the determination becomes final.
    (g) Survivor entitlement for deceased miner--25 years or more coal 
mine employment. If a miner died on or before March 1, 1978, and had 
worked for 25 years or more in one or more coal mines before June 30, 
1971, the eligible survivors of the miner shall be enititled to the 
payment of benefits at the same rate as that under section 412(a)(2) of 
the Act, unless it is established that at the time of the miner's death 
the miner was not partially or totally disabled due to pneumoconiosis.
    (h) Miner defined. A miner is any person who works or has worked in 
or around a coal mine or coal preparation facility in the extraction, 
preparation or transportation of coal, and any person who works or has 
worked in coal mine construction or maintenance in or around a coal mine 
or coal preparation facility. A coal mine construction or transportation 
worker shall be considered a miner to the extent such individual is or 
was exposed to coal dust as a result of his or her employment in or 
around a coal mine or preparation facility. In the case of an individual 
employed in coal transportation or coal mine construction, there shall 
be a rebuttable presumption that such individual was exposed to coal 
dust during all periods of such employment occurring in or around a coal 
mine or coal preparation facility for purposes of determining whether 
such individual is or was a miner. The presumption may be rebutted by 
evidence which demonstrates that the individual was not regularly 
exposed to coal dust during his or her employment in or around a coal 
mine or preparation facility or that the individual was not regularly 
employed in or around a coal mine or coal preparation facility. An 
individual

[[Page 682]]

employed by a coal mine operator, regardless of the nature of such 
individual's employment, shall be considered a miner unless such 
individual was not employed in or around a coal mine or coal preparation 
facility. A person who is or was a self employed miner, independent 
contractor, or coal mine worker, as described in this paragraph, shall 
be considered a miner for the purposes of this subpart.
    (i) X-ray rereading prohibition. Where there is other evidence, such 
as the kind in Sec. 410.414(c), that a miner has a pulmonary or 
respiratory impairment, a board certified or board eligible 
radiologist's interpretation of a chest X-ray taken by a radiologist or 
qualified technician will be accepted if: (1) It is of a quality 
sufficient to demonstrate the presence of pneumoconiosis and; (2) it was 
submitted in support of a claim, unless it is established that the claim 
has been fraudulently represented.
    (j) Acceptance of autopsy reports. Unless there is reason to believe 
that an autopsy report is not accurate, or that the condition of the 
miner is being fraudulently misrepresented, an autopsy report concerning 
the presence of pneumoconiosis and the stage of advancement of the 
disease will be accepted if it is already on file.
    (k) Acceptance of affidavits-miner deceased. Where there is no 
medical evidence or other relevant evidence (see Sec. 410.414(c)) to 
establish total disability or death due to pneumoconiosis of a deceased 
miner, affidavits from the spouse and other individuals having knowledge 
of the deceased miner's physical condition will be sufficient to 
establish total disability or death due to pneumoconiosis if they are 
already on file.

[43 FR 34781, Aug. 7, 1978, as amended at 44 FR 10058, Feb. 16, 1979]



Sec. 410.703  Adjudicatory rules for determining entitlement to benefits.

    (a) General. Section 402(f)(2) of the Act provides that the criteria 
and standards to be applied to a claim reviewed under section 435 of the 
Act, for determining whether a miner is or was totally disabled due to 
pneumoconiosis or died due to pneumoconiosis, shall be no more 
restrictive than the criteria applicable to a claim filed with the 
Social Security Administration on or before June 30, 1973, under part B 
of title IV of the Act. In keeping with this provision, the interim 
evidentiary rules and disability criteria contained in Sec. 410.490 
will be applicable for this review.
    (b) Payment provisions. The DOL has sole responsibility for 
assigning liability for payment purposes. The DOL regulations relating 
to the amount of benefits payable, the manner of payment and all other 
provisions published at 20 CFR part 725 shall be applicable to a claim 
approved under this subpart.
    (c) Date from which benefits are payable. Benefits for claims 
reviewed under this subpart G for which entitlement to benefits is 
established under the BLBRA of 1977 are payable on a retroactive basis 
for a period which begins no earlier than January 1, 1974.



Sec. 410.704  Review procedures.

    (a) Notification. Each claimant who has filed a claim for benefits 
under part B of title IV of the Act, and whose claim is either pending 
before the Social Security Administration or the courts or has been 
denied on or before March 1, 1978, will be mailed a notice advising 
that, upon the request of the claimant, the claim shall be:
    (1) Reviewed by the Social Security Administration or DOL, Office of 
Workers' Compensation Programs to see whether entitlement to benefits 
may be established under the BLBRA of 1977; and
    (2) If review by the Social Security Administration is requested, 
the review will be made on the basis of the evidence on file as of March 
1, 1978; and
    (3) If review by the Office of Workers' Compensation Programs is 
requested, the Office of Workers' Compensation Programs will provide an 
opportunity for additional evidence to be submitted for consideration 
prior to a determination.
    (b) Where the claimant is mentally incompetent or physically 
incapable, or is a minor, review of the claim may be elected by those 
people described in Sec. 410.222. Where the original claimant is 
deceased, any person who may be entitled to benefits as a survivor of 
the claimant, including those described in

[[Page 683]]

Sec. 410.570(c), may elect review of the claim.
    (c) Effect of review of a pending part B claim under the BLBRA of 
1977 on the pending claim. Part B claims pending before the Social 
Security Administration or the courts will continue to be processed 
under the old law at the same time that these claims are being reviewed 
by the Social Security Administration, at the claimant's request, under 
the BLBRA of 1977. Claimants would then have two separate and 
independent claims for benefits pending. Where claims for benefits are 
reviewed, upon request, under this subpart G and it is determined that 
entitlement to benefits is established under the BLBRA of 1977, part C 
benefits may be paid back to January 1, 1974. Where pending part B 
claims continue to be processed under the old law and it is determined 
that the claimant is entitled to benefits under the old law, then the 
benefits may include payment for periods prior to January 1, 1974. Part 
C benefits payable to an individual for periods beginning with January 
1, 1974, are offset by part B benefits payable for the same periods to 
the individual. Election by claimants to have their pending claims 
reviewed under the BLBRA of 1977 for payment of benefits back to January 
1, 1974, will not affect the processing of their pending part B claims 
under the old law for payment of benefits prior to January 1, 1974.
    (d) Response to notification. A request for review by the Social 
Security Administration or the Office of Workers' Compensation Programs, 
must be received by the Social Security Administration within 6 months 
from the date on which the notice is mailed. Upon receipt, the request 
will be dated and made a part of the claims file. If a request for 
review by the Social Security Administration or the Office of Workers' 
Compensation Program is not received by the Social Security 
Administration within 6 months from the date the notice is mailed, the 
claimant shall be considered to have waived the right of review afforded 
by this subpart G unless good cause can be established for not 
responding within this time period. Good cause may be established in the 
following situations:
    (1) Circumstances beyond the individual's control, such as extended 
illness, mental or physical incapacity, or communication difficulties; 
or
    (2) Incorrect or incomplete information furnished the individual by 
the Social Security Administration; or
    (3) Unusual or unavoidable circumstances, the nature of which 
demonstrate that the individual could not reasonably be expected to have 
been aware of the need to respond within this time period.

Good cause for failure to respond timely does not exist when there is 
evidence of record that the individual was informed that he or she 
should respond timely and the individual failed to do so because of 
negligence or intent not to respond.
    (e) Changing election. After a claimant has elected review by the 
Social Security Administration, he or she may change the election any 
time prior to the date an initial determination is made. If a claimant 
has elected review by the Office of Workers' Compensation Programs. The 
claimant may change the election if the Social Security Administration 
has not yet forwarded the file to the Office of Workers' Compensation 
Programs. Once the file is forwarded to the Office of Workers' 
Compensation Programs, a claimant's right to change the election from 
the Office of Workers' Compensation Programs to the Social Security 
Administration is governed by the regulations of DOL.
    (f) Social Security Administration review elected. (1) If review by 
the Social Security Administration is requested, a complete review of 
the evidence on file will be made to see if the file establishes 
entitlement to benefits under the BLBRA of 1977. Evidence on file is 
information in the black lung claims file, in the social security title 
II and title XVI disability claims files, or in a person's earnings 
record, as of March 1, 1978. In the case of a pending claim which is 
being appealed, this review will not be delayed because of the pending 
claim. If it is determined that eligibility to benefits can be 
established, the claims file, including all evidence and other pertinent 
material in the claims file, will be transferred to the

[[Page 684]]

Office of Worker's Compensation Programs for processing and assignment 
of liability in accordance with regulations published by DOL at 20 CFR 
part 727. The decision of the Social Security Administration approving 
the claim will be binding upon the Office of Worker's Compensation 
Programs as an initial determination of the claim. The Social Security 
Administration will notify the claimant of its approval. If the claimant 
disagrees with any part of the Social Security Administration's 
determination of approval, the claimant may request review of this 
determination by the Office of Worker's Compensation Programs. The 
Social Security Administration has no authority under the BLBRA of 1977 
to process an appeal of any determination made by it in reviewing these 
denied and pending part B claims.
    (2) If it is determined that the evidence on file is insufficient to 
support an award of benefits, the claims file, including all evidence 
and other pertinent material in the claims file, will be transferred to 
the Office of Worker's Compensation Programs for further review in 
accordance with regulations published at 20 CFR part 727. The Social 
Security Administration will notify the claimant of this action.
    (g) DOL, Office of Workers' Compensation Programs review elected. If 
review by the Office of Workers' Compensation Programs is requested, the 
claims file and all pertinent material will be forwarded to the Office 
of Workers' Compensation Programs, without review by the Social Security 
Administration, for processing by the Office of Workers' Compensation 
Programs in accordance with regulations published at 20 CFR part 727.

[43 FR 34781, Aug. 7, 1978, as amended at 44 FR 10058, Feb. 16, 1979; 44 
FR 12164, Mar. 6, 1979; 62 FR 38454, July 18, 1997]



Sec. 410.705  Duplicate claims.

    (a) Approved by the Social Security Administration--denied or 
pending with the Office of Workers' Compensation Programs. A person 
whose part B claim for benefits was approved by the Social Security 
Administration and who also filed a part C claim with the Office of 
Workers' Compensation Programs which is pending or has been denied shall 
be entitled to a review of the part C claim by the Office of Workers' 
Compensation Programs under the BLBRA of 1977.
    (b) Denied or pending with the Social Security Administration--
approved by the Office of Workers' Compensation Programs. A person who 
has filed a part B claim with the Social Security Administration which 
is pending or has been denied and who has also filed a part C claim with 
the Office of Workers' Compensation Programs, which has been approved, 
shall be entitled, upon request, to a review of the pending or denied 
part B claim in light of the BLBRA of 1977 by either the Social Security 
Administration or the Office of Workers' Compensation Programs, in 
accordance with this subpart.
    (c) Pending or denied by the Social Security Administration and the 
Office of Workers' Compensation Programs. A person who has filed a claim 
both with the Social Security Administration and the Office of Workers' 
Compensation Programs and whose claims are either pending with or have 
been denied by both agencies shall have the claim reviewed under the 
BLBRA of 1977 by the Social Security Administration if such review is 
requested by the claimant. If the claim is not approved by the Social 
Security Administration it shall be forwarded to the Office of Workers' 
Compensation Programs for further review as provided in Sec. 
410.704(e)(2). During the pendency of review proceedings by the Social 
Security Administration, if any, no action shall be taken by the 
Secretary of Labor with respect to the part C claim which is pending or 
has been denied by DOL. If the claimant does not respond to notification 
of his or her right to review by the Social Security Administration 
within 6 months of the notice (see Sec. 410.704(c)) unless the period 
is enlarged for good cause shown, the Office of Workers' Compensation 
Programs shall proceed under DOL's regulations at 20 CFR part 727 to 
review the claim originally filed with the Secretary of Labor. If the 
claimant, upon notification by the Social Security Administration of his 
or her right to review (see Sec. 410.704(a)) requests that the claim 
originally filed with the Social Security Administration be forwarded to 
the Office of

[[Page 685]]

Workers' Compensation Programs for review, or if more than one claim has 
been filed with the Secretary of Labor by the same claimant, such claims 
shall be merged and processed with the first claim filed with the Office 
of Workers' Compensation Programs.



Sec. 410.706  Effect of the Social Security Administration determination 
of entitlement.

    Under section 435 of the BLBRA of 1977 a determination of 
entitlement made by the Social Security Administration under this 
subpart G is binding on the Office of Workers' Compensation Programs as 
an initial determination of eligibility.



Sec. 410.707  Hearings and appeals.

    The review of any determination made by the Social Security 
Administration of a claim under this subpart will be made by the Office 
of Workers' Compensation Programs. If the Social Security Administration 
does not approve the claim following its review under this subpart, the 
claim will be referred to the Office of Worker's Compensation Programs, 
and the Office of Workers' Compensation Programs will automatically 
review the claim. The Office of Workers' Compensation Programs will 
provide an opportunity for the claimant to submit additional evidence if 
it is needed to approve the claim. See Sec. 410.704(e)(2) of this 
subpart. If the Social Security Administration approves the claim but 
the claimant disagrees with any part of the Social Security 
Administration's determination, he or she may request the Office of 
Workers' Compensation Programs to review the Social Security 
Administration's determination. See Sec. 410.704 (e)(1) of this 
subpart.



PART 411_The Ticket to Work and Self-Sufficiency Program--Table of Contents




                         Subpart A_Introduction

Sec.
411.100 Scope.
411.105 What is the purpose of the Ticket to Work program?
411.110 How is the Ticket to Work program implemented?
411.115 Definitions of terms used in this part.

           Subpart B_Tickets Under the Ticket to Work Program

411.120 What is a ticket under the Ticket to Work program?
411.125 Who is eligible to receive a ticket under the Ticket to Work 
          program?
411.130 How will SSA distribute tickets under the Ticket to Work 
          program?
411.135 What do I do when I receive a ticket?
411.140 When can I assign my ticket and how?
411.145 Once my ticket has been assigned to an EN or State VR agency, 
          can it be taken out of assignment?
411.150 Can I reassign my ticket to a different EN or the State VR 
          agency?
411.155 When does my ticket terminate?

 Subpart C_Suspension of Continuing Disability Reviewsfor Beneficiaries 
                         Who are Using a Ticket

                              Introduction

411.160 What does this subpart do?
411.165 How does being in the Ticket to Work program affect my 
          continuing disability reviews?
411.166 Glossary of terms used in this subpart.

                      Definition of Using a Ticket

411.170 When does the period of using a ticket begin?
411.171 When does the period of using a ticket end?
411.175 What if I assign my ticket after a continuing disability review 
          has begun?

    Guidelines for Timely Progress Toward Self-Supporting Employment

411.180 What is timely progress toward self-supporting employment?
411.185 How much do I need to earn to be considered to be working?
411.190 How is it determined if I am meeting the timely progress 
          guidelines?
411.191 Table summarizing the guidelines for timely progress toward 
          self-supporting employment.
411.195 How will the PM conduct my 24-month progress review?
411.200 How will the PM conduct my 12-month progress reviews?
411.205 What if I disagree with the PM's decision about whether I am 
          making timely progress toward self-supporting employment?

                     Failure To Make Timely Progress

411.210 What happens if I do not make timely progress toward self-
          supporting employment?

[[Page 686]]

                          The Extension Period

411.220 What if my ticket is no longer assigned to an EN or State VR 
          agency?
411.225 What if I reassign my ticket after the end of the extension 
          period?

       Subpart D_Use of One or More Program Managers To Assist in 
              Administration of the Ticket to Work Program

411.230 What is a PM?
411.235 What qualifications are required of a PM?
411.240 What limitations are placed on a PM?
411.245 What are a PM's responsibilities under the Ticket to Work 
          program?

                Evaluation of Program Manager Performance

411.250 How will SSA evaluate a PM?

                      Subpart E_Employment Networks

411.300 What is an EN?
411.305 Who is eligible to be an EN?
411.310 How does an entity other than a State VR agency apply to be an 
          EN and who will determine whether an entity qualifies as an 
          EN?
411.315 What are the minimum qualifications necessary to be an EN?
411.320 What are an EN's responsibilities as a participant in the Ticket 
          to Work program?
411.321 Under what conditions will SSA terminate an agreement with an EN 
          due to inadequate performance?
411.325 What reporting requirements are placed on an EN as a participant 
          in the Ticket to Work program?
411.330 How will SSA evaluate an EN's performance?

    Subpart F_State Vocational Rehabilitation Agencies' Participation

               Participation in the Ticket to Work Program

411.350 Must a State VR agency participate in the Ticket to Work 
          program?
411.355 What payment options does a State VR agency have under the 
          Ticket to Work program?
411.360 How does a State VR agency become an EN?
411.365 How does a State VR agency notify SSA about its choice of a 
          payment system for use when functioning as an EN?
411.370 Does a State VR agency ever have to function as an EN?
411.375 Does a State VR agency continue to provide services under the 
          requirements of the State plan approved under title I of the 
          Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et 
          seq.), when functioning as an EN?

                              Ticket Status

411.380 What does a State VR agency do if the State VR agency wants to 
          determine whether a person seeking services has a ticket?
411.385 What does a State VR agency do if a beneficiary who is eligible 
          for VR services has a ticket that is available for assignment 
          or reassignment?
411.390 What does a State VR agency do if a beneficiary to whom it is 
          already providing services has a ticket that is available for 
          assignment?
411.395 Is a State VR agency required to provide periodic reports?

          Referrals by Employment Networks to State VR Agencies

411.400 Can an EN to which a beneficiary's ticket is assigned refer the 
          beneficiary to a State VR agency for services?

      Agreements Between Employment Networks and State VR Agencies

411.405 When does an agreement between an EN and the State VR agency 
          have to be in place?
411.410 Does each referral from an EN to a State VR agency require its 
          own agreement?
411.415 Who will verify the establishment of agreements between ENs and 
          State VR agencies?
411.420 What information should be included in an agreement between an 
          EN and a State VR agency?
411.425 What should a State VR agency do if it gets an attempted 
          referral from an EN and no agreement has been established 
          between the EN and the State VR agency?
411.430 What should the PM do when it is informed that an EN has 
          attempted to make a referral to a State VR agency without an 
          agreement being in place?

Resolving Disputes Arising Under Agreements Between Employment Networks 
                          and State VR Agencies

411.435 How will disputes arising under the agreements between ENs and 
          State VR agencies be resolved?

            Subpart G_Requirements for Individual Work Plans

411.450 What is an Individual Work Plan?
411.455 What is the purpose of an IWP?
411.460 Who is responsible for determining what information is contained 
          in the IWP?
411.465 What are the minimum requirements for an IWP?

[[Page 687]]

411.470 When does an IWP become effective?

              Subpart H_Employment Network Payment Systems

411.500 Definitions of terms used in this subpart.
411.505 How is an EN paid by SSA?
411.510 How is the State VR agency paid under the Ticket to Work 
          program?
411.515 Can the EN change its elected payment system?
411.520 How are beneficiaries whose tickets are assigned to an EN 
          affected by a change in that EN's elected payment system?
411.525 How are the EN payments calculated under each of the two EN 
          payment systems?
411.530 How will the outcome payments be reduced when paid under the 
          outcome-milestone payment system?
411.535 What are the milestones for which an EN can be paid?
411.540 What are the payment amounts for each of the milestones?
411.545 What are the payment amounts for outcome payment months under 
          the outcome-milestone payment system?
411.550 What are the payment amounts for outcome payment months under 
          the outcome payment system?
411.555 Can the EN keep the milestone and outcome payments even if the 
          beneficiary does not achieve all 60 outcome months?
411.560 Is it possible to pay a milestone or outcome payment to more 
          than one EN?
411.565 What happens if two or more ENs qualify for payment on the same 
          ticket but have elected different EN payment systems?
411.570 Can an EN request payment from the beneficiary who assigned a 
          ticket to the EN?
411.575 How does the EN request payment for milestones or outcome 
          payment months achieved by a beneficiary who assigned a ticket 
          to the EN?
411.580 Can an EN receive payments for milestones or outcome payment 
          months that occur before the beneficiary assigns a ticket to 
          the EN?
411.585 Can a State VR agency and an EN both receive payment for serving 
          the same beneficiary?
411.587 Which provider will SSA pay if, with respect to the same ticket, 
          SSA receives a request for payment from an EN or a State VR 
          agency that elected payment under an EN payment system and a 
          request for payment from a State VR agency that elected 
          payment under the cost reimbursement payment system?
411.590 What can an EN do if the EN disagrees with our decision on a 
          payment request?
411.595 What oversight procedures are planned for the EN payment 
          systems?
411.597 Will SSA periodically review the outcome payment system and the 
          outcome-milestone payment system for possible modifications?

           Subpart I_Ticket to Work Program Dispute Resolution

         Disputes Between Beneficiaries and Employment Networks

411.600 Is there a process for resolving disputes between beneficiaries 
          and ENs that are not State VR agencies?
411.605 What are the responsibilities of the EN that is not a State VR 
          agency regarding the dispute resolution process?
411.610 When should a beneficiary receive information on the procedures 
          for resolving disputes?
411.615 How will a disputed issue be referred to the PM?
411.620 How long does the PM have to recommend a resolution to the 
          dispute?
411.625 Can the beneficiary or the EN that is not a State VR agency 
          request a review of the PM's recommendation?
411.630 Is SSA's decision final?
411.635 Can a beneficiary be represented in the dispute resolution 
          process under the Ticket to Work program?

          Disputes Between Beneficiaries and State VR Agencies

411.640 Do the dispute resolution procedures of the Rehabilitation Act 
          of 1973, as amended (29 U.S.C. 720 et seq.), apply to 
          beneficiaries seeking services from the State VR agency?

        Disputes Between Employment Networks and Program Managers

411.650 Is there a process for resolving disputes between ENs that are 
          not State VR agencies and PMs, other than disputes on a 
          payment request?
411.655 How will the PM refer the dispute to us?
411.660 Is SSA's decision final?

 Subpart J_The Ticket to Work Program and Alternate Participants Under 
    the Programs for Payments for Vocational Rehabilitation Services

411.700 What is an alternate participant?
411.705 Can an alternate participant become an EN?
411.710 How will an alternate participant choose to participate as an EN 
          in the Ticket to Work program?
411.715 If an alternate participant becomes an EN, will beneficiaries 
          for whom an

[[Page 688]]

          employment plan was signed prior to implementation be covered 
          under the Ticket to Work program payment provisions?
411.720 If an alternate participant chooses not to become an EN, can it 
          continue to function under the programs for payments for VR 
          services?
411.725 If an alternate participant becomes an EN and it has signed 
          employment plans, both as an alternate participant and an EN, 
          how will SSA pay for services provided under each employment 
          plan?
411.730 What happens if an alternate participant signed an employment 
          plan with a beneficiary before Ticket to Work program 
          implementation in the State and the required period of 
          substantial gainful activity is not completed by January 1, 
          2004?

    Authority: Sec. 1148 of the Social Security Act (42 U.S.C. 1320b-
19); sec. 101(b)-(e), Pub. L. 106-170, 113 Stat. 1860, 1873 (42 U.S.C. 
1320b-19 note).

    Source: 66 FR 67420, Dec. 28, 2001, unless otherwise noted.



                         Subpart A_Introduction



Sec. 411.100  Scope.

    The regulations in this part 411 relate to the provisions of section 
1148 of the Social Security Act which establishes the Ticket to Work and 
Self-Sufficiency Program (hereafter referred to as the ``Ticket to Work 
program''). The regulations in this part are divided into ten subparts:
    (a) Subpart A explains the scope of this part, explains the purpose 
and manner of implementation of the Ticket to Work program, and provides 
definitions of terms used in this part.
    (b) Subpart B contains provisions relating to the ticket under the 
Ticket to Work program.
    (c) Subpart C contains provisions relating to the suspension of 
continuing disability reviews for disabled beneficiaries who are 
considered to be using a ticket.
    (d) Subpart D contains provisions relating to the use of one or more 
program managers to assist us in the administration of the Ticket to 
Work program.
    (e) Subpart E contains provisions relating to employment networks in 
the Ticket to Work program.
    (f) Subpart F contains provisions relating to State vocational 
rehabilitation agencies' participation in the Ticket to Work program.
    (g) Subpart G contains provisions relating to individual work plans 
in the Ticket to Work program.
    (h) Subpart H contains provisions establishing employment network 
payment systems.
    (i) Subpart I contains provisions that establish a procedure for 
resolving disputes under the Ticket to Work program.
    (j) Subpart J contains provisions explaining how the implementation 
of the Ticket to Work program affects alternate participants under the 
programs for payments for vocational rehabilitation services under 
subpart V of part 404 and subpart V of part 416 of this chapter.



Sec. 411.105  What is the purpose of the Ticket to Work program?

    The purpose of the Ticket to Work program is to expand the universe 
of service providers available to individuals who are entitled to Social 
Security benefits based on disability or eligible for Supplemental 
Security Income (SSI) benefits based on disability or blindness in 
obtaining the services necessary to find, enter and retain employment. 
Expanded employment opportunities for these individuals also will 
increase the likelihood that these individuals will reduce their 
dependency on Social Security and SSI cash benefits.



Sec. 411.110   How is the Ticket to Work program implemented?

    We are implementing the Ticket to Work program in graduated phases 
at phase-in sites around the country. We are implementing the program at 
sites on a wide enough scale to allow for a thorough evaluation and 
ensure full implementation of the program on a timely basis.



Sec. 411.115  Definitions of terms used in this part.

    As used in this part:
    (a) ``The Act'' means the Social Security Act, as amended.
    (b) ``Commissioner'' means the Commissioner of Social Security.
    (c) ``Cost reimbursement payment system'' means the provisions for 
payment

[[Page 689]]

for vocational rehabilitation services under subpart V of part 404 and 
subpart V of part 416 of this chapter.
    (d) ``Disabled beneficiary'' means a title II disability beneficiary 
or a title XVI disability beneficiary.
    (e) ``Employment network'' or ``EN'' means a qualified public or 
private entity that has entered into an agreement with us to serve under 
the Ticket to Work program and that assumes responsibility for the 
coordination and delivery of employment services, vocational 
rehabilitation services, or other support services to beneficiaries 
assigning tickets to it. The rules on employment networks are described 
in subpart E of this part (Sec. Sec. 411.300-411.330). A State 
vocational rehabilitation agency may choose, on a case-by-case basis, to 
function as an employment network with respect to a beneficiary under 
the Ticket to Work program. The rules on State vocational rehabilitation 
agencies' participation in the Ticket to Work program are described in 
subpart F of this part (Sec. Sec. 411.350-411.435).
    (f) ``Employment plan'' means an individual work plan described in 
paragraph (i) of this section, or an individualized plan for employment 
described in paragraph (j) of this section. When used in subpart J of 
this part, ``employment plan'' also means a ``similar document'' 
referred to in Sec. Sec. 404.2114(a)(2) and 416.2214(a)(2) of this 
chapter under which an alternate participant under the programs for 
payments for vocational rehabilitation services (described in subpart V 
of part 404 and subpart V of part 416 of this chapter) provides services 
to a disabled beneficiary under those programs.
    (g) ``Federal SSI cash benefits'' means a ``Supplemental Security 
Income benefit under title XVI'' based on blindness or disability as 
described in paragraphs (n) and (r) of this section.
    (h) ``I'', ``my'', ``you'', or ``your'' means the disabled 
beneficiary.
    (i) ``Individual work plan'' or ``IWP'' means an employment plan 
under which an employment network (other than a State vocational 
rehabilitation agency) provides services to a disabled beneficiary under 
the Ticket to Work program. An individual work plan must be developed 
under, and meet the requirements of, the rules in subpart G of this part 
(Sec. Sec. 411.450-411.470).
    (j) ``Individualized plan for employment'' or ``IPE'' means an 
employment plan under which a State vocational rehabilitation agency 
provides services to individuals with disabilities (including 
beneficiaries assigning tickets to it under the Ticket to Work program) 
under a State plan approved under title I of the Rehabilitation Act of 
1973, as amended (29 U.S.C. 720 et seq.). An individualized plan for 
employment must be developed under, and meet the requirements of, 34 CFR 
361.45 and 361.46.
    (k) ``Program manager'' or ``PM'' means an organization in the 
private or public sector that has entered into a contract with us to 
assist us in administering the Ticket to Work program. The rules on the 
use of one or more program managers to assist us in administering the 
program are described in subpart D of this part (Sec. Sec. 411.230-
411.250).
    (l) ``Social Security disability benefits'' means the benefits 
described in paragraph (q) of this section.
    (m) ``State vocational rehabilitation agency'' or ``State VR 
agency'' means a State agency administering or supervising the 
administration of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.). In those 
States that have one agency that provides VR services to non-blind 
individuals and another agency that provides services to blind 
individuals, this term refers to either State agency.
    (n) ``Supplemental Security Income benefit under title XVI'' means a 
cash benefit under section 1611 or 1619(a) of the Act, and does not 
include a State supplementary payment, administered Federally or 
otherwise.
    (o) ``Ticket'' means a document described in Sec. 411.120 which the 
Commissioner may issue to disabled beneficiaries for participation in 
the Ticket to Work program.
    (p) ``Ticket to Work program'' or ``program'' means the Ticket to 
Work and Self-Sufficiency Program under section 1148 of the Act.

[[Page 690]]

    (q) ``Title II disability beneficiary'' means an individual entitled 
to disability insurance benefits under section 223 or to monthly 
insurance benefits under section 202 of the Act based on such 
individual's disability as defined in section 223(d) of the Act. (See 
Sec. 404.1505 of this chapter.) An individual is a title II disability 
beneficiary for each month for which such individual is entitled to such 
benefits.
    (r) ``Title XVI disability beneficiary'' means an individual 
eligible for Supplemental Security Income benefits under title XVI on 
the basis of blindness (within the meaning of section 1614(a)(2) of the 
Act) (see Sec. Sec. 416.981 and 416.982 of this chapter) or disability 
(within the meaning of section 1614(a)(3) of the Act) (see Sec. 416.905 
of this chapter). An individual is a title XVI disability beneficiary 
for each month for which such individual is eligible for such benefits.
    (s) ``We'' or ``us'' means the Social Security Administration.



           Subpart B_Tickets Under the Ticket to Work Program



Sec. 411.120  What is a ticket under the Ticket to Work program?

    (a) A ticket under the Ticket to Work program is a document which 
provides evidence of the Commissioner's agreement to pay, under the 
rules in subpart H of this part, an employment network (EN) or a State 
VR agency to which a disabled beneficiary's ticket is assigned, for 
providing employment services, vocational rehabilitation services, and 
other support services to the beneficiary.
    (b) The ticket is a red, white and blue document approximately 
6 by 9 in size. The left side of the document 
includes the beneficiary's name, ticket number, claim account number and 
the date we issued the ticket. The ticket number is 12 characters and 
comprises the beneficiary's own social security number, the letters 
``TW'' and a number 1, 2, etc. A number 1 in the last position would 
signify that this is the first ticket the beneficiary has received, 
consistent with Sec. 411.125(b).
    (c) The right side of the ticket includes the signature of the 
Commissioner of Social Security, and the following language:

    This ticket is issued to you by the Social Security Administration 
under the Ticket to Work and Self-Sufficiency Program. If you want help 
in returning to work or going to work for the first time, you may offer 
this ticket to an Employment Network of your choosing or take it to your 
State vocational rehabilitation agency for services. If you choose an 
Employment Network and it agrees to take your ticket, or if you choose 
your State agency and you qualify for services, these providers can 
offer you the services you may need to go to work.
    An Employment Network provides the services at no cost to you. The 
Social Security Administration will pay the Employment Network if you 
assign your ticket to it, and the Employment Network helps you to go to 
work and complies with other requirements of the Program. An Employment 
Network serving under the Program has agreed to abide by the rules and 
regulations of the Program under the terms of its agreement with the 
Social Security Administration for providing services under the Program. 
Your State agency can tell you about its rules for getting services.



Sec. 411.125  Who is eligible to receive a ticket under the Ticket to 
Work program?

    (a) You will be eligible to receive a Ticket to Work in a month in 
which--
    (1) You are age 18 or older and have not attained age 65;
    (2)(i)(A) You are a title II disability beneficiary (other than a 
beneficiary receiving benefit payments under Sec. 404.316(c), Sec. 
404.337(c), Sec. 404.352(d), or Sec. 404.1597a of this chapter); and
    (B) You are in current pay status for monthly title II cash benefits 
based on disability (see subpart E of part 404 of this chapter for our 
rules on nonpayment of title II benefits); or
    (ii)(A) You are a title XVI disability beneficiary (other than a 
beneficiary receiving disability or blindness benefit payments under 
Sec. 416.996 or Sec. 416.1338 of this chapter);
    (B) If you are an individual described in Sec. 416.987(a)(1) of 
this chapter, you are eligible for benefits under title XVI based on 
disability under the standard for evaluating disability for adults 
following a redetermination of your eligibility under Sec. 416.987 of 
this chapter; and
    (C) Your monthly Federal cash benefits based on disability or 
blindness

[[Page 691]]

under title XVI are not suspended (see subpart M of part 416 of this 
chapter for our rules on suspension of title XVI benefit payments); and
    (3) Our records show that--
    (i) Your case is not designated as a medical improvement expected 
diary review case (see Sec. Sec. 404.1590 and 416.990 of this chapter 
for what we mean by a medical improvement expected diary review); or
    (ii) Your case is designated as a medical improvement expected diary 
review case, and we have conducted at least one continuing disability 
review in your case and made a final determination or decision that your 
disability continues (see subpart J of part 404 or subpart N of part 416 
of this chapter for when a determination or decision becomes final).
    (b) You will not be eligible to receive more than one ticket during 
any period during which you are either--
    (1) Entitled to title II benefits based on disability (see 
Sec. Sec. 404.316(b), 404.337(b) and 404.352(b) of this chapter for 
when entitlement to title II disability benefits ends); or
    (2) Eligible for title XVI benefits based on disability or blindness 
and your eligibility has not terminated (see subpart M of part 416 of 
this chapter for our rules on when eligibility for title XVI benefits 
terminates).
    (c) If your entitlement to title II benefits based on disability 
ends and/or your eligibility for title XVI benefits based on disability 
or blindness terminates as described in Sec. 411.155(b)(1) or (2), you 
will be eligible to receive a new ticket in a month in which--
    (1) Your entitlement to title II benefits based on disability is 
reinstated under section 223(i) of the Act, or your eligibility for 
title XVI benefits based on disability or blindness is reinstated under 
section 1631(p) of the Act; and
    (2) You meet the requirements of paragraphs (a)(1) and (2) of this 
section.



Sec. 411.130  How will SSA distribute tickets under the Ticket to Work 
program?

    (a) We will distribute tickets in graduated phases at phase-in sites 
selected by the Commissioner, to permit a thorough evaluation of the 
Ticket to Work program and ensure that the most effective methods are in 
place for full implementation of the program. (See Sec. 411.110.)
    (b) We will distribute a ticket to you when we distribute tickets in 
your State, if you are eligible to receive a ticket under Sec. 411.125.



Sec. 411.135  What do I do when I receive a ticket?

    Your participation in the Ticket to Work program is voluntary. When 
you receive your ticket, you are free to choose when and whether to 
assign it (see Sec. 411.140 for information on assigning your ticket). 
If you want to participate in the program, you can take your ticket to 
any EN you choose or to your State VR agency.



Sec. 411.140  When can I assign my ticket and how?

    (a) You may assign your ticket only during a month in which you meet 
the requirements of Sec. 411.125(a)(1) and (a)(2). You may assign your 
ticket to any EN which is serving under the program and is willing to 
provide you with services, or you may assign your ticket to a State VR 
agency if you are eligible to receive VR services according to 34 CFR 
361.42. You may not assign your ticket to more than one provider of 
services (i.e. an EN or a State VR agency) at a time. Once you have 
assigned your ticket to an EN or State VR agency, you may take your 
ticket out of assignment for any reason under the rules in Sec. 
411.145(a). Also, you may reassign your ticket under the rules in Sec. 
411.150.
    (b)(1) In determining which EN you want to work with, you may 
discuss your rehabilitation and employment plans with as many ENs in 
your area as you wish. You also may discuss your rehabilitation and 
employment plans with the State VR agency.
    (2) You can obtain a list of the approved ENs in your area from the 
program manager (PM) we have enlisted to assist in the administration of 
the Ticket to Work program. (See Sec. 411.115(k) for a definition of 
the PM.)
    (c) If you choose to work with an EN serving under the program, both 
you and the EN of your choice need to agree upon an individual work plan 
(IWP) (see Sec. 411.115(i) for a definition of

[[Page 692]]

an IWP). If you choose to work with a State VR agency, you must develop 
an individualized plan for employment (IPE) and your State VR counselor 
must agree to the terms of the IPE, according to the requirements 
established in 34 CFR 361.45 and 361.46. (See Sec. 411.115(j) for a 
definition of an IPE.) The IWP or IPE outlines the services necessary to 
assist you in achieving your chosen employment goal.
    (d) In order for you to assign your ticket to an EN or State VR 
agency, all of the following requirements must be met:
    (1)(i) If you decide to work with an EN, you and a representative of 
the EN must agree to and sign an IWP; or
    (ii) If you decide to work with a State VR agency, you and a 
representative of the State VR agency must agree to and sign both an IPE 
and a form that provides the information described in Sec. 
411.385(a)(1), (2) and (3).
    (2) You must be eligible to assign your ticket under the rules in 
paragraph (a) of this section.
    (3) A representative of the EN must submit a copy of the signed IWP 
to the PM or a representative of the State VR agency must submit the 
completed and signed form (as described in Sec. 411.385(a) and (b)) to 
the PM.
    (4) The PM must receive the copy of the IWP or receive the required 
form, as appropriate.
    (e) If all of the requirements in paragraph (d) of this section are 
met, we will consider your ticket assigned to the EN or State VR agency. 
The effective date of the assignment of your ticket will be the first 
day on which the requirements of paragraphs (d)(1) and (2) of this 
section are met. See Sec. Sec. 411.160 through 411.225 for an 
explanation of how assigning your ticket may affect medical reviews that 
we conduct to determine if you are still disabled under our rules.



Sec. 411.145  Once my ticket has been assigned to an EN or State VR agency, 
can it be taken out of assignment?

    (a) If you assigned your ticket to an EN or a State VR agency, you 
may take your ticket out of assignment for any reason. You must notify 
the PM in writing that you wish to take your ticket out of assignment. 
The ticket will be no longer assigned to that EN or State VR agency 
effective with the first day of the month following the month in which 
you notify the PM in writing that you wish to take your ticket out of 
assignment. You may reassign your ticket under the rules in Sec. 
411.150.
    (b) If your EN goes out of business or is no longer approved to 
participate as an EN in the Ticket to Work program, the PM will take 
your ticket out of assignment with that EN. The ticket will be no longer 
assigned to that EN effective on the first day of the month following 
the month in which the EN goes out of business or is no longer approved 
to participate in the Ticket to Work program. You will be sent a notice 
informing you that your ticket is no longer assigned to that EN. In 
addition, if your EN is no longer willing or able to provide you with 
services, or if your State VR agency stops providing services to you 
because you have been determined to be ineligible for VR services under 
34 CFR 361.42, the EN or State VR agency may ask the PM to take your 
ticket out of assignment with that EN or State VR agency. The ticket 
will be no longer assigned to that EN or State VR agency effective on 
the first day of the month following the month in which the EN or State 
VR agency makes a request to the PM that the ticket be taken out of 
assignment. You will be sent a notice informing you that your ticket is 
no longer assigned to that EN or State VR agency. You may reassign your 
ticket under the rules in Sec. 411.150.
    (c) For information about how taking a ticket out of assignment may 
affect medical reviews that we conduct to determine if you are still 
disabled under our rules, see Sec. Sec. 411.171(c) and 411.220.



Sec. 411.150  Can I reassign my ticket to a different EN or the State 
VR agency?

    (a) Yes. If you previously assigned your ticket and your ticket is 
no longer assigned (see Sec. 411.145) or you wish to change the 
assignment, you may reassign your ticket, unless you are receiving 
benefit payments under Sec. 404.316(c), Sec. 404.337(c), Sec. 
404.352(d) or Sec. 404.1597a of this chapter, or you are receiving 
disability or blindness benefit

[[Page 693]]

payments under Sec. 416.996 or Sec. 416.1338 of this chapter (the 
provisions of paragraph (b)(3) of this section notwithstanding). If you 
previously assigned your ticket to an EN, you may reassign your ticket 
to a different EN which is serving under the program and is willing to 
provide you with services, or you may reassign your ticket to the State 
VR agency if you are eligible to receive VR services according to 34 CFR 
361.42. If you previously assigned your ticket to the State VR agency, 
you may reassign your ticket to an EN which is serving under the program 
and is willing to provide you with services or to another State VR 
agency if you are eligible to receive services according to 34 CFR 
361.42.
    (b) In order for you to reassign your ticket to an EN or State VR 
agency, all of the following requirements must be met:
    (1) Your ticket must be unassigned. If your ticket is assigned to an 
EN or a State VR agency, you must first tell the PM in writing that you 
want to take your ticket out of assignment (see Sec. 411.145).
    (2)(i) You and a representative of the new EN must agree to and sign 
a new IWP; or
    (ii) If you wish to reassign your ticket to a State VR agency, you 
and a representative of the State VR agency must agree to and sign both 
an IPE and a form that provides the information described in Sec. 
411.385(a)(1), (2) and (3).
    (3) You must meet the requirements of Sec. 411.125(a)(1) and (2) on 
or after the day you and a representative of the new EN sign your IWP or 
you and a representative of the State VR agency sign your IPE and the 
required form, except if--
    (i) Your ticket is not in use (see Sec. 411.170 et seq.) and the 
requirements of paragraph (b)(2) of this section are met within 30 days 
of the effective date your ticket no longer was assigned to the previous 
EN or State VR agency (see Sec. 411.145); or
    (ii) Your ticket is in use (see Sec. 411.170 et seq.) and the 
requirements of paragraph (b)(2) of this section are met before the end 
of the 3-month extension period described in Sec. 411.220.
    (4) A representative of the EN must submit a copy of the signed IWP 
to the PM or a representative of the State VR agency must submit the 
completed and signed form (as described in Sec. 411.385(a) and (b)) to 
the PM.
    (5) The PM must receive the copy of the IWP or received the required 
form, as appropriate.
    (c) If all of the requirements in paragraphs (a) and (b) of this 
section are met, we will consider your ticket reassigned to the new EN 
or State VR agency. The effective date of the reassignment of your 
ticket will be the first day on which the requirements of paragraphs (a) 
and (b)(1), (2) and (3) of this section are met. See Sec. Sec. 411.160 
through 411.225 for an explanation of how reassigning your ticket may 
affect medical reviews that we conduct to determine if you are still 
disabled under our rules.



Sec. 411.155  When does my ticket terminate?

    (a) Your ticket will terminate if and when you are no longer 
eligible to participate in the Ticket to Work program. If your ticket 
terminates, you may not assign or reassign it to an EN or State VR 
agency. We will not pay an EN (including a State VR agency) for 
milestones or outcomes achieved in or after the month in which your 
ticket terminates (see Sec. 411.525(c)). Your eligibility to 
participate in the Ticket to Work program will end, and your ticket will 
terminate, in the earliest of the following months:
    (1) The month in which your entitlement to title II benefits based 
on disability ends for reasons other than your work activity or 
earnings, or the month in which your eligibility for benefits under 
title XVI based on disability or blindness terminates for reasons other 
than your work activity or earnings, whichever is later;
    (2) If you are entitled to widow's or widower's insurance benefits 
based on disability (see Sec. Sec. 404.335 and 404.336 of this 
chapter), the month in which you attain age 65; or
    (3) If you are eligible for benefits under title XVI based on 
disability or blindness, the month following the month in which you 
attain age 65.
    (b) The rules in paragraph (c) of this section apply in determining 
when your eligibility to participate in the

[[Page 694]]

Ticket to Work program will end and your ticket will terminate if--
    (1) You were not a concurrent title II/title XVI disability 
beneficiary, and your entitlement to title II benefits based on 
disability ends or your eligibility for title XVI benefits based on 
disability or blindness terminates because of your work activity or 
earnings; or
    (2) You were a concurrent title II/title XVI disability beneficiary 
and--
    (i) Your entitlement to title II benefits based on disability ends 
because of work activity or earnings and your eligibility for title XVI 
benefits based on disability or blindness terminates for any reason; or
    (ii) Your eligibility for title XVI benefits based on disability or 
blindness terminates because of your work activity or earnings and your 
entitlement to title II benefits based on disability ends for any 
reason.
    (c) For purposes of paragraph (b) of this section, the ticket which 
you received in connection with the previous period during which you 
were either entitled to title II benefits based on disability or 
eligible for title XVI benefits based on disability or blindness (as 
described in Sec. 411.125(b)) will terminate, and your eligibility to 
participate in the Ticket to Work program based on that ticket will end, 
in the earliest of the following months:
    (1) If we make a final determination or decision that you are not 
entitled to have title II benefits based on disability reinstated under 
section 223(i) of the Act or eligible to have title XVI benefits based 
on disability or blindness reinstated under section 1631(p) of the Act, 
the month in which we make that determination or decision;
    (2) If we make a final determination or decision that you are not 
entitled to title II benefits based on disability or eligible for title 
XVI benefits based on disability or blindness after you file an 
application for benefits, the month in which we make that determination 
or decision;
    (3) The month you attain retirement age (as defined in section 
216(l) of the Act);
    (4) The month in which you die;
    (5) The month in which you become entitled to a title II benefit 
that is not based on disability or eligible for a title XVI benefit that 
is not based on disability or blindness;
    (6) The month in which you again become entitled to title II 
benefits based on disability, or eligible for title XVI benefits based 
on disability or blindness, based on the filing of an application for 
such benefits; or
    (7) If your entitlement to title II benefits based on disability is 
reinstated under section 223(i) of the Act, or your eligibility for 
title XVI benefits based on disability or blindness is reinstated under 
section 1631(p) of the Act, the month in which you are eligible to 
receive a new ticket under Sec. 411.125(c).



Subpart C_Suspension of Continuing Disability Reviews for Beneficiaries 
                         Who Are Using a Ticket

                              Introduction



Sec. 411.160  What does this subpart do?

    (a) This subpart explains our rules about continuing disability 
reviews for disability beneficiaries who are participating in the Ticket 
to Work program.
    (b) Continuing disability reviews are reviews that we conduct to 
determine if you are still disabled under our rules (see Sec. Sec. 
404.1589, 416.989 and 416.989a of this chapter for the rules on when we 
may conduct continuing disability reviews). For the purposes of this 
subpart, continuing disability reviews include the medical reviews we 
conduct to determine if your medical condition has improved (see 
Sec. Sec. 404.1594 and 416.994 of this chapter), but not any review to 
determine if your disability has ended under Sec. 404.1594(d)(5) of 
this chapter because you have demonstrated your ability to engage in 
substantial gainful activity (SGA), as defined in Sec. Sec. 404.1571-
404.1576 of this chapter.



Sec. 411.165  How does being in the Ticket to Work program affect 
my continuing disability reviews?

    We periodically review your case to determine if you are still 
disabled under our rules. However, if you are in the Ticket to Work 
program, we will not begin a continuing disability review during the 
period in which you are using a ticket. Sections 411.170 and

[[Page 695]]

411.171 describe when the period of using a ticket begins and ends. You 
must meet certain requirements for us to consider you to be using a 
ticket.



Sec. 411.166  Glossary of terms used in this subpart.

    (a) Active participation in your employment plan means you are 
engaging in activities outlined in your employment plan on a regular 
basis and in the approximate time frames specified in the employment 
plan.
    (b) Extension period is a period of up to three months during which 
you may reassign a ticket without being subject to continuing disability 
reviews. You may be eligible for an extension period if the ticket is in 
use and no longer assigned to an Employment Network (EN) or State VR 
agency (see Sec. 411.220).
    (c) Inactive status is a status in which you may place your ticket 
if you are temporarily unable to participate or not actively 
participating in your employment plan. You may place a ticket in 
inactive status only during the initial 24-month period. Months during 
which your ticket is in inactive status do not count toward the time 
limitations for making timely progress toward self-supporting 
employment. You may keep your ticket in inactive status as long as you 
choose. However, because the ticket is not in use during months in which 
it is in inactive status, you will be subject to continuing disability 
reviews during these months.
    (d) Initial 24-month period means the 24-month period that begins 
with the month following the month in which you first assigned your 
ticket. We do not count any month in which the ticket is not assigned to 
an EN or State VR agency, as described in Sec. 411.145, or any month 
during which the ticket is not in use because it is in inactive status 
(see Sec. 411.190(a)(2)) or because you were determined to be no longer 
making timely progress toward self-supporting employment under Sec. 
411.190(a)(3) or Sec. 411.205.
    (e) Progress review means the reviews the program manager (PM) 
conducts to determine if you are meeting the timely progress guidelines 
described in these regulations. (See Sec. 411.115(k) for a definition 
of the PM.) The method for conducting the 24-month progress review is 
explained in Sec. 411.195 and the method for conducting 12-month 
progress reviews is explained in Sec. 411.200.
    (f) Timely progress guidelines means the guidelines we use to 
determine if you are making timely progress toward self-supporting 
employment. In general, we determine if you are making timely progress 
toward self-supporting employment using two distinct criteria with 
defined time frames. These criteria are active participation in your 
employment plan during the initial 24-month period and increased work 
and earnings during subsequent 12-month progress review periods (see 
Sec. 411.180 to Sec. 411.190, Sec. 411.195 and Sec. 411.200).
    (g) 12-month progress review period means the 12-month period that 
begins either following the end of the initial 24-month period or 
following the previous 12-month progress review period. We do not count 
any month during which your ticket is not assigned to an EN or State VR 
agency, as described in Sec. 411.145.
    (h) Using a ticket means that you have assigned a ticket to an EN or 
State VR agency and are making timely progress toward self-supporting 
employment. (See Sec. 411.171 for a discussion of when the period of 
using a ticket ends.)

                      Definition of Using a Ticket



Sec. 411.170  When does the period of using a ticket begin?

    The period of using a ticket begins on the effective date of the 
assignment of your ticket to an EN or State VR agency under Sec. 
411.140.
    Note: If your period of using a ticket ends because you have 
previously failed to meet the timely progress guidelines under 
Sec. Sec. 411.180 through 411.190, the period of using a ticket will 
resume if you satisfy the requirements for re-entering in-use status. 
(See Sec. 411.210.)



Sec. 411.171  When does the period of using a ticket end?

    The period of using a ticket ends with the earliest of the 
following--
    (a) The month before the month in which the ticket terminates as a 
result of one of the events listed in Sec. 411.155;
    (b) The day before the effective date of a decision under Sec. 
411.190; Sec. 411.195,

[[Page 696]]

Sec. 411.200, or Sec. 411.205 that you are no longer making timely 
progress toward self-supporting employment;
    (c) The close of the three-month extension period which begins with 
the first month in which your ticket is no longer assigned to an EN or 
State VR agency (see Sec. 411.145), unless you reassign your ticket 
within the three-month extension period (see Sec. 411.220 for an 
explanation of the three-month extension period);
    (d) The 60th month for which an outcome payment is made to your EN 
(including a State VR agency) under subpart H of this part; or
    (e) If you have assigned your ticket to a State VR agency which 
selects the cost reimbursement payment system, the 60th month for which 
an outcome payment would have been made had the State VR agency chosen 
to serve you as an EN.



Sec. 411.175  What if I assign my ticket after a continuing disability 
review has begun?

    (a) If we begin a continuing disability review before the date on 
which you assign a ticket, you may still assign the ticket and receive 
services under the Ticket to Work program. However, we will complete the 
continuing disability review. If in this review we determine that you 
are no longer disabled, in most cases you will no longer be eligible to 
receive benefit payments. However, if you assigned your ticket before we 
determined that you are no longer disabled, in certain circumstances you 
may continue to receive benefit payments (see Sec. Sec. 404.316(c), 
404.337(c), 404.352(d), and 416.1338 of this chapter). If you appeal the 
decision that you are no longer disabled, you may also choose to have 
your benefits continued pending reconsideration and/or a hearing before 
an administrative law judge on the cessation determination (see 
Sec. Sec. 404.1597a and 416.996 of this chapter).
    (b) The date on which we begin the continuing disability review is 
the date on the notice we send you that tells you that we are beginning 
to review your disability case.

    Guidelines for Timely Progress Toward Self-Supporting Employment



Sec. 411.180  What is timely progress toward self-supporting employment?

    (a) General. The purpose of the Ticket to Work program is to provide 
you with the services and supports you need to work and reduce or 
eliminate your dependence on Social Security disability benefits and/or 
SSI benefits based on disability or blindness. We consider you to be 
making timely progress toward self-supporting employment when you show 
an increasing ability to work at levels which will reduce or eliminate 
your dependence on these benefits.
    (b) Definitions. As used in this subpart--
    (1) Initial 24-month period means the 24-month period that begins 
with the month following the month in which you first assigned your 
ticket. (See Sec. Sec. 411.220(e) and 411.225(c) for when a new initial 
24-month period may be established for you.) We do not count any month 
during which the ticket is not assigned to an EN or State VR agency, as 
described in Sec. 411.145, or any month during which the ticket is not 
in use because it is in inactive status (see Sec. 411.190(a)(2)) or 
because you were determined to be no longer making timely progress 
toward self-supporting employment under Sec. 411.190(a)(3) or Sec. 
411.205.
    (2) 12-month progress review period means the 12-month period that 
begins either following the end of the initial 24-month period or 
following the previous 12-month progress review period. We do not count 
any month during which your ticket is not assigned to an EN or State VR 
agency, as described in Sec. 411.145.
    (c) Guidelines. We will determine whether you are making timely 
progress toward self-supporting employment by using the following 
guidelines:
    (1) During the initial 24-month period after you assign your ticket, 
you must be actively participating in your employment plan. ``Actively 
participating in your employment plan'' means that you are engaging in 
activities outlined in your employment plan on a regular

[[Page 697]]

basis and in the approximate time frames specified in the employment 
plan. These activities may include employment, if agreed to in the 
employment plan. At the end of the initial 24-month period, you must 
successfully complete the 24-month progress review, as described in 
Sec. 411.195. If you worked in one or more months during the initial 
24-month period at the level of work applicable to the work requirement 
for the first 12-month progress review period, each such month of work 
may be used to reduce by one month the number of months of work referred 
to in Sec. 411.195(a)(2) and Sec. 411.195(a)(3) for purposes of 
meeting the requirements of those sections regarding a goal of three 
months of work during the first 12-month progress review period.
    (2) During your first 12-month progress review period, you must work 
(as defined in Sec. 411.185) for at least three of these 12 months. The 
three months do not need to be consecutive. If you worked one or more 
months during the initial 24-month period at the level of work 
applicable to the work requirement for the first 12-month progress 
review period, each such month of work may be used to reduce by one 
month the number of months of work required for the first 12-month 
progress review period.
    (3) During your second 12-month progress review period, and in later 
12-month progress review periods, you must work (as defined in Sec. 
411.185) for at least six of these 12 months. The six months do not need 
to be consecutive.



Sec. 411.185  How much do I need to earn to be considered to be working?

    For the purpose of determining if you are meeting the timely 
progress requirements for continued ticket use, we will consider you to 
be working in each month in which you have earnings at the following 
levels:
    (a) For title II disability beneficiaries:
    (1) During your first and second 12-month progress review periods, 
we will consider you to be working in a month in which you have earnings 
from employment or self-employment at the SGA level for non-blind 
beneficiaries, as defined in Sec. Sec. 404.1572 through 404.1576 of 
this chapter. For a month in which you are in a trial work period (see 
Sec. 404.1592 of this chapter), or if you are statutorily blind as 
defined in Sec. 404.1581 of this chapter, we will consider the 
following as fulfilling this requirement--
    (i) Gross earnings from employment, before any deductions for 
impairment related work expenses under Sec. 404.1576 of this chapter, 
that are more than the SGA threshold amount for non-blind beneficiaries 
in Sec. 404.1574(b)(2) of this chapter; or
    (ii) Net earnings from self-employment (as defined in Sec. 
416.1110(b) of this chapter), before any deductions for impairment 
related work expenses under Sec. 404.1576 of this chapter, that are 
more than the SGA threshold amount for non-blind beneficiaries in Sec. 
404.1574(b)(2) of this chapter.

    Note to paragraph (a)(1): If you worked in one or more months during 
the initial 24-month period at the level of work described in paragraph 
(a)(1) of this section, those months of work may be used to meet certain 
requirements of the 24-month progress review as explained in Sec. 
411.180(c)(1) and the work requirements for the first 12-month progress 
review period as explained in Sec. 411.180(c)(2).

    (2) During your third 12-month progress review period, and during 
later 12-month progress review periods, we will consider you to be 
working in a month for which Social Security disability benefits are not 
payable to you because of your work or earnings.
    (b) For title XVI beneficiaries:
    (1) During your first and second 12-month progress review periods, 
we will consider you to be working in a month in which you have--
    (i) Gross earnings from employment, before any SSI income 
exclusions, that are more than the SGA threshold amount for non-blind 
beneficiaries in Sec. 404.1574(b)(2) of this chapter; or
    (ii) Net earnings from self-employment (as defined in Sec. 
416.1110(b) of this chapter), before any SSI income exclusions, that are 
more than the SGA threshold amount for non-blind beneficiaries in Sec. 
404.1574(b)(2) of this chapter.

    Example to paragraph (b)(1): If you earn $750 in January 2001, but 
exclude $200 of this income in a Plan for Achieving Self-Support (see 
Sec. Sec. 416.1180-416.1182 of this chapter), you

[[Page 698]]

would still be considered to be working in that month.
    Note to paragraph (b)(1): If you worked in one or more months during 
the initial 24-month period at the level of work described in paragraph 
(b)(1) of this section, those months of work may be used to meet certain 
requirements of the 24-month progress review as explained in Sec. 
411.180(c)(1) and the work requirements for the first 12-month progress 
review period as explained in Sec. 411.180(c)(2).

    (2) During your third 12-month progress review period, and during 
any later 12-month progress review periods, we will consider you to be 
working in a month in which you have earnings from employment or self-
employment that are sufficient to preclude the payment of Federal SSI 
cash benefits for a month.
    (c) For concurrent title II and title XVI beneficiaries:
    (1) During your first and second 12-month progress review periods, 
we will consider you to be working in a month in which you have earnings 
from employment or self-employment at the SGA level for non-blind 
beneficiaries as defined in Sec. Sec. 404.1572 through 404.1576 of this 
chapter. For a month in which you are in a trial work period (see Sec. 
404.1592 of this chapter), or if you are statutorily blind as defined in 
Sec. 404.1581 of this chapter, we will consider the following as 
fulfilling this requirement--
    (i) Gross earnings from employment, before any SSI income exclusions 
or deductions for impairment related work expenses under Sec. 404.1576 
of this chapter, that are more than the SGA threshold amount for non-
blind beneficiaries in Sec. 404.1574(b)(2) of this chapter; or
    (ii) Net earnings from self-employment (as defined in Sec. 
416.1110(b) of this chapter), before any SSI income exclusions or 
deductions for impairment related work expenses under Sec. 404.1576 of 
this chapter, that are more than the SGA threshold amount for non-blind 
beneficiaries in Sec. 404.1574(b)(2) of this chapter.

    Note to paragraph (c)(1): If you worked in one or more months during 
the initial 24-month period at the level of work described in paragraph 
(c)(1) of this section, those months of work may be used to meet certain 
requirements of the 24-month progress review as explained in Sec. 
411.180(c)(1) and the work requirements for the first 12-month progress 
review period as explained in Sec. 411.180(c)(2).

    (2) During your third 12-month progress review period, and during 
later 12-month progress review periods, we will consider you to be 
working in a month in which you have earnings from employment or self-
employment sufficient to preclude the payment of Social Security 
disability benefits and Federal SSI cash benefits for a month.



Sec. 411.190  How is it determined if I am meeting the timely progress 
guidelines?

    (a) During the initial 24-month period.
    (1) General. During the initial 24-month period after you assign 
your ticket, you must be actively participating in your employment plan, 
as defined in Sec. 411.180(c)(1). Active participation in your 
employment plan will be presumed unless you or your EN or State VR 
agency tell the program manager (PM) that you are not actively 
participating. (See Sec. 411.115(k) for a definition of the PM.) If you 
or your EN or State VR agency report to the PM that you are temporarily 
unable to participate or are not actively participating in your 
employment plan during the initial 24-month period after you assign your 
ticket, the PM will give you the choice of placing your ticket in 
inactive status or resuming active participation in your employment 
plan.
    (2) Inactive status. If you choose to place the ticket in inactive 
status, your ticket will be placed in inactive status beginning with the 
first day of the month following the month in which you make your 
request. You are not considered to be using a ticket during months in 
which your ticket is in inactive status. Therefore, you will be subject 
to continuing disability reviews during those months. The months in 
which your ticket is in inactive status do not count toward the time 
limitations for making timely progress toward self-supporting 
employment. You may not place your ticket in inactive status after the 
initial 24-month period.
    (i) To place a ticket in inactive status, you must submit a written 
request to the PM asking that your ticket be placed in inactive status. 
The request

[[Page 699]]

must include a statement from your EN or State VR agency that you will 
not be participating in your plan or receiving services from them during 
the period of inactive status.
    (ii) If your ticket is still assigned to an EN or State VR agency, 
you may reactivate your ticket and return to in-use status at any time 
by submitting a written request to the PM. Your ticket will be 
reactivated beginning with the first day of the month following the 
month in which the PM receives your request.
    (3) Resuming active participation. If you choose to resume active 
participation in your employment plan, you will be allowed three months 
to demonstrate this active participation to the PM. During this period, 
you will be considered to be making timely progress toward self-
supporting employment, and these months will count toward your initial 
24-month period. The PM will contact your EN or State VR agency after 
the three months to determine whether you have been actively 
participating in your employment plan during these three months. If the 
EN or State VR agency reports that you have been actively participating 
in your employment plan during these three months, you will continue to 
be considered to be making timely progress toward self-supporting 
employment. If the EN or State VR agency reports that you have not been 
actively participating in your employment plan during these three 
months, the PM will find that you are no longer making timely progress 
toward self-supporting employment. The PM will send a written notice of 
this decision to you at your last known address. The notice will explain 
the reasons for the decision and inform you of the right to ask us to 
review the decision. The decision will become effective 30 days after 
the date on which the PM sends the notice of the decision to you, unless 
you request that we review the decision under Sec. 411.205.
    (b) After the initial 24-month period. (1) After the initial 24-
month period, the PM will conduct progress reviews to determine if you 
are meeting the timely progress guidelines for continuing to be 
considered to be using a ticket.
    (2) The PM will conduct a 24-month progress review at the end of the 
initial 24-month period. (See Sec. 411.195.)
    (3) If you successfully complete your 24-month progress review, the 
PM will then conduct 12-month progress reviews at the end of each 12-
month progress review period. (See Sec. 411.200.)



Sec. 411.191  Table summarizing the guidelines for timely progress toward 
self-supporting employment.

    You may use the following table as a general guide to determine what 
you need to do to meet the guidelines for timely progress toward self-
supporting employment. For more detail, refer to Sec. Sec. 411.180-
411.190, and Sec. Sec. 411.195 and 411.200.

----------------------------------------------------------------------------------------------------------------
                                                                                               At the end of the
             If you:                You are in this     You must work:    With this level of    period we will
                                        period:                                earnings:         conduct your:
----------------------------------------------------------------------------------------------------------------
(a) First assigned your ticket    Initial 24-month    No work             Not applicable....  24-month progress
 less than 24 months ago (not      period.             requirement. Must                       review.
 counting any months during                            be actively
 which your ticket was                                 participating in
 unassigned or was not in use).                        employment plan.

[[Page 700]]

 
(b) First assigned your ticket    First 12-month      3 months out of 12  Earnings at the     First 12-month
 25 to 36 months ago, not          progress review     \2\.                SGA level for non-  progress review.
 counting certain months \1\.      period.                                 blind
                                                                           beneficiaries;
                                                                           \3\ or If you are
                                                                           an SSI-only
                                                                           beneficiary,
                                                                           gross earnings
                                                                           from employment
                                                                           or net earnings
                                                                           from self-
                                                                           employment which,
                                                                           before SSI income
                                                                           exclusions, are
                                                                           more than the SGA
                                                                           threshold amount
                                                                           for non-blind
                                                                           beneficiaries.
(c) First assigned your ticket    Second 12-month     6 months out of 12  Earnings at the     Second 12-month
 37 to 48 months ago, not          progress review                         SGA level for non-  progress review.
 counting certain months \1\.      period.                                 blind
                                                                           beneficiaries;
                                                                           \2\ or If you are
                                                                           an SSI-only
                                                                           beneficiary,
                                                                           gross earnings
                                                                           from employment
                                                                           or net earnings
                                                                           from self-
                                                                           employment which,
                                                                           before SSI income
                                                                           exclusions, are
                                                                           more than the SGA
                                                                           threshold amount
                                                                           for non-blind
                                                                           beneficiaries.
(d) First assigned your ticket    Third 12-month      6 months out of 12  Earnings            Third 12-month
 49 to 60 months ago, not          progress review                         sufficient to       progress review.
 counting certain months \3\.      period.                                 preclude Social
                                                                           Security
                                                                           disability and
                                                                           Federal SSI cash
                                                                           benefits for a
                                                                           month.
----------------------------------------------------------------------------------------------------------------
Note to table: In later 12-month progress review periods, the work and earnings requirements are the same as in
  the third 12-month progress review period.
\1\ In counting the 24 months which make up the initial 24-month period that begins after you assign your
  ticket, we do not count any months during which your ticket was unassigned or was not in use (see Sec.
  411.180(b)(1)). In counting the 12 months which make up any subsequent 12-month progress revieww period, we do
  not count any months during which your ticket was unassigned (see Sec.  411.180(b)(2)).
\2\ If you worked in one or more months during the initial 24-month period at the level of work applicable to
  the work requirement for the first 12-month progress review period, each such month of work may be used to
  reduce by one month the number of months of work required for the first 12-month progress review period (see
  Sec.  411.180(c)(2)).
\3\ For an explanation of how we determine if you meet this requirement if you are in a trial work period or if
  you are blind, see Sec.  411.185(a)(1) or (c)(1).



Sec. 411.195  How will the PM conduct my 24-month progress review?

    (a) In this review the PM will consider the following:
    (1) Are you actively participating in your employment plan? By 
``actively participating in your employment plan,'' we mean that you are 
engaging in activities outlined in your employment plan on a regular 
basis and in the approximate time frames specified in the plan. These 
activities may include employment, if agreed to in the employment plan.
    (2) Does your employment plan have a goal of at least three months 
of work (as defined in Sec. 411.185) by the time of your first 12-month 
progress review?
    (3) Given your current progress in your employment plan, can you 
reasonably be expected to reach this goal of at least three months of 
work (as defined in Sec. 411.185) at the time of your first 12-month 
progress review?


[[Page 701]]


    Note to paragraph (a): If you worked in one or more months during 
the initial 24-month period at the level of work applicable to the work 
requirement for the first 12-month progress review period, each such 
month of work may be used to reduce by one month the number of months of 
work referred to in paragraphs (a)(2) and (3) of this section and the 
number of months of work required for the first 12-month progress review 
period (see Sec. 411.180(c)(1) and (2)).

    (b) If the answer to all three of these questions is yes, the PM 
will find that you are making timely progress toward self-supporting 
employment. We will consider you to be making timely progress toward 
self-supporting employment until your first 12-month progress review.
    (c) If the answer to any of these questions is no, the PM will find 
that you are not making timely progress toward self-supporting 
employment. The PM will send a written notice of the decision to you at 
your last known address. The notice will explain the reasons for the 
decision and inform you of the right to ask us to review the decision. 
The decision will be effective 30 days after the date on which the PM 
sends the notice of the decision to you, unless you request that we 
review the decision under Sec. 411.205.



Sec. 411.200  How will the PM conduct my 12-month progress reviews?

    (a) The 12-month progress review is a two step process:
    (1) Step one--Retrospective review. Did you complete the work 
requirements (as specified in Sec. 411.180 and Sec. 411.185) in the 
just completed 12-month progress review period?
    (i) If you have not completed the work requirements, the PM will 
find that you are not making timely progress toward self-supporting 
employment.
    (ii) If you have completed the work requirements, the PM will go to 
step two.
    (2) Step two--Anticipated work level. Do both you and your EN or 
State VR agency expect that you will work at the level required during 
the next 12-month progress review period?
    (i) If not, the PM will find that you are not making timely progress 
toward self-supporting employment.
    (ii) If so, the PM will find that you are making timely progress 
toward self-supporting employment. We will consider you to be making 
timely progress toward self-supporting employment until your next 12-
month progress review.
    (b) If the PM finds that you are not making timely progress toward 
self-supporting employment, the PM will send a written notice of the 
decision to you at your last known address. The notice will explain the 
reasons for the decision and inform you of the right to ask us to review 
the decision. The decision will be effective 30 days after the date on 
which the PM sends the notice of the decision to you, unless you request 
that we review the decision under Sec. 411.205.



Sec. 411.205  What if I disagree with the PM's decision about whether I 
am making timely progress toward self-supporting employment?

    If you disagree with the PM's decision, you may request that we 
review the decision. You must make the request before the 30th day after 
the date on which the PM sends the notice of its decision to you. We 
will consider you to be making timely progress toward self-supporting 
employment until we make a decision. We will send a written notice of 
our decision to you at your last known address. If we decide that you 
are no longer making timely progress toward self-supporting employment, 
our decision will be effective on the date on which we send the notice 
of the decision to you.

                     Failure To Make Timely Progress



Sec. 411.210  What happens if I do not make timely progress toward 
self-supporting employment?

    (a) General. If it is determined that you are not making timely 
progress toward self-supporting employment, we will find that you are no 
longer using a ticket. If this happens, you will once again be subject 
to continuing disability reviews. However, you may continue 
participating in the Ticket to Work program. Your EN (including a State 
VR agency which is serving you as an EN) also may receive any milestone 
or outcome payments for which it is eligible under Sec. 411.500 et seq. 
If you

[[Page 702]]

are working with a State VR agency which elected payment under the cost 
reimbursement payment system, your State VR agency may receive payment 
for which it is eligible under the cost reimbursement payment system 
(see subparts F and H of this part).
    (b) Re-entering in-use status. If you failed to meet the timely 
progress guidelines for continuing to use a ticket, you may re-enter in-
use status. If you believe that you meet the requirements for re-
entering in-use status described in paragraph (b)(1), (b)(2), (b)(3), 
(b)(4) or (b)(5) of this section, you may request that you be reinstated 
to in-use status. You must submit a written request to the PM asking 
that you be reinstated to in-use status. The PM will decide whether you 
have satisfied the applicable requirements for re-entering in-use 
status. The requirements for re-entering in-use status depend on how far 
you progressed before you failed to meet the timely progress guidelines.
    (1) If you failed to meet the timely progress guidelines during the 
initial 24-month period.
    (i) If you failed to meet the timely progress guidelines during the 
initial 24-month period, you may re-enter in-use status by demonstrating 
three consecutive months of active participation in your employment plan 
(see Sec. 411.166(a)).
    (ii) When you have satisfied this requirement, you will be 
reinstated to in-use status, provided that your ticket is assigned to an 
EN or State VR agency. See paragraph (c) of this section for when your 
reinstatement to in-use status will be effective.
    (iii) After you are reinstated to in-use status, your next review 
will be the 24-month progress review described in Sec. 411.195.
    (2) If you failed to meet the timely progress guidelines in your 24-
month progress review.
    (i) If you failed to meet the timely progress guidelines in your 24-
month progress review, you may re-enter in-use status by completing 
three months of work (as defined in Sec. 411.185(a)(1), (b)(1) or 
(c)(1)) within a rolling 12-month period. The rolling 12-month period 
must begin after the effective date of the decision that you failed to 
meet the timely progress guidelines. You also must satisfy the test of 
Sec. 411.200(a)(2) regarding the anticipated level of your work during 
the 12-month progress review period that may begin under paragraph 
(b)(2)(iii) of this section. The work requirements for this 12-month 
progress review period will be the work requirements applicable during 
the second 12-month progress review period.
    (ii) When you have satisfied these requirements, you will be 
reinstated to in-use status, provided that your ticket is assigned to an 
EN or State VR agency. See paragraph (c) of this section for when your 
reinstatement to in-use status will be effective.
    (iii) After you are reinstated to in-use status, the second 12-month 
progress review period will begin. During this 12-month progress review 
period, you will be required to work (as defined in Sec. 411.185(a)(1), 
(b)(1) or (c)(1)) at least six months. The PM will conduct a 12-month 
progress review at the end of this 12-month progress review period to 
determine if you have met this requirement. After this, the PM will 
conduct 12-month progress reviews in the usual manner.
    (3) If you failed to meet the timely progress guidelines in your 
first 12-month progress review.
    (i) If you failed to meet the timely progress guidelines in your 
first 12-month progress review, you may re-enter in-use status by 
completing three months of work (as defined in Sec. 411.185(a)(1), 
(b)(1) or (c)(1)) within a rolling 12-month period. The rolling 12-month 
period must begin after the effective date of the decision that you 
failed to meet the timely progress guidelines. You also must satisfy the 
test of Sec. 411.200(a)(2) regarding the anticipated level of your work 
during the next 12-month progress review period that may begin under 
paragraph (b)(3)(iii) of this section.
    (ii) When you have satisfied these requirements, you will be 
reinstated to in-use status, provided that your ticket is assigned to an 
EN or State VR agency. See paragraph (c) of this section for when your 
reinstatement to in-use status will be effective.
    (iii) After you are reinstated to in-use status, your next 12-month

[[Page 703]]

progress review period will begin. During this 12-month progress review 
period, you will be required to work (as defined in Sec. 411.185(a)(1), 
(b)(1) or (c)(1)) at least six months. The PM will conduct a 12-month 
progress review at the end of this 12-month progress review period to 
determine if you have met this requirement. After this, the PM will 
conduct 12-month progress reviews in the usual manner.
    (4) If you failed to meet the timely progress guidelines in your 
second 12-month progress review.
    (i) If you failed to meet the timely progress guidelines in your 
second 12-month progress review, you may re-enter in-use status by 
completing six months of work (as defined in Sec. 411.185(a)(1), (b)(1) 
or (c)(1)) within a rolling 12-month period. The rolling 12-month period 
must begin after the effective date of the decision that you failed to 
meet the timely progress guidelines. You also must satisfy the test of 
Sec. 411.200(a)(2) regarding the anticipated level of your work during 
the next 12-month progress review period that may begin under paragraph 
(b)(4)(iii) of this section.
    (ii) When you have satisfied these requirements, you will be 
reinstated to in-use status, provided that your ticket is assigned to an 
EN or State VR agency. See paragraph (c) of this section for when your 
reinstatement to in-use status will be effective.
    (iii) After you are reinstated to in-use status, your next 12-month 
progress review period will begin. During this 12-month progress review 
period, you will be required to work (as defined in Sec. 411.185(a)(2), 
(b)(2) or (c)(2)) at least six months. The PM will conduct a 12-month 
progress review at the end of this 12-month progress review period to 
determine if you have met this requirement. After this, the PM will 
conduct 12-month progress reviews in the usual manner.
    (5) If you failed to meet the timely progress guidelines in any 
progress review after your second 12-month progress review.
    (i) If you failed to meet the timely progress guidelines in any 
progress review after your second 12-month progress review, you may re-
enter in-use status by completing six months of work within a rolling 
12-month period with earnings in each of the six months at the level 
specified in Sec. 411.185(a)(2), (b)(2) or (c)(2). The rolling 12-month 
period must begin after the effective date of the decision that you 
failed to meet the timely progress guidelines. You also must satisfy the 
test in Sec. 411.200(a)(2) regarding the anticipated level of your work 
during the next 12-month progress review period that may begin under 
paragraph (b)(5)(iii) of this section.
    (ii) When you have satisfied these requirements, you will be 
reinstated to in-use status, provided that your ticket is assigned to an 
EN or State VR agency. See paragraph (c) of this section for when your 
reinstatement to in-use status will be effective.
    (iii) After you are reinstated to in-use status, your next 12-month 
progress review period will begin. During this 12-month progress review 
period, you will be required to work at least six months with earnings 
at the level specified in Sec. 411.185(a)(2), (b)(2) or (c)(2). The PM 
will conduct a 12-month progress review at the end of this 12-month 
progress review period to determine if you have met this requirement. 
After this, the PM will conduct 12-month progress reviews in the usual 
manner.
    (c) Decisions on whether you have satisfied the requirements for re-
entering in-use status.
    (1) After you have submitted a written request to the PM asking that 
you be reinstated to in-use status, the PM will decide whether you have 
satisfied the applicable requirements in this section for re-entering 
in-use status. The PM will send a written notice of the decision to you 
at your last known address. The notice will explain the reasons for the 
decision and inform you of the right to ask us to review the decision. 
If the PM decides that you have satisfied the requirements for re-
entering in-use status (including the requirement that your ticket be 
assigned to an EN or State VR agency), you will be reinstated to in-use 
status effective with the date on which the PM sends the notice of the 
decision to you. If the PM decides that you have not satisfied the 
requirements for re-entering in-use status, you may request that we 
review

[[Page 704]]

the decision under paragraph (c)(2) of this section.
    (2) If you disagree with the PM's decision, you may request that we 
review the decision. You must make the request before the 30th day after 
the date on which the PM sends the notice of its decision to you. We 
will send you a written notice of our decision at your last known 
address. If we decide that you have satisfied the requirements for re-
entering in-use status (including the requirement that your ticket be 
assigned to an EN or State VR agency), you will be reinstated to in-use 
status effective with the date on which we send the notice of the 
decision to you.

                          The Extension Period



Sec. 411.220  What if my ticket is no longer assigned to an EN or State 
VR agency?

    (a) If your ticket was once assigned to an EN or State VR agency and 
is no longer assigned, you are eligible for an extension period of up to 
three months to reassign your ticket. You are eligible for an extension 
period if your ticket is in use and no longer assigned because--
    (1) You retrieved your ticket because you were dissatisfied with the 
services being provided (see Sec. 411.145(a)) or because you relocated 
to an area not served by your previous EN or State VR agency; or
    (2) Your EN went out of business, is no longer approved to 
participate as an EN in the Ticket to Work program, or is no longer 
willing or able to provide you with services as described in Sec. 
411.145(b), or your State VR agency stopped providing services to you as 
described in Sec. 411.145(b).
    (b) During the extension period, the ticket will still be considered 
to be in use. This means that you will not be subject to continuing 
disability reviews during this period.
    (c) Time spent in the extension period will not count toward the 
time limitations for the timely progress guidelines.
    (d) The extension period--
    (1) Begins on the first day on which the ticket is no longer 
assigned (see Sec. 411.145); and
    (2) Ends three months after it begins or when you assign your ticket 
to a new EN or State VR agency, whichever is sooner.
    (e) If your extension period began during the initial 24-month 
period, and you reassign your ticket to an EN or State VR agency (other 
than the EN or State VR agency to which the ticket was previously 
assigned), you will have a new initial 24-month period when you reassign 
your ticket. This initial 24-month period will begin with the first 
month beginning after the day on which the reassignment of your ticket 
is effective under Sec. 411.150(c).
    (f) If you do not assign your ticket by the end of the extension 
period, the ticket will no longer be in use and you will once again be 
subject to continuing disability reviews.



Sec. 411.225  What if I reassign my ticket after the end of the extension 
period?

    (a) General. You may reassign your ticket after the end of the 
extension period under the conditions described in Sec. 411.150. If you 
reassign your ticket after the end of the extension period, you will be 
reinstated to in-use status beginning on the day on which the 
reassignment of your ticket is effective under Sec. 411.150(c).
    (b) Time limitations for the timely progress guidelines. Any month 
during which your ticket is not assigned, either during or after the 
extension period, will not count toward the time limitations for the 
timely progress guidelines. See Sec. 411.180(b)(1) and (2).
    (c) If your extension period began during the initial 24-month 
period. If your extension period began during the initial 24-month 
period, and you reassign your ticket to an EN or State VR agency (other 
than the EN or State VR agency to which the ticket was previously 
assigned), you will have a new initial 24-month period when you reassign 
your ticket. This initial 24-month period will begin with the first 
month beginning after the day on which the reassignment of your ticket 
is effective under Sec. 411.150(c).
    (d) If your extension period began during any 12-month progress 
review period. If your extension period began during a 12-month progress 
review period and you reassign your ticket after the end of the 
extension period, the period

[[Page 705]]

comprising the remaining months in that 12-month progress review period 
(see Sec. 411.180(b)(2)) will begin with the first month beginning 
after the day on which the reassignment of your ticket is effective 
under Sec. 411.150(c).



       Subpart D_Use of One or More Program Managers To Assist in 
              Administration of the Ticket to Work Program



Sec. 411.230  What is a PM?

    A program manager (PM) is an organization in the private or public 
sector that has entered into a contract to assist us in administering 
the Ticket to Work program. We will use a competitive bidding process to 
select one or more PMs.



Sec. 411.235  What qualifications are required of a PM?

    A PM must have expertise and experience in the field of vocational 
rehabilitation or employment services.



Sec. 411.240  What limitations are placed on a PM?

    A PM is prohibited from directly participating in the delivery of 
employment services, vocational rehabilitation services, or other 
support services to beneficiaries with tickets in the PM's designated 
service delivery area. A PM is also prohibited from holding a financial 
interest in an employment network (EN) or service provider that provides 
services under the Ticket to Work program in the PM's designated service 
delivery area.



Sec. 411.245  What are a PM's responsibilities under the Ticket to Work 
program?

    A PM will assist us in administering the Ticket to Work program by 
conducting the following activities:
    (a) Recruiting, recommending, and monitoring ENs. A PM must recruit 
and recommend for selection by us public and private entities to 
function as ENs under the program. A PM is also responsible for 
monitoring the ENs operating in its service delivery area. Such 
monitoring must be done to the extent necessary and appropriate to 
ensure that adequate choices of services are made available to 
beneficiaries with tickets. A PM may not limit the number of public or 
private entities being recommended to function as ENs.
    (b) Facilitating access by beneficiaries to ENs. A PM must assist 
beneficiaries with tickets in accessing ENs.
    (1) A PM must establish and maintain lists of the ENs available to 
beneficiaries with tickets in its service delivery area and make these 
lists generally available to the public.
    (2) A PM must ensure that all information provided to beneficiaries 
with tickets about ENs is in accessible formats. For purposes of this 
section, accessible format means by media that is appropriate to a 
particular beneficiary's impairment(s).
    (3) A PM must take necessary measures to ensure that sufficient ENs 
are available and that each beneficiary under the Ticket to Work program 
has reasonable access to employment services, vocational rehabilitation 
services, and other support services. The PM shall ensure that services 
such as the following are available in each service area, including 
rural areas: case management, work incentives planning, supported 
employment, career planning, career plan development, vocational 
assessment, job training, placement, follow-up services, and other 
services that we may require in an agreement with a PM.
    (4) A PM must ensure that each beneficiary with a ticket is allowed 
to change ENs. When a change in the EN occurs, the PM must reassign the 
ticket based on the choice of the beneficiary.
    (c) Facilitating payments to ENs. A PM must facilitate payments to 
the ENs in its service delivery area. Subpart H explains the EN payment 
systems and the PM's role in administering these systems.
    (1) A PM must maintain documentation and provide regular assurances 
to us that payments to an EN are warranted. The PM shall ensure that an 
EN is complying with the terms of its agreement and applicable 
regulations.
    (2) Upon the request of an EN, the PM shall make a determination of 
the allocation of the outcome or milestone payments due to an EN based 
on the services provided by the EN when a

[[Page 706]]

beneficiary has been served by more than one EN.
    (d) Administrative requirements. A PM will perform such 
administrative tasks as are required to assist us in administering and 
implementing the Ticket to Work program. Administrative tasks required 
for the implementation of the Program may include, but are not limited 
to:
    (1) Reviewing individual work plans (IWPs) submitted by ENs for 
ticket assignment. These reviews will be conducted to ensure that the 
IWPs meet the requirements of Sec. 411.465. (The PM will not review 
individualized plans for employment developed by State VR agencies and 
beneficiaries.)
    (2) Reviewing amendments to IWPs to ensure that the amendments meet 
the requirements in Sec. 411.465.
    (3) Ensuring that ENs only refer an individual to a State VR agency 
for services pursuant to an agreement regarding the conditions under 
which such services will be provided.
    (4) Resolving a dispute between an EN and a State VR agency with 
respect to agreements regarding the conditions under which services will 
be provided when an individual is referred by an EN to a State VR agency 
for services.

                Evaluation of Program Manager Performance



Sec. 411.250  How will SSA evaluate a PM?

    (a) We will periodically conduct a formal evaluation of the PM. The 
evaluation will include, but not be limited to, an assessment examining 
the following areas:
    (1) Quality of services;
    (2) Cost control;
    (3) Timeliness of performance;
    (4) Business relations; and
    (5) Customer satisfaction.
    (b) Our Project Officer will perform the evaluation. The PM will 
have an opportunity to comment on the evaluation, and then the 
Contracting Officer will determine the PM's final rating.
    (c) These performance evaluations will be made part of our database 
on contractor past performance to which any Federal agency may have 
access.
    (d) Failure to comply with the standards used in the evaluation may 
result in early termination of our agreement with the PM.



                      Subpart E_Employment Networks



Sec. 411.300  What is an EN?

    An employment network (EN) is any qualified entity that has entered 
into an agreement with us to function as an EN under the Ticket to Work 
program and assume responsibility for the coordination and delivery of 
employment services, vocational rehabilitation services, or other 
support services to beneficiaries who have assigned their tickets to 
that EN.



Sec. 411.305  Who is eligible to be an EN?

    Any qualified agency or instrumentality of a State (or political 
subdivision thereof) or a private entity that assumes responsibility for 
the coordination and delivery of services under the Ticket to Work 
program to disabled beneficiaries is eligible to be an EN. A single 
entity or an association of or consortium of entities combining their 
resources is eligible to be an EN. The entity may provide these services 
directly or by entering into an agreement with other organizations or 
individuals to provide the appropriate services or other assistance that 
a beneficiary with a ticket may need to find and maintain employment 
that reduces dependency on disability benefits. ENs may include, but are 
not limited to:
    (a) Any public or private entity, including charitable and religious 
organizations, that can provide directly, or arrange for other 
organizations or entities to provide, employment services, vocational 
rehabilitation services, or other support services.
    (b) State agencies administering or supervising the administration 
of the State plan approved under title I of the Rehabilitation Act of 
1973, as amended (29 U.S.C. 720 et seq.) may choose, on a case-by-case 
basis, to be paid as an EN under the payment systems described in 
subpart H of this part. For the rules on State VR agencies' 
participation in the Ticket to Work program, see subpart F of this part. 
The rules in this subpart E apply to entities other than State VR 
agencies.
    (c) One-stop delivery systems established under subtitle B of title 
I of the

[[Page 707]]

Workforce Investment Act of 1998 (29 U.S.C. 2841 et seq.).
    (d) Alternate participants currently operating under the authority 
of section 222(d)(2) of the Social Security Act.
    (e) Organizations administering Vocational Rehabilitation Services 
Projects for American Indians with Disabilities authorized under section 
121 of part C of title I of the Rehabilitation Act of 1973, as amended 
(29 U.S.C. 750 et seq.).
    (f) Public or private schools that provide VR or employment 
services, conduct job training programs, or make services or programs 
available that can assist students with disabilities in acquiring 
specific job skills that lead to employment. This includes transition 
programs that can help students acquire work skills.
    (g) Employers that offer job training or other support services or 
assistance to help individuals with disabilities obtain and retain 
employment or arrange for individuals with disabilities to receive 
relevant services or assistance.



Sec. 411.310  How does an entity other than a State VR agency apply to 
be an EN and who will determine whether an entity qualifies as an EN?

    (a) An entity other than a State VR agency applies by responding to 
our Request for Proposal (RFP), which we published in the Commerce 
Business Daily and which is available online through the Federal 
government's electronic posting system (http://www.eps.gov). This RFP 
also is available through SSA's website, http://www.ssa.gov/work. Since 
recruitment of ENs will be an ongoing process, the RFP is open and 
continuous. The entity must respond in a format prescribed in the RFP 
announcement. In its response, the entity must assure SSA that it is 
qualified to provide employment services, vocational rehabilitation 
services, or other support services to disabled beneficiaries, either 
directly or through arrangements with other entities.
    (b) The PM will solicit service providers and other qualified 
entities to respond to the RFP on an ongoing basis. (See Sec. 
411.115(k) for a definition of the PM.) The PM will conduct a 
preliminary review of responses to the RFP from applicants located in 
the PM's service delivery area and make recommendations to the 
Commissioner regarding selection. The Commissioner will decide which 
applicants will be approved to serve as ENs under the program.
    (c) State VR agencies must comply with the requirements in subpart F 
of this part to participate as an EN in the Ticket to Work program. (See 
Sec. Sec. 411.360ff).



Sec. 411.315  What are the minimum qualifications necessary to be an EN?

    To serve as an EN under the Ticket to Work program, an entity must 
meet and maintain compliance with both general selection criteria and 
specific selection criteria.
    (a) The general criteria include:
    (1) having systems in place to protect the confidentiality of 
personal information about beneficiaries seeking or receiving services;
    (2) being accessible, both physically and programmatically, to 
beneficiaries seeking or receiving services (examples of being 
programmatically accessible include the capability of making documents 
and literature available in alternate media including Braille, recorded 
formats, enlarged print, and electronic media; and insuring that data 
systems available to clients are fully accessible for independent use by 
persons with disabilities);
    (3) not discriminating in the provision of services based on a 
beneficiary's age, gender, race, color, creed, or national origin;
    (4) having adequate resources to perform the activities required 
under the agreement with us or the ability to obtain them;
    (5) complying with the terms and conditions in the agreement with 
us, including delivering or coordinating the delivery of employment 
services, vocational rehabilitation services, and other support 
services; and
    (6) implementing accounting procedures and control operations 
necessary to carry out the Ticket to Work program.
    (b) The specific criteria that an entity must meet to qualify as an 
EN include:

[[Page 708]]

    (1)(i) Using staff who are qualified under applicable certification, 
licensing, or registration standards that apply to their profession 
including certification or accreditation by national accrediting or 
certifying organizations; or
    (ii) Using staff that are otherwise qualified based on education or 
experience, such as by using staff with experience or a college degree 
in a field related to the services the EN wants to provide, such as 
vocational counseling, human relations, teaching, or psychology; and
    (2) Taking reasonable steps to assure that if any medical and 
related health services are provided, such medical and health related 
services are provided under the formal supervision of persons licensed 
to prescribe or supervise the provision of these services in the State 
in which the services are performed.
    (c) Any entity must have applicable certificates, licenses or other 
credentials if such documentation is required by State law to provide 
vocational rehabilitation services, employment services or other support 
services.
    (d) We will not use the following as an EN:
    (1) any entity that has had its license, accreditation, 
certification, or registration suspended or revoked for reasons 
concerning professional competence or conduct or financial integrity;
    (2) any entity that has surrendered a license, accreditation, 
certification, or registration with a disciplinary proceeding pending; 
or
    (3) any entity that is precluded from Federal procurement or non-
procurement programs.



Sec. 411.320  What are an EN's responsibilities as a participant in the 
Ticket to Work program?

    An EN must--
    (a) Enter into an agreement with us.
    (b) Serve a prescribed service area. The EN must designate the 
geographic area in which it will provide services. This will be 
designated in the EN's agreement with us.
    (c) Provide services directly, or enter into agreements with other 
entities to provide employment services, vocational rehabilitation 
services, or other support services to beneficiaries with tickets.
    (d) Ensure that employment services, vocational rehabilitation 
services, and other support services provided under the Ticket to Work 
program are provided under appropriate individual work plans (IWPs).
    (e) Elect a payment system at the time of signing an agreement with 
us (see Sec. 411.505).
    (f) Develop and implement each IWP in partnership with each 
beneficiary receiving services in a manner that affords the beneficiary 
the opportunity to exercise informed choice in selecting an employment 
goal and specific services needed to achieve that employment goal. Each 
IWP must meet the requirements described in Sec. 411.465.



Sec. 411.321  Under what conditions will SSA terminate an agreement 
with an EN due to inadequate performance?

    We will terminate our agreement with an EN if it does not comply 
with the requirements under Sec. Sec. 411.320, Sec. 411.325, or the 
conditions in the agreement between SSA and the EN, including minimum 
performance standards relating to beneficiaries achieving self-
supporting employment and leaving the benefit rolls.



Sec. 411.325  What reporting requirements are placed on an EN as a 
participant in the Ticket to Work program?

    An EN must:
    (a) Report to the PM each time it accepts a ticket for assignment;
    (b) Submit a copy of each signed IWP to the PM;
    (c) Submit to the PM copies of amendments to a beneficiary's IWP;
    (d) Submit to the PM a copy of any agreement the EN has established 
with a State VR agency regarding the conditions under which the State VR 
agency will provide services to beneficiaries who are referred by the EN 
under the Ticket to Work program;
    (e) Submit information to assist the PM conducting the reviews 
necessary to assess a beneficiary's timely progress towards self-
supporting employment to determine if a beneficiary

[[Page 709]]

is using a ticket for purposes of suspending continuing disability 
reviews (see subpart C of this part);
    (f) Report to the PM the specific outcomes achieved with respect to 
specific services the EN provided or secured on behalf of beneficiaries 
whose tickets it accepted for assignment. Such reports shall conform to 
a national model prescribed by us and shall be submitted to the PM at 
least annually;
    (g) Provide a copy of its most recent annual report on outcomes to 
each beneficiary considering assigning a ticket to it and assure that a 
copy of its most recent report is available to the public while ensuring 
that personal information on beneficiaries is kept confidential;
    (h) Meet our financial reporting requirements. These requirements 
will be described in the agreements between ENs and the Commissioner, 
and will include submitting a financial report to the program manager on 
an annual basis;
    (i) Collect and record such data as we shall require, in a form 
prescribed by us; and
    (j) Adhere to all requirements specified in the agreement with the 
Commissioner and all regulatory requirements in this part 411.



Sec. 411.330  How will SSA evaluate an EN's performance?

    (a) We will periodically review the results of the work of each EN 
to ensure effective quality assurance in the provision of services by 
ENs.
    (b) In conducting such a review, we will solicit and consider the 
views of the individuals the EN serves and the PM which monitors the EN.
    (c) ENs must make the results of these periodic reviews available to 
disabled beneficiaries to assist them in choosing among available ENs.



    Subpart F_State Vocational Rehabilitation Agencies' Participation

               Participation in the Ticket to Work Program



Sec. 411.350   Must a State VR agency participate in the Ticket to Work 
program?

    Yes. Each State agency administering or supervising the 
administration of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), must 
participate in the Ticket to Work program if it wishes to receive 
payments from SSA for serving disabled beneficiaries who are issued a 
ticket.



Sec. 411.355  What payment options does a State VR agency have under the 
Ticket to Work program?

    (a) The Ticket to Work program provides different payment options 
that are available to a State VR agency for providing services to 
disabled beneficiaries who have a ticket. A State VR agency participates 
in the program in one of two ways when providing services to a 
particular disabled beneficiary under the program. On a case-by-case 
basis, subject to the limitations in Sec. 411.585, the State VR agency 
may participate either--
    (1) As an employment network (EN); or
    (2) Under the cost reimbursement payment system (see subpart V of 
part 404 and subpart V of part 416 of this chapter).
    (b) When the State VR agency serves a beneficiary with a ticket as 
an EN, the State VR agency will use the EN payment system it has elected 
for this purpose, either the outcome payment system or the outcome-
milestone payment system (described in subpart H of this part). The 
State VR agency will have periodic opportunities to change the payment 
system it uses when serving as an EN.
    (c) The State VR agency may seek payment only under its elected EN

[[Page 710]]

payment system whenever it serves as an EN. When serving a beneficiary 
who was not issued a ticket, the State VR agency may seek payment only 
under the cost reimbursement payment system.
    (d) A State VR agency can choose to function as an EN or to receive 
payment under the cost reimbursement payment system each time that a 
ticket is assigned or reassigned to it if payment has not previously 
been made with respect to that ticket. If payment has previously been 
made with respect to that ticket, the State VR agency can receive 
payment only under the payment system under which the earlier payment 
was made.



Sec. 411.360  How does a State VR agency become an EN?

    (a) As the Ticket to Work program is implemented in States, we will 
notify the State VR agency by letter about payment systems available 
under the program. The letter will ask the State VR agency to choose a 
payment system to use when it functions as an EN.
    (b) When serving a beneficiary holding a ticket, the State VR agency 
may choose, on a case-by-case basis, to seek payment under its elected 
EN payment system or under the cost reimbursement payment system, 
subject to the limitations in Sec. 411.585.



Sec. 411.365  How does a State VR agency notify SSA about its choice 
of a payment system for use when functioning as an EN?

    (a) When the State VR agency receives our letter described in Sec. 
411.360(a) regarding implementation of the Ticket to Work program, the 
State VR agency must respond by sending us a letter telling us which EN 
payment system it will use when it functions as an EN with respect to a 
beneficiary who has a ticket.
    (b) The director of the State agency administering or supervising 
the administration of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), or the 
director's designee must sign the State VR agency's letter described in 
paragraph (a) of this section.



Sec. 411.370  Does a State VR agency ever have to function as an EN?

    A State VR agency does not have to function as an EN when serving a 
beneficiary with a ticket if the ticket has not previously been assigned 
to an EN or State VR agency or, if it has been previously assigned, we 
have not made payment under an EN payment system with respect to that 
ticket. However, as described in Sec. 411.585(b), a State VR agency is 
precluded from being paid under the cost reimbursement payment system if 
an EN or a State VR agency serving a beneficiary as an EN has been paid 
by us under one of the EN payment systems with respect to the same 
ticket.



Sec. 411.375  Does a State VR agency continue to provide services under 

the requirements of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), when 
functioning as an EN?

    Yes. The State VR agency must continue to provide services under the 
requirements of the State plan approved under title I of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 720 et seq.), even 
when functioning as an EN.

                              Ticket Status



Sec. 411.380  What does a State VR agency do if the State VR agency wants 
to determine whether a person seeking services has a ticket?

    A State VR agency can contact the Program Manager (PM) to determine 
if a person seeking VR services has a ticket and, if so, whether the 
ticket may be assigned to the State VR agency (see Sec. 411.140) or 
reassigned to the State VR agency (see Sec. 411.150). (See Sec. 
411.115(k) for a definition of the PM.)



Sec. 411.385  What does a State VR agency do if a beneficiary who is 

eligible for VR services has a ticket that is available for assignment 
or reassignment?

    (a) Once the State VR agency determines that a beneficiary is 
eligible for VR services, the beneficiary and a representative of the 
State VR agency

[[Page 711]]

must agree to and sign the individualized plan for employment (IPE) 
required under section 102(b) of the Rehabilitation Act of 1973, as 
amended (29 U.S.C. 722(b)). This requirement must be met in order for a 
beneficiary to assign or reassign his or her ticket to the State VR 
agency. Section 411.140(d) describes the other requirements which must 
be met in order for a beneficiary to assign a ticket. Section 411.150(a) 
and (b) describe the other requirements which must be met in order for a 
beneficiary to reassign a ticket. Under Sec. 411.140(d)(3) and Sec. 
411.150(b)(4), the State VR agency must submit the following information 
to the PM in order for the beneficiary's ticket to be assigned or 
reassigned to the State VR AGENCY:
    (1) A statement that the beneficiary has decided to assign or 
reassign the ticket to the State VR agency and that an IPE has been 
agreed to and signed by both the beneficiary and a representative of the 
State VR agency;
    (2) A statement of the vocational goal outlined in the beneficiary's 
IPE; and
    (3) A statement of the State VR agency's selection of the payment 
system (either the cost reimbursement payment system or the previously 
elected EN payment system) under which the State VR agency will seek 
payment for providing services to the beneficiary.
    (b) This information must be submitted to the PM in a format 
prescribed by us and must include the signatures of both the 
beneficiary, or a representative of the beneficiary, and a 
representative of the State VR agency.



Sec. 411.390  What does a State VR agency do if a beneficiary to whom 

it is already providing services has a ticket that is available for 
assignment?

    If a beneficiary who is receiving services from the State VR agency 
under an existing IPE becomes eligible for a ticket that is available 
for assignment and decides to assign the ticket to the State VR agency, 
the State VR agency must submit the information required in Sec. 
411.385(a)(1)-(3) and (b) to the PM. This requirement must be met in 
order for the beneficiary to assign his or her ticket to the State VR 
agency. Section 411.140(d) describes the other requirements which must 
be met in order for a beneficiary to assign a ticket.



Sec. 411.395  Is a State VR agency required to provide periodic reports?

    (a) For cases where a State VR agency provided services functioning 
as an EN, the State VR agency will be required to prepare periodic 
reports on the specific outcomes achieved with respect to the specific 
services the State VR agency provided to or secured for disabled 
beneficiaries whose tickets it accepted for assignment. These reports 
must be submitted to the PM at least annually.
    (b) Regardless of the payment method selected, a State VR agency 
must submit information to assist the PM conducting the reviews 
necessary to assess a beneficiary's timely progress toward self-
supporting employment to determine if a beneficiary is using a ticket 
for purposes of suspending continuing disability reviews (see Sec. Sec. 
411.190, 411.195 and 411.200).

          Referrals by Employment Networks to State VR Agencies



Sec. 411.400  Can an EN to which a beneficiary's ticket is assigned refer 
the beneficiary to a State VR agency for services?

    Yes. An EN may refer a beneficiary it is serving under the Ticket to 
Work program to a State VR agency for services. However, a referral can 
be made only if the State VR agency and the EN have an agreement that 
specifies the conditions under which services will be provided by the 
State VR agency. This agreement must be in writing and signed by the 
State VR agency and the EN prior to the EN referring any beneficiary to 
the State VR agency for services.

      Agreements Between Employment Networks and State VR Agencies



Sec. 411.405  When does an agreement between an EN and the State VR agency 
have to be in place?

    Each EN must have an agreement with the State VR agency prior to 
referring a beneficiary it is serving under the Ticket to Work program 
to the State VR agency for specific services.

[[Page 712]]



Sec. 411.410  Does each referral from an EN to a State VR agency require 
its own agreement?

    No. The agreements between ENs and State VR agencies should be 
broad-based and apply to all beneficiaries who may be referred by the EN 
to the State VR agency for services, although an EN and a State VR 
agency may want to enter into an individualized agreement to meet the 
needs of a single beneficiary.



Sec. 411.415  Who will verify the establishment of agreements between 
ENs and State VR agencies?

    The PM will verify the establishment of these agreements. Each EN is 
required to submit a copy of the agreement it has established with the 
State VR agency to the PM.



Sec. 411.420  What information should be included in an agreement between 
an EN and a State VR agency?

    The agreement between an EN and a State VR agency should state the 
conditions under which the State VR agency will provide services to a 
beneficiary when the beneficiary is referred by the EN to the State VR 
agency for services. Examples of this information include-
    (a) Procedures for making referrals and sharing information that 
will assist in providing services;
    (b) A description of the financial responsibilities of each party to 
the agreement;
    (c) The terms and procedures under which the EN will pay the State 
VR agency for providing services; and
    (d) Procedures for resolving disputes under the agreement.



Sec. 411.425  What should a State VR agency do if it gets an attempted 

referral from an EN and no agreement has been established between the 
EN and the State VR agency?

    The State VR agency should contact the EN to discuss the need to 
establish an agreement. If the State VR agency and the EN are not able 
to negotiate acceptable terms for an agreement, the State VR agency 
should notify the PM that an attempted referral has been made without an 
agreement.



Sec. 411.430  What should the PM do when it is informed that an EN has 

attempted to make a referral to a State VR agency without an agreement 
being in place?

    The PM will contact the EN to explain that a referral cannot be made 
to the State VR agency unless an agreement has been established that 
sets out the conditions under which services will be provided when a 
beneficiary's ticket is assigned to the EN and the EN is referring the 
beneficiary to the State VR agency for specific services.

Resolving Disputes Arising Under Agreements Between Employment Networks 
                          and State VR Agencies



Sec. 411.435  How will disputes arising under the agreements between ENs 
and State VR agencies be resolved?

    Disputes arising under agreements between ENs and State VR agencies 
must be resolved using the following steps:
    (a) When procedures for resolving disputes are spelled out in the 
agreement between the EN and the State VR agency, those procedures must 
be used.
    (b) If procedures for resolving disputes are not included in the 
agreement between the EN and the State VR agency and procedures for 
resolving disputes under contracts and interagency agreements are 
provided for in State law or administrative procedures, the State 
procedures must be used to resolve disputes under agreements between ENs 
and State VR agencies.
    (c) If procedures for resolving disputes are not spelled out in the 
agreement or in State law or administrative procedures, the EN or the 
State VR agency may request that the PM recommend a resolution to the 
dispute.
    (1) The request must be in writing and include:
    (i) a copy of the agreement;
    (ii) information on the issue(s) in dispute; and
    (iii) information on the position of both the EN and the State VR 
agency regarding the dispute.
    (2) The PM has 20 calendar days after receiving a written request to 
recommend a resolution to the dispute. If either the EN or the State VR 
agency

[[Page 713]]

does not agree with the PM's recommended resolution to the dispute, the 
EN or the State VR agency has 30 calendar days after receiving the PM's 
recommendation to request a decision by us on the matter in dispute.



            Subpart G_Requirements For Individual Work Plans



Sec. 411.450  What is an Individual Work Plan?

    An individual work plan (IWP) is a required written document signed 
by an employment network (EN) (other than a State VR agency) and a 
beneficiary, or a representative of a beneficiary, with a ticket. It is 
developed and implemented in partnership when a beneficiary and an EN 
have come to a mutual understanding to work together to pursue the 
beneficiary's employment goal under the Ticket to Work program.



Sec. 411.455  What is the purpose of an IWP?

    The purpose of an IWP is to outline the specific employment 
services, vocational rehabilitation services and other support services 
that the EN and beneficiary have determined are necessary to achieve the 
beneficiary's stated employment goal. An IWP provides written 
documentation for both the EN and beneficiary. Both parties should 
develop and implement the IWP in partnership. The EN shall develop and 
implement the plan in a manner that gives the beneficiary the 
opportunity to exercise informed choice in selecting an employment goal. 
Specific services needed to achieve the designated employment goal are 
discussed and agreed to by both parties.



Sec. 411.460  Who is responsible for determining what information is 
contained in the IWP?

    The beneficiary and the EN share the responsibility for determining 
the employment goal and the specific services needed to achieve that 
employment goal. The EN will present information and options in a way 
that affords the beneficiary the opportunity to exercise informed choice 
in selecting an employment goal and specific services needed to achieve 
that employment goal.



Sec. 411.465  What are the minimum requirements for an IWP?

    (a) An IWP must include at least--
    (1) A statement of the vocational goal developed with the 
beneficiary, including, as appropriate, goals for earnings and job 
advancement;
    (2) A statement of the services and supports necessary for the 
beneficiary to accomplish that goal;
    (3) A statement of any terms and conditions related to the provision 
of these services and supports;
    (4) A statement that the EN may not request or receive any 
compensation for the costs of services and supports from the 
beneficiary;
    (5) A statement of the conditions under which an EN may amend the 
IWP or terminate the relationship;
    (6) A statement of the beneficiary's rights under the Ticket to Work 
program, including the right to retrieve the ticket at any time if the 
beneficiary is dissatisfied with the services being provided by the EN;
    (7) A statement of the remedies available to the beneficiary, 
including information on the availability of advocacy services and 
assistance in resolving disputes through the State Protection and 
Advocacy (P&A) System;
    (8) A statement of the beneficiary's rights to privacy and 
confidentiality regarding personal information, including information 
about the beneficiary's disability;
    (9) A statement of the beneficiary's right to seek to amend the IWP 
(the IWP can be amended if both the beneficiary and the EN agree to the 
change); and
    (10) A statement of the beneficiary's right to have a copy of the 
IWP made available to the beneficiary, including in an accessible format 
chosen by the beneficiary.
    (b) The EN will be responsible for ensuring that each IWP contains 
this information.



Sec. 411.470  When does an IWP become effective?

    (a) An IWP becomes effective if the following requirements are met--

[[Page 714]]

    (1) It has been signed by the beneficiary or the beneficiary's 
representative, and by a representative of the EN;
    (2)(i) The beneficiary is eligible to assign his or her ticket under 
Sec. 411.140(a); or
    (ii) The beneficiary is eligible to reassign his or her ticket under 
Sec. 411.150(a) and (b); and
    (3) A representative of the EN submits a copy of the signed IWP to 
the PM and the PM receives the copy of the IWP.
    (b) If all of the requirements in paragraph (a) of this section are 
met, the IWP will be effective on the first day on which the 
requirements of paragraphs (a)(1) and (a)(2) of this section are met.



              Subpart H_Employment Network Payment Systems



Sec. 411.500  Definitions of terms used in this subpart.

    (a) Payment Calculation Base means for any calendar year--
    (1) In connection with a title II disability beneficiary (including 
a concurrent title II/title XVI disability beneficiary), the average 
monthly disability insurance benefit payable under section 223 of the 
Act for months during the preceding calendar year to all beneficiaries 
who are in current pay status for the month for which the benefit is 
payable; and
    (2) In connection with a title XVI disability beneficiary (who is 
not concurrently a title II disability beneficiary), the average monthly 
payment of Supplemental Security Income (SSI) benefits based on 
disability payable under title XVI (excluding State supplementation) for 
months during the preceding calendar year to all beneficiaries who--
    (i) Have attained age 18 but have not attained age 65;
    (ii) Are not concurrent title II/title XVI beneficiaries; and
    (iii) Are in current pay status for the month for which the payment 
is made.
    (b) Outcome Payment Period means a period of 60 months, not 
necessarily consecutive, for which Social Security disability benefits 
and Federal SSI cash benefits are not payable to the individual because 
of the performance of substantial gainful activity (SGA) or by reason of 
earnings from work. This period begins with the first month, ending 
after the date on which the ticket was first assigned, for which such 
benefits are not payable due to SGA or earnings. This period ends with 
the 60th month, consecutive or otherwise, ending after such date, for 
which such benefits are not payable due to SGA or earnings.
    (c) Outcome Payment System is a system providing a schedule of 
payments to an employment network (EN) for each month, during an 
individual's outcome payment period, for which Social Security 
disability benefits and Federal SSI cash benefits are not payable to the 
individual because of work or earnings.
    (d) Outcome Payment means the payment for an outcome payment month.
    (e) Outcome Payment Month means a month, during the individual's 
outcome payment period, for which Social Security disability benefits 
and Federal SSI cash benefits are not payable to the individual because 
of work or earnings. The maximum number of outcome payment months for 
each ticket is 60.
    (f) Outcome-Milestone Payment System is a system providing a 
schedule of payments to an EN that includes, in addition to any outcome 
payments which may be made during the individual's outcome payment 
period, payment for completion by a beneficiary of up to four milestones 
directed toward the goal of permanent employment. The milestones for 
which payment may be made must occur prior to the beginning of the 
individual's outcome payment period.



Sec. 411.505  How is an EN paid by SSA?

    An EN can elect to be paid under either the outcome payment system 
or the outcome-milestone payment system. The EN will elect a payment 
system at the time the EN enters into an agreement with SSA. (For State 
VR agencies, see Sec. 411.365.) The EN may periodically change its 
elected payment system as described in Sec. 411.515.

[[Page 715]]



Sec. 411.510  How is the State VR agency paid under the Ticket to Work 
program?

    (a) The State VR agency's payment choices are described in Sec. 
411.355.
    (b) The State VR agency's decision to serve the beneficiary must be 
communicated to the program manager (PM). (See Sec. 411.115(k) for a 
definition of the PM.) At the same time, the State VR agency must notify 
the PM of its selected payment system for that beneficiary.
    (c) For each beneficiary who is already a client of the State VR 
agency prior to receiving a ticket, the State VR agency will notify the 
PM of the payment system election for each such beneficiary at the time 
the beneficiary decides to assign the ticket to the State VR agency.



Sec. 411.515  Can the EN change its elected payment system?

    (a) Yes. Any change by an EN in its elected EN payment system will 
apply to beneficiaries who assign their ticket to the EN after the EN's 
change in election becomes effective. A change in the EN's election will 
become effective with the first day of the month following the month in 
which the EN notifies us of the change. For beneficiaries who already 
assigned their ticket to the EN under the EN's earlier elected payment 
system, the EN's earlier elected payment system will continue to apply. 
These rules also apply to a change by a State VR agency in its elected 
EN payment system for cases in which the State VR agency serves a 
beneficiary as an EN.
    (b) After an EN (or a State VR agency) first elects an EN payment 
system, the EN (or State VR agency) can choose to make one change in its 
elected payment system at any time prior to the close of which of the 
following is later:
    (1) The 12th month following the month in which the EN (or State VR 
agency) first elects an EN payment system; or
    (2) The 12th month following the month in which we implement the 
Ticket to Work program in the State in which the EN (or State VR agency) 
operates.
    (c) After an EN (or a State VR agency) first elects a payment 
system, as part of signing the EN agreement with us (for State VR 
agencies, see Sec. 411.365), the EN (or State VR agency) will have the 
opportunity to change from its existing elected payment system during 
times announced by us. We will offer the opportunity for each EN (and 
State VR agency) to make a change in its elected payment system at least 
every 18 months.



Sec. 411.520  How are beneficiaries whose tickets are assigned to an EN 
affected by a change in that EN's elected payment system?

    A change in an EN's (or State VR agency's) elected payment system 
has no effect upon the beneficiaries who have assigned their ticket to 
the EN (or State VR agency).



Sec. 411.525  How are the EN payments calculated under each of the two 
EN payment systems?

    (a) For payments for outcome payment months, both EN payment systems 
use the payment calculation base as defined in Sec. 411.500(a)(1) or 
(a)(2), as appropriate.
    (1)(i) Under the outcome payment system, we can pay up to 60 monthly 
payments to the EN. For each month for which Social Security disability 
benefits and Federal SSI cash benefits are not payable to the individual 
because of work or earnings, the EN is eligible for a monthly outcome 
payment. Payment for an outcome payment month under the outcome payment 
system is equal to 40 percent of the payment calculation base for the 
calendar year in which such month occurs, rounded to the nearest whole 
dollar. (See Sec. 411.550.)
    (ii) If a disabled beneficiary's entitlement to Social Security 
disability benefits ends (see Sec. Sec. 404.316(b), 404.337(b) and 
404.352(b) of this chapter) or eligibility for SSI benefits based on 
disability or blindness terminates (see Sec. 416.1335 of this chapter) 
because of the performance of SGA or by reason of earnings from work 
activity, we will consider any month after the month with which such 
entitlement ends or eligibility terminates to be a month for which 
Social Security disability benefits and Federal SSI cash benefits

[[Page 716]]

are not payable to the individual because of work or earnings if--
    (A) The individual has gross earnings from employment (or net 
earnings from self-employment as defined in Sec. 416.1110(b) of this 
chapter) in that month that are more than the SGA threshold amount in 
Sec. 404.1574(b)(2) of this chapter (or in Sec. 404.1584(d) of this 
chapter for an individual who is statutorily blind); and
    (B) The individual is not entitled to any monthly benefits under 
title II or eligible for any benefits under title XVI for that month.
    (2) Under the outcome-milestone payment system, we can pay the EN 
for up to four milestones achieved by a beneficiary who has assigned his 
or her ticket to the EN. The milestones for which payment may be made 
must occur prior to the beginning of the beneficiary's outcome period 
and meet the requirements of Sec. 411.535. In addition to the milestone 
payments, monthly outcome payments can be paid to the EN during the 
outcome payment period.
    (b) The outcome-milestone payment system is designed so that the 
total payments to the EN for a beneficiary are less than the total 
amount to which payments would be limited if the EN were paid under the 
outcome payment system. Under the outcome-milestone payment system, the 
EN's total potential payment is about 85 percent of the total that would 
have been potentially payable under the outcome payment system for the 
same beneficiary.
    (c) We will pay an EN to whom the individual has assigned a ticket 
only for milestones or outcomes achieved in months prior to the month in 
which the ticket terminates (see Sec. 411.155). We will not pay a 
milestone or outcome payment to an EN based on an individual's work 
activity or earnings in or after the month in which the ticket 
terminates.



Sec. 411.530  How will the outcome payments be reduced when paid under 
the outcome-milestone payment system?

    Under the outcome-milestone payment system, each outcome payment 
made to an EN with respect to an individual will be reduced by an amount 
equal to \1/60\th of the milestone payments made to the EN with respect 
to the same individual.



Sec. 411.535  What are the milestones for which an EN can be paid?

    (a) Under the outcome-milestone payment system, there are four 
milestones for which the EN can be paid. The milestones occur after the 
date on which the ticket was first assigned and after the beneficiary 
starts to work. The milestones are based on the earnings levels that we 
use when we consider if work activity is SGA. We will use the SGA 
threshold amount in Sec. 404.1574(b)(2) of this chapter for 
beneficiaries who are not statutorily blind, and we will use the SGA 
threshold amount in Sec. 404.1584(d) of this chapter for beneficiaries 
who are statutorily blind. We will use these SGA threshold amounts in 
order to measure if the beneficiary's earnings level meets the milestone 
objective.
    (1) The first milestone is met when the beneficiary has worked for 
one calendar month and has gross earnings from employment (or net 
earnings from self-employment as defined in Sec. 416.1110(b) of this 
chapter) for that month that are more than the SGA threshold amount.
    (2) The second milestone is met when the beneficiary has worked for 
three calendar months within a 12-month period and has gross earnings 
from employment (or net earnings from self-employment as defined in 
Sec. 416.1110(b) of this chapter) for each of the three months that are 
more than the SGA threshold amount. The month used to meet the first 
milestone can be included in the three months used to meet the second 
milestone.
    (3) The third milestone is met when the beneficiary has worked for 
seven calendar months within a 12-month period and has gross earnings 
from employment (or net earnings from self-employment as defined in 
Sec. 416.1110(b) of this chapter) for each of the seven months that are 
more than the SGA threshold amount. Any of the months used to meet the 
first two milestones can be included in the seven months used to meet 
the third milestone.

[[Page 717]]

    (4) The fourth milestone is met when the beneficiary has worked for 
12 calendar months within a 15-month period and has gross earnings from 
employment (or net earnings from self-employment as defined in Sec. 
416.1110(b) of this chapter) for each of the 12 months that are more 
than the SGA threshold amount. Any of the months used to meet the first 
three milestones can be included in the 12 months used to meet the 
fourth milestone.
    (b) An EN can be paid for a milestone only if the milestone is 
attained after a beneficiary has assigned his or her ticket to the EN. 
See Sec. 411.575 for other milestone payment criteria.



Sec. 411.540  What are the payment amounts for each of the milestones?

    (a) The payment for the first milestone is equal to 34 percent of 
the payment calculation base for the calendar year in which the month of 
attainment of the milestone occurs, rounded to the nearest whole dollar.
    (b) The payment for the second milestone is equal to 68 percent of 
the payment calculation base for the calendar year in which the month of 
attainment of the milestone occurs, rounded to the nearest whole dollar.
    (c) The payment for the third milestone is equal to 136 percent of 
the payment calculation base for the calendar year in which the month of 
attainment of the milestone occurs, rounded to the nearest whole dollar.
    (d) The payment for the fourth milestone is equal to 170 percent of 
the payment calculation base for the calendar year in which the month of 
attainment of the milestone occurs, rounded to the nearest whole dollar.
    (e) The month of attainment of the first milestone is the first 
month in which the individual has the required earnings as described in 
Sec. 411.535.
    (f) The month of attainment of the second milestone is the 3rd 
month, within a 12-month period, in which the individual has the 
required earnings as described in Sec. 411.535.
    (g) The month of attainment of the third milestone is the 7th month, 
within a 12-month period, in which the individual has the required 
earnings as described in Sec. 411.535.
    (h) The month of attainment of the fourth milestone is the 12th 
month, within a 15-month period, in which the individual has the 
required earnings as described in Sec. 411.535.



Sec. 411.545  What are the payment amounts for outcome payment months 
under the outcome-milestone payment system?

    The amount of each monthly outcome payment under the outcome-
milestone payment system is equal to 34 percent of the payment 
calculation base for the calendar year in which the month occurs, 
rounded to the nearest whole dollar, and reduced, if necessary, as 
described in Sec. 411.530.



Sec. 411.550  What are the payment amounts for outcome payment months 
under the outcome payment system?

    Under the outcome payment system, the payment for an outcome payment 
month is equal to 40 percent of the payment calculation base for the 
calendar year in which the month occurs, rounded to the nearest whole 
dollar.



Sec. 411.555  Can the EN keep the milestone and outcome payments even 
if the beneficiary does not achieve all 60 outcome months?

    (a) Yes. The EN can keep each milestone and outcome payment for 
which the EN is eligible, even though the beneficiary does not achieve 
all 60 outcome months.
    (b) Payments which we make or deny to an EN or State VR agency 
serving a beneficiary as an EN may be subject to adjustment (including 
recovery, as appropriate) if we determine that more or less than the 
correct amount was paid. This may happen, for example, because we 
determine that the payment determination was in error or because of--
    (1) An allocation of a payment under Sec. 411.560; or
    (2) A determination or decision we make about an individual's right 
to benefits which causes the payment or denial of a payment to be 
incorrect (see Sec. 411.590(d)).
    (c) If we determine that an overpayment or underpayment has 
occurred, we will notify the EN or State VR agency serving a beneficiary 
as an EN of the adjustment. Any dispute which

[[Page 718]]

the EN or State VR agency has regarding the adjustment may be resolved 
under the rules in Sec. 411.590(a) and (b).



Sec. 411.560  Is it possible to pay a milestone or outcome payment to 
more than one EN?

    Yes. It is possible for more than one EN to receive payment based on 
the same milestone or outcome. If the beneficiary has assigned the 
ticket to more than one EN at different times, and more than one EN 
requests payment for the same milestone or outcome payment under its 
elected payment system, the PM will make a determination of the 
allocation of payment to each EN. The PM will make this determination 
based upon the contribution of the services provided by each EN toward 
the achievement of the outcomes or milestones. Outcome and milestone 
payments will not be increased because the payments are shared between 
two or more ENs.



Sec. 411.565  What happens if two or more ENs qualify for payment on the 
same ticket but have elected different EN payment systems?

    We will pay each EN according to its elected EN payment system in 
effect at the time the beneficiary assigned the ticket to the EN.



Sec. 411.570  Can an EN request payment from the beneficiary who assigned 
a ticket to the EN?

    No. Section 1148(b)(4) of the Act prohibits an EN from requesting or 
receiving compensation from the beneficiary for the services of the EN.



Sec. 411.575  How does the EN request payment for milestones or outcome 
payment months achieved by a beneficiary who assigned a ticket to the EN?

    The EN will send its request for payment, evidence of the 
beneficiary's work or earnings and other information to the PM.
    (a) Milestone payments. (1) We will pay the EN for milestones only 
if--
    (i) The outcome-milestone payment system was the EN's elected 
payment system in effect at the time the beneficiary assigned a ticket 
to the EN;
    (ii) The milestones occur prior to the outcome payment period (see 
Sec. 411.500(b));
    (iii) The requirements in Sec. 411.535 are met; and
    (iv) The ticket has not terminated for any of the reasons listed in 
Sec. 411.155.
    (2) The EN must request payment for each milestone achieved by a 
beneficiary who has assigned a ticket to the EN. The request must 
include evidence that the milestone was achieved, and other information 
as we may require, to evaluate the EN's request. We do not have to stop 
monthly benefit payments to the beneficiary before we can pay the EN for 
milestones achieved by the beneficiary.
    (b) Outcome payments. (1) We will pay an EN an outcome payment for a 
month if--
    (i)(A) Social Security disability benefits and Federal SSI cash 
benefits are not payable to the individual for that month due to work or 
earnings; or
    (B) The requirements of Sec. 411.525(a)(1)(ii) are met in a case 
where the beneficiary's entitlement to Social Security disability 
benefits has ended or eligibility for SSI benefits based on disability 
or blindness has terminated because of work activity or earnings; and
    (ii) We have not already paid for 60 outcome payment months on the 
same ticket; and
    (iii) The ticket has not terminated for any of the other reasons 
listed in Sec. 411.155.
    (2) The EN must request payment for outcome payment months on at 
least a quarterly basis. Along with the request, the EN must submit 
evidence of the beneficiary's work or earnings (e.g. a statement of 
monthly earnings from the employer or the employer's designated payroll 
preparer, an unaltered copy of the beneficiary's pay stub). Exception: 
If the EN does not currently hold the ticket because it is unassigned or 
assigned to another EN, the EN must request payment, but is not required 
to submit evidence of the beneficiary's work or earnings.

[[Page 719]]



Sec. 411.580  Can an EN receive payments for milestones or outcome payment 
months that occur before the beneficiary assigns a ticket to the EN?

    No. An EN may be paid only for milestones or outcome payment months 
that are achieved after the ticket is assigned to the EN.



Sec. 411.585  Can a State VR agency and an EN both receive payment for 
serving the same beneficiary?

    Yes. It is possible if the State VR agency serves the beneficiary as 
an EN. In this case, both the State VR agency serving as an EN and the 
other EN may be eligible for payment based on the same ticket (see Sec. 
411.560).
    (a) If a State VR agency is paid by us under the cost reimbursement 
payment system with respect to a ticket, such payment precludes any 
subsequent payment by us based on the same ticket to an EN or to a State 
VR agency serving as an EN under either the outcome payment system or 
the outcome-milestone payment system.
    (b) If an EN or a State VR agency serving a beneficiary as an EN is 
paid by us under one of the EN payment systems with respect to a ticket, 
such payment precludes subsequent payment to a State VR agency under the 
cost reimbursement payment system based on the same ticket.



Sec. 411.587  Which provider will SSA pay if, with respect to the same 

ticket, SSA receives a request for payment from an EN or a State VR 
agency that elected payment under an EN payment system and a request 
for payment from a State VR agency that elected payment under the cost 
          reimbursement payment system?

    (a) We will pay the provider that first meets the requirements for 
payment under its elected payment system applicable to the beneficiary 
who assigned the ticket.
    (b) In the event that both providers first meet the requirements for 
payment under their respective payment systems in the same month, we 
will pay the claim of the provider to which the beneficiary's ticket is 
currently assigned or, if the ticket is not currently assigned to either 
provider, the claim of the provider to which the ticket was most 
recently assigned.



Sec. 411.590  What can an EN do if the EN disagrees with our decision on 
a payment request?

    (a) If an EN other than a State VR agency has a payment dispute with 
us, the dispute shall be resolved under the dispute resolution 
procedures contained in the EN's agreement with us.
    (b) If a State VR agency serving a beneficiary as an EN has a 
dispute with us regarding payment under an EN payment system, the State 
VR agency may, within 60 days of receiving notice of our decision, 
request reconsideration in writing. The State VR agency must send the 
request for reconsideration to the PM. The PM will forward to us the 
request for reconsideration and a recommendation. We will notify the 
State VR agency of our reconsidered decision in writing.
    (c) An EN (including a State VR agency) cannot appeal determinations 
we make about an individual's right to benefits (e.g. determinations 
that disability benefits should be suspended, terminated, continued, 
denied, or stopped or started on a different date than alleged). Only 
the beneficiary or applicant or his or her representative can appeal 
these determinations. See Sec. 404.900 et seq. and 416.1400 et seq. of 
this chapter.
    (d) Determinations or decisions which we make about an individual's 
right to benefits may affect an EN's eligibility for payment, and may 
cause payments which we have already made to an EN (or a denial of a 
payment to an EN) to be incorrect, resulting in an overpayment or 
underpayment to the EN. If this happens, we will make any necessary 
adjustments to the payments (see Sec. 411.555). While an EN cannot 
appeal our determination about an individual's right to benefits, the EN 
may furnish any evidence the EN has which relates to the issue(s) to be 
decided on appeal if the individual appeals our determination.



Sec. 411.595  What oversight procedures are planned for the EN payment 
systems?

    We use audits, reviews, studies and observation of daily activities 
to identify areas for improvement. Internal

[[Page 720]]

reviews of our systems security controls are regularly performed. These 
reviews provide an overall assurance that our business processes are 
functioning as intended. The reviews also ensure that our management 
controls and financial management systems comply with the standards 
established by the Federal Managers' Financial Integrity Act and the 
Federal Financial Management Improvement Act. These reviews operate in 
accordance with the Office of Management and Budget Circulars A-123, A-
127 and Appendix III to A-130. Additionally, our Executive Internal 
Control Committee meets periodically and provides further oversight of 
program and management control issues.



Sec. 411.597  Will SSA periodically review the outcome payment system 
and the outcome-milestone payment system for possible modifications?

    (a) Yes. We will periodically review the system of payments and 
their programmatic results to determine if they provide an adequate 
incentive for ENs to assist beneficiaries to enter the work force, while 
providing for appropriate economies.
    (b) We will specifically review the limitation on monthly outcome 
payments as a percentage of the payment calculation base, the difference 
in total payments between the outcome-milestone payment system and the 
outcome payment system, the length of the outcome payment period, and 
the number and amount of milestone payments, as well as the benefit 
savings and numbers of beneficiaries going to work. We will consider 
altering the payment system conditions based upon the information 
gathered and our determination that an alteration would better provide 
for the incentives and economies noted above.



           Subpart I_Ticket to Work Program Dispute Resolution

         Disputes Between Beneficiaries and Employment Networks



Sec. 411.600  Is there a process for resolving disputes between 
beneficiaries and ENs that are not State VR agencies?

    Yes. After an IWP is signed, a process is available which will 
assure each party a full, fair and timely review of a disputed matter. 
This process has three steps.
    (a) The beneficiary can seek a solution through the EN's internal 
grievance procedures.
    (b) If the EN's internal grievance procedures do not result in an 
agreeable solution, either the beneficiary or the EN may seek a 
resolution from the PM. (See Sec. 411.115(k) for a definition of the 
PM.)
    (c) If either the beneficiary or the EN is dissatisfied with the 
resolution proposed by the PM, either party may request a decision from 
us.



Sec. 411.605  What are the responsibilities of the EN that is not a State 
VR agency regarding the dispute resolution process?

    The EN must:
    (a) Have grievance procedures that a beneficiary can use to seek a 
resolution to a dispute under the Ticket to Work program;
    (b) Give each beneficiary seeking services a copy of its internal 
grievance procedures;
    (c) Inform each beneficiary seeking services of the right to refer a 
dispute first to the PM for review, and then to us for a decision; and
    (d) Inform each beneficiary of the availability of assistance from 
the State P&A system.



Sec. 411.610  When should a beneficiary receive information on the procedures 
for resolving disputes?

    Each EN that is not a State VR agency must inform each beneficiary 
seeking services under the Ticket to Work program of the procedures for 
resolving disputes when--
    (a) The EN and the beneficiary complete and sign the IWP;
    (b) Services in the beneficiary's IWP are reduced, suspended or 
terminated; and
    (c) A dispute arises related to the services spelled out in the 
beneficiary's IWP or to the beneficiary's participation in the program.



Sec. 411.615  How will a disputed issue be referred to the PM?

    The beneficiary or the EN that is not a State VR agency may ask the 
PM to review a disputed issue. The PM will

[[Page 721]]

contact the EN to submit all relevant information within 10 working 
days. The information should include:
    (a) A description of the disputed issue(s);
    (b) A summary of the beneficiary's position, prepared by the 
beneficiary or a representative of the beneficiary, related to each 
disputed issue;
    (c) A summary of the EN's position related to each disputed issue; 
and
    (d) A description of any solutions proposed by the EN when the 
beneficiary sought resolution through the EN's grievance procedures, 
including the reasons the beneficiary rejected each proposed solution.



Sec. 411.620  How long does the PM have to recommend a resolution to the 
dispute?

    The PM has 20 working days to provide a written recommendation. The 
recommendation should explain the reasoning for the proposed resolution.



Sec. 411.625  Can the beneficiary or the EN that is not a State VR agency 
request a review of the PM's recommendation?

    (a) Yes. After receiving the PM's recommendation, either the 
beneficiary or the EN may request a review by us. The request must be in 
writing and received by the PM within 15 working days of the receipt of 
the PM's recommendation for resolving the dispute.
    (b) The PM has 10 working days to refer the request for a review to 
us. The request for a review must include:
    (1) A copy of the beneficiary's IWP;
    (2) Information and evidence related to the disputed issue(s); and
    (3) The PM's conclusion(s) and recommendation(s).



Sec. 411.630  Is SSA's decision final?

    Yes. Our decision is final. If either the beneficiary or the EN that 
is not a State VR agency is unwilling to accept our decision, either has 
the right to terminate its relationship with the other.



Sec. 411.635  Can a beneficiary be represented in the dispute resolution 
process under the Ticket to Work program?

    Yes. Both the beneficiary and the EN that is not a State VR agency 
may use an attorney or other individual of their choice to represent 
them at any step in the dispute resolution process. The P&A system in 
each State and U.S. Territory is available to provide assistance and 
advocacy services to beneficiaries seeking or receiving services under 
the Ticket to Work program, including assistance in resolving issues at 
any stage in the dispute resolution process.

          Disputes Between Beneficiaries and State VR Agencies



Sec. 411.640  Do the dispute resolution procedures of the Rehabilitation 

Act of 1973, as amended (29 U.S.C. 720 et seq.), apply to beneficiaries 
seeking services from the State VR agency?

    Yes. The procedures in the Rehabilitation Act of 1973, as amended 
(29 U.S.C. 720 et seq.) apply to any beneficiary who has assigned a 
ticket to a State VR agency. ENs that are State VR agencies are subject 
to the provisions of the Rehabilitation Act. The Rehabilitation Act 
requires the State VR agency to provide each person seeking or receiving 
services with a description of the services available through the Client 
Assistance Program authorized under section 112 of the Rehabilitation 
Act of 1973, as amended (29 U.S.C. 732). It also provides the 
opportunity to resolve disputes using formal mediation services or the 
impartial hearing process in section 102(c) of the Rehabilitation Act of 
1973, as amended (29 U.S.C. 722(c)). ENs that are not State VR agencies 
are not subject to the provisions of Title I of the Rehabilitation Act 
of 1973, as amended (29 U.S.C. 720 et seq.).

        Disputes Between Employment Networks and Program Managers



Sec. 411.650  Is there a process for resolving disputes between ENs that 
are not State VR agencies and PMs, other than disputes on a payment request?

    Yes. Under the agreement to assist us in administering the Ticket to 
Work program, a PM is required to have procedures to resolve disputes 
with ENs that do not involve an EN's payment request. (See Sec. 411.590 
for the process

[[Page 722]]

for resolving disputes on EN payment requests.) This process must ensure 
that:
    (a) The EN can seek a solution through the PM's internal grievance 
procedures; and
    (b) If the PM's internal grievance procedures do not result in a 
mutually agreeable solution, the PM shall refer the dispute to us for a 
decision.



Sec. 411.655  How will the PM refer the dispute to us?

    The PM has 20 working days from the failure to come to a mutually 
agreeable solution with an EN to refer the dispute to us with all 
relevant information. The information should include:
    (a) A description of the disputed issue(s);
    (b) A summary of the EN's and PM's position related to each disputed 
issue; and
    (c) A description of any solutions proposed by the EN and PM when 
the EN sought resolution through the PM's grievance procedures, 
including the reasons each party rejected each proposed solution.



Sec. 411.660  Is SSA's decision final?

    Yes. Our decision is final.



 Subpart J_The Ticket to Work Program and Alternate Participants Under 
    the Programs For Payments For Vocational Rehabilitation Services



Sec. 411.700  What is an alternate participant?

    An alternate participant is any public or private agency (other than 
a participating State VR agency described in Sec. Sec. 404.2104 and 
416.2204 of this chapter), organization, institution, or individual with 
whom the Commissioner has entered into an agreement or contract to 
provide VR services to disabled beneficiaries under the programs 
described in subpart V of part 404 and subpart V of part 416 of this 
chapter. In this subpart J, we refer to these programs as the programs 
for payments for VR services.



Sec. 411.705  Can an alternate participant become an EN?

    In any State where the Ticket to Work program is implemented, each 
alternate participant whose service area is in that State will be asked 
to choose if it wants to participate in the program as an EN.



Sec. 411.710  How will an alternate participant choose to participate 
as an EN in the Ticket to Work program?

    (a) When the Ticket to Work program is implemented in a State, each 
alternate participant whose service area is in that State will be 
notified of its right to choose to participate as an EN in the program 
in that State. The notification to the alternate participant will 
provide instructions on how to become an EN and the requirements that an 
EN must meet to participate in the Ticket to Work program.
    (b) An alternate participant who chooses to become an EN must meet 
the requirements to be an EN, including--
    (1) Enter into an agreement with SSA to participate as an EN under 
the Ticket to Work program (see Sec. 411.320);
    (2) Agree to serve a prescribed service area (see Sec. 411.320);
    (3) Agree to the EN reporting requirements (see Sec. 411.325); and
    (4) Elect a payment option under one of the two EN payment systems 
(see Sec. 411.505).



Sec. 411.715  If an alternate participant becomes an EN, will beneficiaries 

for whom an employment plan was signed prior to implementation be covered 
under the Ticket to Work program payment provisions?

    No. When an alternate participant becomes an EN in a State in which 
the Ticket to Work program is implemented, those beneficiaries for whom 
an employment plan was signed prior to the date of implementation of the 
program in the State, will continue to be covered for a limited time 
under the programs for payments for VR services (see Sec. 411.730).

[[Page 723]]



Sec. 411.720  If an alternate participant chooses not to become an EN, 
can it continue to function under the programs for payments for VR services?

    Once the Ticket to Work program has been implemented in a State, the 
alternate participant programs for payments for VR services begin to be 
phased-out in that State. We will not pay any alternate participant 
under these programs for any services that are provided under an 
employment plan that is signed on or after the date of implementation of 
the Ticket to Work program in that State. If an employment plan was 
signed before that date, we will pay the alternate participant, under 
the programs for payments for VR services, for services provided prior 
to January 1, 2004 if all other requirements for payment under these 
programs are met. We will not pay an alternate participant under these 
programs for any services provided on or after January 1, 2004.



Sec. 411.725  If an alternate participant becomes an EN and it has signed 

employment plans, both as an alternate participant and an EN, how will SSA 
pay for services provided under each employment plan?

    We will continue to abide by the programs for payments for VR 
services in cases where services are provided to a beneficiary under an 
employment plan signed prior to the date of implementation of the Ticket 
to Work program in the State. However, we will not pay an alternate 
participant under these programs for services provided on or after 
January 1, 2004. For those employment plans signed by a beneficiary and 
the EN after implementation of the program in the State, the EN's 
elected EN payment system under the Ticket to Work program applies.



Sec. 411.730  What happens if an alternate participant signed an employment 

plan with a beneficiary before Ticket to Work program implementation in the 
State and the required period of substantial gainful activity is not 
          completed by January 1, 2004?

    The beneficiary does not have to complete the nine-month continuous 
period of substantial gainful activity (SGA) prior to January 1, 2004, 
in order for the costs of the services to be payable under the programs 
for payments for VR services. The nine-month SGA period can be completed 
after January 1, 2004. However, SSA will not pay an alternate 
participant under these programs for the costs of any services provided 
after December 31, 2003.



PART 416_SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND DISABLED
--Table of Contents




       Subpart A_Introduction, General Provisions and Definitions

Sec.
416.101 Introduction.
416.105 Administration.
416.110 Purpose of program.
416.120 General definitions and use of terms.
416.121 Receipt of aid or assistance for December 1973 under an approved 
          State plan under title I, X, XIV, or XVI of the Social 
          Security Act.

                          Subpart B_Eligibility

                                 General

416.200 Introduction.
416.201 General definitions and terms used in this subpart.
416.202 Who may get SSI benefits.
416.203 Initial determinations of SSI eligibility.
416.204 Redeterminations of SSI eligibility.

  Reasons Why You May Not Get SSI Benefits for Which You Are Otherwise 
                                Eligible

416.207 You do not give us permission to contact financial institutions.
416.210 You do not apply for other benefits.
416.211 You are a resident of a public institution.
416.212 Continuation of full benefits in certain cases of medical 
          confinement.
416.214 You are disabled and drug addiction or alcoholism is a 
          contributing factor material to the determination of 
          disability.
416.215 You leave the United States.
416.216 You are a child of armed forces personnel living overseas.

     Eligibility for Increased Benefits Because of Essential Persons

416.220 General.
416.221 Who is a qualified individual.
416.222 Who is an essential person.
416.223 What happens if you are a qualified individual.

[[Page 724]]

416.250 Experimental, pilot, and demonstration projects in the SSI 
          program.

  Special Provisions for People Who Work Despite a Disabling Impairment

416.260 General.
416.261 What are special SSI cash benefits and when are they payable.
416.262 Eligibility requirements for special SSI cash benefits.
416.263 No additional application needed.
416.264 When does the special SSI eligibility status apply.
416.265 Requirements for the special SSI eligibility status.
416.266 Continuation of SSI status for Medicaid.
416.267 General.
416.268 What is done to determine if you must have Medicaid in order to 
          work.
416.269 What is done to determine whether your earnings are too low to 
          provide comparable benefits and services you would receive in 
          the absence of those earnings.

                    Subpart C_Filing of Applications

                           General Provisions

416.301 Introduction.
416.302 Definitions.
416.305 You must file an application to receive supplemental security 
          income benefits.

                              Applications

416.310 What makes an application a claim for benefits.
416.315 Who may sign an application.
416.320 Evidence of authority to sign an application for another.
416.325 When an application is considered filed.
416.327 Pilot program for photographic identification of disability 
          benefit applicants in designated geographic areas.

                 Effective Filing Period of Application

416.330 Filing before the first month you meet the requirements for 
          eligibility.
416.335 Filing in or after the month you meet the requirements for 
          eligibility.

       Filing Date Based Upon a Written Statement or Oral Inquiry

416.340 Use of date of written statement as application filing date.
416.345 Use of date of oral inquiry as application filing date.
416.350 Treating a title II application as an oral inquiry about SSI 
          benefits.

               Deemed Filing Date Based on Misinformation

416.351 Deemed filing date in a case of misinformation.

                        Withdrawal of Application

416.355 Withdrawal of an application.
416.360 Cancellation of a request to withdraw.

                      Subpart D_Amount of Benefits

416.401 Scope of subpart.
416.405 Cost-of-living adjustments in benefits.
416.410 Amount of benefits; eligible individual.
416.412 Amount of benefits; eligible couple.
416.413 Amount of benefits; qualified individual.
416.414 Amount of benefits; eligible individual or eligible couple in a 
          medical care facility.
416.415 Amount of benefits; eligible individual is disabled child under 
          age 18.
416.420 Determination of benefits; general.
416.421 Determination of benefits; computation of prorated benefits.
416.426 Change in status involving an individual; ineligibility occurs.
416.428 Eligible individual without an eligible spouse has an essential 
          person in his home.
416.430 Eligible individual with eligible spouse; essential person(s) 
          present.
416.432 Change in status involving a couple; eligibility continues.
416.435 Change in status involving a couple; ineligibility occurs.

     Subpart E_Payment of Benefits, Overpayments, and Underpayments

416.501 Payment of benefits: General.
416.502 Manner of payment.
416.503 Minimum monthly benefit amount.
416.520 Emergency advance payments.
416.525 Reimbursement to States for interim assistance payments.
416.532 Method of payment when the essential person resides with more 
          than one eligible person.
416.533 Transfer or assignment of benefits.
416.535 Underpayments and overpayments.
416.536 Underpayments--defined.
416.537 Overpayments--defined.
416.538 Amount of underpayment or overpayment.
416.542 Underpayments--to whom underpaid amount is payable.
416.543 Underpayments--applied to reduce overpayments.
416.544 Paying benefits in installments: Drug addiction or alcoholism.
416.545 Paying large past-due benefits in installments.

[[Page 725]]

416.546 Payment into dedicated accounts of past-due benefits for 
          eligible individuals under age 18 who have a representative 
          payee.
416.550 Waiver of adjustment or recovery--when applicable.
416.551 Waiver of adjustment or recovery--effect of.
416.552 Waiver of adjustment or recovery--without fault.
416.553 Waiver of adjustment or recovery--defeat the purpose of the 
          supplemental security income program.
416.554 Waiver of adjustment or recovery--against equity and good 
          conscience.
416.555 Waiver of adjustment or recovery--impede administration.
416.556 Waiver of adjustment or recovery--countable resources in excess 
          of the limits prescribed in Sec. 416.1205 by $50 or less.
416.558 Notice relating to overpayments and underpayments.
416.560 Recovery--refund.
416.570 Adjustment--general rule.
416.571 10-percent limitation of recoupment rate--overpayment.
416.572 Are title II benefits and title VIII benefits subject to 
          adjustment to recover title XVI overpayments?
416.580 Referral of overpayments to the Department of the Treasury for 
          tax refund offset--General.
416.581 Notice to overpaid individual.
416.582 Review within SSA that an overpayment is past due and legally 
          enforceable.
416.583 Findings by SSA.
416.584 Review of our records related to the overpayment.
416.585 Suspension of offset.
416.586 Tax refund insufficient to cover amount of overpayment.
416.590 Are there additional methods for recovery of title XVI benefit 
          overpayments?

                    Subpart F_Representative Payment

416.601 Introduction.
416.610 When payment will be made to a representative payee.
416.615 Information considered in determining whether to make 
          representative payment.
416.620 Information considered in selecting a representative payee.
416.621 Order of preference in selecting a representative payee.
416.625 Information to be submitted by a representative payee.
416.630 Advance notice of the determination to make representative 
          payment.
416.635 Responsibilities of a representative payee.
416.640 Use of benefit payments.
416.640a Compensation for qualified organizations serving as 
          representative payees.
416.641 Liability for misuse of benefit payments.
416.645 Conservation and investment of benefit payments.
416.650 When a new representative payee will be selected.
416.655 When representative payment will be stopped.
416.660 Transfer of accumulated benefit payments.
416.665 Accounting for benefit payments.

                       Subpart G_Reports Required

                              Introduction

416.701 Scope of subpart.
416.702 Definitions.

                            Report Provisions

416.704 Who must make reports.
416.708 What you must report.
416.710 What reports must include.
416.712 Form of the report.
416.714 When reports are due.

                           Penalty Deductions

416.722 Circumstances under which we make a penalty deduction.
416.724 Amounts of penalty deductions.
416.726 Penalty period: First failure to report.
416.728 Penalty period: Second failure to report.
416.730 Penalty period: Three or more failures to report.
416.732 No penalty deduction if you have good cause for failure to 
          report timely.

                     Subpart H_Determination of Age

416.801 Evidence as to age--when required.
416.802 Type of evidence to be submitted.
416.803 Evaluation of evidence.
416.804 Certified copy in lieu of original.
416.805 When additional evidence may be required.
416.806 Expedited adjudication based on documentary evidence of age.

             Subpart I_Determining Disability and Blindness

                                 General

416.901 Scope of subpart.
416.902 General definitions and terms for this subpart.

                             Determinations

416.903 Who makes disability and blindness determinations.
416.903a Program integrity.
416.904 Determinations by other organizations and agencies.

[[Page 726]]

                        Definition of Disability

416.905 Basic definition of disability for adults.
416.906 Basic definition of disability for children.
416.907 Disability under a State plan.
416.908 What is needed to show an impairment.
416.909 How long the impairment must last.
416.910 Meaning of substantial gainful activity.
416.911 Definition of disabling impairment.

                                Evidence

416.912 Evidence.
416.913 Medical and other evidence of your impairment(s).
416.914 When we will purchase existing evidence.
416.915 Where and how to submit evidence.
416.916 If you fail to submit medical and other evidence.
416.917 Consultative examination at our expense.
416.918 If you do not appear at a consultative examination.

Standards To Be Used in Determining When a Consultative Examination Will 
        Be Obtained in Connection With Disability Determinations

416.919 The consultative examination.
416.919a When we will purchase a consultative examination and how we 
          will use it.
416.919b When we will not purchase a consultative examination.

        Standards for the Type of Referral and for Report Content

416.919f Type of purchased examinations.
416.919g Who we will select to perform a consultative examination.
416.919h Your treating source.
416.919i Other sources for consultative examinations.
416.919j Objections to the medical source designated to perform the 
          consultative examination.
416.919k Purchase of medical examinations, laboratory tests, and other 
          services.
416.919m Diagnostic tests or procedures.
416.919n Informing the medical source of examination scheduling, report 
          content, and signature requirements.
416.919o When a properly signed consultative examination report has not 
          been received.
416.919p Reviewing reports of consultative examinations.
416.919q Conflict of interest.

             Authorizing and Monitoring the Referral Process

416.919s Authorizing and monitoring the consultative examination.

           Procedures To Monitor the Consultative Examination

416.919t Consultative examination oversight.

                        Evaluation of Disability

416.920 Evaluation of disability of adults, in general.
416.920a Evaluation of mental impairments.
416.921 What we mean by a not severe impairment(s) in an adult.
416.922 When you have two or more unrelated impairments--initial claims.
416.923 Multiple impairments.
416.924 How we determine disability for children.
416.924a Considerations in determining disability for children.
416.924b Age as a factor of evaluation in the sequential evaluation 
          process for children.

                         Medical Considerations

416.925 Listing of Impairments in appendix 1 of subpart P of part 404 of 
          this chapter.
416.926 Medical equivalence for adults and children.
416.926a Functional equivalence for children.
416.927 Evaluating opinion evidence.
416.928 Symptoms, signs, and laboratory findings.
416.929 How we evaluate symptoms, including pain.
416.930 Need to follow prescribed treatment.

                  Presumptive Disability and Blindness

416.931 The meaning of presumptive disability or presumptive blindness.
416.932 When presumptive payments begin and end.
416.933 How we make a finding of presumptive disability or presumptive 
          blindness.
416.934 Impairments which may warrant a finding of presumptive 
          disability or presumptive blindness.

                      Drug Addiction and Alcoholism

416.935 How we will determine whether your drug addiction or alcoholism 
          is a contributing factor material to the determination of 
          disability.
416.936 Treatment required for individuals whose drug addiction or 
          alcoholism is a contributing factor material to the 
          determination of disability.
416.937 What we mean by appropriate treatment.
416.938 What we mean by approved institutions or facilities.
416.939 How we consider whether treatment is available.
416.940 Evaluating compliance with the treatment requirements.
416.941 Establishment and use of referral and monitoring agencies.

[[Page 727]]

                      Residual Functional Capacity

416.945 Your residual functional capacity.
416.946 Responsibility for assessing your residual functional capacity.

                        Vocational Considerations

416.960 When we will consider your vocational background.
416.962 Medical-vocational profiles showing an inability to make an 
          adjustment to other work.
416.963 Your age as a vocational factor.
416.964 Your education as a vocational factor.
416.965 Your work experience as a vocational factor.
416.966 Work which exists in the national economy.
416.967 Physical exertion requirements.
416.968 Skill requirements.
416.969 Listing of Medical-Vocational Guidelines in appendix 2 of 
          subpart P of part 404 of this chapter.
416.969a Exertional and nonexertional limitations.

                      Substantial Gainful Activity

416.971 General.
416.972 What we mean by substantial gainful activity.
416.973 General information about work activity.
416.974 Evaluation guides if you are an employee.
416.974a When and how we will average your earnings.
416.975 Evaluation guides if you are self-employed.
416.976 Impairment-related work expenses.

                                Blindness

416.981 Meaning of blindness as defined in the law.
416.982 Blindness under a State plan.
416.983 How we evaluate statutory blindness.
416.984 If you are statutorily blind and still working.
416.985 How we evaluate other visual impairments.
416.986 Why and when we will find that you are no longer entitled to 
          benefits based on statutory blindness.

      Disability Redeterminations for Individuals Who Attain Age 18

416.987 Disability redeterminations for individuals who attain age 18.

             Continuing or Stopping Disability or Blindness

416.988 Your responsibility to tell us of events that may change your 
          disability or blindness status.
416.989 We may conduct a review to find out whether you continue to be 
          disabled.
416.989a We may conduct a review to find out whether you continue to be 
          blind.
416.990 When and how often we will conduct a continuing disability 
          review.
416.991 If your medical recovery was expected and you returned to work.
416.992-416.992a [Reserved]
416.993 Medical evidence in continuing disability review cases.
416.994 How we will decide whether your disability continues or ends, 
          disabled adults.
416.994a How we will determine whether your disability continues or 
          ends, and whether you are and have been receiving treatment 
          that is medically necessary and available, disabled children.
416.995 If we make a determination that your physical or mental 
          impairment(s) has ceased, did not exist or is no longer 
          disabling (Medical Cessation Determination).
416.996 Continued disability or blindness benefits pending appeal of a 
          medical cessation determination.
416.998 If you become disabled by another impairment(s).

                 Subpart J_Determinations of Disability

                           General Provisions

416.1001 Purpose and scope.
416.1002 Definitions.
416.1003 Basic responsibilities for us and the State.

  Responsibilities for Performing the Disability Determination Function

416.1010 How a State notifies us that it wishes to perform the 
          disability determination function.
416.1011 How we notify a State whether it may perform the disability 
          determination function.
416.1013 Disability determinations the State makes.
416.1014 Responsibilities for obtaining evidence to make disability 
          determinations.
416.1015 Making disability determinations.
416.1016 Medical or psychological consultants.
416.1017 Reasonable efforts to obtain review by a qualified psychiatrist 
          or psychologist.
416.1018 Notifying claimant of the disability determination.

            Administrative Responsibilities and Requirements

416.1020 General administrative requirements.
416.1021 Personnel.
416.1022 Training.
416.1023 Facilities.

[[Page 728]]

416.1024 Medical and other purchased services.
416.1025 Records and reports.
416.1026 Fiscal.
416.1027 Audits.
416.1028 Property.
416.1029 Participation in research and demonstration projects.
416.1030 Coordination with other agencies.
416.1031 Confidentiality of information and records.
416.1032 Other Federal laws and regulations.
416.1033 Policies and operating instructions.

                          Performance Standards

416.1040 General.
416.1041 Standards of performance.
416.1042 Processing time standards.
416.1043 Performance accuracy standard.
416.1044 How and when we determine whether the processing time standards 
          are met.
416.1045 How and when we determine whether the performance accuracy 
          standard is met.
416.1050 Action we will take if a State agency does not meet the 
          standards.

                   Performance Monitoring and Support

416.1060 How we will monitor.
416.1061 When we will provide performance support.
416.1062 What support we will provide.

                           Substantial Failure

416.1070 General.
416.1071 Good cause for not following the Act, our regulations, or other 
          written guidelines.
416.1075 Finding of substantial failure.

                          Hearings and Appeals

416.1080 Notice of right to hearing on proposed finding of substantial 
          failure.
416.1081 Disputes on matters other than substantial failure.
416.1082 Who conducts the hearings.
416.1083 Hearings and appeals process.

             Assumption of Disability Determination Function

416.1090 Assumption when we make a finding of substantial failure.
416.1091 Assumption when State no longer wishes to perform the 
          disability determination function.
416.1092 Protection of State employees.
416.1093 Limitation on State expenditures after notice.
416.1094 Final accounting by the State.

                            Subpart K_Income

                                 General

416.1100 Income and SSI eligibility.
416.1101 Definition of terms.
416.1102 What is income.
416.1103 What is not income.
416.1104 Income we count.

                              Earned Income

416.1110 What is earned income.
416.1111 How we count earned income.
416.1112 Earned income we do not count.

                             Unearned Income

416.1120 What is unearned income.
416.1121 Types of unearned income.
416.1123 How we count unearned income.
416.1124 Unearned income we do not count.

                     In-Kind Support and Maintenance

416.1130 Introduction.
416.1131 The one-third reduction rule.
416.1132 What we mean by ``living in another person's household''.
416.1133 What is a pro rata share of household operating expenses.
416.1140 The presumed value rule.
416.1141 When the presumed value rule applies.
416.1142 If you live in a public assistance household.
416.1143 If you live in a noninstitutional care situation.
416.1144 If you live in a nonprofit retirement home or similar 
          institution.
416.1145 How the presumed value rule applies in a nonmedical for-profit 
          institution.

        In-Kind Support and Maintenance in Special Circumstances

416.1147 How we value in-kind support and maintenance for a couple.
416.1147a Income rules in change-of-status situations involving in-kind 
          support and maintenance.
416.1148 If you have both in-kind support and maintenance and income 
          that is deemed to you.

                            Temporary Absence

416.1149 What is a temporary absence from your living arrangement.

                                Disasters

416.1150 How we treat income received because of a major disaster.
416.1151 How we treat the repair or replacement of lost, damaged, or 
          stolen resources.

                         Home Energy Assistance

416.1157 Support and maintenance assistance.

                            Deeming of Income

416.1160 What is deeming of income.

[[Page 729]]

416.1161 Income of an ineligible spouse, ineligible parent, and 
          essential person for deeming purposes.
416.1161a Income for deeming purposes where Medicaid eligibility is 
          affected.
416.1163 How we deem income to you from your ineligible spouse.
416.1165 How we deem income to you from your ineligible parent(s).
416.1166 How we deem income to you and your eligible child from your 
          ineligible spouse.
416.1166a How we deem income to you from your sponsor if you are an 
          alien.
416.1167 Temporary absences and deeming rules.
416.1168 How we deem income to you from your essential person.
416.1169 When we stop deeming income from an essential person.

     Alternative Income Counting Rules for Certain Blind Individuals

416.1170 General.
416.1171 When the alternative rules apply.

  Rules for Helping Blind and Disabled Individuals Achieve Self-Support

416.1180 General.
416.1181 What a plan to achieve self-support is.
416.1182 When we begin to count the income excluded under the plan.

Appendix to Subpart K--List of Types of Income Excluded Under the SSI 
          Program as Provided by Federal Laws Other Than the Social 
          Security Act

                   Subpart L_Resources and Exclusions

416.1201 Resources; general.
416.1202 Deeming of resources.
416.1203 Deeming of resources of an essential person.
416.1204 Deeming of resources of the sponsor of an alien.
416.1204a Deeming of resources where Medicaid eligibility is affected.
416.1205 Limitation on resources.
416.1207 Resources determinations.
416.1208 How funds held in financial institution accounts are counted.
416.1210 Exclusions from resources; general.
416.1212 Exclusion of the home.
416.1216 Exclusion of household goods and personal effects.
416.1218 Exclusion of the automobile.
416.1220 Property essential to self-support; general.
416.1222 How income-producing property essential to self-support is 
          counted.
416.1224 How nonbusiness property used to produce goods or services 
          essential to self-support is counted.
416.1225 An approved plan for self-support; general.
416.1226 What a plan to achieve self-support is.
416.1227 When the resources excluded under a plan to achieve self-
          support begin to count.
416.1228 Exclusion of Alaskan natives' stock in regional or village 
          corporations.
416.1229 Exclusion of payments received as compensation for expenses 
          incurred or losses suffered as a result of a crime.
416.1230 Exclusion of life insurance.
416.1231 Burial spaces and certain funds set aside for burial expenses.
416.1232 Replacement of lost, damaged, or stolen excluded resources.
416.1233 Exclusion of certain underpayments from resources.
416.1234 Exclusion of Indian lands.
416.1235 Exclusion of earned income tax credit.
416.1236 Exclusions from resources; provided by other statutes.
416.1237 Assistance received on account of major disaster.
416.1238 Exclusion of certain housing assistance.
416.1239 Exclusion of State or local relocation assistance payments.
416.1240 Disposition of resources.
416.1242 Time limits for disposing of resources.
416.1244 Treatment of proceeds from disposition of resources.
416.1245 Exceptions to required disposition of real property.
416.1246 Disposal of resources at less than fair market value.
416.1247 Exclusion of a dedicated account in a financial institution.
416.1260 Special resource provision for recipients under a State plan.
416.1261 Application of special resource provision.
416.1262 Special resource provision applicable in cases involving 
          essential persons.
416.1264 Spouse ineligible under a State plan in December 1973.
416.1266 Individual under special resource provision dies after December 
          1973.

                 Subpart M_Suspensions and Terminations

416.1320 Suspensions; general.
416.1321 Suspension for not giving us permission to contact financial 
          institutions.
416.1322 Suspension due to failure to comply with request for 
          information.
416.1323 Suspension due to excess income.
416.1324 Suspension due to excess resources.
416.1325 Suspension due to status as a resident of a public institution.
416.1326 Suspension for failure to comply with treatment for drug 
          addiction or alcoholism.
416.1327 Suspension due to absence from the United States.

[[Page 730]]

416.1329 Suspension due to loss of United States residency, United 
          States citizenship, or status as an alien lawfully admitted 
          for permanent residence or otherwise permanently residing in 
          the United States under color of law.
416.1330 Suspension due to failure to apply for and obtain other 
          benefits.
416.1331 Termination of your disability or blindness payments.
416.1332 Termination of benefit for disabled individual: Exception.
416.1333 Termination at the request of the recipient.
416.1334 Termination due to death of recipient.
416.1335 Termination due to continuous suspension.
416.1336 Notice of intended action affecting recipient's payment status.
416.1337 Exceptions to the continuation of previously established 
          payment level.
416.1338 If you are participating in a vocational rehabilitation 
          program.
416.1339 Suspension due to flight to avoid criminal prosecution or 
          custody or confinement after conviction, or due to violation 
          of probation or parole.
416.1340 Penalty for false or misleading statements.

 Subpart N_Determinations, Administrative Review Process, and Reopening 
                     of Determinations and Decisions

          Introduction, Definitions, and Initial Determinations

416.1400 Introduction.
416.1401 Definitions.
416.1402 Administrative actions that are initial determinations.
416.1403 Administrative actions that are not initial determinations.
416.1404 Notice of the initial determination.
416.1405 Effect of an initial determination.
416.1406 Testing modifications to the disability determination 
          procedures.

                             Reconsideration

416.1407 Reconsideration--general.
416.1408 Parties to a reconsideration.
416.1409 How to request reconsideration.
416.1411 Good cause for missing the deadline to request review.
416.1413 Reconsideration procedures.
416.1413a Reconsiderations of initial determinations on applications.
416.1413b Reconsideration procedures for post-eligibility claims.
416.1413c Arrangement for conferences.
416.1414 Disability hearing--general.
416.1415 Disability hearing--disability hearing officers.
416.1416 Disability hearing--procedures.
416.1417 Disability hearing--disability hearing officer's reconsidered 
          determination.
416.1418 Disability hearing--review of the disability hearing officer's 
          reconsidered determination before it is issued.
416.1419 Notice of another person's request for reconsideration.
416.1420 Reconsidered determination.
416.1421 Effect of a reconsidered determination.
416.1422 Notice of a reconsidered determination.

                        Expedited Appeals Process

416.1423 Expedited appeals process--general.
416.1424 When the expedited appeals process may be used.
416.1425 How to request expedited appeals process.
416.1426 Agreement in expedited appeals process.
416.1427 Effect of expedited appeals process agreement.
416.1428 Expedited appeals process request that does not result in 
          agreement.

               Hearing Before an Administrative Law Judge

416.1429 Hearing before an administrative law judge--general.
416.1430 Availability of a hearing before an administrative law judge.
416.1432 Parties to a hearing before an administrative law judge.
416.1433 How to request a hearing before an administrative law judge.
416.1435 Submitting evidence prior to a hearing before an administrative 
          law judge.
416.1436 Time and place for a hearing before an administrative law 
          judge.
416.1438 Notice of a hearing before an administrative law judge.
416.1439 Objections to the issues.
416.1440 Disqualification of the administrative law judge.
416.1441 Prehearing case review.
416.1442 Prehearing proceedings and decisions by attorney advisors.
416.1443 Responsibilities of the adjudication officer.

               Administrative Law Judge Hearing Procedures

416.1444 Administrative law judge hearing procedures--general.
416.1446 Issues before an administrative law judge.
416.1448 Deciding a case without an oral hearing before an 
          administrative law judge.
416.1449 Presenting written statements and oral arguments.
416.1450 Presenting evidence at a hearing before an administrative law 
          judge.
416.1451 When a record of a hearing before an administrative law judge 
          is made.

[[Page 731]]

416.1452 Consolidated hearings before an administrative law judge.
416.1453 The decision of an administrative law judge.
416.1455 The effect of an administrative law judge's decision.
416.1456 Removal of a hearing request from an administrative law judge 
          to the Appeals Council.
416.1457 Dismissal of a request for a hearing before an administrative 
          law judge.
416.1458 Notice of dismissal of a request for a hearing before an 
          administrative law judge.
416.1459 Effect of dismissal of a request for a hearing before an 
          administrative law judge.
416.1460 Vacating a dismissal of a request for a hearing before an 
          administrative law judge.
416.1461 Prehearing and posthearing conferences.
416.1465 [Reserved]

                         Appeals Council Review

416.1466 Testing elimination of the request for Appeals Council review.
416.1467 Appeals Council review--general.
416.1468 How to request Appeals Council review.
416.1469 Appeals Council initiates review.
416.1470 Cases the Appeals Council will review.
416.1471 Dismissal by Appeals Council.
416.1472 Effect of dismissal of request for Appeals Council review.
416.1473 Notice of Appeals Council review.
416.1474 Obtaining evidence from Appeals Council.
416.1475 Filing briefs with the Appeals Council.
416.1476 Procedures before Appeals Council on review.
416.1477 Case remanded by Appeals Council.
416.1479 Decision of Appeals Council.
416.1481 Effect of Appeals Council's decision or denial of review.
416.1482 Extension of time to file action in Federal district court.

                           Court Remand Cases

416.1483 Case remanded by a Federal court.
416.1484 Appeals Council review of administrative law judge decision in 
          a case remanded by a Federal court.
416.1485 Application of circuit court law.

           Reopening and Revising Determinations and Decisions

416.1487 Reopening and revising determinations and decisions.
416.1488 Conditions for reopening.
416.1489 Good cause for reopening.
416.1491 Late completion of timely investigation.
416.1492 Notice of revised determination or decision.
416.1493 Effect of revised determination or decision.
416.1494 Time and place to request further review or a hearing on 
          revised determination or decision.

                   Payment of Certain Travel Expenses

416.1495 Payment of certain travel expenses--general.
416.1496 Who may be reimbursed.
416.1498 What travel expenses are reimbursable.
416.1499 When and how to claim reimbursement.

                   Subpart O_Representation of Parties

416.1500 Introduction.
416.1503 Definitions.
416.1505 Who may be your representative.
416.1506 Notification of options for obtaining attorney representation.
416.1507 Appointing a representative.
416.1510 Authority of a representative.
416.1515 Notice or request to a representative.
416.1520 Fee for a representative's services.
416.1525 Request for approval of a fee.
416.1528 Proceedings before a State or Federal court.
416.1535 Services in a proceeding under title XVI of the Act.
416.1540 Rules of conduct and standards of responsibility for 
          representatives.
416.1545 Violations of our requirements, rules, or standards.
416.1550 Notice of charges against a representative.
416.1555 Withdrawing charges against a representative.
416.1565 Hearing on charges.
416.1570 Decision by hearing officer.
416.1575 Requesting review of the hearing officer's decision.
416.1576 Assignment of request for review of the hearing officer's 
          decision.
416.1580 Appeals Council's review of hearing officer's decision.
416.1585 Evidence permitted on review.
416.1590 Appeals Council's decision.
416.1595 When the Appeals Council will dismiss a request for review.
416.1597 Reinstatement after suspension--period of suspension expired.
416.1599 Reinstatement after suspension or disqualification--period of 
          suspension not expired.

                   Subpart P_Residence and Citizenship

416.1600 Introduction.
416.1601 Definitions and terms used in this subpart.
416.1603 How to prove you are a resident of the United States.

[[Page 732]]

416.1610 How to prove you are a citizen or a national of the United 
          States.
416.1615 How to prove you are lawfully admitted for permanent residence 
          in the United States.
416.1618 When you are considered permanently residing in the United 
          States under color of law.
416.1619 When you cannot be considered permanently residing in the 
          United States under color of law.

Subpart Q_Referral of Persons Eligible for Supplemental Security Income 
                            to Other Agencies

                                 General

416.1701 Scope of subpart.
416.1705 Definitions.

             Referral for Vocational Rehabilitation Services

416.1710 Whom we refer and when.

         Referral for Treatment of Alcoholism or Drug Addiction

416.1720 Whom we refer.
416.1725 Effect of your failure to comply with treatment requirements 
          for your drug addiction or alcoholism.

                         Subpart R_Relationship

416.1801 Introduction.

                      Who Is Considered Your Spouse

416.1802 Effects of marriage on eligibility and amount of benefits.
416.1806 Whether you are married and who is your spouse.
416.1816 Information we need concerning marriage when you apply for SSI.
416.1821 Showing that you are married when you apply for SSI.
416.1826 Showing that you are not married when you apply for SSI.
416.1830 When we stop considering you and your spouse an eligible 
          couple.
416.1832 When we consider your marriage ended.
416.1835 Information we need about separation or end of marriage after 
          you become eligible for SSI.

                        Who Is Considered a Child

416.1851 Effects of being considered a child.
416.1856 Who is considered a child.
416.1861 Deciding whether you are a child: Are you a student?
416.1866 Deciding whether you are a child: Are you the head of a 
          household?

                      Who Is Considered Your Parent

416.1876 Effects a parent (or parents) can have on the child's benefits.
416.1881 Deciding whether someone is your parent or stepparent.

                 Subpart S_Interim Assistance Provisions

                              Introduction

416.1901 Scope of subpart S.
416.1902 Definitions.

                             Authorizations

416.1904 Authorization to withhold SSI benefits.
416.1906 When your authorization is in effect.
416.1908 When we need another authorization.

                      Interim Assistance Agreements

416.1910 Requirements for interim assistance agreement.

                                 Appeals

416.1920 Your appeal rights in the State.
416.1922 Your appeal rights in SSA.

     Subpart T_State Supplementation Provisions; Agreement; Payments

416.2001 State supplementary payments; general.
416.2005 Administration agreements with SSA.
416.2010 Essentials of the administration agreements.
416.2015 Establishing eligibility.
416.2020 Federally administered supplementary payments.
416.2025 Optional supplementation: Countable income.
416.2030 Optional supplementation: Variations in payments.
416.2035 Optional supplementation: Additional State options.
416.2040 Limitations on eligibility.
416.2045 Overpayments and underpayments; federally administered 
          supplementation.
416.2047 Waiver of State supplementary payments.
416.2050 Mandatory minimum State supplementation.
416.2055 Mandatory minimum supplementation reduced.
416.2060 Mandatory minimum supplementary payments not applicable.
416.2065 Mandatory minimum State supplementation: Agreement deemed.
416.2070 Mandatory supplementation: State compliance not applicable.
416.2075 Monitoring of mandatory minimum supplementary payments.
416.2090 State funds transferred for supplementary payments.
416.2095 Pass-along of Federal benefit increases.
416.2096 Basic pass-along rules.

[[Page 733]]

416.2097 Combined supplementary/SSI payment levels.
416.2098 Supplementary payment levels.
416.2099 Compliance with pass-along.

              Subpart U_Medicaid Eligibility Determinations

416.2101 Introduction.
416.2111 Conditions for our agreeing to make Medicaid eligibility 
          determinations.
416.2116 Medicaid eligibility determinations.
416.2130 Effect of the agreement and responsibilities of States.
416.2140 Liability for erroneous Medicaid eligibility determinations.
416.2145 Services other than Medicaid determinations.
416.2161 Charges to States.
416.2166 Changing the agreement.
416.2171 Duration of agreement.
416.2176 Disagreements between a State and us.

        Subpart V_Payments for Vocational Rehabilitation Services

                           General Provisions

416.2201 General.
416.2202 Purpose and scope.
416.2203 Definitions.
416.2204 Participation by State VR agencies or alternate participants.
416.2206 Basic qualifications for alternate participants.

                           Payment Provisions

416.2208 Requirements for payment.
416.2209 Responsibility for making payment decisions.
416.2210 What we mean by ``SGA'' and by ``a continuous period of 9 
          months''.
416.2211 Criteria for determining when VR services will be considered to 
          have contributed to a continuous period of 9 months.
416.2212 Payment for VR services in a case where an individual continues 
          to receive disability or blindness benefits based on 
          participation in an approved VR program.
416.2214 Services for which payment may be made.
416.2215 When services must have been provided.
416.2216 When claims for payment for VR services must be made (filing 
          deadlines).
416.2217 What costs will be paid.

                        Administrative Provisions

416.2218 Applicability of these provisions to alternate participants.
416.2219 Method of payment.
416.2220 Audits.
416.2221 Validation reviews.
416.2222 Confidentiality of information and records.
416.2223 Other Federal laws and regulations.
416.2227 Resolution of disputes.

    Editorial Note: Nomenclature changes to part 416 appear at 68 FR 
53509, Sept. 11, 2003.



       Subpart A_Introduction, General Provisions and Definitions

    Authority: Secs. 702(a)(5) and 1601-1635 of the Social Security Act 
(42 U.S.C. 902(a)(5) and 1381-133d); sec. 212, Pub. L. 93-66, 87 Stat. 
155 (42 U.S.C. 1382 note); sec. 502(a), Pub. L. 94-241, 90 Stat. 268 (48 
U.S.C. 1681 note).

    Source: 39 FR 28625, Aug. 9, 1974, unless otherwise noted.



Sec. 416.101  Introduction.

    The regulations in this part 416 (Regulations No. 16 of the Social 
Security Administration) relate to the provisions of title XVI of the 
Social Security Act as amended by section 301 of Pub. L. 92-603 enacted 
October 30, 1972, and as may thereafter be amended. Title XVI 
(Supplemental Security Income For The Aged, Blind, and Disabled) of the 
Social Security Act, as amended, established a national program, 
effective January 1, 1974, for the purpose of providing supplemental 
security income to individuals who have attained age 65 or are blind or 
disabled. The regulations in this part are divided into the following 
subparts according to subject content:
    (a) This subpart A contains this introduction, a statement of the 
general purpose underlying the supplemental security income program, 
general provisions applicable to the program and its administration, and 
definitions and use of terms occurring throughout this part.
    (b) Subpart B of this part covers in general the eligibility 
requirements which must be met for benefits under the supplemental 
security income program. It sets forth the requirements regarding 
residence, citizenship, age, disability, or blindness, and describes the 
conditions which bar eligibility and generally points up other 
conditions of eligibility taken up in greater detail

[[Page 734]]

elsewhere in the regulations (e.g., limitations on income and resources, 
receipt of support and maintenance, etc.).
    (c) Subpart C of this part sets forth the rules with respect to the 
filing of applications, requests for withdrawal of applications, 
cancellation of withdrawal requests and other similar requests.
    (d) Subpart D of this part sets forth the rules for computing the 
amount of benefits payable to an eligible individual and eligible 
spouse.
    (e) Subpart E of this part covers provisions with respect to 
periodic payment of benefits, joint payments, payment of emergency cash 
advances, payment of benefits prior to a determination of disability, 
prohibition against transfer or assignment of benefits, adjustment and 
waiver of overpayments, and payment of underpayments.
    (f) Subpart F of this part contains provisions with respect to the 
selection of representative payees to receive benefits on behalf of and 
for the use of recipients and to the duties and responsibilities of 
representative payees.
    (g) Subpart G of this part sets forth rules with respect to the 
reporting of events and circumstances affecting eligibility or the 
amount of benefits payable.
    (h) Subpart H of this part sets forth rules and guidelines for the 
submittal and evaluation of evidence of age where age is pertinent to 
establishing eligibility or the amount of benefits payable.
    (i) Subpart I of this part sets forth the rules for establishing 
disability or blindness where the establishment of disability or 
blindness is pertinent to eligibility.
    (j) Subpart J of this part sets forth the standards, requirements 
and procedures for States making determinations of disability for the 
Commissioner. It also sets out the Commissioner's responsibilities in 
carrying out the disability determination function.
    (k) Subpart K of this part defines income, earned income, and 
unearned income and sets forth the statutory exclusions applicable to 
earned and unearned income for the purpose of establishing eligibility 
for and the amount of benefits payable.
    (l) Subpart L of this part defines the term resources and sets forth 
the statutory exclusions applicable to resources for the purpose of 
determining eligibility.
    (m) Subpart M of this part deals with events or circumstances 
requiring suspension or termination of benefits.
    (n) Subpart N of this part contains provisions with respect to 
procedures for making determinations with respect to eligibility, amount 
of benefits, representative payment, etc., notices of determinations, 
rights of appeal and procedures applicable thereto, and other procedural 
due process provisions.
    (o) Subpart O of this part contains provisions applicable to 
attorneys and other individuals who represent applicants in connection 
with claims for benefits.
    (p) Subpart P of this part sets forth the residence and citizenship 
requirements that are pertinent to eligibility.
    (q) Subpart Q of this part contains provisions with respect to the 
referral of individuals for vocational rehabilitation, treatment for 
alcoholism and drug addiction, and application for other benefits to 
which an applicant may be potentially entitled.
    (r) Subpart R of this part sets forth the rules for determining 
marital and other family relationships where pertinent to the 
establishment of eligibility for or the amount of benefits payable.
    (s) Subpart S of this part explains interim assistance and how 
benefits may be withheld to repay such assistance given by the State.
    (t) Subpart T of this part contains provisions with respect to the 
supplementation of Federal supplemental security income payments by 
States, agreements for Federal administration of State supplementation 
programs, and payment of State supplementary payments.
    (u) Subpart U of this part contains provisions with respect to 
agreements with States for Federal determination of Medicaid eligibility 
of applicants for supplemental security income.

[[Page 735]]

    (v) Subpart V of this part explains when payments are made to State 
vocational rehabilitation agencies (or alternate participants) for 
vocational rehabilitation services.

[39 FR 28625, Aug. 9, 1974, as amended at 51 FR 11718, Apr. 7, 1986; 62 
FR 38454, July 18, 1997]



Sec. 416.105  Administration.

    The Supplemental Security Income for the Aged, Blind, and Disabled 
program is administered by the Social Security Administration.

[51 FR 11718, Apr. 7, 1986, as amended at 62 FR 38454, July 18, 1997]



Sec. 416.110  Purpose of program.

    The basic purpose underlying the supplemental security income 
program is to assure a minimum level of income for people who are age 65 
or over, or who are blind or disabled and who do not have sufficient 
income and resources to maintain a standard of living at the established 
Federal minimum income level. The supplemental security income program 
replaces the financial assistance programs for the aged, blind, and 
disabled in the 50 States and the District of Columbia for which grants 
were made under the Social Security Act. Payments are financed from the 
general funds of the United States Treasury. Several basic principles 
underlie the program:
    (a) Objective tests. The law provides that payments are to be made 
to aged, blind, and disabled people who have income and resources below 
specified amounts. This provides objective measurable standards for 
determining each person's benefits.
    (b) Legal right to payments. A person's rights to supplemental 
security income payments--how much he gets and under what conditions--
are clearly defined in the law. The area of administrative discretion is 
thus limited. If an applicant disagrees with the decision on his claim, 
he can obtain an administrative review of the decision and if still not 
satisfied, he may initiate court action.
    (c) Protection of personal dignity. Under the Federal program, 
payments are made under conditions that are as protective of people's 
dignity as possible. No restrictions, implied or otherwise, are placed 
on how recipients spend the Federal payments.
    (d) Nationwide uniformity of standards. The eligibility requirements 
and the Federal minimum income level are identical throughout the 50 
States and the District of Columbia. This provides assurance of a 
minimum income base on which States may build supplementary payments.
    (e) Incentives to work and opportunities for rehabilitation. Payment 
amounts are not reduced dollar-for-dollar for work income but some of an 
applicant's income is counted toward the eligibility limit. Thus, 
recipients are encouraged to work if they can. Blind and disabled 
recipients with vocational rehabilitation potential are referred to the 
appropriate State vocational rehabilitation agencies that offer 
rehabilitation services to enable them to enter the labor market.
    (f) State supplementation and Medicaid determinations. (1) Federal 
supplemental security income payments lessen the variations in levels of 
assistance and provide a basic level of assistance throughout the 
nation. States are required to provide mandatory minimum State 
supplementary payments beginning January 1, 1974, to aged, blind, or 
disabled recipients of assistance for the month of December 1973 under 
such State's plan approved under title I, X, XIV, or XVI of the Act in 
order for the State to be eligible to receive title XIX funds (see 
subpart T of this part). These payments must be in an amount sufficient 
to ensure that individuals who are converted to the new program will not 
have their income reduced below what it was under the State program for 
December 1973. In addition, each State may choose to provide more than 
the Federal supplemental security income and/or mandatory minimum State 
supplementary payment to whatever extent it finds appropriate in view of 
the needs and resources of its citizens or it may choose to provide no 
more than the mandatory minimum payment where applicable. States which 
provide State supplementary payments can enter into agreements for 
Federal administration of the mandatory and optional State supplementary 
payments with the Federal

[[Page 736]]

Government paying the administrative costs. A State which elects Federal 
administration of its supplementation program must apply the same 
eligibility criteria (other than those pertaining to income) applied to 
determine eligibility for the Federal portion of the supplemental 
security income payment, except as provided in sec. 1616(c) of the Act 
(see subpart T of this part). There is a limitation on the amount 
payable to the Commissioner by a State for the amount of the 
supplementary payments made on its behalf for any fiscal year pursuant 
to the State's agreement with the Secretary. Such limitation on the 
amount of reimbursement is related to the State's payment levels for 
January 1972 and its total expenditures for calendar year 1972 for aid 
and assistance under the appropriate State plan(s) (see subpart T of 
this part).
    (2) States with Medicaid eligibility requirements for the aged, 
blind, and disabled that are identical (except as permitted by Sec. 
416.2111) to the supplemental security income eligibility requirements 
may elect to have the Social Security Administration determine Medicaid 
eligibility under the State's program for recipients of supplemental 
security income and recipients of a federally administered State 
supplementary payment. The State would pay half of Social Security 
Administration's incremental administrative costs arising from carrying 
out the agreement.

[39 FR 28625, Aug. 9, 1974, as amended at 53 FR 12941, Apr. 20, 1988; 62 
FR 38454, July 18, 1997]



Sec. 416.120  General definitions and use of terms.

    (a) Terms relating to acts and regulations. As used in this part:
    (1) The Act means the Social Security Act as amended (42 U.S.C. 
Chap. 7).
    (2) Wherever a title is referred to, it means such title of the Act.
    (3) Vocational Rehabilitation Act means the act approved June 2, 
1920 (41 Stat. 735), 29 U.S.C. 31-42, as amended, and as may be amended 
from time to time hereafter.
    (b) Commissioner; Appeals Council; defined. As used in this part:
    (1) Commissioner means the Commissioner of Social Security.
    (2) Appeals Council means the Appeals Council of the Office of 
Hearings and Appeals in the Social Security Administration or such 
member or members thereof as may be designated by the Chairman.
    (c) Miscellaneous. As used in this part unless otherwise indicated:
    (1) Supplemental security income benefit means the amount to be paid 
to an eligible individual (or eligible individual and his eligible 
spouse) under title XVI of the Act.
    (2) Income means the receipt by an individual of any property or 
service which he can apply, either directly or by sale or conversion, to 
meeting his basic needs (see subpart K of this part).
    (3) Resources means cash or other liquid assets or any real or 
personal property that an individual owns and could convert to cash to 
be used for support and maintenance (see Sec. 416.1201(a)).
    (4) Attainment of age. An individual attains a given age on the 
first moment of the day preceding the anniversary of his birth 
corresponding to such age.
    (5) Couple means an eligible individual and his eligible spouse.
    (6) Institution (see Sec. 416.201).
    (7) Public institution (see Sec. 416.201).
    (8) Resident of a public institution (see Sec. 416.201).
    (9) State, unless otherwise indicated, means a State of the United 
States, the District of Columbia, or effective January 9, 1978, the 
Northern Mariana Islands.
    (10) The term United States when used in a geographical sense means 
the 50 States, the District of Columbia, and effective January 9, 1978, 
the Northern Mariana Islands.
    (11) Masculine gender includes the feminine, unless otherwise 
indicated.
    (12) Section means a section of the regulations in part 416 of this 
chapter unless the context indicates otherwise.
    (13) Eligible individual means an aged, blind, or disabled 
individual who meets all the requirements for eligibility for benefits 
under the supplemental security income program.
    (14) Eligible spouse means an aged, blind, or disabled individual 
who is the husband or wife of another aged, blind,

[[Page 737]]

or disabled individual and who is living with that individual (see Sec. 
416.1801(c)).
    (d) Periods of limitation ending on nonwork days. Pursuant to the 
Act, where any provision of title XVI, or any provision of another law 
of the United States (other than the Internal Revenue Code of 1954) 
relating to or changing the effect of title XVI, or any regulation of 
the Commissioner issued under title XVI, provides for a period within 
which an act is required to be done which affects eligibility for or the 
amount of any benefit or payment under title XVI or is necessary to 
establish or protect any rights under title XVI and such period ends on 
a Saturday, Sunday, or Federal legal holiday or on any other day all or 
part of which is declared to be a nonworkday for Federal employees by 
statute or Executive Order, then such act shall be considered as done 
within such period if it is done on the first day thereafter which is 
not a Saturday, Sunday, or legal holiday or any other day all or part of 
which is declared to be a nonworkday for Federal employees either by 
statute or Executive Order. For purposes of this paragraph, the day on 
which a period ends shall include the final day of any extended period 
where such extension is authorized by law or by the Commissioner 
pursuant to law. Such extension of any period of limitation does not 
apply to periods during which an application for benefits or payments 
may be accepted as such an application pursuant to subpart C of this 
part.

[39 FR 28625, Aug. 9, 1974, as amended at 43 FR 25091, June 9, 1978; 51 
FR 11719, Apr. 7, 1986; 60 FR 16374, Mar. 30, 1995; 62 FR 38454, July 
18, 1997]



Sec. 416.121  Receipt of aid or assistance for December 1973 under an 

approved State plan under title I, X, XIV, or XVI of the Social Security 
Act.

    (a) Recipient of aid or assistance defined. As used in this part 
416, the term individual who was a recipient of aid or assistance for 
December 1973 under a State plan approved under title I, X, XIV, or XVI 
of the Social Security Act means an individual who correctly received 
aid or assistance under such plan for December 1973 even though such aid 
or assistance may have been received subsequent to December 1973. It 
also includes an individual who filed an application prior to January 
1974 and was otherwise eligible for aid or assistance for December 1973 
under the provisions of such State plan but did not in fact receive such 
aid or assistance. It does not include an individual who received aid or 
assistance because of the provisions of 45 CFR 205.10(a) (pertaining to 
continuation of assistance until a fair hearing decision is rendered), 
as in effect in December 1973, and with respect to whom it is 
subsequently determined that such aid or assistance would not have been 
received without application of the provisions of such 45 CFR 205.10(a).
    (b) Aid or assistance defined. As used in this part 416, the term 
aid or assistance means aid or assistance as defined in titles I, X, 
XIV, and XVI of the Social Security Act, as in effect in December 1973, 
and such aid or assistance is eligible for Federal financial 
participation in accordance with those titles and the provisions of 45 
CFR chapter II as in effect in December 1973.
    (c) Determinations of receipt of aid or assistance for December 
1973. For the purpose of application of the provisions of this part 416, 
the determination as to whether an individual was a recipient of aid or 
assistance for December 1973 under a State plan approved under title I, 
X, XIV, or XVI of the Social Security Act will be made by the Social 
Security Administration. In making such determination, the Social 
Security Administration may take into consideration a prior 
determination by the appropriate State agency as to whether the 
individual was eligible for aid or assistance for December 1973 under 
such State plan. Such prior determination, however, shall not be 
considered as conclusive in determining whether an individual was a 
recipient of aid or assistance for December 1973 under a State plan 
approved under title I, X, XIV, or XVI of the Social Security Act for 
purposes of application of the provisions of this part 416.
    (d) Special provision for disabled recipients. For purposes of Sec. 
416.907, the criteria and definitions enumerated in paragraphs (a) 
through (c) of this section are applicable in determining

[[Page 738]]

whether an individual was a recipient of aid or assistance (on the basis 
of disability) under a State plan approved under title XIV or XVI of the 
Act for a month prior to July 1973. It is not necessary that the aid or 
assistance for December 1973 and for a month prior to July 1973 have 
been paid under the State plan of the same State.

[39 FR 32024, Sept. 4, 1974; 39 FR 33207, Sept. 16, 1974, as amended at 
51 FR 11719, Apr. 7, 1986]



                          Subpart B_Eligibility

    Authority: Secs. 702(a)(5), 1110(b), 1602, 1611, 1614, 1619(a), 
1631, and 1634 of the Social Security Act (42 U.S.C. 902(a)(5), 1310(b), 
1381a, 1382, 1382c, 1382h(a), 1383, and 1383c); secs. 211 and 212, Pub. 
L. 93-66, 87 Stat. 154 and 155 (42 U.S.C. 1382 note); sec. 502(a), Pub. 
L. 94-241, 90 Stat. 268 (48 U.S.C. 1681 note); sec. 2, Pub. L. 99-643, 
100 Stat. 3574 (42 U.S.C. 1382h note).

    Source: 47 FR 3103, Jan. 22, 1982, unless otherwise noted.

                                 General



Sec. 416.200  Introduction.

    You are eligible for SSI benefits if you meet all the basic 
requirements listed in Sec. 416.202. However, the first month for which 
you may receive SSI benefits is the month after the month in which you 
meet these eligibility requirements. (See Sec. 416.501.) You must give 
us any information we request and show us necessary documents or other 
evidence to prove that you meet these requirements. We determine your 
eligibility for each month on the basis of your countable income in that 
month. You continue to be eligible unless you lose your eligibility 
because you no longer meet the basic requirements or because of one of 
the reasons given in Sec. Sec. 416.207 through 416.216.

[64 FR 31972, June 15, 1999, as amended at 68 FR 53508, Sept. 11, 2003]



Sec. 416.201  General definitions and terms used in this subpart.

    Any 9-month period means any period of 9 full calendar months ending 
with any full calendar month throughout which (as defined in Sec. 
416.211) an individual is residing in a public emergency shelter for the 
homeless (as defined in this section) and including the immediately 
preceding 8 consecutive full calendar months. January 1988 is the 
earliest possible month in any 9-month period.
    Educational or vocational training means a recognized program for 
the acquisition of knowledge or skills to prepare an individual for 
gainful employment. For purposes of these regulations, educational or 
vocational training does not include programs limited to the acquisition 
of basic life skills including but not limited to eating and dressing.
    Emergency shelter means a shelter for individuals whose homelessness 
poses a threat to their lives or health.
    Homeless individual is one who is not in the custody of any public 
institution and has no currently usable place to live. By custody we 
mean the care and control of an individual in a mandatory residency 
where the individual's freedom to come and go as he or she chooses is 
restricted. An individual in a public institution awaiting discharge and 
placement in the community is in the custody of that institution until 
discharged and is not homeless for purposes of this provision.
    Institution means an establishment that makes available some 
treatment or services in addition to food and shelter to four or more 
persons who are not related to the proprietor.
    Medical care facility means a hospital (defined in section 1861(e) 
of the Act), a skilled nursing facility (defined in section 1861(j) of 
the Act), or an intermediate care facility (defined in section 1905(c) 
of the Act).
    Public emergency shelter for the homeless means a public institution 
or that part of a public institution used as an emergency shelter by the 
Federal government, a State, or a political subdivision of a State, 
primarily for making available on a temporary basis a place to sleep, 
food, and some services or treatment to homeless individuals. A medical 
facility (as defined in Sec. 416.201) or any holding facility, 
detoxification center, foster care facility, or the like that has 
custody of the individual is not a public emergency shelter for the 
homeless. Similarly, transitional living arrangements such as a halfway 
house that are part of an

[[Page 739]]

insitution's plan to facilitate the individual's adjustment to community 
living are not public emergency shelters for the homeless.
    Public institution means an institution that is operated by or 
controlled by the Federal government, a State, or a political 
subdivision of a State such as a city or county. The term public 
institution does not include a publicly operated community residence 
which serves 16 or fewer residents.
    Resident of a public institution means a person who can receive 
substantially all of his or her food and shelter while living in a 
public institution. The person need not be receiving treatment and 
services available in the institution and is a resident regardless of 
whether the resident or anyone else pays for all food, shelter, and 
other services in the institution. A person is not a resident of a 
public institution if he or she is living in a public educational 
institution for the primary purpose of receiving educational or 
vocational training as defined in this section. A resident of a public 
institution means the same thing as an inmate of a public institution as 
used in section 1611(e)(1)(A) of the Social Security Act. (See Sec. 
416.211(b), (c), and (d) of this subpart for exceptions to the general 
limitation on the eligibility for Supplemental Security Income benefits 
of individuals who are residents of a public institution.)
    SSI means supplemental security income.
    State assistance means payments made by a State to an aged, blind, 
or disabled person under a State plan approved under title I, X, XIV, or 
XVI (AABD) of the Social Security Act which was in effect before the SSI 
Program.
    We or Us means the Social Security Administration.
    You or Your means the person who applies for or receives SSI 
benefits or the person for whom an application is filed.

[47 FR 3103, Jan. 22, 1982, as amended at 49 FR 19639, May 19, 1984; 50 
FR 48570, Nov. 26, 1985; 50 FR 51517, Dec. 18, 1985; 54 FR 19164, May 4, 
1989]



Sec. 416.202  Who may get SSI benefits.

    You are eligible for SSI benefits if you meet all of the following 
requirements:
    (a) You are--
    (1) Aged 65 or older (subpart H);
    (2) Blind (subpart I); or
    (3) Disabled (subpart I).
    (b) You are a resident of the United States (Sec. 416.1603), and--
    (1) A citizen or a national of the United States (Sec. 416.1610);
    (2) An alien lawfully admitted for permanent residence in the United 
States (Sec. 416.1615);
    (3) An alien permanently residing in the United States under color 
of law (Sec. 416.1618); or
    (4) A child of armed forces personnel living overseas as described 
in Sec. 416.216.
    (c) You do not have more income than is permitted (subparts K and 
D).
    (d) You do not have more resources than are permitted (subpart L).
    (e) You are disabled, drug addiction or alcoholism is a contributing 
factor material to the determination of disability (see Sec. 416.935), 
and you have not previously received a total of 36 months of Social 
Security benefit payments when appropriate treatment was available or 36 
months of SSI benefits on the basis of disability where drug addiction 
or alcoholism was a contributing factor material to the determination of 
disability.
    (f) You are not--
    (1) Fleeing to avoid prosecution for a crime, or an attempt to 
commit a crime, which is a felony under the laws of the place from which 
you flee (or which, in the case of the State of New Jersey, is a high 
misdemeanor under the laws of that State);
    (2) Fleeing to avoid custody or confinement after conviction for a 
crime, or an attempt to commit a crime, which is a felony under the laws 
of the place from which you flee (or which, in the case of the State of 
New Jersey, is a high misdemeanor under the laws of that State); or
    (3) Violating a condition of probation or parole imposed under 
Federal or State law.

[[Page 740]]

    (g) You file an application for SSI benefits (subpart C).

[47 FR 3103, Jan. 22, 1982, as amended at 58 FR 4897, Jan. 19, 1993; 60 
FR 8149, Feb. 10, 1995; 61 FR 10277, Mar. 13, 1996; 65 FR 40495, June 
30, 2000]



Sec. 416.203  Initial determinations of SSI eligibility.

    (a) What happens when you apply for SSI benefits. When you apply for 
SSI benefits we will ask you for documents and any other information we 
need to make sure you meet all the requirements. We will ask for 
information about your income and resources and about other eligibility 
requirements and you must answer completely. We will help you get any 
documents you need but do not have.
    (b) How we determine your eligibility for SSI benefits. We determine 
that you are eligible for SSI benefits for a given month if you meet the 
requirements in Sec. 416.202 in that month. However, you cannot become 
eligible for payment of SSI benefits until the month after the month in 
which you first become eligible for SSI benefits (see Sec. 416.501). In 
addition, we usually determine the amount of your SSI benefits for a 
month based on your income in an earlier month (see Sec. 416.420). 
Thus, it is possible for you to meet the eligibility requirements in a 
given month but receive no benefit payment for that month.

[47 FR 3103, Jan. 22, 1982, as amended at 50 FR 48570, Nov. 26, 1985; 64 
FR 31972, June 15, 1999]



Sec. 416.204  Redeterminations of SSI eligibility.

    (a) Redeterminations defined. A redetermination is a review of your 
eligibility to make sure that you are still eligible and that you are 
receiving the right amount of SSI benefits. This review deals with the 
requirements for eligibility other than whether you are still disabled 
or blind. Continuation of disability or blindness reviews are discussed 
in Sec. Sec. 416.989 and 416.990.
    (b) When we make redeterminations. (1) We redetermine your 
eligibility on a scheduled basis at periodic intervals. The length of 
time between scheduled redeterminations varies depending on the 
likelihood that your situation may change in a way that affects your 
benefits.
    (2) We may also redetermine your eligibility when you tell us (or we 
otherwise learn) of a change in your situation which affects your 
eligibility or the amount of your benefit.
    (c) The period for which a redetermination applies: (1) The first 
redetermination applies to--
    (i) The month in which we make the redetermination;
    (ii) All months beginning with the first day of the latest of the 
following:
    (A) The month of first eligibility or re-eligibility; or
    (B) The month of application; or
    (C) The month of deferred or updated development; and
    (iii) Future months until the second redetermination.
    (2) All other redeterminations apply to--
    (i) The month in which we make the redetermination;
    (ii) All months beginning with the first day of the month the last 
redetermination was initiated; and
    (iii) Future months until the next redetermination.
    (3) If we made two redeterminations which cover the same month, the 
later redetermination is the one we apply to that month.

[47 FR 3103, Jan. 22, 1982, as amended at 50 FR 48570, Nov. 26, 1985; 58 
FR 64893, Dec. 10, 1993]

  Reasons Why You May Not Get SSI Benefits for Which You Are Otherwise 
                                Eligible



Sec. 416.207  You do not give us permission to contact financial institutions.

    (a) To be eligible for SSI payments you must give us permission to 
contact any financial institution and request any financial records that 
financial institution may have about you. You must give us this 
permission when you apply for SSI payments or when we ask for it at a 
later time. You must also provide us with permission from anyone whose 
income and resources we consider as being available to you, i.e., 
deemors (see Sec. Sec. 416.1160, 416.1202, 416.1203, and 416.1204).
    (b) Financial institution means any:

[[Page 741]]

    (1) Bank,
    (2) Savings bank,
    (3) Credit card issuer,
    (4) Industrial loan company,
    (5) Trust company,
    (6) Savings association,
    (7) Building and loan,
    (8) Homestead association,
    (9) Credit union,
    (10) Consumer finance institution, or
    (11) Any other financial institution as defined in section 1101(1) 
of the Right to Financial Privacy Act.
    (c) Financial record means an original of, a copy of, or information 
known to have been derived from any record held by the financial 
institution pertaining to your relationship with the financial 
institution.
    (d) We may ask any financial institution for information on any 
financial account concerning you. We may also ask for information on any 
financial accounts for anyone whose income and resources we consider as 
being available to you (see Sec. Sec. 416.1160, 416.1202, 416.1203, and 
416.1204).
    (e) We ask financial institutions for this information when we think 
that it is necessary to determine your SSI eligibility or payment 
amount.
    (f) Your permission to contact financial institutions, and the 
permission of anyone whose income and resources we consider as being 
available to you, i.e., a deemor (see Sec. Sec. 416.1160, 416.1202, 
416.1203, and 416.1204), remains in effect until a terminating event 
occurs. The following terminating events only apply prospectively and do 
not invalidate the permission for past periods.
    (1) You cancel your permission in writing and provide the writing to 
us.
    (2) The deemor cancels their permission in writing and provides the 
writing to us.
    (3) The basis on which we consider a deemor's income and resources 
available to you ends, e.g. when spouses separate or divorce or a child 
attains age 18.
    (4) Your application for SSI is denied, and the denial is final. A 
denial is final when made, unless you appeal the denial timely as 
described in Sec. Sec. 416.1400 through 416.1499.
    (5) You are no longer eligible for SSI as described in Sec. Sec. 
416.1331 through 416.1335.
    (g) If you don't give us permission to contact any financial 
institution and request any financial records about you when we think it 
is necessary to determine your SSI eligibility or payment amount, or if 
you cancel the permission, you cannot be eligible for SSI payments. 
Also, except as noted in paragraph (h), if anyone whose income and 
resources we consider as being available to you (see Sec. Sec. 
416.1160, 416.1202, 416.1203, and 416.1204) doesn't give us permission 
to contact any financial institution and request any financial records 
about that person when we think it is necessary to determine your 
eligibility or payment amount, or if that person cancels the permission, 
you cannot be eligible for SSI payments. This means that if you are 
applying for SSI payments, you cannot receive them. If you are receiving 
SSI payments, we will stop your payments.
    (h) You may be eligible for SSI payments if there is good cause for 
your being unable to obtain permission for us to contact any financial 
institution and request any financial records about someone whose income 
and resources we consider as being available to you (see Sec. Sec. 
416.1160, 416.1202, 416.1203, and 416.1204).
    (1) Good cause exists if permission cannot be obtained from the 
individual and there is evidence that the individual is harassing you, 
abusing you, or endangering your life.
    (2) Good cause may exist if an individual other than one listed in 
paragraph (h)(3) of this section refuses to provide permission and: you 
acted in good faith to obtain permission from the individual but were 
unable to do so through no fault of your own, or you cooperated with us 
in our efforts to obtain permission.
    (3) Good cause does not apply if the individual is your 
representative payee and your legal guardian, if you are a minor child 
and the individual is your representative payee and your custodial 
parent, or if you are an alien and the individual is your sponsor or the 
sponsor's living-with spouse.

[68 FR 53508, Sept. 11, 2003]

[[Page 742]]



Sec. 416.210  You do not apply for other benefits.

    (a) General rule. You are not eligible for SSI benefits if you do 
not apply for all other benefits for which you may be eligible.
    (b) What ``other benefits'' includes. ``Other benefits'' includes 
any payments for which you can apply that are available to you on an 
ongoing or one-time basis of a type that includes annuities, pensions, 
retirement benefits, or disability benefits. For example, ``other 
benefits'' includes veterans' compensation and pensions, workers' 
compensation payments, Social Security insurance benefits and 
unemployment insurance benefits. ``Other benefits'' for which you are 
required to apply do not include payments that you may be eligible to 
receive from a fund established by a State to aid victims of crime. (See 
Sec. 416.1124(c)(17).)
    (c) Our notice to you. We will give you a dated, written notice that 
will tell you about any other benefits that we think you are likely to 
be eligible for. In addition, the notice will explain that your 
eligibility for SSI benefits will be affected if you do not apply for 
those other benefits.
    (d) What you must do to apply for other benefits. In order to apply 
for other benefits, you must file any required applications and do 
whatever else is needed so that your eligibility for the other benefits 
can be determined. For example, if any documents (such as a copy of a 
birth certificate) are required in addition to the application, you must 
submit them.
    (e) What happens if you do not apply for the other benefits. (1) If 
you do not apply for the other benefits within 30 days from the day that 
you receive our written notice, you are not eligible for SSI benefits. 
This means that if you are applying for SSI benefits, you cannot receive 
them. If you are receiving SSI benefits, your SSI benefits will stop. In 
addition, you will have to repay us for any SSI benefits that you 
received beginning with the month that you received our written notice. 
We assume (unless you prove otherwise) that you received our written 
notice 5 days after the date shown on the notice. We will also find that 
you are not eligible for SSI benefits if you file the required 
application for other benefits but do not take other necessary steps to 
obtain them.
    (2) We will not find you ineligible for SSI benefits if you have a 
good reason for not applying for the other benefits within the 30-day 
period or taking other necessary steps to obtain them. In determining 
whether a good reason exists, we will take into account any physical, 
mental, educational, or linguistic limitations (including any lack of 
facility with the English language) which may have caused you to fail to 
apply for other benefits. You may have a good reason if, for example--
    (i) You are incapacitated (because of illness you were not able to 
apply); or
    (ii) It would be useless for you to apply (you once applied for the 
benefits and the reasons why you were turned down have not changed).

[47 FR 3103, Jan. 22, 1982, as amended at 50 FR 5573, Feb. 11, 1985; 50 
FR 14211, April 11, 1985; 59 FR 1635, Jan. 12, 1994; 61 FR 1712, Jan. 
23, 1996]



Sec. 416.211  You are a resident of a public institution.

    (a) General rule. (1) Subject to the exceptions described in 
paragraphs (b), (c), and (d) of this section and Sec. 416.212, you are 
not eligible for SSI benefits for any month throughout which you are a 
resident of a public institution as defined in Sec. 416.201. In 
addition, if you are a resident of a public institution when you apply 
for SSI benefits and meet all other eligibility requirements, you cannot 
be eligible for payment of benefits until the first day of the month 
following the day of your release from the institution.
    (2) By throughout a month we mean that you reside in an institution 
as of the beginning of a month and stay the entire month. If you have 
been a resident of a public institution, you remain a resident if you 
are transferred from one public institution to another or if you are 
temporarily absent for a period of not more than 14 consecutive days. A 
person also is a resident of an institution throughout a month if he or 
she is born in the institution during the month and resides in the 
institution the rest of the month or resides in the institution as of 
the beginning of a

[[Page 743]]

month and dies in the institution during the month.
    (b) Exception--SSI benefits payable at a reduced rate. You may be 
eligible for SSI benefits at a reduced rate described in Sec. 416.414, 
if--
    (1)(i) You reside throughout a month in a public institution that is 
a medical care facility where Medicaid (title XIX of the Social Security 
Act) pays a substantial part (more than 50 percent) of the cost of your 
care; you are a child under the age of 18 residing throughout a month in 
a public institution that is a medical care facility where a substantial 
part (more than 50 percent) of the cost of your care is paid under a 
health insurance policy issued by a private provider of such insurance; 
or, you are a child under the age of 18 residing throughout a month in a 
public institution that is a medical care facility where a substantial 
part (more than 50 percent) of the cost of your care is paid by a 
combination of Medicaid payments and payments made under a health 
insurance policy issued by a private provider of such insurance; or
    (ii) You reside for part of a month in a public institution and the 
rest of the month in a public institution or private medical facility 
where Medicaid pays a substantial part (more than 50 percent) of the 
cost of your care; you are a child under the age of 18 residing for part 
of a month in a public institution and the rest of the month in a public 
institution or private medical facility where a substantial part (more 
than 50 percent) of the cost of your care is paid under a health 
insurance policy issued by a private provider of such insurance; or you 
are a child under the age of 18 residing for part of a month in a public 
institution and the rest of the month in a public institution or private 
medical facility where a substantial part (more than 50 percent) of the 
cost of your care is paid by a combination of Medicaid payments and 
payments made under a health insurance policy issued by a private 
provider; and
    (2) You are ineligible in that month for a benefit described in 
Sec. 416.212 that is payable to a person temporarily confined in a 
medical facility.
    (c) Exception for publicly operated community residences which serve 
no more than 16 residents. (1) General rule. If you are a resident of a 
publicly operated community residence which serves no more than 16 
residents, you may be eligible for SSI benefits.
    (2) Services that a facility must provide in order to be a community 
residence. To be a community residence, a facility must provide food and 
shelter. In addition, it must make available some other services. For 
example, the other services could be--
    (i) Social services;
    (ii) Help with personal living activities;
    (iii) Training in socialization and life skills; or
    (iv) Providing occasional or incidental medical or remedial care.
    (3) Serving no more than 16 residents. A community residence serves 
no more than 16 residents if--
    (i) It is designed and planned to serve no more than 16 residents, 
or the design and plan were changed to serve no more than 16 residents; 
and
    (ii) It is in fact serving 16 or fewer residents.
    (4) Publicly operated. A community residence is publicly operated if 
it is operated or controlled by the Federal government, a State, or a 
political subdivision of a State such as a city or county.
    (5) Facilities which are not a publicly operated community 
residence. If you live in any of the following facilities, you are not a 
resident of a publicly operated community residence:
    (i) A residential facility which is on the grounds of or next to a 
large institution or multipurpose complex;
    (ii) An educational or vocational training institution whose main 
function is to provide an approved, accredited, or recognized program to 
some or all of those who live there;
    (iii) A jail or other facility where the personal freedom of anyone 
who lives there is restricted because that person is a prisoner, is 
being held under court order, or is being held until charges against 
that person are disposed of; or
    (iv) A medical care facility (defined in Sec. 416.201).
    (d) Exception for residents of public emergency shelters for the 
homeless. For months after December 1987, if you are

[[Page 744]]

a resident of a public emergency shelter for the homeless (defined in 
Sec. 416.201) you may be eligible for SSI benefits for any 6 months 
throughout which you reside in a shelter in any 9-month period (defined 
in Sec. 416.201). The 6 months do not need to be consecutive and we 
will not count as part of the 6 months any prior months throughout which 
you lived in the shelter but did not receive SSI benefits. We will also 
not count any months throughout which you lived in the shelter and 
received SSI benefits prior to January 1988.

    Example: You are receiving SSI benefits when you lose your home and 
enter a public emergency shelter for the homeless on March 10, 1988. You 
remain a resident of a shelter until October 10, 1988. Since you were 
not in the shelter throughout the month of March, you are eligible to 
receive your benefit for March without having this month count towards 
the 6-month period. The last full month throughout which you reside in 
the shelter is September 1988. Therefore, if you meet all eligibility 
requirements, you will also be paid benefits for April through September 
(6 months during the 9-month period September 1988 back through January 
1988). If you are otherwise eligible, you will receive your SSI benefit 
for October when you left the shelter, since you were not a resident of 
the shelter throughout that month.

[47 FR 3103, Jan. 22, 1982, as amended at 50 FR 51518, Dec. 18, 1985; 51 
FR 13492, Apr. 21, 1986; 51 FR 17332, May 12, 1986; 51 FR 34464, Sept. 
29, 1986; 54 FR 19164, May 4, 1989; 61 FR 10277, Mar. 13, 1996; 62 FR 
1055, Jan. 8, 1997; 64 FR 31972, June 15, 1999]



Sec. 416.212  Continuation of full benefits in certain cases of medical 
confinement.

    (a) Benefits payable under section 1611(e)(1)(E) of the Social 
Security Act. Subject to eligibility and regular computation rules (see 
subparts B and D of this part), you are eligible for the benefits 
payable under section 1611(e)(1)(E) of the Social Security Act for up to 
2 full months of medical confinement during which your benefits would 
otherwise be suspended because of residence in a public institution or 
reduced because of residence in a public or private institution where 
Medicaid pays a substantial part (more than 50 percent) of the cost of 
your care or, if you are a child under age 18, reduced because of 
residence in a public or private institution which receives payments 
under a health insurance policy issued by a private provider, or a 
combination of Medicaid and a health insurance policy issued by a 
private provider, pay a substantial part (more than 50 percent) of the 
cost of your care if--
    (1) You were eligible under either section 1619(a) or section 
1619(b) of the Social Security Act in the month before the first full 
month of residence in an institution;
    (2) The institution agrees that no portion of these benefits will be 
paid to or retained by the institution excepting nominal sums for 
reimbursement of the institution for any outlay for a recipient's 
personal needs (e.g., personal hygiene items, snacks, candy); and
    (3) The month of your institutionalization is one of the first 2 
full months of a continuous period of confinement.
    (b) Benefits payable under section 1611(e)(1)(G) of the Social 
Security Act. (1) Subject to eligibility and regular computation rules 
(see subparts B and D of this part), you are eligible for the benefits 
payable under section 1611(e)(1)(G) of the Social Security Act for up to 
3 full months of medical confinement during which your benefits would 
otherwise be suspended because of residence in a public institution or 
reduced because of residence in a public or private institution where 
Medicaid pays a substantial part (more than 50 percent) of the cost of 
your care or, if you are a child under age 18, reduced because of 
residence in a public institution which receives payments under a health 
insurance policy issued by a private provider, or a combination of 
Medicaid and a health insurance policy issued by a private provider, pay 
a substantial part (more than 50 percent) of the cost of your care if--
    (i) You were eligible for SSI cash benefits and/or federally 
administered State supplementary payments for the month immediately 
prior to the first full month you were a resident in such institution;
    (ii) The month of your institutionalization is one of the first 3 
full months of a continuous period of confinement;
    (iii) A physician certifies, in writing, that you are not likely to 
be confined for longer than 90 full consecutive days

[[Page 745]]

following the day you entered the institution, and the certification is 
submitted to SSA no later than the day of discharge or the 90th full day 
of confinement, whichever is earlier; and
    (iv) You need to pay expenses to maintain the home or living 
arrangement to which you intend to return after institutionalization and 
evidence regarding your need to pay these expenses is submitted to SSA 
no later than the day of discharge or the 90th full day of confinement, 
whichever is earlier.
    (2) We will determine the date of submission of the evidence 
required in paragraphs (b)(1) (iii) and (iv) of this section to be the 
date we receive it or, if mailed, the date of the postmark.
    (c) Prohibition against using benefits for current maintenance. If 
the recipient is a resident in an institution, the recipient or his or 
her representative payee will not be permitted to pay the institution 
any portion of benefits payable under section 1611(e)(1)(G) excepting 
nominal sums for reimbursement of the institution for any outlay for the 
recipient's personal needs (e.g., personal hygiene items, snacks, 
candy). If the institution is the representative payee, it will not be 
permitted to retain any portion of these benefits for the cost of the 
recipient's current maintenance excepting nominal sums for reimbursement 
for outlays for the recipient's personal needs.

[61 FR 10277, Mar. 13, 1996, as amended at 62 FR 1055, Jan. 8, 1997]



Sec. 416.214  You are disabled and drug addiction or alcoholism is a 
contributing factor material to the determination of disability.

    (a) If you do not comply with treatment requirements. If you receive 
benefits because you are disabled and drug addiction or alcoholism is a 
contributing factor material to the determination of disability (see 
Sec. 416.935), you must avail yourself of any appropriate treatment for 
your drug addiction or alcoholism at an approved institution or facility 
when this treatment is available and make progress in your treatment. 
You are not eligible for SSI benefits beginning with the month after the 
month you are notified in writing that we determined that you have 
failed to comply with the treatment requirements. If your benefits are 
suspended because you failed to comply with treatment requirements, you 
will not be eligible to receive benefits until you have demonstrated 
compliance with treatment for a period of time, as specified in Sec. 
416.1326. The rules regarding treatment for drug addiction and 
alcoholism are in subpart I of this part.
    (b) If you previously received 36 months of SSI or Social Security 
benefits. You are not eligible for SSI benefits by reason of disability 
on the basis of drug addiction or alcoholism as described in Sec. 
416.935 if--
    (1) You previously received a total of 36 months of SSI benefits on 
the basis of disability and drug addiction or alcoholism was a 
contributing factor material to the determination of disability for 
months beginning March 1995, as described in Sec. 416.935. Not included 
in these 36 months are months before March 1995 and months for which 
your benefits were suspended for any reason. The 36-month limit is no 
longer effective for months beginning after September 2004; or
    (2) You previously received a total of 36 months of Social Security 
benefits counted in accordance with the provisions of Sec. Sec. 
404.316, 404.337, and 404.352 by reason of disability on the basis of 
drug addiction or alcoholism as described in Sec. 404.1535.

[60 FR 8149, Feb. 10, 1995. Redesignated at 61 FR 10277, Mar. 13, 1996]



Sec. 416.215  You leave the United States.

    You lose your eligibility for SSI benefits for any month during all 
of which you are outside of the United States. If you are outside of the 
United States for 30 days or more in a row, you are not considered to be 
back in the United States until you are back for 30 days in a row. You 
may again be eligible for SSI benefits in the month in which the 30 days 
end if you continue to meet all other eligibility requirements.

By United States, we mean the 50 States, the District of Columbia, and 
the Northern Mariana Islands.

[47 FR 3103, Jan. 22, 1982. Redesignated at 61 FR 10277, Mar. 13, 1996]

[[Page 746]]



Sec. 416.216  You are a child of armed forces personnel living overseas.

    (a) General rule. You may be eligible for continuation of SSI 
benefits if you live overseas and if--
    (1) You are a child as described in Sec. 416.1856;
    (2) You are a citizen of the United States;
    (3) You are living with a parent as described in Sec. 416.1881 who 
is a member of the armed forces of the United States assigned to 
permanent duty ashore outside the United States; and
    (4) You were eligible for an SSI benefit (including any federally 
administered State supplementary payment) for the month before your 
parent reported for such duty.
    (b) Living with. You are considered to be living with your parent 
who is a member of the armed forces if--
    (1) You physically live with the parent who is a member of the armed 
forces overseas; or
    (2) You are not living in the same household as the military parent 
but your presence overseas is due to his or her permanent duty 
assignment.

[58 FR 4897, Jan. 19, 1993; 58 FR 9597, Feb. 22, 1993, as amended at 59 
FR 41400, Aug. 12, 1994. Redesignated at 61 FR 10277, Mar. 13, 1996]

     Eligibility for Increased Benefits Because of Essential Persons



Sec. 416.220  General.

    If you are a qualified individual and have an essential person you 
may be eligible for increased benefits. You may be a qualified 
individual and have an essential person only if you received benefits 
under a State assistance plan approved under title I, X, XIV, or XVI 
(AABD) of the Act for December 1973. Definitions and rules that apply to 
qualified individuals and essential persons are discussed in Sec. Sec. 
416.221 through 416.223.



Sec. 416.221  Who is a qualified individual.

    You are a qualified individual if--
    (a) You received aid or assistance for the month of December 1973 
under a State plan approved under title I, X, XIV, or XVI (AABD) of the 
Act;
    (b) The State took into account the needs of another person in 
deciding your need for the State assistance for December 1973;
    (c) That other person was living in your home in December 1973; and
    (d) That other person was not eligible for State assistance for 
December 1973.



Sec. 416.222  Who is an essential person.

    (a) General rule. A person is an essential person if--
    (1) That person has continuously lived in the home of the same 
qualified individual since December 1973;
    (2) That person was not eligible for State assistance for December 
1973;
    (3) That person was never eligible for SSI benefits in his or her 
own right or as an eligible spouse; and
    (4) There are State records which show that under a State plan in 
effect for June 1973, the State took that person's needs into account in 
determining the qualified individual's need for State assistance for 
December 1973.

Any person who meets these requirements is an essential person. This 
means that the qualified individual can have more than one essential 
person.
    (b) Absence of an essential person from the home of a qualified 
individual. An essential person may be temporarily absent from the house 
of a qualified individual and still be an essential person. For example, 
the essential person could be hospitalized. We consider an absence to 
temporary if--
    (1) The essential person intends to return;
    (2) The facts support this intention;
    (3) It is likely that he or she will return; and
    (4) The absence is not longer than 90 days.
    (c) Absence of a qualified individual from his or her home. You may 
be temporarily absent from your home and still have an essential person. 
For example, you could be hospitalized. We consider an absence to be 
temporary if--
    (1) You intend to return;
    (2) The facts support your intention;
    (3) It is likely that you will return; and
    (4) Your absence does not exceed six months.
    (d) Essential person becomes eligible for SSI benefits. If an 
essential person becomes eligible for SSI benefits, he or

[[Page 747]]

she will no longer be an essential person beginning with the month that 
he or she becomes eligible for the SSI benefits.



Sec. 416.223  What happens if you are a qualified individual.

    (a) Increased SSI benefits. We may increase the amount of your SSI 
benefits if--
    (1) You are a qualified individual; and
    (2) You have one or more essential persons in your home.

In subpart D, we explain how these increased benefits are calculated.
    (b) Income and resource limits. If you are a qualified individual, 
we consider the income and resources of an essential person in your home 
to be yours. You are eligible for increased SSI benefits if--
    (1) Your resources which are counted do not exceed the limit for SSI 
eligibility purposes (see subpart L); and
    (2) Your income which is counted for SSI eligibility purposes (see 
subpart K) does not exceed the sum of--
    (i) The SSI Federal benefit rate (see subpart D); and
    (ii) The proper number of essential person increments (for the value 
of an essential person increment see subpart D). One essential person 
increment is added to the SSI Federal benefit rate for each essential 
person in your home.
    (c) Excluding the income and resources of an essential person. (1) 
While an essential person increment increases your SSI Federal benefit 
rate, that person's income which we consider to be yours may actually 
result in a lower monthly payment to you. We will discuss this with you 
and explain how an essential person affects your benefit. If you choose 
to do so, you may ask us in writing to determine your eligibility 
without your essential person or, if you have more than one essential 
person, without one or more of your essential persons. We will then 
figure the amount of your SSI benefits without counting as your own 
income and resources of the essential persons that you specify and we 
will end the essential person increment for those essential persons. You 
should consider this carefully because once you make the request, you 
cannot withdraw it. We will make the change beginning with the month 
following the month that you make the request.
    (2) We will not include the income and resources of the essential 
person if the person's income or resources would cause you to lose your 
eligibility. The loss of the essential person increment will be 
permanent.



Sec. 416.250  Experimental, pilot, and demonstration projects in the SSI 
program.

    (a) Authority and purpose. Section 1110(b) of the Act authorizes the 
Commissioner to develop and conduct experimental, pilot, and 
demonstration projects to promote the objectives or improve the 
administration of the SSI program. These projects will test the 
advantages of altering certain requirements, conditions, or limitations 
for recipients and test different administrative methods that apply to 
title XVI applicants and recipients.
    (b) Altering benefit requirements, limitations or conditions. 
Notwithstanding any other provision of this part, the Commissioner is 
authorized to waive any of the requirements, limitations or conditions 
established under title XVI of the Act and impose additional 
requirements, limitations or conditions for the purpose of conducting 
experimental, pilot, or demonstration projects. The projects will alter 
the provisions that currently apply to applicants and recipients to test 
their effect on the program. If, as a result of participation in a 
project under this section, a project participant becomes ineligible for 
Medicaid benefits, the Commissioner shall make arrangements to extend 
Medicaid coverage to such participant and shall reimburse the States for 
any additional expenses incurred due to such continued participation.
    (c) Applicability and scope--(1) Participants and nonparticipants. 
If you are selected to participate in an experimental, pilot, or 
demonstration project, we may temporarily set aside one or more current 
requirements, limitations or conditions of eligibility and apply 
alternative provisions to you. We may also modify current methods of 
administering title XVI as part of a

[[Page 748]]

project and apply alternative procedures or policies to you. The 
alternative provisions or methods of administration used in the projects 
will not substantially reduce your total income or resources as a result 
of your participation or disadvantage you in comparison to current 
provisions, policies, or procedures. If you are not selected to 
participate in the experimental, or pilot, or demonstration projects (or 
if you are placed in a control group which is not subject to the 
alternative requirements, limitations, or conditions) we will continue 
to apply the current requirements, limitations or conditions of 
eligibility to you.
    (2) Alternative provisions or methods of administration. The 
alternative requirements, limitations or conditions that apply to you in 
an experimental, pilot, or demonstration project may include any of the 
factors needed for aged, blind, or disabled persons to be eligible for 
SSI benefits. Experiments that we conduct will include, to the extent 
feasible, applicants and recipients who are under age 18 as well as 
adults and will include projects to ascertain the feasibility of 
treating drug addicts and alcoholics.
    (d) Selection of participants. Participation in the SSI project will 
be on a voluntary basis. The voluntary written consent necessary in 
order to participate in any experimental, pilot, or demonstration 
project may be revoked by the participant at any time.
    (e) Duration of experimental, pilot, and demonstration projects. A 
notice describing each experimental, pilot, or demonstration project 
will be published in the Federal Register before each project is placed 
in operation. Each experimental, pilot and demonstration project will 
have a termination date (up to 10 years from the start of the project).

[48 FR 7576, Feb. 23, 1983, as amended at 52 FR 37605, Oct. 8, 1987; 62 
FR 38454, July 18, 1997]

  Special Provisions for People Who Work Despite a Disabling Impairment



Sec. 416.260  General.

    The regulations in Sec. Sec. 416.260 through 416.269 describe the 
rules for determining eligibility for special SSI cash benefits and for 
special SSI eligibility status for an individual who works despite a 
disabling impairment. Under these rules an individual who works despite 
a disabling impairment may qualify for special SSI cash benefits and in 
most cases for Medicaid benefits when his or her gross earned income 
exceeds the applicable dollar amount which ordinarily represents SGA 
described in Sec. 416.974(b)(2). The calculation of this gross earned 
income amount, however, is not to be considered an actual SGA 
determination. Also, for purposes of determining eligibility or 
continuing eligibility for Medicaid benefits, a blind or disabled 
individual (no longer eligible for regular SSI benefits or for special 
SSI cash benefits) who, except for earnings, would otherwise be eligible 
for SSI cash benefits may be eligible for a special SSI eligibility 
status under which he or she is considered to be a blind or disabled 
individual receiving SSI benefits. We explain the rules for eligibility 
for special SSI cash benefits in Sec. Sec. 416.261 and 416.262. We 
explain the rules for the special SSI eligibility status in Sec. Sec. 
416.264 through 416.269.

[59 FR 41403, Aug. 12, 1994]



Sec. 416.261  What are special SSI cash benefits and when are they payable.

    Special SSI cash benefits are benefits that we may pay you in lieu 
of regular SSI benefits because your gross earned income in a month of 
initial eligibility for regular SSI benefits exceeds the amount 
ordinarily considered to represent SGA under Sec. 416.974(b)(2). You 
must meet the eligibility requirements in Sec. 416.262 in order to 
receive special SSI cash benefits. Special SSI cash benefits are not 
payable for any month in which your countable income exceeds the limits 
established for the SSI program (see subpart K of this part). If you are 
eligible for special SSI cash benefits, we consider you to be a disabled 
individual receiving SSI benefits for purposes of eligibility for 
Medicaid. We compute the amount of special SSI cash benefits according 
to the rules in subpart D of this part. If your State makes 
supplementary payments which we administer under a Federal-State 
agreement, and if your State elects to

[[Page 749]]

supplement the special SSI cash benefits, the rules in subpart T of this 
part will apply to these payments.

[47 FR 15324, Apr. 9, 1982, as amended at 50 FR 46763, Nov. 13, 1985; 59 
FR 41403, Aug. 12, 1994]



Sec. 416.262  Eligibility requirements for special SSI cash benefits.

    You are eligible for special SSI cash benefits if you meet the 
following requirements--
    (a) You were eligible to receive a regular SSI benefit or a 
federally administered State supplementary payment (see Sec. 416.2001) 
in a month before the month for which we are determining your 
eligibility for special SSI cash benefits as long as that month was not 
in a prior period of eligibility which has terminated according to 
Sec. Sec. 416.1331 through 416.1335;
    (b) In the month for which we are making the determination, your 
gross earned income exceeds the amount ordinarily considered to 
represent SGA under Sec. 416.974(b)(2);
    (c) You continue to have a disabling impairment;
    (d) If your disability is based on a determination that drug 
addiction or alcoholism is a contributing factor material to the 
determination of disability as described in Sec. 416.935, you have not 
yet received SSI cash benefits, special SSI cash benefits, or special 
SSI eligibility status for a total of 36 months, or Social Security 
benefit payments when treatment was available for a total of 36 months; 
and
    (e) You meet all the nondisability requirements for eligibility for 
SSI benefits (see Sec. 416.202).

We will follow the rules in this subpart in determining your eligibility 
for special SSI cash benefits.

[47 FR 15324, Apr. 9, 1982, as amended at 59 FR 41404, Aug. 12, 1994; 60 
FR 8149, Feb. 10, 1995; 64 FR 31972, June 15, 1999]



Sec. 416.263  No additional application needed.

    We do not require you to apply for special cash benefits nor is it 
necessary for you to apply to have the special SSI eligibility status 
determined. We will make these determinations automatically.

[47 FR 15324, Apr. 9, 1982]



Sec. 416.264  When does the special SSI eligibility status apply.

    The special SSI eligibility status applies for the purposes of 
establishing or maintaining your eligibility for Medicaid. For these 
purposes we continue to consider you to be a blind or disabled 
individual receiving benefits even though you are in fact no longer 
receiving regular SSI benefits or special SSI cash benefits. You must 
meet the eligibility requirements in Sec. 416.265 in order to qualify 
for the special SSI eligibility status. Special SSI eligibility status 
also applies for purposes of reacquiring status as eligible for regular 
SSI benefits or special SSI cash benefits.

[59 FR 41404, Aug. 12, 1994]



Sec. 416.265  Requirements for the special SSI eligibility status.

    In order to be eligible for the special SSI eligibility status, you 
must have been eligible to receive a regular SSI benefit or a federally 
administered State supplementary payment (see Sec. 416.2001) in a month 
before the month for which we are making the special SSI eligibility 
status determination. The month you were eligible for a regular SSI 
benefit or a federally administered State supplementary payment may not 
be in a prior period of eligibility which has been terminated according 
to Sec. Sec. 416.1331 through 416.1335. For periods prior to May 1, 
1991, you must be under age 65. Also, we must establish that:
    (a) You are blind or you continue to have a disabling impairment 
which, if drug addiction or alcoholism is a contributing factor material 
to the determination of disability as described in Sec. 416.935, has 
not resulted in your receiving SSI cash benefits, special SSI cash 
benefits, or special SSI eligibility status for a total of 36 months, or 
Social Security benefit payments when treatment was available for a 
total of 36 months;

[[Page 750]]

    (b) Except for your earnings, you meet all the nondisability 
requirements for eligibility for SSI benefits (see Sec. 416.202);
    (c) The termination of your eligibility for Medicaid would seriously 
inhibit your ability to continue working (see Sec. 416.268); and
    (d) Your earnings after the exclusions in Sec. 416.1112(c) (6), 
(8), and (9) are not sufficient to allow you to provide yourself with a 
reasonable equivalent of the benefits (SSI benefits, federally 
administered State supplementary payments, Medicaid, and publicly-funded 
attendant care services, including personal care assistance under Sec. 
416.269(d)) which would be available to you if you did not have those 
earnings (see Sec. 416.269).

[47 FR 15324, Apr. 9, 1982, as amended at 59 FR 41404, Aug. 12, 1994; 59 
FR 49291, Sept. 27, 1994; 60 FR 8149, Feb. 10, 1995]



Sec. 416.266  Continuation of SSI status for Medicaid

    If we stop your benefits because of your earnings and you are 
potentially eligible for the special SSI eligibility status you will 
continue to be considered an SSI recipient for purposes of eligibility 
for Medicaid during the time it takes us to determine whether the 
special eligibility status applies to you.

[47 FR 15324, Apr. 9, 1982]



Sec. 416.267  General.

    We determine whether the special SSI eligibility status applies to 
you by verifying that you continue to be blind or have a disabling 
impairment by applying the rules in subpart I of this part, and by 
following the rules in this subpart to determine whether you meet the 
requirements in Sec. 416.265(b). If you do not meet these requirements 
we determine that the special eligibility status does not apply. If you 
meet these requirements, then we apply special rules to determine if you 
meet the requirements of Sec. 416.265 (c) and (d). If for the period 
being evaluated, you meet all of the requirements in Sec. 416.265 we 
determine that the special status applies to you.

[47 FR 15324, Apr. 9, 1982]



Sec. 416.268  What is done to determine if you must have Medicaid in 
order to work.

    For us to determine that you need Medicaid benefits in order to 
continue to work, you must establish:
    (a) That you are currently using or have received services which 
were paid for by Medicaid during the period which began 12 months before 
our first contact with you to discuss this use; or
    (b) That you expect to use these services within the next 12 months; 
or
    (c) That you would need Medicaid to pay for unexpected medical 
expenses in the next 12 months.

[59 FR 41404, Aug. 12, 1994]



Sec. 416.269  What is done to determine whether your earnings are too 

low to provide comparable benefits and services you would receive in 
the absence of those earnings.

    (a) What we determine. We must determine whether your earnings are 
too low to provide you with benefits and services comparable to the 
benefits and services you would receive if you did not have those 
earnings (see Sec. 416.265(d)).
    (b) How the determination is made. In determining whether your 
earnings are too low to provide you with benefits and services 
comparable to the benefits and services you would receive if you did not 
have those earnings, we compare your anticipated gross earnings (or a 
combination of anticipated and actual gross earnings, as appropriate) 
for the 12-month period beginning with the month for which your special 
SSI eligibility status is being determined to a threshold amount for 
your State of residence. This threshold amount consists of the sum for a 
12-month period of two items, as follows:
    (1) The amount of gross earnings including amounts excluded under 
Sec. 416.1112(c) (4), (5) and (7) that would reduce to zero the Federal 
SSI benefit and the optional State supplementary payment for an 
individual with no other income living in his or her own household in 
the State where you reside. This amount will vary from State to State 
depending on the amount of the State supplementary payment; and
    (2) The average expenditures for Medicaid benefits for disabled and 
blind

[[Page 751]]

SSI cash recipients, including recipients of federally administered 
State supplementary payments only, in your State of residence.
    (c) How the eligibility requirements are met. (1) You meet the 
requirements in Sec. 416.265(d) if the comparison shows that your gross 
earnings are equal to or less than the applicable threshold amount for 
your State, as determined under paragraphs (b) (1) and (2) of this 
section. However, if the comparison shows that these earnings exceed the 
applicable threshold amount for your State, we will establish (and use 
in a second comparison) an individualized threshold taking into account 
the total amount of:
    (i) The amount determined under paragraph (b)(1) of this section 
that would reduce to zero the Federal SSI benefit and State 
supplementary payment for your actual living arrangement;
    (ii) The average Medicaid expenditures for your State of residence 
under paragraph (b)(2) of this section or, if higher, your actual 
medical expenditures in the appropriate 12-month period;
    (iii) Any amounts excluded from your income as impairment-related 
work expenses (see Sec. 416.1112(c)(6)), work expenses of the blind 
(see Sec. 416.1112(c)(8)), and income used or set aside for use under 
an approved plan for achieving self support (see Sec. 416.1112(c)(9)); 
and
    (iv) the value of any publicly-funded attendant care services as 
described in paragraph (d) of this section (including personal care 
assistance).
    (2) If you have already completed the 12-month period for which we 
are determining your eligibility, we will consider only the expenditures 
made in that period.
    (d) Attendant care services. Expenditures for attendant care 
services (including personal care assistance) which would be available 
to you in the absence of earnings that make you ineligible for SSI cash 
benefits will be considered in the individualized threshold (as 
described in paragraph (c)(1) of this section) if we establish that they 
are:
    (1) Provided by a paid attendant;
    (2) Needed to assist with work-related and/or personal functions; 
and
    (3) Paid from Federal, State, or local funds.
    (e) Annual update of information. The threshold amounts used in 
determinations of sufficiency of earnings will be based on information 
and data updated no less frequently than annually.

[59 FR 41404, Aug. 12, 1994; 59 FR 49291, Sept. 27, 1994]



                    Subpart C_Filing of Applications

    Authority: Secs. 702(a)(5), 1611, and 1631 (a), (d), and (e) of the 
Social Security Act (42 U.S.C. 902(a)(5), 1382, and 1383 (a), (d), and 
(e)).

    Source: 45 FR 48120, July 18, 1980, unless otherwise noted.

                           General Provisions



Sec. 416.301  Introduction.

    This subpart contains the rules for filing a claim for supplemental 
security income (SSI) benefits. It tells you what an application is, who 
may sign it, who must file one to be eligible for benefits, the period 
of time it is in effect, and how it may be withdrawn. It also tells you 
when a written statement or an oral inquiry may be considered to 
establish an application filing date.



Sec. 416.302  Definitions.

    For the purpose of this subpart--
    Benefits means any payments made under the SSI program. SSI benefits 
also include any federally administered State supplementary payments.
    Claimant means the person who files an application for himself or 
herself or the person on whose behalf an application is filed.
    We or us means the Social Security Administration (SSA).
    You or your means the person who applies for benefits, the person 
for whom an application is filed or anyone who may consider applying for 
benefits.



Sec. 416.305  You must file an application to receive supplemental security 
income benefits.

    (a) General rule. In addition to meeting other requirements, you 
must file an application to become eligible to receive benefits. If you 
believe you may

[[Page 752]]

be eligible, you should file an application as soon as possible. Filing 
an application will--
    (1) Permit us to make a formal determination whether or not you are 
eligible to receive benefits;
    (2) Assure that you receive benefits for any months you are eligible 
to receive payment; and
    (3) Give you the right to appeal if you disagree with the 
determination.
    (b) Exceptions. You need not file a new application if--
    (1) You have been receiving benefits as an eligible spouse and are 
no longer living with your husband or wife;
    (2) You have been receiving benefits as an eligible spouse of an 
eligible individual who has died;
    (3) You have been receiving benefits because you are disabled or 
blind and you are 65 years old before the date we determine that you are 
no longer blind or disabled.
    (4) A redetermination of your eligibility is being made and it is 
found that you were not eligible for benefits during any part of a 
period for which we are making a redetermination but you currently meet 
the requirements for eligibility;
    (5) You are notified that your payments of SSI benefits will be 
stopped because you are no longer eligible and you again meet the 
requirements for eligibility before your appeal rights are exhausted.

[45 FR 48120, July 18, 1980, as amended at 60 FR 16374, Mar. 30, 1995; 
64 FR 31972, June 15, 1999]

                              Applications



Sec. 416.310  What makes an application a claim for benefits.

    An application will be considered a claim for benefits, if the 
following requirements are met:
    (a) An application form prescribed by us must be filled out.
    (b) be filed at a social security office, at another Federal or 
State office we have designated to receive applications for us, or with 
a person we have authorized to receive applications for us. See Sec. 
416.325.
    (c) The claimant or someone who may sign an application for the 
claimant must sign the application. See Sec. Sec. 416.315 and 416.320.
    (d) The claimant must be alive at the time the application is filed. 
See Sec. Sec. 416.340, 416.345, and 416.351 for exceptions.

[45 FR 48120, July 18, 1980, as amended at 59 FR 44926, Aug. 31, 1994]



Sec. 416.315  Who may sign an application.

    We will determine who may sign an application according to the 
following rules:
    (a) If you are 18 years old or over, mentally competent, and 
physically able, you must sign your own application. If you are 16 years 
old or older and under age 18, you may sign the application if you are 
mentally competent, have no court appointed representative, and are not 
in the care of any other person or institution.
    (b) If the claimant is under age 18, or is mentally incompetent, or 
is physically unable to sign the application, a court appointed 
representative or a person who is responsible for the care of the 
claimant, including a relative, may sign the application. If the 
claimant is in the care of an institution, the manager or principal 
officer of the institution may sign the application.
    (c) To prevent a claimant from losing benefits because of a delay in 
filing an application when there is a good reason why the claimant 
cannot sign an application, we may accept an application signed by 
someone other than a person described in this section.

    Example: Mr. Smith comes to a Social Security office to file an 
application for SSI disability benefits for Mr. Jones. Mr. Jones, who 
lives alone, just suffered a heart attack and is in the hospital. He 
asked Mr. Smith, whose only relationship is that of a neighbor and 
friend, to file the application for him. We will accept an application 
signed by Mr. Smith since it would not be possible to have Mr. Jones 
sign and file the application at this time. SSI benefits can be paid 
starting with the first day of the month following the month the 
individual first meets all eligibility requirements for such benefits, 
including having filed an application. If Mr. Smith could not sign an 
application for Mr. Jones, a loss of benefits would result if it is 
later

[[Page 753]]

determined that Mr. Jones is in fact disabled.

[45 FR 48120, July 18, 1980, as amended at 51 FR 13492, Apr. 21, 1986; 
64 FR 31972, June 15, 1999]



Sec. 416.320  Evidence of authority to sign an application for another.

    (a) A person who signs an application for someone else will be 
required to provide evidence of his or her authority to sign the 
application for the person claiming benefits under the following rules:
    (1) If the person who signs is a court appointed representative, he 
or she must submit a certificate issued by the court showing authority 
to act for the claimant.
    (2) If the person who signs is not a court appointed representative, 
he or she must submit a statement describing his or her relationship to 
the claimant. The statement must also describe the extent to which the 
person is responsible for the care of the claimant. This latter 
information will not be requested if the application is signed by a 
parent for a child with whom he or she is living. If the person signing 
is the manager or principal officer of an institution he or she should 
show his or her title.
    (b) We may, at any time, require additional evidence to establish 
the authority of a person to sign an application for someone else.

[45 FR 48120, July 18, 1980, as amended at 51 FR 13493, Apr. 21, 1986]



Sec. 416.325  When an application is considered filed.

    (a) General rule. We consider an application for SSI benefits filed 
on the day it is received by an employee at any social security office, 
by someone at another Federal or State office designated to receive 
applications for us, or by a person we have authorized to receive 
applications for us.
    (b) Exceptions. (1) When we receive an application that is mailed, 
we will use the date shown by the United States postmark as the filing 
date if using the date the application is received will result in a loss 
of benefits. If the postmark is unreadable or there is no postmark, we 
will use the date the application is signed (if dated) or 5 days before 
the day we receive the signed application, whichever date is later.
    (2) We consider an application to be filed on the date of the filing 
of a written statement or the making of an oral inquiry under the 
conditions in Sec. Sec. 416.340, 416.345 and 416.350.
    (3) We will establish a ``deemed'' filing date of an application in 
a case of misinformation under the conditions described in Sec. 
416.351. The filing date of the application will be a date determined 
under Sec. 416.351(b).

[45 FR 48120, July 18, 1980, as amended at 51 FR 13493, Apr. 21, 1986; 
59 FR 44926, Aug. 31, 1994]



Sec. 416.327  Pilot program for photographic identification of disability 
benefit applicants in designated geographic areas.

    (a) To be eligible for SSI disability or blindness benefits in the 
designated pilot geographic areas during the time period of the pilot, 
you or a person acting on your behalf must give SSA permission to take 
your photograph and make this photograph a part of the claims folder. 
You must give us this permission when you apply for benefits and/or when 
we ask for it at a later time. Failure to cooperate will result in 
denial of benefits. We will permit an exception to the photograph 
requirement when an individual has a sincere religious objection. This 
pilot will be in effect for a six-month period after these final rules 
become effective.
    (b) Designated pilot geographic areas means:
    (1) All SSA field offices in the State of South Carolina.
    (2) The Augusta, Georgia SSA field office.
    (3) All SSA field offices in the State of Kansas.
    (4) Selected SSA field offices located in New York City.

[68 FR 23195, May 1, 2003]

                 Effective Filing Period of Application



Sec. 416.330  Filing before the first month you meet the requirements 
for eligibility.

    If you file an application for SSI benefits before the first month 
you meet

[[Page 754]]

all the other requirements for eligibility, the application will remain 
in effect from the date it is filed until we make a final determination 
on your application, unless there is a hearing decision on your 
application. If there is a hearing decision, your application will 
remain in effect until the hearing decision is issued.
    (a) If you meet all the requirements for eligibility while your 
application is in effect, the earliest month for which we can pay you 
benefits is the month following the month that you first meet all the 
requirements.
    (b) If you first meet all the requirements for eligibility after the 
period for which your application was in effect, you must file a new 
application for benefits. In this case, we can pay you benefits only 
from the first day of the month following the month that you meet all 
the requirements based on the new application.

[64 FR 31973, June 15, 1999]



Sec. 416.335   Filing in or after the month you meet the requirements 
for eligibility.

    When you file an application in the month that you meet all the 
other requirements for eligibility, the earliest month for which we can 
pay you benefits is the month following the month you filed the 
application. If you file an application after the month you first meet 
all the other requirements for eligibility, we cannot pay you for the 
month in which your application is filed or any months before that 
month. See Sec. Sec. 416.340, 416.345 and 416.350 on how a written 
statement or an oral inquiry made before the filing of the application 
form may affect the filing date of the application.

[64 FR 31973, June 15, 1999]

       Filing Date Based Upon a Written Statement or Oral Inquiry



Sec. 416.340  Use of date of written statement as application filing date.

    We will use the date a written statement, such as a letter, an SSA 
questionnaire or some other writing, is received at a social security 
office, at another Federal or State office designated by us, or by a 
person we have authorized to receive applications for us as the filing 
date of an application for benefits, only if the use of that date will 
result in your eligibility for additional benefits. If the written 
statement is mailed, we will use the date the statement was mailed to us 
as shown by a United States postmark. If the postmark is unreadable or 
there is no postmark, we will use the date the statement is signed (if 
dated) or 5 days before the day we receive the written statement, 
whichever date is later, as the filing date of an application for 
benefits. In order for us to use your written statement to protect your 
filing date, the following requirements must be met:
    (a) The written statement shows an intent to claim benefits for 
yourself or for another person.
    (b) You, your spouse or a person who may sign an application for you 
signs the statement.
    (c) An application form signed by you or by a person who may sign an 
application for you is filed with us within 60 days after the date of a 
notice we will send telling of the need to file an application. The 
notice will say that we will make an initial determination of 
eligibility for SSI benefits if an application form is filed within 60 
days after the date of the notice. (We will send the notice to the 
claimant, or where he or she is a minor or incompetent, to the person 
who gave us the written statement.)
    (d)(1) The claimant is alive when the application is filed on a 
prescribed form, or
    (2) If the claimant dies after the written statement is filed, the 
deceased claimant's surviving spouse or parent(s) who could be paid the 
claimant's benefits under Sec. 416.542(b), or someone on behalf of the 
surviving spouse or parent(s) files an application form. If we learn 
that the claimant has died before the notice is sent or within 60 days 
after the notice but before an application form is filed, we will send a 
notice to such a survivor. The notice will say that we will make an 
initial determination of eligibility for SSI benefits only if an 
application form is filed on behalf of the deceased within 60 days

[[Page 755]]

after the date of the notice to the survivor.

[45 FR 48120, July 18, 1980, as amended at 51 FR 13493, Apr. 21, 1986; 
58 FR 52912, Oct. 13, 1993]



Sec. 416.345  Use of date of oral inquiry as application filing date.

    We will use the date of an oral inquiry about SSI benefits as the 
filing date of an application for benefits only if the use of that date 
will result in your eligibility for additional benefits and the 
following requirements are met:
    (a) The inquiry asks about the claimant's eligibility for SSI 
benefits.
    (b) The inquiry is made by the claimant, the claimant's spouse, or a 
person who may sign an application on the claimant's behalf as described 
in Sec. 416.315.
    (c) The inquiry, whether in person or by telephone, is directed to 
an office or an official described in Sec. 416.310(b).
    (d) The claimant or a person on his or her behalf as described in 
Sec. 416.315 files an application on a prescribed form within 60 days 
after the date of the notice we will send telling of the need to file an 
application. The notice will say that we will make an initial 
determination of eligibility for SSI benefits if an application form is 
filed within 60 days after the date of the notice. (We will send the 
notice to the claimant or, where he or she is a minor or incompetent, to 
the person who made the inquiry.)
    (e)(1) The claimant is alive when the application is filed on a 
prescribed form, or
    (2) If the claimant dies after the oral inquiry is made, the 
deceased claimant's surviving spouse or parent(s) who could be paid the 
claimant's benefits under Sec. 416.542(b), or someone on behalf of the 
surviving spouse or parent(s) files an application form. If we learn 
that the claimant has died before the notice is sent or within 60 days 
after the notice but before an application form is filed, we will send a 
notice to such a survivor. The notice will say that we will make an 
initial determination of eligibility for SSI benefits only if an 
application form is filed on behalf of the deceased within 60 days after 
the date of the notice to the survivor.

[45 FR 48120, July 18, 1980, as amended at 51 FR 13493, Apr. 21, 1986; 
58 FR 52912, Oct. 13, 1993]



Sec. 416.350  Treating a title II application as an oral inquiry about 
SSI benefits.

    (a) When a person applies for benefits under title II (retirement, 
survivors, or disability benefits) we will explain the requirements for 
receiving SSI benefits and give the person a chance to file an 
application for them if--
    (1) The person is within 2 months of age 65 or older or it looks as 
if the person might qualify as a blind or disabled person, and
    (2) It is not clear that the person's title II benefits would 
prevent him or her from receiving SSI or any State supplementary 
benefits handled by the Social Security Administration.
    (b) If the person applying for title II benefits does not file an 
application for SSI on a prescribed form when SSI is explained to him or 
her, we will treat his or her filing of an application for title II 
benefits as an oral inquiry about SSI, and the date of the title II 
application form may be used to establish the SSI application date if 
the requirements of Sec. 416.345 (d) and (e) are met.

               Deemed Filing Date Based on Misinformation



Sec. 416.351  Deemed filing date in a case of misinformation.

    (a) General. You may have considered applying for SSI benefits for 
yourself or for another person, and you may have contacted us in 
writing, by telephone or in person to inquire about filing an 
application for these benefits. It is possible that in responding to 
your inquiry, we may have given you misinformation about your 
eligibility for such benefits, or the eligibility of the person on whose 
behalf you were considering applying for benefits, which caused you not 
to file an application at that time. If this happened, and later an 
application for such benefits is filed with us, we may establish an 
earlier filing date under this section.


[[Page 756]]


    Example 1: Ms. Jones calls a Social Security office to inquire about 
filing an application for SSI benefits. During her conversation with an 
SSA employee, she tells the employee about her resources. The SSA 
employee tells Ms. Jones that because her countable resources are above 
the allowable limit, she would be ineligible for SSI benefits. The 
employee fails to consider certain resource exclusions under the SSI 
program which would have reduced Ms. Jones' countable resources below 
the allowable limit, making her eligible for benefits. Because Ms. Jones 
thought that she would be ineligible, she decides not to file an 
application for SSI benefits. Ms. Jones later reads about resource 
exclusions under the SSI program. She recontacts the Social Security 
office to file an SSI application, and alleges that she had been 
previously misinformed about her eligibility for SSI benefits. She files 
an application for SSI benefits, provides the information required under 
paragraph (f) of this section to show that an SSA employee provided 
misinformation, and requests a deemed filing date based upon her receipt 
of misinformation.
    Example 2: Mr. Adams resides in a State which provides State 
supplementary payments that are administered by SSA under the SSI 
program. He telephones a Social Security office and tells an SSA 
employee that he does not have enough income to live on and wants to 
file for SSI benefits. Mr. Adams states that his only income is his 
monthly Social Security benefit check. The SSA employee checks Mr. 
Adams' Social Security record and advises him that he is ineligible for 
SSI benefits based on the amount of his monthly Social Security benefit. 
The employee does not consider whether Mr. Adams would be eligible for 
State supplementary payments. Because Mr. Adams was told that he would 
not be eligible for benefits under the SSI program, he does not file an 
application. The employee does not make a record of Mr. Adams' oral 
inquiry or take any other action. A year later, Mr. Adams speaks to a 
neighbor who receives the same Social Security benefit amount that Mr. 
Adams does, but also receives payments under the SSI program. Thinking 
the law may have changed, Mr. Adams recontacts a Social Security office 
and learns from an SSA employee that he would be eligible for State 
supplementary payments under the SSI program and that he could have 
received these payments earlier had he filed an application. Mr. Adams 
explains that he did not file an application earlier because he was told 
by an SSA employee that he was not eligible for SSI benefits. Mr. Adams 
files an application for the benefits, provides the information required 
under paragraph (f) of this section to show that an SSA employee 
provided misinformation, and requests a deemed filing date based on the 
misinformation provided to him earlier.

    (b) Deemed filing date of an application based on misinformation. 
Subject to the requirements and conditions in paragraphs (c) through (g) 
of this section, we may establish a deemed filing date of an application 
for SSI benefits under the following provisions.
    (1)(i) If we determine that you failed to apply for SSI benefits for 
yourself because we gave you misinformation about your eligibility for 
such benefits, we will deem an application for such benefits to have 
been filed with us on the later of--
    (A) The date on which the misinformation was provided to you; or
    (B) The date on which you met all of the requirements for 
eligibility for such benefits, other than the requirement of filing an 
application.
    (ii) Before we may establish a deemed filing date of an application 
for benefits for you under paragraph (b)(1)(i) of this section, you or a 
person described in Sec. 416.315 must file an application for such 
benefits. If you die before an application for the benefits is filed 
with us, we will consider establishing a deemed filing date of an 
application for such benefits only if a person who would be qualified 
under Sec. 416.542(b) to receive any benefits due you, or someone on 
his or her behalf, files an application for the benefits.
    (2)(i) If you had authority under Sec. 416.315 to sign an 
application for benefits for another person, and we determine that you 
failed to apply for SSI benefits for that person because we gave you 
misinformation about that person's eligibility for such benefits, we 
will deem an application for such benefits to have been filed with us on 
the later of--
    (A) The date on which the misinformation was provided to you; or
    (B) The date on which the person met all of the requirements for 
eligibility for such benefits, other than the requirement of filing an 
application.
    (ii) Before we may establish a deemed filing date of an application 
for benefits for the person under paragraph (b)(2)(i) of this section, 
you, such person, or another person described in Sec. 416.315 must file 
an application for such benefits. If the person referred to

[[Page 757]]

in paragraph (b)(2)(i) of this section dies before an application for 
the benefits is filed with us, we will consider establishing a deemed 
filing date of an application for such benefits only if a person who 
would be qualified under Sec. 416.542(b) to receive any benefits due 
the deceased person, or someone on his behalf, files an application for 
the benefits.
    (c) Requirements concerning the misinformation. We apply the 
following requirements for purposes of paragraph (b) of this section.
    (1) The misinformation must have been provided to you by one of our 
employees while he or she was acting in his or her official capacity as 
our employee. For purposes of this section, an employee includes an 
officer of SSA.
    (2) Misinformation is information which we consider to be incorrect, 
misleading, or incomplete in view of the facts which you gave to the 
employee, or of which the employee was aware or should have been aware, 
regarding your particular circumstances, or the particular circumstances 
of the person referred to in paragraph (b)(2)(i) of this section. In 
addition, for us to find that the information you received was 
incomplete, the employee must have failed to provide you with the 
appropriate, additional information which he or she would be required to 
provide in carrying out his or her official duties.
    (3) The misinformation may have been provided to you orally or in 
writing.
    (4) The misinformation must have been provided to you in response to 
a specific request by you to us for information about your eligibility 
for benefits or the eligibility for benefits of the person referred to 
in paragraph (b)(2)(i) of this section for which you were considering 
filing an application.
    (d) Evidence that misinformation was provided. We will consider the 
following evidence in making a determination under paragraph (b) of this 
section.
    (1) Preferred evidence. Preferred evidence is written evidence which 
relates directly to your inquiry about your eligibility for benefits or 
the eligibility of another person and which shows that we gave you 
misinformation which caused you not to file an application. Preferred 
evidence includes, but is not limited to, the following--
    (i) A notice, letter, or other document which was issued by us and 
addressed to you; or
    (ii) Our record of your telephone call, letter, or in-person 
contact.
    (2) Other evidence. In the absence of preferred evidence, we will 
consider other evidence, including your statements about the alleged 
misinformation, to determine whether we gave you misinformation which 
caused you not to file an application. We will not find that we gave you 
misinformation, however, based solely on your statements. Other evidence 
which you provide or which we obtain must support your statements. 
Evidence which we will consider includes, but is not limited to, the 
following--
    (i) Your statements about the alleged misinformation, including 
statements about--
    (A) The date and time of the alleged contact(s);
    (B) How the contact was made, e.g., by telephone or in person;
    (C) The reason(s) the contact was made;
    (D) Who gave the misinformation; and
    (E) The questions you asked and the facts you gave us, and the 
questions we asked and the information we gave you at the time of the 
contact;
    (ii) Statements from others who were present when you were given the 
alleged misinformation, e.g., a neighbor who accompanied you to our 
office;
    (iii) If you can identify the employee or the employee can recall 
your inquiry about benefits--
    (A) Statements from the employee concerning the alleged contact, 
including statements about the questions you asked, the facts you gave, 
the questions the employee asked, and the information provided to you at 
the time of the alleged contact; and
    (B) Our assessment of the likelihood that the employee provided the 
alleged misinformation;
    (iv) An evaluation of the credibility and the validity of your 
allegations in conjunction with other relevant information; and
    (v) Any other information regarding your alleged contact.

[[Page 758]]

    (e) Information which does not constitute satisfactory proof that 
misinformation was given. Certain kinds of information will not be 
considered satisfactory proof that we gave you misinformation which 
caused you not to file an application. Examples of such information 
include--
    (1) General informational pamphlets that we issue to provide basic 
program information;
    (2) The SSI Benefit Estimate Letter that is based on an individual's 
reported and projected income and is an estimate which can be requested 
at any time;
    (3) General information which we review or prepare but which is 
disseminated by the media, e.g., radio, television, magazines, and 
newspapers; and
    (4) Information provided by other governmental agencies, e.g., the 
Department of Veterans Affairs, the Department of Defense, State 
unemployment agencies, and State and local governments.
    (f) Claim for benefits based on misinformation. You may make a claim 
for benefits based on misinformation at any time. Your claim must 
contain information that will enable us to determine if we did provide 
misinformation to you about your eligibility for SSI benefits, or the 
eligibility of a person on whose behalf you were considering applying 
for benefits, which caused you not to file an application for the 
benefits. Specifically, your claim must be in writing and it must 
explain what information was provided; how, when, and where it was 
provided and by whom; and why the information caused you not to file an 
application. If you give us this information, we will make a 
determination on such a claim for benefits if all of the following 
conditions are also met.
    (1) An application for the benefits described in paragraph (b)(1)(i) 
or (b)(2)(i) of this section is filed with us by someone described in 
paragraph (b)(1)(ii) or (b)(2)(ii) of this section, as appropriate. The 
application must be filed after the alleged misinformation was provided. 
This application may be--
    (i) An application on which we have made a previous final 
determination or decision awarding the benefits, but only if the 
claimant continues to be eligible for benefits (or again could be 
eligible for benefits) based on that application;
    (ii) An application on which we have made a previous final 
determination or decision denying the benefits, but only if such 
determination or decision is reopened under Sec. 416.1488; or
    (iii) A new application on which we have not made a final 
determination or decision.
    (2) The establishment of a deemed filing date of an application for 
benefits based on misinformation could result in the claimant becoming 
eligible for benefits or for additional benefits.
    (3) We have not made a previous final determination or decision to 
which you were a party on a claim for benefits based on alleged 
misinformation involving the same facts and issues. This provision does 
not apply, however, if the final determination or decision may be 
reopened under Sec. 416.1488.
    (g) Effective date. This section applies only to misinformation 
which we provided on or after December 19, 1989. In addition, this 
section is effective only for benefits payable for months after December 
1989.

[59 FR 44926, Aug. 31, 1994]

                        Withdrawal of Application



Sec. 416.355  Withdrawal of an application.

    (a) Request for withdrawal filed before we make a determination. If 
you make a request to withdraw your application before we make a 
determination on your claim, we will approve the request if the 
following requirements are met:
    (1) You or a person who may sign an application for you signs a 
written request to withdraw the application and files it at a place 
described in Sec. 416.325.
    (2) You are alive when the request is filed.
    (b) Request for withdrawal filed after a determination is made. If 
you make a request to withdraw your application after we make a 
determination on your claim, we will approve the request if the 
following requirements are met:
    (1) The conditions in paragraph (a) of this section are met.
    (2) Every other person who may lose benefits because of the 
withdrawal consents in writing (anyone who could

[[Page 759]]

sign an application for that person may give the consent).
    (3) All benefits already paid based on the application are repaid or 
we are satisfied that they will be repaid.
    (c) Effect of withdrawal. If we approve your request to withdraw an 
application, we will treat the application as though you never filed it. 
If we disapprove your request for withdrawal, we will treat the 
application as though you never requested the withdrawal.



Sec. 416.360  Cancellation of a request to withdraw.

    You may cancel your request to withdraw your application and your 
application will still be good if the following requirements are met:
    (a) You or a person who may sign an application for you signs a 
written request for cancellation and files it at a place described in 
Sec. 416.325.
    (b) You are alive at the time the request for cancellation is filed.
    (c) For a cancellation request received after we have approved the 
withdrawal, the cancellation request is filed no later than 60 days 
after the date of the notice of approval of the withdrawal request.



                      Subpart D_Amount of Benefits

    Authority: Secs. 702(a)(5), 1611 (a), (b), (c), and (e), 1612, 1617, 
and 1631 of the Social Security Act (42 U.S.C. 902(a)(5), 1382 (a), (b), 
(c), and (e), 1382a, 1382f, and 1383).



Sec. 416.401  Scope of subpart.

    This subpart D sets forth basic guidelines for establishing the 
amount of monthly benefits payable to an eligible individual or couple 
(as defined in Sec. 416.120(c)(5)). This subpart does not contain 
provisions with respect to establishing the amount of State 
supplementary payments payable in accordance with an agreement entered 
into between a State and the Administration under the provisions of 
subpart T of this part. Provisions with respect to determination and 
payment of State supplementary payments under such agreements will be 
administered by the Administration in accordance with the terms set 
forth in such agreements.

[39 FR 23053, June 26, 1974]



Sec. 416.405  Cost-of-living adjustments in benefits.

    Whenever benefit amounts under title II of the Act (part 404 of this 
chapter) are increased by any percentage effective with any month as a 
result of a determination made under Section 215(i) of the Act, each of 
the dollar amounts in effect for such month under Sec. Sec. 416.410, 
416.412, and 416.413, as specified in such sections or as previously 
increased under this section or under any provision of the Act, will be 
increased. We will increase the unrounded yearly SSI benefit amount by 
the same percentage by which the title II benefits are being increased 
based on the Consumer Price Index, or, if greater, the percentage they 
would be increased if the rise in the Consumer Price Index were 
currently the basis for the title II increase. (See Sec. Sec. 404.270-
404.277 for an explanation of how the title II cost-of-living adjustment 
is computed.) If the increased annual SSI benefit amount is not a 
multiple of $12, it will be rounded to the next lower multiple of $12.

[51 FR 12606, Apr. 21, 1986; 51 FR 16016, Apr. 30, 1986]



Sec. 416.410  Amount of benefits; eligible individual.

    The benefit under this part for an eligible individual (including 
the eligible individual receiving benefits payable under the Sec. 
416.212 provisions) who does not have an eligible spouse, who is not 
subject to either benefit suspension under Sec. 416.1325 or benefit 
reduction under Sec. 416.414, and who is not a qualified individual (as 
defined in Sec. 416.221) shall be payable at the rate of $5,640 per 
year ($470 per month) effective for the period beginning January 1, 
1996. This rate is the result of a 2.6 percent cost-of-living adjustment 
(see Sec. 416.405) to the December 1995 rate. For the period January 1, 
through December 31, 1995, the rate payable, as increased by the 2.8 
percent cost-of-living adjustment, was $5,496 per year ($458 per month). 
For the period January 1, through December 31, 1994, the rate payable, 
as increased by the 2.6 percent cost-of-living adjustment, was $5,352 
per year ($446 per month). The monthly rate is reduced by the amount of 
the

[[Page 760]]

individual's income which is not excluded pursuant to subpart K of this 
part.

[61 FR 10278, Mar. 13, 1996]



Sec. 416.412  Amount of benefits; eligible couple.

    The benefit under this part for an eligible couple (including 
couples where one or both members of the couple are receiving benefits 
payable under the Sec. 416.212 provisions), neither of whom is subject 
to suspension of benefits based on Sec. 416.1325 or reduction of 
benefits based on Sec. 416.414 nor is a qualified individual (as 
defined in Sec. 416.221) shall be payable at the rate of $8,460 per 
year ($705 per month), effective for the period beginning January 1, 
1996. This rate is the result of a 2.6 percent cost-of-living adjustment 
(see Sec. 416.405) to the December 1995 rate. For the period January 1, 
through December 31, 1995, the rate payable, as increased by the 2.8 
percent cost-of-living adjustment, was $8,224 per year ($687 per month). 
For the period January 1, through December 31, 1994, the rate payable, 
as increased by the 2.6 percent cost-of-living adjustment, was $8,028 
per year ($669 per month). The monthly rate is reduced by the amount of 
the couple's income which is not excluded pursuant to subpart K of this 
part.

[61 FR 10278, Mar. 13, 1996]



Sec. 416.413  Amount of benefits; qualified individual.

    The benefit under this part for a qualified individual (defined in 
Sec. 416.221) is payable at the rate for an eligible individual or 
eligible couple plus an increment for each essential person (defined in 
Sec. 416.222) in the household, reduced by the amount of countable 
income of the eligible individual or eligible couple as explained in 
Sec. 416.420. A qualified individual will receive an increment of 
$2,820 per year ($235 per month), effective for the period beginning 
January 1, 1996. This rate is the result of the 2.6 percent cost-of-
living adjustment (see Sec. 416.405) to the December 1995 rate, and is 
for each essential person (as defined in Sec. 416.222) living in the 
household of a qualified individual. (See Sec. 416.532.) For the period 
January 1, through December 31, 1995, the rate payable, as increased by 
the 2.8 percent cost-of-living adjustment, was $2,748 per year ($229 per 
month). For the period January 1, through December 31, 1994, the rate 
payable, as increased by the 2.6 percent cost-of-living adjustment, was 
$2,676 per year ($223 per month). The total benefit rate, including the 
increment, is reduced by the amount of the individual's or couple's 
income that is not excluded pursuant to subpart K of this part.

[61 FR 10278, Mar. 13, 1996]



Sec. 416.414  Amount of benefits; eligible individual or eligible couple 
in a medical care facility.

    (a) General rule. Except where the Sec. 416.212 provisions provide 
for payment of benefits at the rates specified under Sec. Sec. 416.410 
and 416.412, reduced SSI benefits are payable to persons and couples who 
are in medical care facilities where a substantial part (more than 50 
percent) of the cost of their care is paid by a State plan under title 
XIX of the Social Security Act (Medicaid). This reduced SSI benefit rate 
applies to persons who are in medical care facilities where a 
substantial part (more than 50 percent) of the cost would have been paid 
by an approved Medicaid State plan but for the application of section 
1917(c) of the Social Security Act due to a transfer of assets for less 
than fair market value. This reduced SSI benefit rate also applies to 
children under age 18 who are in medical care facilities where a 
substantial part (more than 50 percent) of the cost of their care is 
paid by a health insurance policy issued by a private provider of such 
insurance, or where a substantial part (more than 50 percent) of the 
cost of their care is paid for by a combination of Medicaid payments and 
payments made under a health insurance policy issued by a private 
provider of such insurance. Persons and couples to whom these reduced 
benefits apply are--
    (1) Those who are otherwise eligible and who are in the medical care 
facility throughout a month. (By throughout a month we mean that you are 
in the medical care facility as of the beginning of the month and stay 
the entire month. If you are in a medical care facility you will be 
considered to have continuously been staying there if you

[[Page 761]]

are transferred from one medical facility to another or if you are 
temporarily absent for a period of not more than 14 consecutive days.); 
and
    (2) Those who reside for part of a month in a public institution and 
for the rest of the month are in a public or private medical care 
facility where Medicaid pays or would have paid (but for the application 
of section 1917(c) of the Act) a substantial part (more than 50 percent) 
of the cost of their care; and
    (3) Children under age 18 who reside for part of a month in a public 
institution and for the rest of the month are in a public or private 
medical care facility where a substantial part (more than 50 percent) of 
the cost of their care is being paid under a health insurance policy 
issued by a private provider or by a combination of Medicaid and 
payments under a health insurance policy issued by a private provider.
    (b) The benefit rates are--(1) Eligible individual. For months after 
June 1988, the benefit rate for an eligible individual with no eligible 
spouse is $30 per month. The benefit payment is figured by subtracting 
the eligible individual's countable income (see subpart K) from the 
benefit rate as explained in Sec. 416.420.
    (2) Eligible couple both of whom are temporarily absent from home in 
medical care facilities as described in Sec. 416.1149(c)(1). For months 
after June 1988, the benefit rate for a couple is $60 a month. The 
benefit payment is figured by subtracting the couple's countable income 
(see subpart K) from the benefit rate as explained in Sec. 416.420.
    (3) Eligible couple with one spouse who is temporarily absent from 
home as described in Sec. 416.1149(c)(1). The couple's benefit rate 
equals:
    (i) For months after June 1988, $30 per month for the spouse in the 
medical care facility; plus
    (ii) The benefit rate for an eligible individual (see Sec. 416.410) 
for the spouse who is not in the medical care facility. The benefit 
payment for each spouse is figured by subtracting each individual's own 
countable income in the appropriate month (see Sec. 416.420) from his 
or her portion of the benefit rate shown in paragraphs (b)(3) (i) and 
(ii).
    (c) Definition. For purposes of this section a medical care facility 
means a hospital (see section 1861(e) of the Act), a skilled nursing 
facility (see section 1861(j) of the Act) or an intermediate care 
facility (see section 1905(c) of the Act).

[47 FR 3106, Jan. 22, 1982, as amended at 50 FR 48571, Nov. 26, 1985; 50 
FR 51514, Dec. 18, 1985; 54 FR 19164, May 4, 1989; 58 FR 64894, Dec. 10, 
1993; 60 FR 16374, Mar. 30, 1995; 61 FR 10278, Mar. 13, 1996; 62 FR 
1056, Jan. 8, 1997]



Sec. 416.415  Amount of benefits; eligible individual is disabled child 
under age 18.

    (a) If you are a disabled child under age 18 and meet the conditions 
in Sec. 416.1165(i) for waiver of deeming, your parents' income will 
not be deemed to you and your benefit rate will be $30 a month.
    (b) If you are a disabled child under age 18 and do not meet the 
conditions in Sec. 416.1165(i) only because your parents' income is not 
high enough to make you ineligible for SSI but deeming of your parents' 
income would result in an SSI benefit less than the amount payable if 
you received benefits as a child under Sec. 416.1165(i), your benefit 
will be the amount payable if you received benefits as a child under 
Sec. 416.1165(i).

[60 FR 361, Jan. 4, 1995]



Sec. 416.420  Determination of benefits; general.

    Benefits shall be determined for each month. The amount of the 
monthly payment will be computed by reducing the benefit rate (see 
Sec. Sec. 416.410, 416.412, 416.413, and 416.414) by the amount of 
countable income as figured under the rules in subpart K of this part. 
The appropriate month's countable income to be used to determine how 
much your benefit payment will be for the current month (the month for 
which a benefit is payable) will be determined as follows:
    (a) General rule. We generally use the amount of your countable 
income in the second month prior to the current month to determine how 
much your benefit amount will be for the current month. We will use the 
benefit rate (see Sec. Sec. 416.410 through 416.414), as increased by a 
cost-of-living adjustment,

[[Page 762]]

in determining the value of the one-third reduction or the presumed 
maximum value, to compute your SSI benefit amount for the first 2 months 
in which the cost-of-living adjustment is in effect. If you have been 
receiving an SSI benefit and a Social Security insurance benefit and the 
latter is increased on the basis of the cost-of-living adjustment or 
because your benefit is recomputed, we will compute the amount of your 
SSI benefit for January, the month of an SSI benefit increase, by 
including in your income the amount by which your Social Security 
benefit in January exceeds the amount of your Social Security benefit in 
November. Similarly, we will compute the amount of your SSI benefit for 
February by including in your income the amount by which your Social 
Security benefit in February exceeds the amount of your Social Security 
benefit in December.

    Example 1. Mrs. X's benefit amount is being determined for September 
(the current month). Mrs. X's countable income in July is used to 
determine the benefit amount for September.
    Example 2. Mr. Z's SSI benefit amount is being determined for 
January (the current month). There has been a cost-of-living increase in 
SSI benefits effective January. Mr. Z's countable income in November is 
used to determine the benefit amount for January. In November, Mr. Z had 
in-kind support and maintenance valued at the presumed maximum value as 
described in Sec. 416.1140(a). We will use the January benefit rate, as 
increased by the COLA, to determine the value of the in-kind support and 
maintenance Mr. Z received in November when we determine Mr. Z's SSI 
benefit amount for January.
    Example 3. Mr. Y's SSI benefit amount is being determined for 
January (the current month). Mr. Y has Social Security income of $100 in 
November, $100 in December, and $105 in January. We find the amount by 
which his Social Security income in January exceeds his Social Security 
income in November ($5) and add that to his income in November to 
determine the SSI benefit amount for January.

    (b) Exceptions to the general rule--(1) First month of initial 
eligibility for payment or the first month of eligibility after a month 
of ineligibility. We use your countable income in the current month to 
determine your benefit amount for the first month you are initially 
eligible for payment of SSI benefits (see Sec. 416.501) or for the 
first month you again become eligible for SSI benefits after at least a 
month of ineligibility. Your payment for a first month of reeligibility 
after at least one-month of ineligibility will be prorated according to 
the number of days in the month that you are eligible beginning with the 
date on which you reattain eligibility.

    Example: Mrs. Y applies for SSI benefits in September and meets the 
requirements for eligibility in that month. (We use Mrs. Y's countable 
income in September to determine if she is eligible for SSI in 
September.) The first month for which she can receive payment is October 
(see Sec. 416.501). We use Mrs. Y's countable income in October to 
determine the amount of her benefit for October. If Mrs. Y had been 
receiving SSI benefits through July, became ineligible for SSI benefits 
in August, and again became eligible for such benefits in September, we 
would use Mrs. Y's countable income in September to determine the amount 
of her benefit for September. In addition, the proration rules discussed 
above would also apply to determine the amount of benefits in September 
in this second situation.

    (2) Second month of initial eligibility for payment or second month 
of eligibility after a month of ineligibility. We use your countable 
income in the first month prior to the current month to determine how 
much your benefit amount will be for the current month when the current 
month is the second month of initial eligibility for payment or the 
second month of reeligibility following at least a month of 
ineligibility. However, if you have been receiving both an SSI benefit 
and a Social Security insurance benefit and the latter is increased on 
the basis of the cost-of-living adjustment or because your benefit is 
recomputed, we will compute the amount of your SSI benefit for January, 
the month of an SSI benefit increase, by including in your income the 
amount by which your Social Security benefit in January exceeds the 
amount of your Social Security benefit in December.

    Example: Mrs. Y was initially eligible for payment of SSI benefits 
in October. Her benefit amount for November will be based on her 
countable income in October (first prior month).

    (3) Third month of initial eligibility for payment or third month of 
eligibility after

[[Page 763]]

a month of ineligibility. We use your countable income according to the 
rule set out in paragraph (a) of this section to determine how much your 
benefit amount will be for the third month of initial eligibility for 
payment or the third month of reeligibility after at least a month of 
ineligibility.

    Example: Mrs. Y was initially eligible for payment of SSI benefits 
in October. Her benefit amount for December will be based on her 
countable income in October (second prior month).

    (4) Income derived from certain assistance payments. We use your 
income in the current month from the programs listed below to determine 
your benefit amount for that same month. The assistance programs are as 
follows:
    (i) Aid to Families with Dependent Children under title IV-A of the 
Social Security Act (the Act);
    (ii) Foster Care under title IV-E of the Act;
    (iii) Refugee Cash Assistance pursuant to section 412(e) of the 
Immigration and Nationality Act;
    (iv) Cuban and Haitian Entrant Assistance pursuant to section 501(a) 
of Pub. L. 96-422; and
    (v) Bureau of Indian Affairs general assistance and child welfare 
assistance pursuant to 42 Stat. 208 as amended.
    (c) Reliable information which is currently available for 
determining benefits. The Commissioner has determined that no reliable 
information exists which is currently available to use in determining 
benefit amounts.
    (1) Reliable information. For purposes of this section reliable 
information means payment information that is maintained on a computer 
system of records by the government agency determining the payments 
(e.g., Department of Veterans Affairs, Office of Personnel Management 
for Federal civil service information and the Railroad Retirement 
Board).
    (2) Currently available information. For purposes of this section 
currently available information means information that is available at 
such time that it permits us to compute and issue a correct benefit for 
the month the information is pertinent.
    (d) Payment of benefits. See subpart E of this part for the rules on 
payments and the minimum monthly benefit (as explained in Sec. 
416.503).

[50 FR 48571, Nov. 26, 1985; 50 FR 51514, Dec. 18, 1985, as amended at 
54 FR 31657, Aug. 1, 1989; 62 FR 30751, June 5, 1997; 63 FR 33546, June 
19, 1998; 64 FR 31973, June 15, 1999]



Sec. 416.421  Determination of benefits; computation of prorated benefits.

    (a) In the month that you reacquire eligibility after a month or 
more of ineligibility (see Sec. 416.1320(b)), your benefit will be 
prorated according to the number of days in the month that you are 
eligible beginning with the date on which you meet all eligibility 
requirements.
    (b) In determining the amount of your benefit for a month in which 
benefits are to be prorated, we first compute the amount of the benefit 
that you would receive for the month as if proration did not apply. We 
then determine the date on which you meet all factors of eligibility. 
(The income limits must be met based on the entire month and the 
resource limit must be as of the first day of the month.) We then count 
the number of days in the month beginning with the day on which you 
first meet all factors of eligibility through the end of the month. We 
then multiply the amount of your unprorated benefit for the month by the 
number of days for which you are eligible for benefits and divide that 
figure by the number of days in the month for which your benefit is 
being determined. The result is the amount of the benefit that you are 
due for the month in which benefits are to be prorated.

[51 FR 13493, Apr. 14, 1986, as amended at 64 FR 31973, June 15, 1999]



Sec. 416.426  Change in status involving an individual; ineligibility 
occurs.

    Whenever benefits are suspended or terminated for an individual 
because of ineligibility, no benefit is payable for that month.

[50 FR 48571, Nov. 26, 1985]

[[Page 764]]



Sec. 416.428  Eligible individual without an eligible spouse has an 
essential person in his home.

    When an eligible individual without an eligible spouse has an 
essential person (as defined in Sec. 416.222 of this part) in his home, 
the amount by which his rate of payment is increased is determined in 
accordance with Sec. Sec. 416.220 through 416.223 and with 416.413 of 
this part. The essential person's income is deemed to be that of the 
eligible individual, and the provisions of Sec. Sec. 416.401 through 
416.426 will apply in determining the benefit of such eligible 
individual.

[39 FR 23053, June 26, 1974, as amended at 51 FR 10616, Mar. 28, 1986; 
65 FR 16814, Mar. 30, 2000]



Sec. 416.430  Eligible individual with eligible spouse; essential 
person(s) present.

    (a) When an eligible individual with an eligible spouse has an 
essential person (Sec. 416.222) living in his or her home, or when both 
such persons each has an essential person, the increase in the rate of 
payment is determined in accordance with Sec. Sec. 416.413 and 416.532. 
The income of the essential person(s) is included in the income of the 
couple and the payment due will be equally divided between each member 
of the eligible couple.
    (b) When one member of an eligible couple is temporarily absent in 
accordance with Sec. 416.1149(c)(1) and Sec. 416.222(c) and either one 
or both individuals has an essential person, add the essential person 
increment to the benefit rate for the member of the couple who is 
actually residing with the essential person and include the income of 
the essential person in that member's income. See Sec. 416.414(b)(3).

[60 FR 16375, Mar. 30, 1995]



Sec. 416.432  Change in status involving a couple; eligibility continues.

    When there is a change in status which involves the formation or 
dissolution of an eligible couple (for example, marriage, divorce), a 
redetermination of the benefit amount shall be made for the months 
subsequent to the month of such formation or dissolution of the couple 
in accordance with the following rules:
    (a) When there is a dissolution of an eligible couple and each 
member of the couple becomes an eligible individual, the benefit amount 
for each person shall be determined individually for each month 
beginning with the first month after the month in which the dissolution 
occurs. This shall be done by determining the applicable benefit rate 
for an eligible individual with no eligible spouse according to 
Sec. Sec. 416.410 or 416.413 and 416.414 and applying Sec. 416.420(a). 
See Sec. 416.1147a for the applicable income rules when in-kind support 
and maintenance is involved.
    (b) When two eligible individuals become an eligible couple, the 
benefit amount will be determined for the couple beginning with the 
first month following the month of the change. This shall be done by 
determining which benefit rate to use for an eligible couple according 
to Sec. Sec. 416.412 or 416.413 and 416.414 and applying the 
requirements in Sec. 416.420(a).

[60 FR 16375, Mar. 30, 1995]



Sec. 416.435  Change in status involving a couple; ineligibility occurs.

    Whenever benefits are suspended or terminated for both members of a 
couple because of ineligibility, no benefits are payable for that month. 
However, when benefits are suspended or terminated for one member of a 
couple because of ineligibility for a month, the member who remains 
eligible assumes the eligibility status of an eligible individual 
without an eligible spouse for such month and the benefit rate and 
payment amount will be determined as an eligible individual for the 
month.

[50 FR 48572, Nov. 26, 1985]



     Subpart E_Payment of Benefits, Overpayments, and Underpayments

    Authority: Secs. 702(a)(5), 1147, 1601, 1602, 1611(c) and (e), and 
1631(a)-(d) and (g) of the Social Security Act (42 U.S.C. 902(a)(5), 
1320b-17, 1381, 1381a, 1382(c) and (e), and 1383(a)-(d) and (g)); 31 
U.S.C. 3720A.

[[Page 765]]



Sec. 416.501  Payment of benefits: General.

    Payment of SSI benefits will be made for the month after the month 
of initial eligibility and for each subsequent month provided all 
requirements for eligibility (see Sec. 416.202) and payment (see Sec. 
416.420) are met. In the month the individual re-establishes eligibility 
after at least a month of ineligibility, benefits are paid for such a 
month beginning with the date in the month on which the individual meets 
all eligibility requirements. In some months, while the factors of 
eligibility based on the current month may be established, it is 
possible to receive no payment for that month if the factors of 
eligibility for payment are not met. Payment of benefits may not be made 
for any period that precedes the first month following the date on which 
an application is filed or, if later, the first month following the date 
all conditions for eligibility are met.

[64 FR 31973, June 15, 1999]



Sec. 416.502  Manner of payment.

    For the month an individual reestablishes eligibility after a month 
of ineligibility, an SSI payment will be made on or after the day of the 
month on which the individual becomes reeligible to receive benefits. In 
all other months, a payment will be made on the first day of each month 
and represents payment for that month. If the first day of the month 
falls on a Saturday, Sunday, or legal holiday, payments will be made on 
the first day preceding such day which is not a Saturday, Sunday, or 
legal holiday. Unless otherwise indicated, the monthly amount for an 
eligible couple will be divided equally and paid separately to each 
individual. Section 416.520 explains emergency advance payments.

[55 FR 4422, Feb. 8, 1990, as amended at 64 FR 31974, June 15, 1999]



Sec. 416.503  Minimum monthly benefit amount.

    If you receive an SSI benefit that does not include a State 
supplement the minimum monthly SSI benefit amount payable is $1. When an 
SSI benefit amount of less than $1 is payable, the benefit amount will 
be increased to $1. If you receive an SSI benefit that does include a 
State supplement and the SSI benefit amount is less than $1 but when 
added to the State supplement exceeds $1, the SSI benefit amount will 
not be increased to $1. Rather, we pay the actual amount of the SSI 
benefit plus the State supplement.

[50 FR 48572, Nov. 26, 1985]



Sec. 416.520  Emergency advance payments.

    (a) General. We may pay a one-time emergency advance payment to an 
individual initially applying for benefits who is presumptively eligible 
for SSI benefits and who has a financial emergency. The amount of this 
payment cannot exceed the Federal benefit rate (see Sec. Sec. 416.410 
through 416.414) plus the federally administered State supplementary 
payment, if any (see Sec. 416.2020), which apply for the month for 
which the payment is made. Emergency advance payment is defined in 
paragraph (b)(1) of this section. The actual payment amount is computed 
as explained in paragraph (c) of this section. An emergency advance 
payment is an advance of benefits expected to be due that is recoverable 
as explained in paragraphs (d) and (e) of this section.
    (b) Definition of terms. For purposes of this subpart--
    (1) Emergency advance payment means a direct, expedited payment by a 
Social Security Administration field office to an individual or spouse 
who is initially applying (see paragraph (b)(3) of this section), who is 
at least presumptively eligible (see paragraph (b)(4) of this section), 
and who has a financial emergency (see paragraph (b)(2) of this 
section).
    (2) Financial emergency is the financial status of an individual who 
has insufficient income or resources to meet an immediate threat to 
health or safety, such as the lack of food, clothing, shelter, or 
medical care.
    (3) Initially applying means the filing of an application (see Sec. 
416.310) which requires an initial determination of eligibility, such as 
the first application for SSI benefits or an application filed 
subsequent to a prior denial or termination of a prior period of 
eligibility for payment. An individual or spouse who previously received 
an emergency

[[Page 766]]

advance payment in a prior period of eligibility which terminated may 
again receive such a payment if he or she reapplies for SSI and meets 
the other conditions for an emergency advance payment under this 
section.
    (4) Presumptively eligible is the status of an individual or spouse 
who presents strong evidence of the likelihood of meeting all of the 
requirements for eligibility including the income and resources tests of 
eligibility (see subparts K and L of this part), categorical eligibility 
(age, disability, or blindness), and technical eligibility (United 
States residency and citizenship or alien status--see subpart P of this 
part).
    (c) Computation of payment amount. To compute the emergency advance 
payment amount, the maximum amount described in paragraph (a) of this 
section is compared to both the expected amount payable for the month 
for which the payment is made (see paragraph (c)(1) of this section) and 
the amount the applicant requested to meet the emergency. The actual 
payment amount is no more than the least of these three amounts.
    (1) In computing the emergency advance payment amount, we apply the 
monthly income counting rules appropriate for the month for which the 
advance is paid, as explained in Sec. 416.420. Generally, the month for 
which the advance is paid is the month in which it is paid. However, if 
the advance is paid in the month the application is filed, the month for 
which the advance is paid is considered to be the first month of 
expected eligibility for payment of benefits.
    (2) For a couple, we separately compute each member's emergency 
advance payment amount.
    (d) Recovery of emergency advance payment where eligibility is 
established. When an individual or spouse is determined to be eligible 
and retroactive payments are due, any emergency advance payment amounts 
are recovered in full from the first payment(s) certified to the United 
States Treasury. However, if no retroactive payments are due and 
benefits are only due in future months, any emergency advance payment 
amounts are recovered through proportionate reductions in those benefits 
over a period of not more than 6 months. (See paragraph (e) of this 
section if the individual or spouse is determined to be ineligible.)
    (e) Disposition of emergency advance payments where eligibility is 
not established. If a presumptively eligible individual (or spouse) or 
couple is determined to be ineligible, the emergency advance payment 
constitutes a recoverable overpayment. (See the exception in Sec. 
416.537(b)(1) when payment is made on the basis of presumptive 
disability or presumptive blindness.)

[55 FR 4422, Feb. 8, 1990; 55 FR 7411, Mar. 1, 1990, as amended at 64 FR 
31974, June 15, 1999]



Sec. 416.525  Reimbursement to States for interim assistance payments.

    Notwithstanding Sec. 416.542, the Social Security Administration 
may, in accordance with the provisions of subpart S of this part, 
withhold supplemental security income benefits due with respect to an 
individual and may pay to a State (or political subdivision thereof, if 
agreed to by the Social Security Administration and the State) from the 
benefits withheld, an amount sufficient to reimburse the State (or 
political subdivision) for interim assistance furnished on behalf of the 
individual.

[41 FR 20872, May 21, 1976]



Sec. 416.532  Method of payment when the essential person resides with 
more than one eligible person.

    (a) When an essential person lives with an eligible individual and 
an eligible spouse, the State may report that the person is essential to 
one or both members of the couple. In either event, the income and 
resources of the essential person will be considered to be available to 
the family unit. The payment increment attributable to the essential 
person will be added to the rate of payment for the couple, the 
countable income subtracted, and the resulting total benefit divided 
equally between the eligible individual and the eligible spouse.
    (b) Where the essential person lives with two eligible individuals 
(as opposed to an eligible individual and eligible spouse), one of whom 
has been designated the qualified individual, the income and resources 
of the essential person will be considered to be available only to the 
qualified individual (as

[[Page 767]]

defined in Sec. 416.221) and any increase in payment will be made to 
such qualified individual.
    (c) In those instances where the State has designated the essential 
person as essential to two or more eligible individuals so that both are 
qualified individuals, the payment increment attributable to the 
essential person must be shared equally, and the income and resources of 
the essential person divided and counted equally against each qualified 
individual.
    (d) When an essential person lives with an eligible individual and 
an eligible spouse (or two or more eligible individuals) only one of 
whom is the qualified individual, essential person status is not 
automatically retained upon the death of the qualified individual or 
upon the separation from the qualified individual. A review of the State 
records established on or before December 31, 1973, will provide the 
basis for a determination as to whether the remaining eligible 
individual or eligible spouse meets the definition of qualified 
individual. Payment in consideration of the essential person will be 
dependent on whether the essential person continues to live with a 
qualified individual. If the essential person does reside with a 
qualified individual, status as an essential person is retained.

[39 FR 33796, Sept. 20, 1974, as amended at 50 FR 48572, Nov. 26, 1985; 
51 FR 10616, Mar. 28, 1986; 60 FR 16375, Mar. 30, 1995]



Sec. 416.533  Transfer or assignment of benefits.

    Except as provided in Sec. 416.525 and subpart S of this part, the 
Social Security Administration will not certify payment of supplemental 
security income benefits to a transferee or assignee of a person 
eligible for such benefits under the Act or of a person qualified for 
payment under Sec. 416.542. The Social Security Administration shall 
not certify payment of supplemental security income benefits to any 
person claiming such payment by virtue of an execution, levy, 
attachment, garnishment, or other legal process or by virtue of any 
bankruptcy or insolvency proceeding against or affecting the person 
eligible for benefits under the Act.

[41 FR 20873, May 21, 1976, as amended at 58 FR 52912, Oct. 13, 1993]



Sec. 416.535  Underpayments and overpayments.

    (a) General. When an individual receives SSI benefits of less than 
the correct amount, adjustment is effected as described in Sec. Sec. 
416.542 and 416.543, and the additional rules in Sec. 416.545 may 
apply. When an individual receives more than the correct amount of SSI 
benefits, adjustment is effected as described in Sec. 416.570. Refund 
of overpayments is discussed in Sec. 416.560 and waiver of recovery of 
overpayments is discussed in Sec. Sec. 416.550 through 416.555.
    (b) Additional rules for individuals whose drug addiction or 
alcoholism is a contributing factor material to the determination of 
disability. When an individual whose drug addiction or alcoholism is a 
contributing factor material to the determination of disability, as 
described in Sec. 416.935, receives less than the correct amount of SSI 
benefits, adjustment is effected as described in Sec. Sec. 416.542 and 
416.543 and the additional rule described in Sec. 416.544 applies.
    (c) Additional rules for eligible individuals under age 18 who have 
a representative payee. When an eligible individual under age 18 has a 
representative payee and receives less than the correct amount of SSI 
benefits, the additional rules in Sec. 416.546 may apply.
    (d) Additional rules for eligible aliens and for their sponsors. 
When an individual who is an alien is overpaid SSI benefits during the 
3-year period in which deeming from a sponsor applies (see Sec. 
416.1160(a)(3)), the sponsor and the alien may be jointly and 
individually liable for repayment of the overpayment. The sponsor is 
liable for the overpayment if he or she failed to report correct 
information that affected the alien's eligibility or payment amount. 
This means information about the income and resources of the sponsor 
and, if they live together, of the sponsor's spouse. However, the 
sponsor is not liable for repayment if the sponsor was without fault or 
had good cause for failing to report correctly. A special rule that 
applies to adjustment of other benefits due the alien and the

[[Page 768]]

sponsor to recover an overpayment is described in Sec. 416.570(b).
    (e) Sponsor without fault or good cause exists for failure to 
report. Without fault or good cause will be found to exist if the 
failure to report was not willful. To establish willful failure, the 
evidence must show that the sponsor knowingly failed to supply pertinent 
information regarding his or her income and resources.

[52 FR 8881, Mar. 20, 1987, as amended at 60 FR 8149, Feb. 10, 1995; 61 
FR 67205, Dec. 20, 1996]



Sec. 416.536  Underpayments--defined.

    An underpayment can occur only with respect to a period for which a 
recipient filed an application, if required, for benefits and met all 
conditions of eligibility for benefits. An underpayment, including any 
amounts of State supplementary payments which are due and administered 
by the Social Security Administration, is:
    (a) Nonpayment, where payment was due but was not made; or
    (b) Payment of less than the amount due. For purposes of this 
section, payment has been made when certified by the Social Security 
Administration to the Department of the Treasury, except that payment 
has not been made where payment has not been received by the designated 
payee, or where payment was returned.

[58 FR 52912, Oct. 13, 1993]



Sec. 416.537  Overpayments--defined.

    (a) Overpayments. As used in this subpart, the term overpayment 
means payment of more than the amount due for any period, including any 
amounts of State supplementary payments which are due and administered 
by the Social Security Administration. For purposes of this section, 
payment has been made when certified by the Social Security 
Administration to the Department of the Treasury, except that payment 
has not been made where payment has not been received by the designated 
payee, or where payment was returned. When a payment of more than the 
amount due is made by direct deposit to a financial institution to or on 
behalf of an individual who has died, and the financial institution 
credits the payment to a joint account of the deceased individual and 
another person who is the surviving spouse of the deceased individual 
and was eligible for a payment under title XVI of the Act (including any 
State supplementation payment paid by the Commissioner) as an eligible 
spouse (or as either member of an eligible couple) for the month in 
which the deceased individual died, the amount of the payment in excess 
of the correct amount will be an overpayment to the surviving spouse.
    (b) Actions which are not overpayments--(1) Presumptive disability 
and presumptive blindness. Any payment made for any month, including an 
advance payment of benefits under Sec. 416.520, is not an overpayment 
to the extent it meets the criteria for payment under Sec. 416.931. 
Payments made on the basis of presumptive disability or presumptive 
blindness will not be considered overpayments where ineligibility is 
determined because the individual or eligible spouse is not disabled or 
blind. However, where it is determined that all or a portion of the 
presumptive payments made are incorrect for reasons other than 
disability or blindness, these incorrect payments are considered 
overpayments (as defined in paragraph (a) of this section). Overpayments 
may occur, for example, when the person who received payments on the 
basis of presumptive disability or presumptive blindness is determined 
to be ineligible for all or any part of the payments because of excess 
resources or is determined to have received excess payment for those 
months based on an incorrect estimate of income.
    (2) Penalty. The imposition of a penalty pursuant to Sec. 416.724 
is not an adjustment of an overpayment and is imposed only against any 
amount due the penalized recipient, or, after death, any amount due the 
deceased which otherwise would be paid to a survivor as defined in Sec. 
416.542.

[40 FR 47763, Oct. 10, 1975, as amended at 43 FR 17354, Apr. 24, 1978; 
50 FR 48572, Nov. 26, 1985; 55 FR 7313, Mar. 1, 1990; 58 FR 52912, Oct. 
13, 1993; 62 FR 38454, July 18, 1997]

[[Page 769]]



Sec. 416.538  Amount of underpayment or overpayment.

    (a) General. The amount of an underpayment or overpayment is the 
difference between the amount paid to a recipient and the amount of 
payment actually due such recipient for a given period. An underpayment 
or overpayment period begins with the first month for which there is a 
difference between the amount paid and the amount actually due for that 
month. The period ends with the month the initial determination of 
overpayment or underpayment is made. With respect to the period 
established, there can be no underpayment to a recipient or his or her 
eligible spouse if more than the correct amount payable under title XVI 
of the Act has been paid, whether or not adjustment or recovery of any 
overpayment for that period to the recipient or his or her eligible 
spouse has been waived under the provisions of Sec. Sec. 416.550 
through 416.556. A subsequent initial determination of overpayment will 
require no change with respect to a prior determination of overpayment 
or to the period relating to such determination to the extent that the 
basis of the prior overpayment remains the same.
    (b) Limited delay in payment of underpaid amount to recipient or 
eligible surviving spouse. Where an apparent overpayment has been 
detected but determination of the overpayment has not been made (see 
Sec. 416.558(a)), a determination of an underpayment and payment of an 
underpaid amount which is otherwise due cannot be delayed to a recipient 
or eligible surviving spouse unless a determination with respect to the 
apparent overpayment can be made before the close of the month following 
the month in which the underpaid amount was discovered.
    (c) Delay in payment of underpaid amount to ineligible individual or 
survivor. A determination of an underpayment and payment of an underpaid 
amount which is otherwise due an individual who is no longer eligible 
for SSI or is payable to a survivor pursuant to Sec. 416.542(b) will be 
delayed for the resolution of all overpayments, incorrect payments, 
adjustments, and penalties.
    (d) Limited delay in payment of underpaid amount to eligible 
individual under age 18 who has a representative payee. When the 
representative payee of an eligible individual under age 18 is required 
to establish a dedicated account pursuant to Sec. Sec. 416.546 and 
416.640(e), payment of past-due benefits which are otherwise due will be 
delayed until the representative payee has established the dedicated 
account as described in Sec. 416.640(e). Once the account is 
established, SSA will deposit the past-due benefits payable directly to 
the account.
    (e) Reduction of underpaid amount. Any underpayment amount otherwise 
payable to a survivor on account of a deceased recipient is reduced by 
the amount of any outstanding penalty imposed against the benefits 
payable to such deceased recipient or survivor under section 1631(e) of 
the Act (see Sec. 416.537(b)(2)).

[58 FR 52912, Oct. 13, 1993, as amended at 61 FR 67205, Dec. 20, 1996]



Sec. 416.542  Underpayments--to whom underpaid amount is payable.

    (a) Underpaid recipient alive--underpayment payable. (1) If an 
underpaid recipient is alive, the amount of any underpayment due him or 
her will be paid to him or her in a separate payment or by increasing 
the amount of his or her monthly payment. If the underpaid amount meets 
the formula in Sec. 416.545 and one of the exceptions does not apply, 
the amount of any past-due benefits will be paid in installments.
    (2) If an underpaid recipient whose drug addiction or alcoholism is 
a contributing factor material to the determination of disability (as 
described in Sec. 416.935) is alive, the amount of any underpayment due 
the recipient will be paid through his or her representative payee in 
installment payments. No underpayment may be paid directly to the 
recipient. If the recipient dies before we have paid all benefits due 
through his or her representative payee, we will follow the rules which 
apply to underpayments for the payment of any remaining amounts due to 
any eligible survivor of a deceased recipient as described in paragraph 
(b) of this section.
    (3) If an underpaid individual under age 18 is alive and has a 
representative payee and is due past-due benefits

[[Page 770]]

which meet the formula in Sec. 416.546, SSA will pay the past-due 
benefits into the dedicated account described in Sec. 416.640(e). If 
the underpaid individual dies before the benefits have been deposited 
into the account, we will follow the rules which apply to underpayments 
for the payment of any unpaid amount due to any eligible survivor of a 
deceased individual as described in paragraph (b) of this section.
    (b) Underpaid recipient deceased--underpaid amount payable to 
survivor. (1) If a recipient dies before we have paid all benefits due 
or before the recipient endorses the check for the correct payment, we 
may pay the amount due to the deceased recipient's surviving eligible 
spouse or to his or her surviving spouse who was living with the 
underpaid recipient within the meaning of section 202(i) of the Act (see 
Sec. 404.347) in the month he or she died or within 6 months 
immediately preceding the month of death.
    (2) If the deceased underpaid recipient was a disabled or blind 
child when the underpayment occurred, the underpaid amount may be paid 
to the natural or adoptive parent(s) of the underpaid recipient who 
lived with the underpaid recipient in the month he or she died or within 
the 6 months preceding death. We consider the underpaid recipient to 
have been living with the natural or adoptive parent(s) in the period if 
the underpaid recipient satisfies the ``living with'' criteria we use 
when applying Sec. 416.1165 or would have satisfied the criteria had 
his or her death not precluded the application of such criteria 
throughout a month.
    (3) If the deceased individual was living with his or her spouse 
within the meaning of section 202(i) of the Act in the month of death or 
within 6 months immediately preceding the month of death, and was also 
living with his or her natural or adoptive parent(s) in the month of 
death or within 6 months preceding the month of death, we will pay the 
parent(s) any SSI underpayment due the deceased individual for months he 
or she was a blind or disabled child and we will pay the spouse any SSI 
underpayment due the deceased individual for months he or she no longer 
met the definition of ``child'' as set forth at Sec. 416.1856. If no 
parent(s) can be paid in such cases due to death or other reason, then 
we will pay the SSI underpayment due the deceased individual for months 
he or she was a blind or disabled child to the spouse.
    (4) No benefits may be paid to the estate of any underpaid 
recipient, the estate of the surviving spouse, the estate of a parent, 
or to any survivor other than those listed in paragraph (b) (1) through 
(3) of this section. Payment of an underpaid amount to an ineligible 
spouse or surviving parent(s) may only be made for benefits payable for 
months after May 1986. Payment to surviving parent(s) may be made only 
for months of eligibility during which the deceased underpaid recipient 
was a child. We will not pay benefits to a survivor other than the 
eligible spouse who requests payment of an underpaid amount more than 24 
months after the month of the individual's death.
    (c) Underpaid recipient's death caused by an intentional act. No 
benefits due the deceased individual may be paid to a survivor found 
guilty by a court of competent jurisdiction of intentionally causing the 
underpaid recipient's death.

[40 FR 47763, Oct. 10, 1975, as amended at 58 FR 52913, Oct. 13, 1993; 
60 FR 8149, Feb. 10, 1995; 61 FR 67206, Dec. 20, 1996]



Sec. 416.543  Underpayments--applied to reduce overpayments.

    We apply any underpayment due an individual to reduce any 
overpayment to that individual that we determine to exist (see Sec. 
416.558) for a different period, unless we have waived recovery of the 
overpayment under the provisions of Sec. Sec. 416.550 through 416.556. 
Similarly, when an underpaid recipient dies, we first apply any amounts 
due the deceased recipient that would be payable to a survivor under 
Sec. 416.542(b) against any overpayment to the survivor unless we have 
waived recovery of such overpayment under the provisions of Sec. Sec. 
416.550 through 416.556.

    Example: A disabled child, eligible for payments under title XVI, 
and his parent, also an eligible individual receiving payments under 
title XVI, were living together. The disabled child dies at a time when 
he was underpaid $100. The deceased child's underpaid benefit is payable 
to the surviving parent. However, since the parent must repay an SSI

[[Page 771]]

overpayment of $225 on his own record, the $100 underpayment will be 
applied to reduce the parent's own overpayment to $125.

[58 FR 52913, Oct. 13, 1993]



Sec. 416.544  Paying benefits in installments: Drug addiction or alcoholism.

    (a) General. For disabled recipients who receive benefit payments 
through a representative payee because drug addiction or alcoholism is a 
contributing factor material to the determination of disability, certain 
amounts due the recipient for a past period will be paid in 
installments. The amounts subject to payment in installments include:
    (1) Benefits due but unpaid which accrued prior to the month payment 
was effectuated;
    (2) Benefits due but unpaid which accrued during a period of 
suspension for which the recipient was subsequently determined to have 
been eligible; and
    (3) Any adjustment to benefits which results in an accrual of unpaid 
benefits.
    (b) Installment formula. Except as provided in paragraph (c) of this 
section, the amount of the installment payment in any month is limited 
so that the sum of (1) the amount due for a past period (and payable 
under paragraph (a) of this section) paid in such month and (2) the 
amount of any current benefit due cannot exceed twice the Federal 
Benefit Rate plus any federally-administered State supplementation 
payable to an eligible individual for the preceding month.
    (c) Exception to installment limitation. An exception to the 
installment payment limitation in paragraph (b) of this section can be 
granted for the first month in which a recipient accrues benefit amounts 
subject to payment in installments if the recipient has unpaid housing 
expenses which result in a high risk of homelessness for the recipient. 
In that case, the benefit payment may be increased by the amount of the 
unpaid housing expenses so long as that increase does not exceed the 
amount of benefits which accrued during the most recent period of 
nonpayment. We consider a person to be at risk of homelessness if 
continued nonpayment of the outstanding housing expenses is likely to 
result in the person losing his or her place to live or if past 
nonpayment of housing expenses has resulted in the person having no 
appropriate personal place to live. In determining whether this 
exception applies, we will ask for evidence of outstanding housing 
expenses that shows that the person is likely to lose or has already 
lost his or her place to live. For purposes of this section, 
homelessness is the state of not being under the control of any public 
institution and having no appropriate personal place to live. Housing 
expenses include charges for all items required to maintain shelter (for 
example, mortgage payments, rent, heating fuel, and electricity).
    (d) Payment through a representative payee. If the recipient does 
not have a representative payee, payment of amounts subject to 
installments cannot be made until a representative payee is selected.
    (e) Underpaid recipient no longer eligible. In the case of a 
recipient who is no longer currently eligible for monthly payments, but 
to whom amounts defined in paragraph (a) of this section are still 
owing, we will continue to make installment payments of such benefits 
through a representative payee.
    (f) Recipient currently not receiving SSI benefits because of 
suspension for noncompliance with treatment. If a recipient is currently 
not receiving SSI benefits because his or her benefits have been 
suspended for noncompliance with treatment (as defined in Sec. 
416.936), the payment of amounts under paragraph (a) of this section 
will stop until the recipient has demonstrated compliance with treatment 
as described in Sec. 416.1326 and will again commence with the first 
month the recipient begins to receive benefits.
    (g) Underpaid recipient deceased. Upon the death of a recipient, any 
remaining unpaid amounts as defined in paragraph (a) of this section 
will be treated as underpayments in accordance with Sec. 416.542(b).

[60 FR 8150, Feb. 10, 1995]



Sec. 416.545   Paying large past-due benefits in installments.

    (a) General. Except as described in paragraph (c) of this section, 
when an

[[Page 772]]

individual is eligible for past-due benefits in an amount which meets 
the formula in paragraph (b) of this section, payment of these benefits 
must be made in installments. The amounts subject to payment in 
installments include:
    (1) Benefits due but unpaid which accrued prior to the month payment 
was effectuated;
    (2) Benefits due but unpaid which accrued during a period of 
suspension for which the recipient was subsequently determined to have 
been eligible; and
    (3) Any adjustment to benefits which results in an accrual of unpaid 
benefits.
    (b) Installment Formula. Installment payments must be made if the 
amount of the past-due benefits including any federally administered 
State supplementation, after applying Sec. 416.525, equals or exceeds 
12 times the Federal Benefit Rate plus any federally administered State 
supplementation payable in a month to an eligible individual (or 
eligible individual and eligible spouse). These installment payments 
will be paid in not more than 3 installments and made at 6-month 
intervals. Except as described in paragraph (d) of this section, the 
amount of each of the first and second installment payments may not 
exceed the threshold amount of 12 times the maximum monthly benefit 
payable as described in this paragraph.
    (c) Exception--When installments payments are not required. 
Installment payments are not required and the rules in this section do 
not apply if, when the determination of an underpayment is made, the 
individual is (1) afflicted with a medically determinable impairment 
which is expected to result in death within 12 months, or (2) ineligible 
for benefits and we determine that he or she is likely to remain 
ineligible for the next 12 months.
    (d) Exception--Increased first and second installment payments. (1) 
The amount of the first and second installment payments may be increased 
by the total amount of the following debts and expenses:
    (i) Outstanding debt for food, clothing, shelter, or medically 
necessary services, supplies or equipment, or medicine; or
    (ii) Current or anticipated expenses in the near future for 
medically necessary services, supplies or equipment, or medicine, or for 
the purchase of a home.
    (2) The increase described in paragraph (d)(1) of this section only 
applies to debts or expenses that are not subject to reimbursement by a 
public assistance program, the Secretary of Health and Human Services 
under title XVIII of the Act, a State plan approved under title XIX of 
the Act, or any private entity that is legally liable for payment in 
accordance with an insurance policy, pre-paid plan, or other 
arrangement.

[61 FR 67206, Dec. 20, 1996]



Sec. 416.546  Payment into dedicated accounts of past-due benefits for 
eligible individuals under age 18 who have a representative payee.

    or purposes of this section, amounts subject to payment into 
dedicated accounts (see Sec. 416.640(e)) include the amounts described 
in Sec. 416.545(a) (1), (2), and (3).
    (a) For an eligible individual under age 18 who has a representative 
payee and who is determined to be eligible for past-due benefits 
(including any federally administered State supplementation) in an 
amount which (after Sec. 416.525 is applied) exceeds six times the 
Federal Benefit Rate plus any federally administered State 
supplementation payable in a month, this unpaid amount must be paid into 
the dedicated account established and maintained as described in Sec. 
416.640(e).
    (b) After the account is established, the representative payee may 
(but is not required to) deposit into the account any subsequent past-
due benefits (including any federally administered State 
supplementation) which are in an amount less than that specified in 
paragraph (a) of this section or any other funds representing an SSI 
underpayment which is equal to or exceeds the maximum Federal Benefit 
Rate.
    (c) If the underpaid individual dies before all the benefits due 
have been deposited into the dedicated account, we will follow the rules 
which apply to underpayments for the payment of any unpaid amount due to 
any eligible survivor as described in Sec. 416.542(b).

[61 FR 67206, Dec. 20, 1996]

[[Page 773]]



Sec. 416.550  Waiver of adjustment or recovery--when applicable.

    Waiver of adjustment or recovery of an overpayment of SSI benefits 
may be granted when (EXCEPTION: This section does not apply to a sponsor 
of an alien):
    (a) The overpaid individual was without fault in connection with an 
overpayment, and
    (b) Adjustment or recovery of such overpayment would either:
    (1) Defeat the purpose of title XVI, or
    (2) Be against equity and good conscience, or
    (3) Impede efficient or effective administration of title XVI due to 
the small amount involved.

[52 FR 8882, Mar. 20, 1987, as amended at 53 FR 16543, May 10, 1988]



Sec. 416.551  Waiver of adjustment or recovery--effect of.

    Waiver of adjustment or recovery of an overpayment from the overpaid 
person himself (or, after his death, from his estate) frees him and his 
eligible spouse from the obligation to repay the amount of the 
overpayment covered by the waiver. Waiver of adjustment or recovery of 
an overpayment from anyone other than the overpaid person himself or his 
estate (e.g., a surviving eligible spouse) does not preclude adjustment 
or recovery against the overpaid person or his estate.

    Example: The recipient was overpaid $390. It was found that the 
overpaid recipient was eligible for waiver of adjustment or recovery of 
$260 of that amount, and such action was taken. Only $130 of the 
overpayment remained to be recovered by adjustment, refund, or the like.

[40 FR 47763, Oct. 10, 1975]



Sec. 416.552  Waiver of adjustment or recovery--without fault.

    Without fault relates only to the situation of the individual 
seeking relief from adjustment or recovery of an overpayment. The 
overpaid individual (and any other individual from whom the Social 
Security Administration seeks to recover the overpayment) is not 
relieved of liability and is not without fault solely because the Social 
Security Administration may have been at fault in making the 
overpayment. In determining whether an individual is without fault, the 
fault of the overpaid person and the fault of the individual seeking 
relief under the waiver provision are considered. Whether an individual 
is without fault depends on all the pertinent circumstances surrounding 
the overpayment in the particular case. The Social Security 
Administration considers the individual's understanding of the reporting 
requirements, the agreement to report events affecting payments, 
knowledge of the occurrence of events that should have been reported, 
efforts to comply with the reporting requirements, opportunities to 
comply with the reporting requirements, understanding of the obligation 
to return checks which were not due, and ability to comply with the 
reporting requirements (e.g., age, comprehension, memory, physical and 
mental condition). In determining whether an individual is without fault 
based on a consideration of these factors, the Social Security 
Administration will take into account any physical, mental, educational, 
or linguistic limitations (including any lack of facility with the 
English language) the individual may have. Although the finding depends 
on all of the circumstances in the particular case, an individual will 
be found to have been at fault in connection with an overpayment when an 
incorrect payment resulted from one of the following:
    (a) Failure to furnish information which the individual knew or 
should have known was material;
    (b) An incorrect statement made by the individual which he knew or 
should have known was incorrect (this includes the individual's 
furnishing his opinion or conclusion when he was asked for facts), or
    (c) The individual did not return a payment which he knew or could 
have been expected to know was incorrect.

[40 FR 47763, Oct. 10, 1975, as amended at 59 FR 1636, Jan. 12, 1994]



Sec. 416.553  Waiver of adjustment or recovery--defeat the purpose of 
the supplemental security income program.

    We will waive adjustment or recovery of an overpayment when an 
individual

[[Page 774]]

on whose behalf waiver is being considered is without fault (as defined 
in Sec. 416.552) and adjustment or recovery of the overpayment would 
defeat the purpose of the supplemental security income program.
    (a) General rule. We consider adjustment or recovery of an 
overpayment to defeat the purpose of the supplemental security income 
(SSI) program if the individual's income and resources are needed for 
ordinary and necessary living expenses under the criteria set out in 
Sec. 404.508(a) of this chapter
    (b) Alternative criteria for individuals currently eligible for SSI 
benefits. We consider an individual or couple currently eligible for SSI 
benefits to have met the test in paragraph (a) of this section if the 
individual's or couple's current monthly income (that is, the income 
upon which the individual's or couple's eligibility for the current 
month is determined) does not exceed--
    (1) The applicable Federal monthly benefit rate for the month in 
which the determination of waiver is made (see subpart D of this part); 
plus
    (2) The $20 monthly general income exclusion described in Sec. Sec. 
416.1112(c)(3) and 416.1124(c)(10); plus
    (3) The monthly earned income exclusion described in Sec. 
416.1112(c)(4); plus
    (4) The applicable State supplementary payment, if any (see subpart 
T of this part) for the month in which determination of waiver is made.

For those SSI recipients whose income exceeds these criteria, we follow 
the general rule in paragraph (a) of this section.

[45 FR 72649, Nov. 3, 1980, as amended at 50 FR 48573, Nov. 26, 1985]



Sec. 416.554  Waiver of adjustment or recovery--against equity and good 
conscience.

    We will waive adjustment or recovery of an overpayment when an 
individual on whose behalf waiver is being considered is without fault 
(as defined in Sec. 416.552) and adjustment or recovery would be 
against equity and good conscience. Adjustment or recovery is considered 
to be against equity and good conscience if an individual changed his or 
her position for the worse or relinquished a valuable right because of 
reliance upon a notice that payment would be made or because of the 
incorrect payment itself. In addition, adjustment or recovery is 
considered to be against equity and good conscience for an individual 
who is a member of an eligible couple that is legally separated and/or 
living apart for that part of an overpayment not received, but subject 
to recovery under Sec. 416.570.

    Example 1: Upon being notified that he was eligible for supplemental 
security income payments, an individual signed a lease on an apartment 
renting for $15 a month more than the room he had previously occupied. 
It was subsequently found that eligibility for the payment should not 
have been established. In such a case, recovery would be considered 
``against equity and good conscience.''
    Example 2: An individual fails to take advantage of a private or 
organization charity, relying instead on the award of supplemental 
security income payments to support himself. It was subsequently found 
that the money was improperly paid. Recovery would be considered 
``against equity and good conscience.''
    Example 3: Mr. and Mrs. Smith--members of an eligible couple--
separate in July. Later in July, Mr. Smith receives earned income 
resulting in an overpayment to both. Mrs. Smith is found to be without 
fault in causing the overpayment. Recovery from Mrs. Smith of Mr. 
Smith's part of the couple's overpayment is waived as being against 
equity and good conscience. Whether recovery of Mr. Smith's portion of 
the couple's overpayment can be waived will be evaluated separately.

[60 FR 16375, Mar. 30, 1995]



Sec. 416.555  Waiver of adjustment or recovery--impede administration.

    Waiver of adjustment or recovery is proper when the overpaid person 
on whose behalf waiver is being considered is without fault, as defined 
in Sec. 416.552, and adjustment or recovery would impede efficient or 
effective administration of title XVI due to the small amount involved. 
The amount of overpayment determined to meet such criteria is measured 
by the current average administrative cost of handling such overpayment 
case through such adjustment or recovery processes. In determining 
whether the criterion is met, the overpaid person's financial 
circumstances are not considered.

[40 FR 47764, Oct. 10, 1975]

[[Page 775]]



Sec. 416.556  Waiver of adjustment or recovery--countable resources in 
excess of the limits prescribed in Sec. 416.1205 by $50 or less.

    (a) If any overpayment with respect to an individual (or an 
individual and his or her spouse if any) is attributable solely to the 
ownership or possession by the individual (and spouse if any) of 
countable resources having a value which exceeds the applicable dollar 
figure specified in Sec. 416.1205 by an amount of $50.00 or less, 
including those resources deemed to an individual in accordance with 
Sec. 416.1202, such individual (and spouse if any) shall be deemed to 
have been without fault in connection with the overpayment, and waiver 
of adjustment or recovery will be made, unless the failure to report the 
value of the excess resources correctly and in a timely manner was 
willful and knowing.
    (b) Failure to report the excess resources correctly and in a timely 
manner will be considered to be willful and knowing and the individual 
will be found to be at fault when the evidence clearly shows the 
individual (and spouse if any) was fully aware of the requirements of 
the law and of the excess resources and chose to conceal these 
resources. When an individual incurred a similar overpayment in the past 
and received an explanation and instructions at the time of the previous 
overpayment, we will generally find the individual to be at fault. 
However, in determining whether the individual is at fault, we will 
consider all aspects of the current and prior overpayment situations, 
and where we determine the individual is not at fault, we will waive 
adjustment or recovery of the subsequent overpayment. In making any 
determination or decision under this section concerning whether an 
individual is at fault, including a determination or decision of whether 
the failure to report the excess resources correctly and in a timely 
manner was willful and knowing, we will take into account any physical, 
mental, educational, or linguistic limitations (including any lack of 
facility with the English language) of the individual (and spouse if 
any).

[53 FR 16544, May 10, 1988, as amended at 59 FR 1636, Jan. 12, 1994]



Sec. 416.558  Notice relating to overpayments and underpayments.

    (a) Notice of overpayment and underpayment determination. Whenever a 
determination concerning the amount paid and payable for any period is 
made and it is found that, with respect to any month in the period, more 
or less than the correct amount was paid, written notice of the correct 
and incorrect amounts for each such month in the period will be sent to 
the individual against whom adjustment or recovery of the overpayment as 
defined in Sec. 416.537(a) may be effected or to whom the underpayment 
as defined in Sec. Sec. 416.536 and any amounts subject to installment 
payments as defined in Sec. 416.544 would be payable, notwithstanding 
the fact that part or all of the underpayment must be withheld in 
accordance with Sec. 416.543. When notifying an individual of a 
determination of overpayment, the Social Security Administration will, 
in the notice, also advise the individual that adjustment or recovery is 
required, as set forth in Sec. 416.571, except under certain specified 
conditions, and of his or her right to request waiver of adjustment or 
recovery of the overpayment under the provisions of Sec. 416.550.
    (b) Notice of waiver determination. Written notice of an initial 
determination of waiver shall be given the individual in accordance with 
Sec. 416.1404 unless the individual was not given notice of the 
overpayment in accordance with paragraph (a) of this section.
    (c) Notice relating to installment payments to individuals whose 
drug addiction or alcoholism is a contributing factor material to the 
determination of disability. Whenever a determination is made concerning 
the amount of any benefits due for a period that must be paid in 
installments, the written notice will also explain the amount of the 
installment payment and when an increased initial installment payment 
may be made (as described in Sec. 416.544). This written notice will be 
sent to the individual and his or her representative payee.

[40 FR 47764, Oct. 10, 1975, as amended at 55 FR 33668, Aug. 17, 1990; 
60 FR 8150, Feb. 10, 1995]

[[Page 776]]



Sec. 416.560  Recovery--refund.

    An overpayment may be refunded by the overpaid recipient or by 
anyone on his or her behalf. Refund should be made in every case where 
the overpaid individual is not currently eligible for SSI benefits. If 
the individual is currently eligible for SSI benefits and has not 
refunded the overpayment, adjustment as set forth in Sec. 416.570 will 
be proposed.

[55 FR 33669, Aug. 17, 1990]



Sec. 416.570  Adjustment--general rule.

    Where a recipient has been overpaid, the overpayment has not been 
refunded, and waiver of adjustment or recovery is not applicable, any 
payment due the overpaid recipient or his or her eligible spouse (or 
recovery from the estate of either or both when either or both die 
before adjustment is completed) is adjusted for recovery of the 
overpayment. Adjustment will generally be accomplished by withholding 
each month the amount set forth in Sec. 416.571 from the benefit 
payable to the individual except that, when the overpayment results from 
the disposition of resources as provided by Sec. Sec. 416.1240(b) and 
416.1244, the overpayment will be recovered by withholding any payments 
due the overpaid recipient or his or her eligible spouse before any 
further payment is made. Absent a specific request from the person from 
whom recovery is sought, no overpayment made under title II, title VIII 
or title XVIII of the Act will be recovered by adjusting SSI benefits. 
In no case shall an overpayment of SSI benefits be adjusted against 
title XVIII benefits. No funds properly deposited into a dedicated 
account (see Sec. Sec. 416.546 and 416.640(e)) can be used to repay an 
overpayment while the overpaid individual remains subject to the 
provisions of those sections.

[55 FR 33669, Aug. 17, 1990; 55 FR 42148, Oct. 17, 1990, as amended at 
61 FR 67206, Dec. 20, 1996; 66 FR 38906, July 26, 2001; 67 FR 38383, 
June 4, 2002]



Sec. 416.571  10-percent limitation of recoupment rate--overpayment.

    Any adjustment or recovery of an overpayment for an individual in 
current payment status is limited in amount in any month to the lesser 
of (1) the amount of the individual's benefit payment for that month or 
(2) an amount equal to 10 percent of the individual's total income 
(countable income plus SSI and State supplementary payments) for that 
month. The countable income used is the countable income used in 
determining the SSI and State supplementary payments for that month 
under Sec. 416.420. When the overpaid individual is notified of the 
proposed SSI and/or federally administered State supplementary 
overpayment adjustment or recovery, the individual will be given the 
opportunity to request that such adjustment or recovery be made at a 
higher or lower rate than that proposed. If a lower rate is requested, a 
rate of withholding that is appropriate to the financial condition of 
the overpaid individual will be set after an evaluation of all the 
pertinent facts. An appropriate rate is one that will not deprive the 
individual of income required for ordinary and necessary living 
expenses. This will include an evaluation of the individual's income, 
resources, and other financial obligations. The 10-percent limitation 
does not apply where it is determined that the overpayment occurred 
because of fraud, willful misrepresentation, or concealment of material 
information committed by the individual or his or her spouse. 
Concealment of material information means an intentional, knowing, and 
purposeful delay in making or failure to make a report that will affect 
payment amount and/or eligibility. It does not include a mere omission 
on the part of the recipient; it is an affirmative act to conceal. The 
10-percent limitation does not apply to the recovery of overpayments 
incurred under agreements to dispose of resources pursuant to Sec. 
416.1240. In addition, the 10-percent limitation does not apply to the 
reduction of any future SSI benefits as a consequence of the misuse of 
funds set aside in accordance with Sec. 416.1231(b) to meet burial 
expenses. Adjustment or recovery will be suspended if the recipient is 
subject to a reduced benefit rate under Sec. 416.414 because of 
residing in a medical facility in which Medicaid

[[Page 777]]

is paying a substantial portion of the recipient's cost of care.

[55 FR 33669, Aug. 17, 1990]



Sec. 416.572  Are title II benefits and title VIII benefits subject to 
adjustment to recover title XVI overpayments?

    (a) Definitions. (1) Cross-program recovery. Cross-program recovery 
is the process that we will use to collect title XVI overpayments from 
benefits payable to you in a month under title II and title VIII of the 
Act.
    (2) Benefits payable in a month. For purposes of this section, 
benefits payable in a month means the amount of title II or title VIII 
benefits that you would actually receive in that month. For title II 
benefits, it includes your monthly benefit and any past due benefits 
after any reductions or deductions listed in Sec. 404.401(a) and (b) of 
this chapter. For title VIII benefits, it includes your monthly benefit 
and any past due benefits after any reduction by the amount of income 
for the month as required by section 805 of the Act.

    Title II Example: A person is entitled to monthly title II benefits 
of $1000. The first benefit payment the person would receive includes 
past-due benefits of $1000. The amount of benefits payable in that month 
for purposes of cross-program recovery is $2000. So, if we were 
recovering 10 percent of that month's benefit, we would be recovering 
$200. The monthly benefit payable for subsequent months is $1000. So, if 
we were recovering 10 percent of that amount, we would be recovering 
$100. If $200 would be deducted from the person's title II benefits in a 
later month because of excess earnings as described in Sec. Sec. 
404.415 and 404.416 of this chapter, the benefit payable in that month 
for purposes of cross-program recovery would be $800. So, if we were 
recovering 10 percent of that month's benefit, we would be recovering 
$80.
    Title VIII Example: A person qualifies for monthly title VIII 
benefits of $384. The person is receiving a monthly pension payment of 
$150 from his employer. The title VIII benefit payable in a particular 
month would be reduced by $150 under section 805 of the Act (42 U.S.C. 
1005). The title VIII benefit payable and subject to withholding in that 
month for purposes of cross-program recovery would be $234. So, if we 
were recovering 10 percent of that month's benefit, we would be 
recovering $23.40.

    (3) Not currently eligible for SSI cash benefits. This means that 
you are not receiving any cash payment, including State supplementary 
payments that we administer, under any provision of title XVI of the Act 
or under section 212(b) of Pub. L. 93-66 (42 U.S.C. 1382 note).
    (b) When we may collect title XVI overpayments using cross-program 
recovery. (1) Except as provided in paragraphs (b)(2) through (4) of 
this section, we may use cross-program recovery to collect a title XVI 
overpayment you owe if:
    (i) You are not currently eligible for SSI cash benefits, and
    (ii) You are receiving title II or title VIII benefits.
    (2) We will not start cross-program recovery against your title II 
or title VIII benefits if you are refunding your title XVI overpayment 
by regular monthly installments.
    (3) We will not start cross-program recovery against your title II 
benefits if we are adjusting your title II benefits to recover a title 
II overpayment under Sec. 404.502 of this chapter or a title VIII 
overpayment under section 808(a)(1) of the Act (42 U.S.C. 1008(a)(1)).
    (4) We will not start cross-program recovery against your title VIII 
benefits if we are adjusting your title VIII benefits to recover a title 
VIII overpayment under section 808(a)(1) of the Act (42 U.S.C. 
1008(a)(1)).
    (c) Notice you will receive. Before we collect an overpayment from 
you using cross-program recovery, we will send you a written notice that 
tells you the following information:
    (1) We have determined that you owe a specific overpayment balance 
that can be collected by cross-program recovery;
    (2) We will withhold a specific amount from the title II benefits 
and/or title VIII benefits payable to you in a month (see paragraph (e) 
of this section);
    (3) You may ask us to review this determination that you still owe 
this overpayment balance;
    (4) You may request that we withhold a different amount (the notice 
will not include this information if paragraph (e)(3) of this section 
applies); and
    (5) You may ask us to waive collection of this overpayment balance.
    (d) When we will begin cross-program recovery. We will begin 
collecting the overpayment balance by cross-program

[[Page 778]]

recovery no sooner than 30 calendar days after the date of the notice 
described in paragraph (c) of this section.
    (1) If within that 30-day period you pay us the full overpayment 
balance stated in the notice, we will not begin cross-program recovery.
    (2) If within that 30-day period you ask us to review our 
determination that you still owe us this overpayment balance, we will 
not begin cross-program recovery before we review the matter and notify 
you of our decision in writing.
    (3) If within that 30-day period you ask us to withhold a different 
amount than the amount stated in the notice, we will not begin cross-
program recovery until we determine the amount we will withhold. This 
paragraph does not apply when paragraph (e)(3) of this section applies.
    (4) If within that 30-day period you ask us to waive recovery of the 
overpayment balance, we will not begin cross-program recovery before we 
review the matter and notify you of our decision in writing. See 
Sec. Sec. 416.550 through 416.556.
    (e) Rate of withholding. (1) We will collect the overpayment at the 
rate of 10 percent of the title II benefits and title VIII benefits 
payable to you in any month, unless:
    (i) You request and we approve a different rate of withholding, or
    (ii) You or your spouse willfully misrepresented or concealed 
material information in connection with the overpayment.
    (2) In determining whether to grant your request that we withhold at 
a lower rate than 10 percent of the title II or title VIII benefits 
payable in a month, we will use the criteria applied under Sec. 416.571 
to similar requests about withholding from title XVI benefits.
    (3) If you or your spouse willfully misrepresented or concealed 
material information in connection with the overpayment, we will collect 
the overpayment at the rate of 100 percent of the title II benefits and 
title VIII benefits payable in any month. We will not collect at a 
lesser rate. (See Sec. 416.571 for what we mean by concealment of 
material information.)

[66 FR 38906, July 26, 2001, as amended at 67 FR 38383, June 4, 2002]



Sec. 416.580  Referral of overpayments to the Department of the Treasury 
for tax refund offset--General.

    (a) The standards we will apply and the procedures we will follow 
before requesting the Department of the Treasury to offset income tax 
refunds due taxpayers who have an outstanding overpayment are set forth 
in Sec. Sec. 416.580 through 416.586 of this subpart. These standards 
and procedures are authorized by the Deficit Reduction Act of 1984 [31 
U.S.C. Sec. 3720A], as implemented through Department of the Treasury 
regulations at 31 CFR 285.2.
    (b) We will use the Department of the Treasury tax refund offset 
procedure to collect overpayments that are certain in amount, past due 
and legally enforceable, and eligible for tax refund offset under 
regulations issued by the Secretary of the Treasury. We will use these 
procedures to collect overpayments only from individuals who are not 
currently entitled to monthly supplemental security income benefits 
under title XVI of the Act. We will refer an overpayment to the 
Secretary of the Treasury for offset against tax refunds no later than 
10 years after our right to collect the overpayment first accrued.

[62 FR 49439, Sept. 22, 1997]



Sec. 416.581  Notice to overpaid individual.

    A request for reduction of a Federal income tax refund will be made 
only after we determine that an amount is owed and past due and provide 
the overpaid individual with 60 calendar days written notice. Our notice 
of intent to collect an overpayment through Federal income tax refund 
offset will state:
    (a) The amount of the overpayment;
    (b) That unless, within 60 calendar days from the date of our 
notice, the overpaid individual repays the overpayment, sends evidence 
to us at the address given in our notice that the overpayment is not 
past due or not legally enforceable, or asks us to waive collection of 
the overpayment under section 1631(b)(1)(B) of the Act, we intend to 
seek collection of the overpayment by requesting that the Department of 
the Treasury reduce any

[[Page 779]]

amounts payable to the overpaid individual as refunds of Federal income 
taxes by an amount equal to the amount of the overpayment;
    (c) The conditions under which we will waive recovery of an 
overpayment under section 1631(b)(1)(B) of the Act;
    (d) That we will review any evidence presented that the overpayment 
is not past due or not legally enforceable;
    (e) That the overpaid individual has the right to inspect and copy 
our records related to the overpayment as determined by us and will be 
informed as to where and when the inspection and copying can be done 
after we receive notice from the overpaid individual that inspection and 
copying are requested.

[62 FR 49439, Sept. 22, 1997]



Sec. 416.582  Review within SSA that an overpayment is past due and legally 
enforceable.

    (a) Notification by overpaid individual. An overpaid individual who 
receives a notice as described in Sec. 416.581 of this subpart has the 
right to present evidence that all or part of the overpayment is not 
past due or not legally enforceable. To exercise this right, the 
individual must notify us and present evidence regarding the overpayment 
within 60 calendar days from the date of our notice.
    (b) Submission of evidence. The overpaid individual may submit 
evidence showing that all or part of the debt is not past due or not 
legally enforceable as provided in paragraph (a) of this section. 
Failure to submit the notification and evidence within 60 calendar days 
will result in referral of the overpayment to the Department of the 
Treasury, unless the overpaid individual, within this 60-day time 
period, has asked us to waive collection of the overpayment under 
section 1631(b)(1)(B) of the Act and we have not yet determined whether 
we can grant the waiver request. If the overpaid individual asks us to 
waive collection of the overpayment, we may ask that evidence to support 
the request be submitted to us.
    (c) Review of the evidence. After a timely submission of evidence by 
the overpaid individual, we will consider all available evidence related 
to the overpayment. We will make findings based on a review of the 
written record, unless we determine that the question of indebtedness 
cannot be resolved by a review of the documentary evidence.

[62 FR 49439, Sept. 22, 1997]



Sec. 416.583  Findings by SSA.

    (a) Following the review of the record, we will issue written 
findings which include supporting rationale for the findings. Issuance 
of these findings concerning whether the overpayment or part of the 
overpayment is past due and legally enforceable is the final Agency 
action with respect to the past-due status and enforceability of the 
overpayment. If we make a determination that a waiver request cannot be 
granted, we will issue a written notice of this determination in 
accordance with the regulations in subpart E of this part. Our referral 
of the overpayment to the Department of the Treasury will not be 
suspended under Sec. 416.585 of this subpart pending any further 
administrative review of the waiver request that the individual may 
seek.
    (b) Copies of the findings described in paragraph (a) of this 
section will be distributed to the overpaid individual and the overpaid 
individual's attorney or other representative, if any.
    (c) If the findings referred to in paragraph (a) of this section 
affirm that all or part of the overpayment is past due and legally 
enforceable and, if waiver is requested and we determine that the 
request cannot be granted, we will refer the overpayment to the 
Department of the Treasury. However, no referral will be made if, based 
on our review of the overpayment, we reverse our prior finding that the 
overpayment is past due and legally enforceable or, upon consideration 
of a waiver request, we determine that waiver of our collection of the 
overpayment is appropriate.

[62 FR 49439, Sept. 22, 1997]

[[Page 780]]



Sec. 416.584  Review of our records related to the overpayment.

    (a) Notification by the overpaid individual. An overpaid individual 
who intends to inspect or copy our records related to the overpayment as 
determined by us must notify us stating his or her intention to inspect 
or copy.
    (b) Our response. In response to a notification by the overpaid 
individual as described in paragraph (a) of this section, we will notify 
the overpaid individual of the location and time when the overpaid 
individual may inspect or copy our records related to the overpayment. 
We may also, at our discretion, mail copies of the overpayment-related 
records to the overpaid individual.

[62 FR 49439, Sept. 22, 1997]



Sec. 416.585  Suspension of offset.

    If, within 60 days of the date of the notice described in Sec. 
416.581 of this subpart, the overpaid individual notifies us that he or 
she is exercising a right described in Sec. 416.582(a) of this subpart 
and submits evidence pursuant to Sec. 416.582(b) of this subpart or 
requests a waiver under Sec. 416.550 of this subpart, we will suspend 
any notice to the Department of the Treasury until we have issued 
written findings that affirm that an overpayment is past due and legally 
enforceable and, if applicable, make a determination that a waiver 
request cannot be granted.

[62 FR 49440, Sept. 22, 1997]



Sec. 416.586  Tax refund insufficient to cover amount of overpayment.

    If a tax refund is insufficient to recover an overpayment in a given 
year, the case will remain with the Department of the Treasury for 
succeeding years, assuming that all criteria for certification are met 
at that time.

[62 FR 49440, Sept. 22, 1997]



Sec. 416.590  Are there additional methods for recovery of title XVI 
benefit overpayments?

    (a) General. In addition to the methods specified in Sec. Sec. 
416.560, 416.570, 416.572 and 416.580, we may recover an overpayment 
under title XVI of the Act from you under the rules in subparts D and E 
of part 422 of this chapter. Subpart D of part 422 of this chapter 
applies only under the following conditions:
    (1) The overpayment occurred after you attained age 18;
    (2) You are no longer entitled to benefits under title XVI of the 
Act; and
    (3) Pursuant to paragraph (b) of this section, we have determined 
that the overpayment is otherwise unrecoverable under section 1631(b) of 
the Act.
    (b) When we consider an overpayment to be otherwise unrecoverable. 
We consider an overpayment under title XVI of the Act to be otherwise 
unrecoverable under section 1631(b) of the Act if all of the following 
conditions are met:
    (1) We have completed our billing system sequence (i.e., we have 
sent you an initial notice of the overpayment, a reminder notice, and a 
past-due notice) or we have suspended or terminated collection activity 
under applicable rules, such as, the Federal Claims Collection Standards 
in 31 CFR 903.2 or 903.3.
    (2) We have not entered into an installment payment arrangement with 
you or, if we have entered into such an arrangement, you have failed to 
make any payment for two consecutive months.
    (3) You have not requested waiver pursuant to Sec. 416.550 or Sec. 
416.582 or, after a review conducted pursuant to those sections, we have 
determined that we will not waive collection of the overpayment.
    (4) You have not requested reconsideration of the initial 
overpayment determination pursuant to Sec. Sec. 416.1407 and 416.1409 
or, after a review conducted pursuant to Sec. 416.1413, we have 
affirmed all or part of the initial overpayment determination.
    (5) We cannot recover your overpayment pursuant to Sec. 416.570 by 
adjustment of benefits payable to any individual other than you. For 
purposes of this paragraph, if you are a member of an eligible couple 
that is legally separated and/or living apart, we will deem 
unrecoverable from the other person that part of your overpayment which 
he or she did not receive.

[66 FR 67081, Dec. 28, 2001, as amended at 68 FR 74184, Dec. 23, 2003]

[[Page 781]]



                    Subpart F_Representative Payment

    Authority: Secs. 702(a)(5), 1631 (a)(2) and (d)(1) of the Social 
Security Act (42 U.S.C. 902(a)(5) and 1383 (a)(2) and (d)(1)).

    Source: 47 FR 30475, July 14, 1982, unless otherwise noted.



Sec. 416.601  Introduction.

    (a) Explanation of representative payment. This subpart explains the 
principles and procedures that we follow in determining whether to make 
representative payment and in selecting a representative payee. It also 
explains the responsibilities that a representative payee has concerning 
the use of the funds he or she receives on behalf of a beneficiary. A 
representative payee may be either a person or an organization selected 
by us to receive benefits on behalf of a beneficiary. A representative 
payee will be selected if we believe that the interest of a beneficiary 
will be served by representative payment rather than direct payment of 
benefits. Generally, we appoint a representative payee if we have 
determined that the beneficiary is not able to manage or direct the 
management of benefit payments in his or her own interest.
    (b) Policy used to determine whether to make representative payment. 
(1) Our policy is that every beneficiary has the right to manage his or 
her own benefits. However, some beneficiaries due to a mental or 
physical condition or due to their youth may be unable to do so. Under 
these circumstances, we may determine that the interests of the 
beneficiary would be better served if we certified benefit payments to 
another person as a representative payee. However, we must select a 
representative payee for an individual who is eligible for benefits 
solely on the basis of disability if drug addiction or alcoholism is a 
contributing factor material to the determination of disability.
    (2) If we determine that representative payment is in the interest 
of a beneficiary, we will appoint a representative payee. We may appoint 
a representative payee even if the beneficiary is a legally competent 
individual. If the beneficiary is a legally incompetent individual, we 
may appoint the legal guardian or some other person as a representative 
payee.
    (3) If payment is being made directly to a beneficiary and a 
question arises concerning his or her ability to manage or direct the 
management of benefit payments, we will, if the beneficiary is 18 years 
old or older and has not been adjudged legally incompetent, continue to 
pay the beneficiary until we make a determination about his or her 
ability to manage or direct the management of benefit payments and the 
selection of a representative payee.

[47 FR 30475, July 14, 1982, as amended at 60 FR 8150, Feb. 10, 1995]



Sec. 416.610  When payment will be made to a representative payee.

    (a) We pay benefits to a representative payee on behalf of a 
beneficiary 18 years old or older when it appears to us that this method 
of payment will be in the interest of the beneficiary. We do this if we 
have information that the beneficiary is--
    (1) Legally incompetent or mentally incapable of managing benefit 
payments; or
    (2) Physically incapable of managing or directing the management of 
his or her benefit payments; or
    (3) Eligible for benefits solely on the basis of disability and drug 
addiction or alcoholism is a contributing factor material to the 
determination of disability.
    (b) Generally, if a beneficiary is under age 18, we will pay 
benefits to a representative payee. However, in certain situations, we 
will make direct payments to a beneficiary under age 18 who shows the 
ability to manage the benefits. For example, we make direct payment to a 
beneficiary under age 18 if the beneficiary is--
    (1) A parent and files for himself or herself and/or his or her 
child and he or she has experience in handling his or her own finances; 
or
    (2) Capable of using the benefits to provide for his or her current 
needs and no qualified payee is available; or
    (3) Within 7 months of attaining age 18 and is initially filing an 
application for benefits.

[47 FR 30475, July 14, 1982, as amended at 54 FR 35483, Aug. 28, 1989; 
60 FR 8150, Feb. 10, 1995]

[[Page 782]]



Sec. 416.615  Information considered in determining whether to make 
representative payment.

    In determining whether to make representative payment we consider 
the following information:
    (a) Court determinations. If we learn that a beneficiary has been 
found to be legally incompetent, a certified copy of the court's 
determination will be the basis of our determination to make 
representative payment.
    (b) Medical evidence. When available, we will use medical evidence 
to determine if a beneficiary is capable of managing or directing the 
management of benefit payments. For example, a statement by a physician 
or other medical professional based upon his or her recent examination 
of the beneficiary and his or her knowledge of the beneficiary's present 
condition will be used in our determination, if it includes information 
concerning the nature of the beneficiary's illness, the beneficiary's 
chances for recovery and the opinion of the physician or other medical 
professional as to whether the beneficiary is able to manage or direct 
the management of benefit payments.
    (c) Other evidence. We will also consider any statements of 
relatives, friends and other people in a position to know and observe 
the beneficiary, which contain information helpful to us in deciding 
whether the beneficiary is able to manage or direct the management of 
benefit payments.



Sec. 416.620  Information considered in selecting a representative payee.

    In selecting a payee we try to select the person, agency, 
organization or institution that will best serve the interest of the 
beneficiary. In making our selection we consider--
    (a) The relationship of the person to the beneficiary;
    (b) The amount of interest that the person shows in the beneficiary;
    (c) Any legal authority the person, agency, organization or 
institution has to act on behalf of the beneficiary;
    (d) Whether the potential payee has custody of the beneficiary; and
    (e) Whether the potential payee is in a position to know of and look 
after the needs of the beneficiary.



Sec. 416.621  Order of preference in selecting a representative payee.

    As a guide in selecting a representative payee, categories of 
preferred payees have been established. These preferences are flexible. 
Our primary concern is to select the payee who will best serve the 
beneficiary's interests. The preferences are:
    (a) For beneficiaries 18 years old or older our preference is--
    (1) A legal guardian, spouse (or other relative) who has custody of 
the beneficiary or who demonstrates strong concern for the personal 
welfare of the beneficiary;
    (2) A friend who has custody of the beneficiary or demonstrates 
strong concern for the personal welfare of the beneficiary;
    (3) A public or nonprofit agency or institution having custody of 
the beneficiary;
    (4) A private institution operated for profit and licensed under 
State law, which has custody of the beneficiary; and
    (5) Persons other than above who are qualified to carry out the 
responsibilities of a payee and who are able and willing to serve as a 
payee for the beneficiary; e.g., members of community groups or 
organizations who volunteer to serve as payee for a beneficiary.
    (b) For beneficiaries under age 18, our preference is--
    (1) A natural or adoptive parent who has custody of the beneficiary, 
or a guardian;
    (2) A natural or adoptive parent who does not have custody of the 
beneficiary, but is contributing toward the beneficiary's support and is 
demonstrating strong concern for the beneficiary's well being;
    (3) A natural or adoptive parent who does not have custody of the 
beneficiary and is not contributing toward his or her support but is 
demonstrating strong concern for the beneficiary's well being;
    (4) A relative or stepparent who has custody of the beneficiary;
    (5) A relative who does not have custody of the beneficiary but is 
contributing toward the beneficiary's support and is demonstrating 
concern for the beneficiary's well being;

[[Page 783]]

    (6) A relative or close friend who does not have custody of the 
beneficiary but is demonstrating concern for the beneficiary's well 
being; and
    (7) An authorized social agency or custodial institution.



Sec. 416.625  Information to be submitted by a representative payee.

    (a) Before we select a representative payee, the payee applicant 
must give us information showing his or her relationship to the 
beneficiary and his or her responsibility for the care of the 
beneficiary.
    (b) Anytime after we have selected a payee, we may ask the payee to 
give us information showing a continuing relationship to the beneficiary 
and a continuing responsibility for the care of the beneficiary. If the 
payee does not give us the requested information within a reasonable 
period of time, we may stop paying the payee unless we determine that 
the payee had a good reason for not complying with our request, and we 
receive the information requested.



Sec. 416.630  Advance notice of the determination to make representative 
payment.

    (a) Generally, whenever we intend to make representative payment and 
to name a payee, we notify the beneficiary or the individual acting on 
his or her behalf, of our proposed actions. In this notice we tell the 
person that we plan to name a representative payee and who that payee 
will be. We also ask the person to contact us if he or she objects to 
either proposed action. If he or she objects to either proposed action, 
the person may--
    (1) Review the evidence upon which the proposed actions will be 
based; and
    (2) Submit any additional evidence regarding the proposed actions.
    (b) If the person objects to the proposed actions, we will review 
our proposed determinations and consider any additional information 
given to us. We will then issue our determinations. If the person is 
dissatisfied with either determination, he or she may request a 
reconsideration.
    (c) If the person does not object to the proposed actions, we will 
issue our determinations. If the person is dissatisfied with either 
determination, he or she may request a reconsideration.



Sec. 416.635  Responsibilities of a representative payee.

    A representative payee has a responsibility to--
    (a) Use the payments he or she receives only for the use and benefit 
of the beneficiary in a manner and for the purposes he or she 
determines, under the guidelines in this subpart, to be in the best 
interests of the beneficiary;
    (b) Notify us of any event that will affect the amount of benefits 
the beneficiary receives or the right of the beneficiary to receive 
benefits (See subpart G of this part concerning these reporting 
requirements);
    (c) Submit to us, upon our request, a written report accounting for 
the benefits received;
    (d) Notify us of any change in his or her circumstances that would 
affect performance of the payee responsibilities; and
    (e) In cases in which the beneficiary is an individual under age 18 
(including cases in which the beneficiary is an individual whose low 
birth weight is a contributing factor material to our determination that 
the individual is disabled), ensure that the beneficiary is and has been 
receiving treatment to the extent considered medically necessary and 
available for the condition that was the basis for providing benefits 
(See Sec. 416.994a(i).)

[47 FR 30475, July 14, 1982, as amended at 62 FR 6420, Feb. 11, 1997]



Sec. 416.640  Use of benefit payments.

    (a) Current maintenance. We will consider that payments we certify 
to a representive payee have been used for the use and benefit of the 
beneficiary if they are used for the beneficiary's current maintenance. 
Current maintenance includes costs incurred in obtaining food, shelter, 
clothing, medical care and personal comfort items.

    Example: A Supplemental Security Income beneficiary is entitled to a 
monthly benefit of $264. The beneficiary's son, who is the 
representative payee, disburses the benefits in the following manner:

Rent and Utilities...............................................   $166
Medical..........................................................     20
Food.............................................................     60
Clothing.........................................................     10

[[Page 784]]

 
Miscellaneous....................................................      8
 

    The above expenditures would represent proper disbursements on 
behalf of the beneficiary.

    (b) Institution not receiving Medicaid funds on beneficiary's 
behalf. If a beneficiary is receiving care in a Federal, State, or 
private institution because of mental or physical incapacity, current 
maintenance will include the customary charges for the care and services 
provided by an institution, expenditures for those items which will aid 
in the beneficiary's recovery or release from the institution, and 
nominal expenses for personal needs (e.g., personal hygiene items, 
snacks, candy) which will improve the beneficiary's condition. Except as 
provided under Sec. 416.212, there is no restriction in using SSI 
benefits for a beneficiary's current maintenance in an institution. Any 
payments remaining from SSI benefits may be used for a temporary period 
to maintain the beneficiary's residence outside of the institution 
unless a physician has certified that the beneficiary is not likely to 
return home.

    Example: A hospitalized disabled beneficiary is entitled to a 
monthly benefit of $264. The beneficiary, who resides in a boarding 
home, has resided there for over 6 years. It is doubtful that the 
beneficiary will leave the boarding home in the near future. The 
boarding home charges $215 per month for the beneficiary's room and 
board.
    The beneficiary's representative payee pays the boarding home $215 
(assuming an unsuccessful effort was made to negotiate a lower rate 
during the beneficiary's absence) and uses the balance to purchase 
miscellaneous personal items for the beneficiary. There are no benefits 
remaining which can be conserved on behalf of the beneficiary. The 
payee's use of the benefits is consistent with our guidelines.

    (c) Institution receiving Medicaid funds on beneficiary's behalf. 
Except in the case of a beneficiary receiving benefits payable under 
Sec. 416.212, if a beneficiary resides throughout a month in an 
institution that receives more than 50 percent of the cost of care on 
behalf of the beneficiary from Medicaid, any payments due shall be used 
only for the personal needs of the beneficiary and not for other items 
of current maintenance.

    Example: A disabled beneficiary resides in a hospital. The 
superintendent of the hospital receives $30 per month as the 
beneficiary's payee. The benefit payment is disbursed in the following 
manner, which would be consistent with our guidelines:

Miscellaneous canteen items........................................  $10
Clothing...........................................................   15
Conserved for future needs of the beneficiary......................    5
 

    (d) Claims of creditors. A payee may not be required to use benefit 
payments to satisfy a debt of the beneficiary, if the debt arose prior 
to the first month for which payments are certified to a payee. If the 
debt arose prior to this time, a payee may satisfy it only if the 
current and reasonably foreseeable needs of the beneficiary are met.

    Example: A disabled beneficiary was determined to be eligible for a 
monthly benefit payment of $208 effective April 1981. The benefits were 
certified to the beneficiary's brother who was appointed as the 
representative payee. The payee conserved $27 of the benefits received. 
In June 1981 the payee received a bill from a doctor who had treated the 
beneficiary in February and March 1981. The bill was for $175.
    After reviewing the beneficiary's current needs and resources, the 
payee decided not to use any of the benefits to pay the doctor's bill. 
(Approximately $180 a month is required for the beneficiary's current 
monthly living expenses--rent, utilities, food, and insurance--and the 
beneficiary will need new shoes and a coat within the next few months.)
    Based upon the above, the payee's decision not to pay the doctor's 
bill is consistent with our guidelines.

    (e) Dedicated accounts for eligible individuals under age 18. (1) 
When past-due benefit payments are required to be paid into a separate 
dedicated account (see Sec. 416.546), the representative payee is 
required to establish in a financial institution an account dedicated to 
the purposes described in paragraph (e)(2) of this section. This 
dedicated account may be a checking, savings or money market account 
subject to the titling requirements set forth in Sec. 416.645. 
Dedicated accounts may not be in the form of certificates of deposit, 
mutual funds, stocks, bonds or trusts.
    (2) A representative payee shall use dedicated account funds, 
whether deposited on a mandatory or permissive basis (as described in 
Sec. 416.546), for the benefit of the child and only for the following 
allowable expenses--

[[Page 785]]

    (i) Medical treatment and education or job skills training;
    (ii) If related to the child's impairment(s), personal needs 
assistance; special equipment; housing modification; and therapy or 
rehabilitation; or
    (iii) Other items and services related to the child's impairment(s) 
that we determine to be appropriate. The representative payee must 
explain why or how the other item or service relates to the 
impairment(s) of the child.
    (3) Representative payees must keep records and receipts of all 
deposits to and expenditures from dedicated accounts, and must submit 
these records to us upon our request, as explained in Sec. Sec. 416.635 
and 416.665.
    (4) The use of funds from a dedicated account in any manner not 
authorized by this section constitutes a misapplication of benefits. 
These misapplied benefits are not an overpayment as defined in Sec. 
416.537; however, if we determine that a representative payee knowingly 
misapplied funds in a dedicated account, that representative payee shall 
be liable to us in an amount equal to the total amount of the misapplied 
funds.
    (5) The restrictions described in this section and the income and 
resource exclusions described in Sec. Sec. 416.1124(c)(20) and 
416.1247 shall continue to apply until all funds in the dedicated 
account are depleted or eligibility for benefits terminates, whichever 
comes first. This continuation of the restrictions and exclusions 
applies in situations where funds remain in the account in any of the 
following situations--
    (i) A child attains age 18, continues to be eligible and receives 
payments directly;
    (ii) A new representative payee is appointed. When funds remaining 
in a dedicated account are returned to us by the former representative 
payee, the new representative payee must establish an account in a 
financial institution into which we will deposit these funds, even if 
the amount is less than that prescribed in Sec. 416.546; or
    (iii) During a period of suspension due to ineligibility as 
described in Sec. 416.1320, administrative suspension, or a period of 
eligibility for which no payment is due.

[47 FR 30475, July 14, 1982, as amended at 61 FR 10278, Mar. 13, 1996; 
61 FR 67206, Dec. 20, 1996]



Sec. 416.640a  Compensation for qualified organizations serving as 
representative payees.

    (a) General. A community-based, nonprofit social service agency 
which meets the requirements set out in paragraph (b) of this section 
may request our authorization to collect a monthly fee from a 
beneficiary for providing representative payee services.
    (b) Organizations that may request compensation. We will authorize 
an organization to collect a fee if all the following requirements are 
met.
    (1) It is community-based, i.e., serves or represents one or more 
neighborhoods, city or county locales and is located within its service 
area.
    (2) It is a nonprofit social service organization founded for 
religious, charitable or social welfare purposes and is tax exempt under 
section 501(c) of the Internal Revenue Code.
    (3) It is bonded or licensed in the State in which it serves as 
representative payee.
    (4) It regularly provides representative payee services concurrently 
to at least five beneficiaries. An organization which has received our 
authorization to collect a fee for representative payee services, but is 
temporarily not a payee for at least five beneficiaries, may request our 
approval to continue to collect fees.
    (5) It was in existence on October 1, 1988.
    (6) It is not a creditor of the beneficiary. See paragraph (c) of 
this section for exceptions to this requirement.
    (c) Creditor relationship. If an organization has a creditor 
relationship with a beneficiary we may, on a case-by-case basis, 
authorize the organization to collect a fee for payee services 
notwithstanding this relationship. To provide this authorization, we 
will review all of the evidence submitted by the organization and 
authorize collection of a fee when:
    (1) The services provided by the organization help to meet the 
current needs of the beneficiary; and

[[Page 786]]

    (2) The amount the organization charges the beneficiary for these 
services is commensurate with the beneficiary's ability to pay.
    (d) Authorization process. (1) An organization must request in 
writing and receive an authorization from us before it may collect a 
fee.
    (2) An organization seeking authorization to collect a fee must also 
give us evidence to show that it is qualified, pursuant to paragraphs 
(b) and (c) of this section, to collect a fee.
    (3) If the evidence provided to us by the organization shows that 
the requirements of this section are met, we will notify the 
organization in writing that it is authorized to collect a fee. If we 
need more evidence, or if we are not able to authorize the collection of 
a fee, we will also notify the organization in writing that we have not 
authorized the collection of a fee.
    (e) Revocation, cancellation and expiration of the authorization. 
(1) We will revoke an authorization to collect a fee if we have evidence 
which establishes that an organization no longer meets the requirements 
of this section. We will issue a written notice to the organization 
explaining the reason(s) for the revocation.
    (2) An organization may cancel its authorization at any time upon 
written notice to us.
    (f) Notices. The written notice we will send to an organization 
authorizing the collection of a fee will contain an effective date for 
the collection of a fee pursuant to paragraphs (b) and (c) of this 
section. The effective date will be no earlier than the month in which 
the organization asked for authorization to collect a fee. The notice 
will be applicable to all beneficiaries for whom the organization was 
payee at the time of our authorization and all beneficiaries for whom 
the organization becomes payee while the authorization is in effect.
    (g) Limitation on fees. (1) An organization authorized to collect a 
fee pursuant to this section may collect from a beneficiary a monthly 
fee for expenses (including overhead) it has incurred in providing payee 
services to a beneficiary if the fee does not exceed the lesser of--
    (i) 10 percent of the beneficiary's monthly benefit payments; or
    (ii) $25.00 per month.
    (2) Any agreement providing for a fee in excess of the amount 
permitted under paragraph (g)(1) of this section shall be void and 
treated as misuse of benefits by the organization of the individual's 
benefits under Sec. 416.641.
    (3) A fee may be collected for any month during which the 
organization--
    (i) Provides representative payee services;
    (ii) Receives a benefit payment for the beneficiary; and
    (iii) Is authorized to receive a fee for representative payee 
services.
    (4) Fees for services may not be taken from any funds conserved for 
the beneficiary by a payee in accordance with Sec. 416.645.
    (5) Generally, an organization may not collect a fee for months in 
which it does not receive a benefit payment. However, an organization 
will be allowed to collect a fee for months in which it did not receive 
a payment if we later issue payments for these months and the 
organization:
    (i) Received our approval to collect a fee for the months for which 
payment is made;
    (ii) Provided payee services in the months for which payment is 
made; and
    (iii) Was the payee when the retroactive payment was paid by us.
    (6) An authorized organization may not collect a fee for the 
expenses it incurred in providing representative payee services if these 
expenses are paid from another source.
    (7) An authorized organization may collect a fee for representative 
payee services from the entire monthly benefit amount received, 
including any payment of a federally-administered State supplementary 
payment under subpart T of this part.
    (8) In the case of an institutionalized beneficiary a fee may not be 
withheld from benefits which must be set aside for the beneficiary's 
personal needs in accordance with Sec. 416.640(c).

[57 FR 23057, June 1, 1992; 57 FR 27091, June 17, 1992]

[[Page 787]]



Sec. 416.641  Liability for misuse of benefit payments.

    Our obligation to the beneficiary is completely discharged when we 
make a correct payment to a representative payee on behalf of the 
beneficiary. The payee personally, and not SSA, may be liable if the 
payee misuses the beneficiary's benefits.



Sec. 416.645  Conservation and investment of benefit payments.

    (a) General. If payments are not needed for the beneficiary's 
current maintenance or reasonably foreseeable needs, they shall be 
conserved or invested on behalf of the beneficiary. Conserved funds 
should be invested in accordance with the rules followed by trustees. 
Any investment must show clearly that the payee holds the property in 
trust for the beneficiary.

    Example: A State institution for mentally retarded children, which 
is receiving Medicaid funds, is representative payee for several 
beneficiaries. The checks the payee receives are deposited into one 
account which shows that the benefits are held in trust for the 
beneficiaries. The institution has supporting records which show the 
share each individual has in the account. Funds from this account are 
disbursed fairly quickly after receipt for the personal needs of the 
beneficiaries. However, not all those funds were disbursed for this 
purpose. As a result, several of the beneficiaries have significant 
accumulated resources in this account. For those beneficiaries whose 
benefits have accumulated over $150, the funds should be deposited in an 
interest-bearing account or invested relatively free of risk on behalf 
of the beneficiaries.

    (b) Preferred investments. Preferred investments for excess funds 
are U.S. Savings Bonds and deposits in an interest or dividend paying 
account in a bank, trust company, credit union, or savings and loan 
association which is insured under either Federal or State law. The 
account must be in a form which shows clearly that the representative 
payee has only a fiduciary and not a personal interest in the funds. If 
the payee is the legally appointed guardian or fiduciary of the 
beneficiary, the account may be established to indicate this 
relationship. If the payee is not the legally appointed guardian or 
fiduciary, the accounts may be established as follows:
    (1) For U.S. Savings Bonds--

    ------------ (Name of beneficiary) ------ (Social Security Number), 
for whom ------------ (Name of payee) is representative payee for 
Supplemental Security Income benefits;

    (2) For interest or dividend paying accounts--

    ------------ (Name of beneficiary) by ------------ (Name of payee), 
representative payee.

    (c) Interest and dividend payments. The interest and dividends which 
result from an investment are the property of the beneficiary and may 
not be considered to be the property of the payee.



Sec. 416.650  When a new representative payee will be selected.

    When we learn that the interests of the beneficiary are not served 
by continuing payment to the present payee or that the present payee is 
no longer able to carry out the payee responsibilities, we try to find a 
new payee. We will select a new payee if we find a preferred payee or if 
the present payee--
    (a) Has not used the benefit payments on the beneficiary's behalf in 
accordance with the guidelines in this subpart;
    (b) Has not carried out the other responsibilities described in this 
subpart;
    (c) Dies;
    (d) No longer wishes to be payee;
    (e) Is unable to manage the benefit payments; or
    (f) Fails to cooperate, within a reasonable time, in providing 
evidence, accounting, or other information which we request.



Sec. 416.655  When representative payment will be stopped.

    If a beneficiary receiving representative payment shows us that he 
or she is mentally and physically able to manage or direct the 
management of benefit payments, we will make direct payment. Information 
which the beneficiary may give us to support his or her request for 
direct payment include the following--
    (a) A physician's statement regarding the beneficiary's condition, 
or a statement by a medical officer of the institution where the 
beneficiary is or was confined, showing that the beneficiary

[[Page 788]]

is able to manage or direct the management of his or her funds; or
    (b) A certified copy of a court order restoring the beneficiary's 
rights in a case where a beneficiary was adjudged legally incompetent; 
or
    (c) Other evidence which establishes the beneficiary's ability to 
manage or direct the management of benefits.



Sec. 416.660  Transfer of accumulated benefit payments.

    A representative payee who has conserved or invested benefit 
payments shall transfer these funds, and the interest earned from the 
invested funds, to either a successor payee, or to us, as we will 
specify. If the funds and the earned interest are returned to us, we 
will recertify them to a successor representative payee or to the 
beneficiary.



Sec. 416.665  Accounting for benefit payments.

    A representative payee is accountable for the use of benefits. We 
may require periodic written reports from representative payees. We may 
also, in certain situations, verify how a representative payee used the 
funds. A representative payee should keep records of what was done with 
the benefit payments in order to make accounting reports. We may ask the 
following questions--
    (a) The amount of benefit payments on hand at the beginning of the 
accounting period;
    (b) How the benefit payments were used;
    (c) How much of the benefit payments were saved and how the savings 
were invested;
    (d) Where the beneficiary lived during the accounting period; and
    (e) The amount of the beneficiary's income from other sources during 
the accounting period. We ask for information about other funds to 
enable us to evaluate the use of benefit payments.



                       Subpart G_Reports Required

    Authority: Secs. 702(a)(5), 1611, 1612, 1613, 1614, and 1631 of the 
Social Security Act (42 U.S.C. 902(a)(5), 1382, 1382a, 1382b, 1382c, and 
1383); sec. 211, Pub. L. 93-66, 87 Stat. 154 (42 U.S.C. 1382 note).

    Source: 46 FR 5873, Jan. 21, 1981, unless otherwise noted.

                              Introduction



Sec. 416.701  Scope of subpart.

    (a) Report provisions. The Social Security Administration, to 
achieve efficient administration of the Supplemental Security Income 
(SSI) program for the Aged, Blind, and Disabled, requires that you (or 
your representative) must report certain events to us. It is important 
for us to know about these events because they may affect your continued 
eligibility for SSI benefits or the amount of your benefits. This 
subpart tells you what events you must report; what your reports must 
include; and when reports are due. The rules regarding reports are in 
Sec. Sec. 416.704 through 416.714.
    (b) Penalty deductions. If you fail to make a required report when 
it is due, you may suffer a penalty. This subpart describes the 
penalties; discusses when we may impose them; and explains that we will 
not impose a penalty if you have good cause for failing to report 
timely. The rules regarding penalties are in Sec. Sec. 416.722 through 
416.732.



Sec. 416.702  Definitions.

    For purposes of this subpart--
    Essential person means someone whose presence was believed to be 
necessary for your welfare under the State program that preceded the SSI 
program. (See Sec. Sec. 416.220 through 416.223 of this part.)
    Parent means a natural parent, an adoptive parent, or the spouse of 
a natural or adoptive parent.
    Representative payee means an individual, an agency, or an 
institution selected by us to receive and manage SSI benefits on your 
behalf. (See subpart F of this part for details describing when a 
representative payee is selected and a representative payee's 
responsibilities.)
    Residence in the United States means that your permanent home is in 
the United States.
    United States or U.S. means the 50 States, the District of Columbia, 
and the Northern Mariana Islands.
    We, Us, or Our means the Social Security Administration.

[[Page 789]]

    You or Your means an applicant, an eligible individual, an eligible 
spouse, or an eligible child.

[46 FR 5873, Jan. 21, 1981, as amended at 65 FR 16814, Mar. 30, 2000]

                            Report Provisions



Sec. 416.704  Who must make reports.

    (a) You are responsible for making required reports to us if you 
are--
    (1) An eligible individual (see Sec. 416.120(c)(13));
    (2) An eligible spouse (see Sec. 416.120(c)(14));
    (3) An eligible child (see Sec. Sec. 416.120(c)(13) and 416.1856); 
or
    (4) An applicant awaiting a final determination upon an application.
    (b) If you have a representative payee, and you have not been 
legally adjudged incompetent, either you or your representative payee 
must make the required reports.
    (c) If you have a representative payee and you have been legally 
adjudged incompetent, you are not responsible for making reports to us; 
however, your representative payee is responsible for making required 
reports to us.

[46 FR 5873, Jan. 21, 1981, as amended at 51 FR 10616, Mar. 28, 1986]



Sec. 416.708  What you must report.

    This section describes the events that you must report to us. They 
are--
    (a) A change of address. You must report to us any change in your 
mailing address and any change in the address where you live.
    (b) A change in living arrangements. You must report to us any 
change in the make-up of your household: That is, any person who comes 
to live in your household and any person who moves out of your 
household.
    (c) A change in income. You must report to us any increase or 
decrease in your income, and any increase or decrease in the income of--
    (1) Your ineligible spouse who lives with you;
    (2) Your essential person;
    (3) Your parent, if you are an eligible child and your parent lives 
with you; or
    (4) An ineligible child who lives with you.

However, you need not report an increase in your Social Security 
benefits if the increase is only a cost-of-living adjustment. (For a 
complete discussion of what we consider income, see subpart K. See 
subpart M, Sec. 416.1323 regarding suspension because of excess 
income.)
    (d) A change in resources. You must report to us any resources you 
receive or part with, and any resources received or parted with by--
    (1) Your ineligible spouse who lives with you;
    (2) Your essential person; or
    (3) Your parent, if you are an eligible child and your parent lives 
with you. (For a complete discussion of what we consider a resource, see 
subpart L. See subpart M, Sec. 416.1324 regarding suspension because of 
excess resources.)
    (e) Eligibility for other benefits. You must report to us your 
eligibility for benefits other than SSI benefits. See Sec. Sec. 416.210 
and 416.1330 regarding your responsibility to apply for any other 
benefits for which you may be eligible.
    (f) Certain deaths. (1) If you are an eligible individual, you must 
report the death of your eligible spouse, the death of your ineligible 
spouse who was living with you, and the death of any other person who 
was living with you.
    (2) If you are an eligible spouse, you must report the death of your 
spouse, and the death of any other person who was living with you.
    (3) If you are an eligible child, you must report the death of a 
parent who was living with you, and the death of any other person who 
was living with you.
    (4) If you are a representative payee, you must report the death of 
an eligible individual, eligible spouse, or eligible child whom you 
represent; and the death of any other person who was living in the 
household of the individual you represent.
    (5) If you have a representative payee, you must report the death of 
your representative payee.
    (g) A change in marital status. You must report to us--
    (1) Your marriage, your divorce, or the annulment of your marriage;
    (2) The marriage, divorce, or annulment of marriage of your parent 
who

[[Page 790]]

lives with you, if you are an eligible child;
    (3) The marriage of an ineligible child who lives with you, if you 
are an eligible child; and
    (4) The marriage of an ineligible child who lives with you if you 
are an eligible individual living with an ineligible spouse.
    (h) Medical improvements. If you are eligible for SSI benefits 
because of disability or blindness, you must report any improvement in 
your medical condition to us.
    (i) [Reserved]
    (j) Refusal to accept treatment for drug addiction or alcoholism; 
discontinuance of treatment. If you have been medically determined to be 
a drug addict or an alcoholic, and you refuse to accept treatment for 
drug addiction or alcoholism at an approved facility or institution, or 
if you discontinue treatment, you must report your refusal or 
discontinuance to us.
    (k) Admission to or discharge from a medical facility, public 
institution, or private institution. You must report to us your 
admission to or discharge from--
    (1) A hospital;
    (2) A skilled nursing facility;
    (3) An intermediate care facility; or
    (4) A public institution (defined in Sec. 416.201); or
    (5) A private institution. Private institution means an institution 
as defined in Sec. 416.201 which is not administered by or the 
responsibility of a governmental unit.
    (l) A change in school attendance. You must report to us--
    (1) A change in your school attendance if you are an eligible child;
    (2) A change in school attendance of an ineligible child who is at 
least age 18 but less than 21 and who lives with you if you are an 
eligible child; and
    (3) A change in school attendance of an ineligible child who is at 
least age 18 but less than 21 and who lives with you if you are an 
eligible individual living with an ineligible spouse.
    (m) A termination of residence in the U.S. You must report to us if 
you leave the United States voluntarily with the intention of abandoning 
your residence in the United States or you leave the United States 
involuntarily (for example, you are deported).
    (n) Leaving the U.S. temporarily. You must report to us if you leave 
the United States for 30 or more consecutive days or for a full calendar 
month (without the intention of abandoning your residence in the U.S.).
    (o) Fleeing to avoid criminal prosecution or custody or confinement 
after conviction, or violating probation or parole. You must report to 
us that you are--
    (1) Fleeing to avoid prosecution for a crime, or an attempt to 
commit a crime, which is a felony under the laws of the place from which 
you flee (or which, in the case of the State of New Jersey, is a high 
misdemeanor under the laws of that State);
    (2) Fleeing to avoid custody or confinement after conviction for a 
crime, or an attempt to commit a crime, which is a felony under the laws 
of the place from which you flee (or which, in the case of the State of 
New Jersey, is a high misdemeanor under the laws of that State); or
    (3) Violating a condition of probation or parole imposed under 
Federal or State law.

[46 FR 5873, Jan. 21, 1981, as amended at 51 FR 10616, Mar. 14, 1986; 65 
FR 40495, June 30, 2000; 68 FR 40124, July 7, 2003]



Sec. 416.710  What reports must include.

    When you make a report you must tell us--
    (a) The name and social security number under which benefits are 
paid;
    (b) The name of the person about whom you are reporting;
    (c) The event you are reporting and the date it happened; and
    (d) Your name.



Sec. 416.712  Form of the report.

    You may make a report in any of the ways described in this section.
    (a) Written reports. You may write a report on your own paper or on 
a printed form supplied by us. You may mail a written report or bring it 
to one of our offices.
    (b) Oral reports. You may report to us by telephone, or you may come 
to one of our offices and tell one of our employees what you are 
reporting.
    (c) Other forms. You may use any other suitable method of 
reporting--for example, a telegram or a cable.

[[Page 791]]



Sec. 416.714  When reports are due.

    (a) A reportable event happens. You should report to us as soon as 
an event listed in Sec. 416.708 happens. If you do not report within 10 
days after the close of the month in which the event happens, your 
report will be late. We may impose a penalty deduction from your 
benefits for a late report (see Sec. Sec. 416.722 through 416.732).
    (b) We request a report. We may request a report from you if we need 
information to determine continuing eligibility or the correct amount of 
your SSI benefit payments. If you do not report within 30 days of our 
written request, we may determine that you are ineligible to receive SSI 
benefits. We will suspend your benefits effective with the month 
following the month in which we determine that you are ineligible to 
receive SSI benefits because of your failure to give us necessary 
information.

[46 FR 5873, Jan. 21, 1981, as amended at 50 FR 48573, Nov. 26, 1985]

                           Penalty Deductions



Sec. 416.722  Circumstances under which we make a penalty deduction.

    A penalty deduction is made from your benefits if--
    (a) You fail to make a required report on time (see Sec. Sec. 
416.708 and 416.714);
    (b) We must reduce, suspend, or terminate your benefits because of 
the event you have not reported;
    (c) You received and accepted an SSI benefit for the penalty period 
(see Sec. Sec. 416.724 through 416.728 for penalty period definitions); 
and
    (d) You do not have good cause for not reporting on time (see Sec. 
416.732).



Sec. 416.724  Amounts of penalty deductions.

    (a) Amounts deducted. If we find that we must impose a penalty 
deduction, you will lose from your SSI benefits a total amount of--
    (1) $25 for a report overdue in the first penalty period;
    (2) $50 for a report overdue in the second penalty period; and
    (3) $100 for a report overdue in the third (or any following) 
penalty period.
    (b) Limit on number of penalties. Even though more than one required 
report is overdue from you at the end of a penalty period, we will limit 
the number of penalty deductions imposed to one penalty deduction for 
any one penalty period.



Sec. 416.726  Penalty period: First failure to report.

    (a) First penalty period. The first penalty period begins on the 
first day of the month you apply for SSI benefits and ends on the day we 
first learn that you should have made a required report, but did not do 
so within 10 days after the close of the month in which the event 
happened. There may be more than one required report overdue at the end 
of the first penalty period, but we will impose no more than one penalty 
deduction for the period.
    (b) Extension of first penalty period. If you have good cause for 
not making a report on time (see Sec. 416.732), we will extend the 
first penalty period to the day when we learn that you should have made 
another required report, but did not do so within 10 days after the 
close of the month in which the event happened. There may be more than 
one required report overdue at the end of the extended first penalty 
period, but we will impose no more than one penalty deduction for the 
extended period.

[46 FR 5873, Jan. 21, 1981, as amended at 50 FR 48573, Nov. 26, 1985]



Sec. 416.728  Penalty period: Second failure to report.

    (a) Second penalty period. The second penalty period begins on the 
day after the first penalty period ends. The second penalty period ends 
on the day we first learn that you should have made a required report, 
but did not do so within 10 days after the close of the month in which 
the event happened. (The event may have happened during the first 
penalty period, with the reporting due date in the second penalty 
period. The due date and the failure to report on time are the important 
factors in establishing a penalty period.) There may be more than one 
required report overdue at the end of the second penalty period, but we 
will impose no more than one penalty deduction for the period.
    (b) Extension of second penalty period. If you have good cause for 
not making

[[Page 792]]

a report on time (see Sec. 416.732), we will extend the second penalty 
period to the day when we learn that you should have made another 
required report, but did not do so within 10 days after the close of the 
month in which the event happened. There may be more than one required 
report overdue at the end of the extended second penalty period, but we 
will impose no more than one penalty deduction for the extended period.

[46 FR 5873, Jan. 21, 1981, as amended at 50 FR 48573, Nov. 26, 1985]



Sec. 416.730  Penalty period: Three or more failures to report.

    (a) Third (or a following) penalty period. A third (or a following) 
penalty period begins the day after the last penalty period ends. This 
penalty period ends on the day we first learn that you should have made 
a required report during the penalty period, but did not do so within 10 
days after the close of the month in which the event happened. (The 
event may have happened during an earlier penalty period, with the 
reporting due date in the third (or a following) penalty period. The due 
date and the failure to report on time are the important factors in 
establishing a penalty period.) There may be more than one required 
report overdue at the end of a penalty period, but we will impose no 
more than one penalty deduction for any one penalty period.
    (b) Extension of third (or a following) penalty period. Just as with 
the first and second penalty periods, if you have good cause for not 
making a report on time during the third (or a following) penalty period 
(see Sec. 416.732), we will extend the penalty period to the day when 
we learn that you should have made another required report, but did not 
do so within 10 days after the close of the month in which the event 
happened. There may be more than one required report overdue at the end 
of an extended penalty period, but we will impose no more than one 
penalty deduction for any one extended penalty period.

[46 FR 5873, Jan. 21, 1981, as amended at 50 FR 48573, Nov. 26, 1985]



Sec. 416.732  No penalty deduction if you have good cause for failure 
to report timely.

    (a) We will find that you have good cause for failure to report 
timely and we will not impose a penalty deduction, if--
    (1) You are ``without fault'' as defined in Sec. 416.552; or
    (2) Your failure or delay in reporting is not willful. ``Not 
willful'' means that--
    (i) You did not have full knowledge of the existence of your 
obligation to make a required report; or
    (ii) You did not intentionally, knowingly, and purposely fail to 
make a required report.


However, in either case we may require that you refund an overpayment 
caused by your failure to report. See subpart E of this part for waiver 
of recovery of overpayments.
    (b) In determining whether you have good cause for failure to report 
timely, we will take into account any physical, mental, educational, or 
linguistic limitations (including any lack of facility with the English 
language) you may have.

[59 FR 1636, Jan. 12, 1994]



                     Subpart H_Determination of Age

    Authority: Secs. 702(a)(5), 1601, 1614(a)(1) and 1631 of the Social 
Security Act (42 U.S.C. 902(a)(5), 1381, 1382c(a)(1), and 1383).

    Source: 39 FR 12731, Apr. 8, 1974, unless otherwise noted.



Sec. 416.801  Evidence as to age--when required.

    An applicant for benefits under title XVI of the Act shall file 
supporting evidence showing the date of his birth if his age is a 
condition of eligibility for benefits or is otherwise relevant to the 
payment of benefits pursuant to such title XVI. Such evidence may also 
be required by the Administration as to the age of any other individual 
when such other individual's age is relevant to the determination of the 
applicant's eligibility or benefit amount. In the absence of evidence to 
the contrary, if the applicant alleges that he is at least 68 years of 
age and submits any documentary evidence at least 3 years old

[[Page 793]]

which supports his allegation, no further evidence of his age is 
required. In the absence of evidence to the contrary, if a State 
required reasonably acceptable evidence of age and provides a statement 
as to an applicant's age, no further evidence of his age is required 
unless a statistically valid quality control sample has shown that a 
State's determination of age procedures do not yield an acceptable low 
rate of error.



Sec. 416.802  Type of evidence to be submitted.

    Where an individual is required to submit evidence of date of birth 
as indicated in Sec. 416.801, he shall submit a public record of birth 
or a religious record of birth or baptism established or recorded before 
his fifth birthday, if available. Where no such document recorded or 
established before age 5 is available the individual shall submit as 
evidence of age another document or documents which may serve as the 
basis for a determination of the individual's date of birth provided 
such evidence is corroborated by other evidence or by information in the 
records of the Administration.



Sec. 416.803  Evaluation of evidence.

    Generally, the highest probative value will be accorded to a public 
record of birth or a religious record of birth or baptism established or 
recorded before age 5. Where such record is not available, and other 
documents are submitted as evidence of age, in determining their 
probative value, consideration will be given to when such other 
documents were established or recorded, and the circumstances attending 
their establishment or recordation. Among the documents which may be 
submitted for such purpose are: school record, census record, Bible or 
other family record, church record of baptism or confirmation in youth 
or early adult life, insurance policy, marriage record, employment 
record, labor union record, fraternal organization record, military 
record, voting record, vaccination record, delayed birth certificate, 
birth certificate of child of applicant, physician's or midwife's record 
of birth, immigration record, naturalization record, or passport.



Sec. 416.804  Certified copy in lieu of original.

    In lieu of the original of any record, except a Bible or other 
family record, there may be submitted as evidence of age a copy of such 
record or a statement as to the date of birth shown by such record, 
which has been duly certified (see Sec. 404.701(g) of this chapter).



Sec. 416.805  When additional evidence may be required.

    If the evidence submitted is not convincing, additional evidence may 
be required.



Sec. 416.806  Expedited adjudication based on documentary evidence of age.

    Where documentary evidence of age recorded at least 3 years before 
the application is filed, which reasonably supports an aged applicant's 
allegation as to his age, is submitted, payment of benefits may be 
initiated even though additional evidence of age may be required by 
Sec. Sec. 416.801 through 416.805. The applicant will be advised that 
additional evidence is required and that, if it is subsequently 
established that the prior finding of age is incorrect, the applicant 
will be liable for refund of any overpayment he has received. If any of 
the evidence initially submitted tends to show that the age of the 
applicant or such other person does not correspond with the alleged age, 
no benefits will be paid until the evidence required by Sec. Sec. 
416.801 through 416.805 is submitted.



             Subpart I_Determining Disability and Blindness

    Authority: Secs. 702(a)(5), 1611, 1614, 1619, 1631(a), (c), and 
(d)(1), and 1633 of the Social Security Act (42 U.S.C. 902(a)(5), 1382, 
1382c, 1382h, 1383(a), (c), and (d)(1), and 1383b); secs. 4(c) and 5, 
6(c)-(e), 14(a), and 15, Pub. L. 98-460, 98 Stat. 1794, 1801, 1802, and 
1808 (42 U.S.C. 421 note, 423 note, 1382h note).

    Source: 45 FR 55621, Aug. 20, 1980, unless otherwise noted.

                                 General



Sec. 416.901  Scope of subpart.

    In order for you to become entitled to any benefits based upon 
disability or blindness you must be disabled or blind

[[Page 794]]

as defined in title XVI of the Social Security Act. This subpart 
explains how we determine whether you are disabled or blind. We have 
organized the rules in the following way.
    (a) We define general terms, then discuss who makes our disability 
or blindness determinations and state that disability and blindness 
determinations made under other programs are not binding on our 
determinations.
    (b) We explain the term disability and note some of the major 
factors that are considered in determining whether you are disabled in 
Sec. Sec. 416.905 through 416.910.
    (c) Sections 416.912 through 416.918 contain our rules on evidence. 
We explain your responsibilities for submitting evidence of your 
impairment, state what we consider to be acceptable sources of medical 
evidence, and describe what information should be included in medical 
reports.
    (d) Our general rules on evaluating disability for adults filing new 
applications are stated in Sec. Sec. 416.920 through 416.923. We 
describe the steps that we go through and the order in which they are 
considered.
    (e) Our general rules on evaluating disability for children filing 
new applications are stated in Sec. 416.924.
    (f) Our rules on medical considerations are found in Sec. Sec. 
416.925 through 416.930. We explain in these rules--
    (1) The purpose and use of the Listing of Impairments found in 
appendix 1 of subpart P of part 404 of this chapter;
    (2) What we mean by the terms medical equivalence and functional 
equivalence and how we make those findings;
    (3) The effect of a conclusion by your physician that you are 
disabled;
    (4) What we mean by symptoms, signs, and laboratory findings;
    (5) How we evaluate pain and other symptoms; and
    (6) The effect on your benefits if you fail to follow treatment that 
is expected to restore your ability to work or, if you are a child, to 
reduce your functional limitations to the point that they are no longer 
marked and severe, and how we apply the rule in Sec. 416.930.
    (g) In Sec. Sec. 416.931 through 416.934 we explain that we may 
make payments on the basis of presumptive disability or presumptive 
blindness.
    (h) In Sec. Sec. 416.935 through 416.939 we explain the rules which 
apply in cases of drug addiction and alcoholism.
    (i) In Sec. Sec. 416.945 through 416.946 we explain what we mean by 
the term residual functional capacity, state when an assessment of 
residual functional capacity is required, and who may make it.
    (j) Our rules on vocational considerations are in Sec. Sec. 416.960 
through 416.969a. We explain in these rules--
    (1) When we must consider vocational factors along with the medical 
evidence;
    (2) How we use our residual functional capacity assessment to 
determine if you can still do your past relevant work or other work;
    (3) How we consider the vocational factors of age, education, and 
work experience;
    (4) What we mean by ``work which exists in the national economy'';
    (5) How we consider the exertional, nonexertional, and skill 
requirements of work, and when we will consider the limitations or 
restrictions that result from your impairment(s) and related symptoms to 
be exertional, nonexertional, or a combination of both; and
    (6) How we use the Medical-Vocational Guidelines in appendix 2 of 
subpart P of part 404 of this chapter.
    (k) Our rules on substantial gainful activity are found in 
Sec. Sec. 416.971 through 416.974. These explain what we mean by 
substantial gainful activity and how we evaluate your work activity.
    (l) In Sec. Sec. 416.981 through 416.985 we discuss blindness.
    (m) Our rules on when disability or blindness continues and stops 
are contained in Sec. Sec. 416.986 and 416.988 through 416.998. We 
explain what your responsibilities are in telling us of any events that 
may cause a change in your disability or blindness status and when we 
will review to see if you are still disabled. We also explain how we 
consider the issue of medical improvement (and

[[Page 795]]

the exceptions to medical improvement) in determining whether you are 
still disabled.

[45 FR 55621, Aug. 20, 1980, as amended at 50 FR 50136, Dec. 6, 1985; 56 
FR 5553, Feb. 11, 1991; 56 FR 57944, Nov. 14, 1991; 62 FR 6420, Feb. 11, 
1997; 65 FR 42788, July 11, 2000; 65 FR 54777, Sept. 11, 2000; 68 FR 
51164, Aug. 26, 2003]



Sec. 416.902  General definitions and terms for this subpart.

    As used in this subpart--
    Acceptable medical source refers to one of the sources described in 
Sec. 416.913(a) who provides evidence about your impairments. It 
includes treating sources, nontreating sources, and nonexamining 
sources.
    Adult means a person who is age 18 or older.
    Child means a person who has not attained age 18.
    Commissioner means the Commissioner of Social Security.
    Disability redetermination means a redetermination of your 
eligibility based on disability using the rules for new applicants 
appropriate to your age, except the rules pertaining to performance of 
substantial gainful activity. For individuals who are working and for 
whom a disability redetermination is required, we will apply the rules 
in Sec. Sec. 416.260 ff. In conducting a disability redetermination, we 
will not use the rules for determining whether disability continues set 
forth in Sec. 416.994 or Sec. 416.994a. (See Sec. 416.987.)
    Impairment(s) means a medically determinable physical or mental 
impairment or a combination of medically determinable physical or mental 
impairments.
    The listings means the Listing of Impairments in appendix 1 of 
subpart P of part 404 of this chapter. When we refer to an impairment(s) 
that ``meets, medically equals, or functionally equals the listings,'' 
we mean that the impairment(s) meets or medically equals the severity of 
any listing in appendix 1 of subpart P of part 404 of this chapter, as 
explained in Sec. Sec. 416.925 and 416.926, or that it functionally 
equals the severity of the listings, as explained in Sec. 416.926a.
    Marked and severe functional limitations, when used as a phrase, 
means the standard of disability in the Social Security Act for children 
claiming SSI benefits based on disability. It is a level of severity 
that meets, medically equals, or functionally equals the listings. (See 
Sec. Sec. 416.906, 416.924, and 416.926a.) The words ``marked'' and 
``severe'' are also separate terms used throughout this subpart to 
describe measures of functional limitations; the term ``marked'' is also 
used in the listings. (See Sec. Sec. 416.924 and 416.926a.) The meaning 
of the words ``marked'' and ``severe'' when used as part of the phrase 
marked and severe functional limitations is not the same as the meaning 
of the separate terms ``marked'' and ``severe'' used elsewhere in 20 CFR 
404 and 416. (See Sec. Sec. 416.924(c) and 416.926a(e).)
    Medical sources refers to acceptable medical sources, or other 
health care providers who are not acceptable medical sources.
    Nonexamining source means a physician, psychologist, or other 
acceptable medical source who has not examined you but provides a 
medical or other opinion in your case. At the administrative law judge 
hearing and Appeals Council levels of the administrative review process, 
it includes State agency medical and psychological consultants, other 
program physicians and psychologists, and medical experts we consult. 
See Sec. 416.927.
    Nontreating source means a physician, psychologist, or other 
acceptable medical source who has examined you but does not have, or did 
not have, an ongoing treatment relationship with you. The term includes 
an acceptable medical source who is a consultative examiner for us, when 
the consultative examiner is not your treating source. See Sec. 
416.927.
    State agency means that agency of a State which has been designated 
by the State to carry out the disability or blindness determination 
function.
    Treating source means your own physician, psychologist, or other 
acceptable medical source who provides you, or has provided you, with 
medical treatment or evaluation and who has, or has had, an ongoing 
treatment relationship with you. Generally, we will consider that you 
have an ongoing treatment relationship with an acceptable medical source 
when the medical

[[Page 796]]

evidence establishes that you see, or have seen, the source with a 
frequency consistent with accepted medical practice for the type of 
treatment and/or evaluation required for your medical condition(s). We 
may consider an acceptable medical source who has treated or evaluated 
you only a few times or only after long intervals (e.g., twice a year) 
to be your treating source if the nature and frequency of the treatment 
or evaluation is typical for your condition(s). We will not consider an 
acceptable medical source to be your treating source if your 
relationship with the source is not based on your medical need for 
treatment or evaluation, but solely on your need to obtain a report in 
support of your claim for disability. In such a case, we will consider 
the acceptable medical source to be a nontreating source.
    We or us refers to either the Social Security Administration or the 
State agency making the disability or blindness determination.
    You, your, me, my and I mean, as appropriate, the person who applies 
for benefits, the person for whom an application is filed, or the person 
who is receiving benefits based on disability or blindness.

[56 FR 36962, Aug. 1, 1991, as amended at 58 FR 47577, Sept. 9, 1993; 62 
FR 6420, Feb. 11, 1997; 62 FR 13733, Mar. 21, 1997; 65 FR 11878, Mar. 7, 
2000; 65 FR 54777, Sept. 11, 2000; 65 FR 80308, Dec. 21, 2000]

                             Determinations



Sec. 416.903  Who makes disability and blindness determinations.

    (a) State agencies. State agencies make disability and blindness 
determinations for the Commissioner for most persons living in the 
State. State agencies make these disability and blindness determinations 
under regulations containing performance standards and other 
administrative requirements relating to the disability and blindness 
determination function. States have the option of turning the function 
over to the Federal Government if they no longer want to make disability 
determinations. Also, the Commissioner may take the function away from 
any State which has substantially failed to make disability and 
blindness determinations in accordance with these regulations. Subpart J 
of this part contains the rules the States must follow in making 
disability and blindness determinations.
    (b) Social Security Administration. The Social Security 
Administration will make disability and blindness determinations for--
    (1) Any person living in a State which is not making for the 
Commissioner any disability and blindness determinations or which is not 
making those determinations for the class of claimants to which that 
person belongs; and
    (2) Any person living outside the United States.
    (c) What determinations are authorized. The Commissioner has 
authorized the State agencies and the Social Security Administration to 
make determinations about--
    (1) Whether you are disabled or blind;
    (2) The date your disability or blindness began; and
    (3) The date your disability or blindness stopped.
    (d) Review of State agency determinations. On review of a State 
agency determination or redetermination of disability or blindness we 
may find that--
    (1) You are, or are not, disabled or blind, regardless of what the 
State agency found;
    (2) Your disability or blindness began earlier or later than the 
date found by the State agency; and
    (3) Your disability or blindness stopped earlier or later than the 
date found by the State agency.
    (e) Initial determinations for mental impairments. An initial 
determination by a State agency or the Social Security Administration 
that you are not disabled (or a Social Security Administration review of 
a State agency's initial determination), in any case where there is 
evidence which indicates the existence of a mental impairment, will be 
made only after every reasonable effort has been made to ensure that a 
qualified psychiatrist or psychologist has completed the medical portion 
of the case review and any applicable residual functional capacity 
assessment. (See Sec. 416.1016 for the qualifications we consider 
necessary for a psychologist to be a psychological consultant and

[[Page 797]]

Sec. 416.1017 for what we consider reasonable effort.) If the services 
of qualified psychiatrists or psychologists cannot be obtained because 
of impediments at the State level, the Commissioner may contract 
directly for the services. In a case where there is evidence of mental 
and nonmental impairments and a qualified psychologist serves as a 
psychological consultant, the psychologist will evaluate only the mental 
impairment, and a physician will evaluate the nonmental impairment.
    (f) Determinations for childhood impairments. In making a 
determination under title XVI with respect to the disability of a child 
to whom paragraph (e) of this section does not apply, we will make 
reasonable efforts to ensure that a qualified pediatrician or other 
individual who specializes in a field of medicine appropriate to the 
child's impairment(s) evaluates the case of the child.

[46 FR 29211, May 29, 1981, as amended at 52 FR 33927, Sept. 9, 1987; 58 
FR 47577, Sept. 9, 1993; 62 FR 38454, July 18, 1997; 65 FR 34958, June 
1, 2000]



Sec. 416.903a  Program integrity.

    We will not use in our program any individual or entity, except to 
provide existing medical evidence, who is currently excluded, suspended, 
or otherwise barred from participation in the Medicare or Medicaid 
programs, or any other Federal or Federally-assisted program; whose 
license to provide health care services is currently revoked or 
suspended by any State licensing authority pursuant to adequate due 
process procedures for reasons bearing on professional competence, 
professional conduct, or financial integrity; or who until a final 
determination is made has surrendered such a license while formal 
disciplinary proceedings involving professional conduct are pending. By 
individual or entity we mean a medical or psychological consultant, 
consultative examination provider, or diagnostic test facility. Also see 
Sec. Sec. 416.919 and 416.919g(b).

[56 FR 36963, Aug. 1, 1991]



Sec. 416.904  Determinations by other organizations and agencies.

    A decision by any nongovernmental agency or any other governmental 
agency about whether you are disabled or blind is based on its rules and 
is not our decision about whether you are disabled or blind. We must 
make a disability or blindness determination based on social security 
law. Therefore, a determination made by another agency that you are 
disabled or blind is not binding on us.

                        Definition of Disability



Sec. 416.905  Basic definition of disability for adults.

    (a) The law defines disability as the inability to do any 
substantial gainful activity by reason of any medically determinable 
physical or mental impairment which can be expected to result in death 
or which has lasted or can be expected to last for a continuous period 
of not less than 12 months. To meet this definition, you must have a 
severe impairment(s) that makes you unable to do your past relevant work 
(see Sec. 416.960(b)) or any other substantial gainful work that exists 
in the national economy. If your severe impairment(s) does not meet or 
medically equal a listing in appendix 1 to subpart P of part 404 of this 
chapter, we will assess your residual functional capacity as provided in 
Sec. Sec. 416.920(e) and 416.945. (See Sec. 416.920(g)(2) and 416.962 
for an exception to this rule.) We will use this residual functional 
capacity assessment to determine if you can do your past relevant work. 
If we find that you cannot do your past relevant work, we will use the 
same residual functional capacity assessment and your vocational factors 
of age, education, and work experience to determine if you can do other 
work.
    (b) There are different rules for determining disability for 
individuals who are statutorily blind. We discuss these in Sec. Sec. 
416.981 through 416.985.

[45 FR 55621, Aug. 20, 1980, as amended at 56 FR 5553, Feb. 11, 1991; 68 
FR 51164, Aug. 26, 2003]

[[Page 798]]



Sec. 416.906  Basic definition of disability for children.

    If you are under age 18, we will consider you disabled if you have a 
medically determinable physical or mental impairment or combination of 
impairments that causes marked and severe functional limitations, and 
that can be expected to cause death or that has lasted or can be 
expected to last for a continuous period of not less than 12 months. 
Notwithstanding the preceding sentence, if you file a new application 
for benefits and you are engaging in substantial gainful activity, we 
will not consider you disabled. We discuss our rules for determining 
disability in children who file new applications in Sec. Sec. 416.924 
through 416.924b and Sec. Sec. 416.925 through 416.926a.

[62 FR 6421, Feb. 11, 1997, as amended at 65 FR 54777, Sept. 11, 2000]



Sec. 416.907  Disability under a State plan.

    You will also be considered disabled for payment of supplemental 
security income benefits if--
    (a) You were found to be permanently and totally disabled as defined 
under a State plan approved under title XIV or XVI of the Social 
Security Act, as in effect for October 1972;
    (b) You received aid under the State plan because of your disability 
for the month of December 1973 and for at least one month before July 
1973; and
    (c) You continue to be disabled as defined under the State plan.



Sec. 416.908  What is needed to show an impairment.

    If you are not doing substantial gainful activity, we always look 
first at your physical or mental impairment(s) to determine whether you 
are disabled or blind. Your impairment must result from anatomical, 
physiological, or psychological abnormalities which can be shown by 
medically acceptable clinical and laboratory diagnostic techniques. A 
physical or mental impairment must be established by medical evidence 
consisting of signs, symptoms, and laboratory findings, not only by your 
statement of symptoms (see Sec. 416.927). (See Sec. 416.928 for 
further information about what we mean by symptoms, signs, and 
laboratory findings.)

[45 FR 55621, Aug. 20, 1980, as amended at 56 FR 36963, Aug. 1, 1991]



Sec. 416.909  How long the impairment must last.

    Unless your impairment is expected to result in death, it must have 
lasted or must be expected to last for a continuous period of at least 
12 months. We call this the duration requirement.



Sec. 416.910  Meaning of substantial gainful activity.

    Substantial gainful activity means work that--
    (a) Involves doing significant and productive physical or mental 
duties; and
    (b) Is done (or intended) for pay or profit.

(See Sec. 416.972 for further details about what we mean by substantial 
gainful activity.)



Sec. 416.911  Definition of disabling impairment.

    (a) If you are an adult:
    (1) A disabling impairment is an impairment (or combination of 
impairments) which, of itself, is so severe that it meets or equals a 
set of criteria in the Listing of Impairments in appendix 1 of subpart P 
of part 404 of this chapter or which, when considered with your age, 
education and work experience, would result in a finding that you are 
disabled under Sec. 416.994, unless the disability redetermination 
rules in Sec. 416.987(b) apply to you.
    (2) If the disability redetermination rules in Sec. 416.987 apply 
to you, a disabling impairment is an impairment or combination of 
impairments that meets the requirements in Sec. Sec. 416.920 (c) 
through (f).
    (b) If you are a child, a disabling impairment is an impairment (or 
combination of impairments) that causes marked and severe functional 
limitations. This means that the impairment or combination of 
impairments:
    (1) Must meet, medically equal, or functionally equal the listings, 
or
    (2) Would result in a finding that you are disabled under Sec. 
416.994a.

[[Page 799]]

    (c) In determining whether you have a disabling impairment, earnings 
are not considered.

[62 FR 6421, Feb. 11, 1997, as amended at 65 FR 54777, Sept. 11, 2000]

                                Evidence



Sec. 416.912  Evidence.

    (a) General. In general, you have to prove to us that you are blind 
or disabled. This means that you must furnish medical and other evidence 
that we can use to reach conclusions about your medical impairment(s). 
If material to the determination whether you are blind or disabled, 
medical and other evidence must be furnished about the effects of your 
impairment(s) on your ability to work, or if you are a child, on your 
functioning, on a sustained basis. We will consider only impairment(s) 
you say you have or about which we receive evidence.
    (b) What we mean by ``evidence.'' Evidence is anything you or anyone 
else submits to us or that we obtain that relates to your claim. This 
includes, but is not limited to:
    (1) Objective medical evidence, that is, medical signs and 
laboratory findings as defined in Sec. 416.928 (b) and (c);
    (2) Other evidence from medical sources, such as medical history, 
opinions, and statements about treatment you have received;
    (3) Statements you or others make about your impairment(s), your 
restrictions, your daily activities, your efforts to work, or any other 
relevant statements you make to medical sources during the course of 
examination or treatment, or to us during interviews, on applications, 
in letters, and in testimony in our administrative proceedings;
    (4) Information from other sources, as described in Sec. 
416.913(d);
    (5) Decisions by any governmental or nongovernmental agency about 
whether you are disabled or blind; and
    (6) At the administrative law judge and Appeals Council levels, 
findings, other than the ultimate determination about whether you are 
disabled, made by State agency medical or psychological consultants and 
other program physicians or psychologists, and opinions expressed by 
medical experts we consult based on their review of the evidence in your 
case record. See Sec. Sec. 416.927(f)(2) and (f)(3).
    (c) Your responsibility. You must provide medical evidence showing 
that you have an impairment(s) and how severe it is during the time you 
say that you are disabled. You must provide evidence showing how your 
impairment(s) affects your functioning during the time you say that you 
are disabled, and any other information that we need to decide your 
case. If we ask you, you must provide evidence about:
    (1) Your age;
    (2) Your education and training;
    (3) Your work experience;
    (4) Your daily activities both before and after the date you say 
that you became disabled;
    (5) Your efforts to work; and
    (6) Any other factors showing how your impairment(s) affects your 
ability to work, or, if you are a child, your functioning. In Sec. Sec. 
416.960 through 416.969, we discuss in more detail the evidence we need 
when we consider vocational factors.
    (d) Our responsibility. Before we make a determination that you are 
not disabled, we will develop your complete medical history for at least 
the 12 months preceding the month in which you file your application 
unless there is a reason to believe that development of an earlier 
period is necessary or unless you say that your disability began less 
than 12 months before you filed your application. We will make every 
reasonable effort to help you get medical reports from your own medical 
sources when you give us permission to request the reports.
    (1) Every reasonable effort means that we will make an initial 
request for evidence from your medical source and, at any time between 
10 and 20 calendar days after the initial request, if the evidence has 
not been received, we will make one followup request to obtain the 
medical evidence necessary to make a determination. The medical source 
will have a minimum of 10 calendar days from the date of our followup 
request to reply, unless our experience with that source indicates that 
a longer period is advisable in a particular case.

[[Page 800]]

    (2) By complete medical history, we mean the records of your medical 
source(s) covering at least the 12 months preceding the month in which 
you file your application. If you say that your disability began less 
than 12 months before you filed your application, we will develop your 
complete medical history beginning with the month you say your 
disability began unless we have reason to believe that your disability 
began earlier.
    (e) Recontacting medical sources. When the evidence we receive from 
your treating physician or psychologist or other medical source is 
inadequate for us to determine whether you are disabled, we will need 
additional information to reach a determination or a decision. To obtain 
the information, we will take the following actions.
    (1) We will first recontact your treating physician or psychologist 
or other medical source to determine whether the additional information 
we need is readily available. We will seek additional evidence or 
clarification from your medical source when the report from your medical 
source contains a conflict or ambiguity that must be resolved, the 
report does not contain all the necessary information, or does not 
appear to be based on medically acceptable clinical and laboratory 
diagnostic techniques. We may do this by requesting copies of your 
medical source's records, a new report, or a more detailed report from 
your medical source, including your treating source, or by telephoning 
your medical source. In every instance where medical evidence is 
obtained over the telephone, the telephone report will be sent to the 
source for review, signature and return.
    (2) We may not seek additional evidence or clarification from a 
medical source when we know from past experience that the source either 
cannot or will not provide the necessary findings.
    (f) Need for consultative examination. If the information we need is 
not readily available from the records of your medical treatment source, 
or we are unable to seek clarification from your medical source, we will 
ask you to attend one or more consultative examinations at our expense. 
See Sec. Sec. 416.917 through 416.919t for the rules governing the 
consultative examination process. Generally, we will not request a 
consultative examination until we have made every reasonable effort to 
obtain evidence from your own medical sources. However, in some 
instances, such as when a source is known to be unable to provide 
certain tests or procedures or is known to be nonproductive or 
uncooperative, we may order a consultative examination while awaiting 
receipt of medical source evidence. We will not evaluate this evidence 
until we have made every reasonable effort to obtain evidence from your 
medical sources.
    (g) Other work. In order to determine under Sec. 416.920(g) that 
you are able to make an adjustment to other work, we must provide 
evidence about the existence of work in the national economy that you 
can do (see Sec. Sec. 416.960 through 416.969a), given your residual 
functional capacity (which we have already assessed, as described in 
Sec. 416.920(e)), age, education, and work experience.

[56 FR 36963, Aug. 1, 1991, as amended at 62 FR 6421, Feb. 11, 1997; 65 
FR 11878, Mar. 7, 2000; 65 FR 34958, June 1, 2000; 68 FR 51164, Aug. 26, 
2003]



Sec. 416.913  Medical and other evidence of your impairment(s).

    (a) Sources who can provide evidence to establish an impairment. We 
need evidence from acceptable medical sources to establish whether you 
have a medically determinable impairment(s). See Sec. 416.908. 
Acceptable medical sources are--
    (1) Licensed physicians (medical or osteopathic doctors);
    (2) Licensed or certified psychologists. Included are school 
psychologists, or other licensed or certified individuals with other 
titles who perform the same function as a school psychologist in a 
school setting, for purposes of establishing mental retardation, 
learning disabilities, and borderline intellectual functioning only;
    (3) Licensed optometrists, for the measurement of visual acuity and 
visual fields (see paragraph (f) of this section for the evidence needed 
for statutory blindness);
    (4) Licensed podiatrists, for purposes of establishing impairments 
of the foot, or foot and ankle only, depending

[[Page 801]]

on whether the State in which the podiatrist practices permits the 
practice of podiatry on the foot only, or the foot and ankle; and
    (5) Qualified speech-language pathologists, for purposes of 
establishing speech or language impairments only. For this source, 
``qualified'' means that the speech-language pathologist must be 
licensed by the State professional licensing agency, or be fully 
certified by the State education agency in the State in which he or she 
practices, or hold a Certificate of Clinical Competence from the 
American-Speech-Language-Hearing Association.
    (b) Medical reports. Medical reports should include--
    (1) Medical history;
    (2) Clinical findings (such as the results of physical or mental 
status examinations);
    (3) Laboratory findings (such as blood pressure, X-rays);
    (4) Diagnosis (statement of disease or injury based on its signs and 
symptoms);
    (5) Treatment prescribed with response, and prognosis; and
    (6) A statement about what you can still do despite your 
impairment(s) based on the acceptable medical source's findings on the 
factors under paragraphs (b)(1) through (b)(5) of this section (except 
in statutory blindness claims). Although we will request a medical 
source statement about what you can still do despite your impairment(s), 
the lack of the medical source statement will not make the report 
incomplete. See Sec. 416.927.
    (c) Statements about what you can still do. At the administrative 
law judge and Appeals Council levels, we will consider residual 
functional capacity assessments made by State agency medical and 
psychological consultants and other program physicians and psychologists 
to be ``statements about what you can still do'' made by nonexamining 
physicians and psychologists based on their review of the evidence in 
the case record. Statements about what you can still do (based on the 
acceptable medical source's findings on the factors under paragraphs 
(b)(1) through (b)(5) of this section) should describe, but are not 
limited to, the kinds of physical and mental capabilities listed as 
follows (See Sec. Sec. 416.927 and 416.945(c)):
    (1) If you are an adult, the acceptable medical source's opinion 
about your ability, despite your impairment(s), to do work-related 
activities such as sitting, standing, walking, lifting, carrying, 
handling objects, hearing, speaking, and traveling;
    (2) If you are an adult, in cases of mental impairment(s), the 
acceptable medical source's opinion about your ability to understand, to 
carry out and remember instructions, and to respond appropriately to 
supervision, coworkers, and work pressures in a work setting; and
    (3) If you are a child, the medical source's opinion about your 
functional limitations compared to children your age who do not have 
impairments in acquiring and using information, attending and completing 
tasks, interacting and relating with others, moving about and 
manipulating objects, caring for yourself, and health and physical well-
being.
    (d) Other sources. In addition to evidence from the acceptable 
medical sources listed in paragraph (a) of this section, we may also use 
evidence from other sources to show the severity of your impairment(s) 
and how it affects your ability to work or, if you are a child, how you 
typically function compared to children your age who do not have 
impairments. Other sources include, but are not limited to--
    (1) Medical sources not listed in paragraph (a) of this section (for 
example, nurse-practitioners, physicians' assistants, naturopaths, 
chiropractors, audiologists, and therapists);
    (2) Educational personnel (for example, school teachers, counselors, 
early intervention team members, developmental center workers, and 
daycare center workers);
    (3) Public and private social welfare agency personnel; and
    (4) Other non-medical sources (for example, spouses, parents and 
other caregivers, siblings, other relatives, friends, neighbors, and 
clergy).
    (e) Completeness. The evidence in your case record, including the 
medical evidence from acceptable medical sources (containing the 
clinical and laboratory findings) and other medical sources not

[[Page 802]]

listed in paragraph (a) of this section, information you give us about 
your medical condition(s) and how it affects you, and other evidence 
from other sources, must be complete and detailed enough to allow us to 
make a determination or decision about whether you are disabled or 
blind. It must allow us to determine--
    (1) The nature and severity of your impairment(s) for any period in 
question;
    (2) Whether the duration requirement described in Sec. 416.909 is 
met; and
    (3) Your residual functional capacity to do work-related physical 
and mental activities, when the evaluation steps described in Sec. 
416.920(e) or (f)(1) apply, or, if you are a child, how you typically 
function compared to children your age who do not have impairments.
    (f) Evidence we need to establish statutory blindness. If you are 
applying for benefits on the basis of statutory blindness, we will 
require an examination by a physician skilled in diseases of the eye or 
by an optometrist, whichever you may select.

[45 FR 55621, Aug. 20, 1980, as amended at 56 FR 5553, Feb. 11, 1991; 56 
FR 36964, Aug. 1, 1991; 58 FR 47577, Sept. 9, 1993; 62 FR 6421, Feb. 11, 
1997; 65 FR 11878, Mar. 7, 2000; 65 FR 34958, June 1, 2000; 65 FR 54777, 
Sept. 11, 2000]



Sec. 416.914  When we will purchase existing evidence.

    We need specific medical evidence to determine whether you are 
disabled or blind. We will pay for the medical evidence we request, if 
there is a charge. We will also be responsible for the cost of medical 
evidence we ask you to get.



Sec. 416.915  Where and how to submit evidence.

    You may give us evidence about your impairment at any of our offices 
or at the office of any State agency authorized to make disability or 
blindness determinations. You may also give evidence to one of our 
employees authorized to accept evidence at another place. For more 
information about this, see subpart C of this part.



Sec. 416.916  If you fail to submit medical and other evidence.

    You (and if you are a child, your parent, guardian, relative, or 
other person acting on your behalf) must co-operate in furnishing us 
with, or in helping us to obtain or identify, available medical or other 
evidence about your impairment(s). When you fail to cooperate with us in 
obtaining evidence, we will have to make a decision based on information 
available in your case. We will not excuse you from giving us evidence 
because you have religious or personal reasons against medical 
examinations, tests, or treatment.

[58 FR 47577, Sept. 9, 1993]



Sec. 416.917  Consultative examination at our expense.

    If your medical sources cannot or will not give us sufficient 
medical evidence about your impairment for us to determine whether you 
are disabled or blind, we may ask you to have one or more physical or 
mental examinations or tests. We will pay for these examinations. 
However, we will not pay for any medical examination arranged by you or 
your representative without our advance approval. If we arrange for the 
examination or test, we will give you reasonable notice of the date, 
time, and place the examination or test will be given, and the name of 
the person or facility who will do it. We will also give the examiner 
any necessary background information about your condition.

[56 FR 36964, Aug. 1, 1991]



Sec. 416.918  If you do not appear at a consultative examination.

    (a) General. If you are applying for benefits and do not have a good 
reason for failing or refusing to take part in a consultative 
examination or test which we arrange for you to get information we need 
to determine your disability or blindness, we may find that you are not 
disabled or blind. If you are already receiving benefits and do not have 
a good reason for failing or refusing to take part in a consultative 
examination or test which we arranged for you, we may determine that 
your disability or blindness has stopped because of your failure or 
refusal. Therefore, if you have any reason why you cannot go for the 
scheduled appointment, you should tell us about this as soon as possible 
before the examination date. If

[[Page 803]]

you have a good reason, we will schedule another examination. We will 
consider your physical, mental, educational, and linguistic limitations 
(including any lack of facility with the English language) when 
determining if you have a good reason for failing to attend a 
consultative examination.
    (b) Examples of good reasons for failure to appear. Some examples of 
what we consider good reasons for not going to a scheduled examination 
include--
    (1) Illness on the date of the scheduled examination or test;
    (2) Not receiving timely notice of the scheduled examination or 
test, or receiving no notice at all;
    (3) Being furnished incorrect or incomplete information, or being 
given incorrect information about the physician involved or the time or 
place of the examination or test, or;
    (4) Having had death or serious illness occur in your immediate 
family.
    (c) Objections by your physician. If any of your treating physicians 
tell you that you should not take the examination or test, you should 
tell us at once. In many cases, we may be able to get the information we 
need in another way. Your physician may agree to another type of 
examination for the same purpose.

[45 FR 55621, Aug. 20, 1980, as amended at 59 FR 1636, Jan. 12, 1994]

Standards To Be Used in Determining When a Consultative Examination Will 
        Be Obtained in Connection With Disability Determinations



Sec. 416.919  The consultative examination.

    A consultative examination is a physical or mental examination or 
test purchased for you at our request and expense from a treating source 
or another medical source, including a pediatrician when appropriate. 
The decision to purchase a consultative examination will be made on an 
individual case basis in accordance with the provisions of Sec. 
416.919a through Sec. 416.919f. Selection of the source for the 
examination will be consistent with the provisions of Sec. 416.903a and 
Sec. Sec. 416.919g through 416.919j. The rules and procedures for 
requesting consultative examinations set forth in Sec. Sec. 416.919a 
and 416.919b are applicable at the reconsideration and hearing levels of 
review, as well as the initial level of determination.

[56 FR 36964, Aug. 1, 1991, as amended at 65 FR 11879, Mar. 7, 2000]



Sec. 416.919a  When we will purchase a consultative examination and how 
we will use it.

    (a)(1) General. The decision to purchase a consultative examination 
for you will be made after we have given full consideration to whether 
the additional information needed (e.g., clinical findings, laboratory 
tests, diagnosis, and prognosis) is readily available from the records 
of your medical sources. See Sec. 416.912 for the procedures we will 
follow to obtain evidence from your medical sources. Before purchasing a 
consultative examination, we will consider not only existing medical 
reports, but also the disability interview form containing your 
allegations as well as other pertinent evidence in your file.
    (2) When we purchase a consultative examination, we will use the 
report from the consultative examination to try to resolve a conflict or 
ambiguity if one exists. We will also use a consultative examination to 
secure needed medical evidence the file does not contain such as 
clinical findings, laboratory tests, a diagnosis or prognosis necessary 
for decision.
    (b) Situations requiring a consultative examination. A consultative 
examination may be purchased when the evidence as a whole, both medical 
and nonmedical, is not sufficient to support a decision on your claim. 
Other situations, including but not limited to the situations listed 
below, will normally require a consultative examination:
    (1) The additional evidence needed is not contained in the records 
of your medical sources;
    (2) The evidence that may have been available from your treating or 
other medical sources cannot be obtained for reasons beyond your 
control, such as death or noncooperation of a medical source;
    (3) Highly technical or specialized medical evidence that we need is 
not

[[Page 804]]

available from your treating or other medical sources;
    (4) A conflict, inconsistency, ambiguity or insufficiency in the 
evidence must be resolved, and we are unable to do so by recontacting 
your medical source; or
    (5) There is an indication of a change in your condition that is 
likely to affect your ability to work, or, if you are a child, your 
functioning, but the current severity of your impairment is not 
established.

[56 FR 36964, Aug. 1, 1991, as amended at 62 FR 6421, Feb. 11, 1997]



Sec. 416.919b  When we will not purchase a consultative examination.

    We will not purchase a consultative examination in situations 
including, but not limited to, the following situations:
    (a) When any issues about your actual performance of substantial 
gainful activity have not been resolved;
    (b) When you do not meet all of the nondisability requirements.

[56 FR 36965, Aug. 1, 1991]

        Standards for the Type of Referral and for Report Content



Sec. 416.919f  Type of purchased examinations.

    We will purchase only the specific examinations and tests we need to 
make a determination in your claim. For example, we will not authorize a 
comprehensive medical examination when the only evidence we need is a 
special test, such as an X-ray, blood studies, or an electrocardiogram.

[56 FR 36965, Aug. 1, 1991]



Sec. 416.919g  Who we will select to perform a consultative examination.

    (a) We will purchase a consultative examination only from a 
qualified medical source. The medical source may be your own physician 
or psychologist, or another source. If you are a child, the medical 
source we choose may be a pediatrician. For a more complete list of 
medical sources, see Sec. 416.913.
    (b) By ``qualified,'' we mean that the medical source must be 
currently licensed in the State and have the training and experience to 
perform the type of examination or test we will request; the medical 
source must not be barred from participation in our programs under the 
provisions of Sec. 416.903a. The medical source must also have the 
equipment required to provide an adequate assessment and record of the 
existence and level of severity of your alleged impairments.
    (c) The medical source we choose may use support staff to help 
perform the consultative examination. Any such support staff (e.g., X-
ray technician, nurse) must meet appropriate licensing or certification 
requirements of the State. See Sec. 416.903a.

[56 FR 36965, Aug. 1, 1991, as amended at 65 FR 11879, Mar. 7, 2000]



Sec. 416.919h  Your treating source.

    When in our judgment your treating source is qualified, equipped, 
and willing to perform the additional examination or tests for the fee 
schedule payment, and generally furnishes complete and timely reports, 
your treating source will be the preferred source to do the purchased 
examination. Even if only a supplemental test is required, your treating 
source is ordinarily the preferred source.

[65 FR 11879, Mar. 7, 2000]



Sec. 416.919i  Other sources for consultative examinations.

    We will use a medical source other than your treating source for a 
purchased examination or test in situations including, but not limited 
to, the following situations:
    (a) Your treating source prefers not to perform such an examination 
or does not have the equipment to provide the specific data needed;
    (b) There are conflicts or inconsistencies in your file that cannot 
be resolved by going back to your treating source;
    (c) You prefer a source other than your treating source and have a 
good reason for your preference;
    (d) We know from prior experience that your treating source may not 
be a productive source, e.g., he or she has consistently failed to 
provide complete or timely reports.

[65 FR 11879, Mar. 7, 2000]

[[Page 805]]



Sec. 416.919j  Objections to the medical source designated to perform 
the consultative examination.

    You or your representative may object to your being examined by a 
medical source we have designated to perform a consultative examination. 
If there is a good reason for the objection, we will schedule the 
examination with another medical source. A good reason may be that the 
medical source we designated had previously represented an interest 
adverse to you. For example, the medical source may have represented 
your employer in a workers' compensation case or may have been involved 
in an insurance claim or legal action adverse to you. Other things we 
will consider include: The presence of a language barrier, the medical 
source's office location (e.g., 2nd floor, no elevator), travel 
restrictions, and whether the medical source had examined you in 
connection with a previous disability determination or decision that was 
unfavorable to you. If your objection is that a medical source allegedly 
``lacks objectivity'' in general, but not in relation to you personally, 
we will review the allegations. See Sec. 416.919s. To avoid a delay in 
processing your claim, the consultative examination in your case will be 
changed to another medical source while a review is being conducted. We 
will handle any objection to use of the substitute medical source in the 
same manner. However, if we had previously conducted such a review and 
found that the reports of the medical source in question conformed to 
our guidelines, we will not change your examination.

[65 FR 11879, Mar. 7, 2000]



Sec. 416.919k  Purchase of medical examinations, laboratory tests, and 
other services.

    We may purchase medical examinations, including psychiatric and 
psychological examinations, X-rays and laboratory tests (including 
specialized tests, such as pulmonary function studies, 
electrocardiograms, and stress tests) from a medical source.
    (a) The rate of payment to be used for purchasing medical or public 
services necessary to make determinations of disability may not exceed 
the highest rate paid by Federal or public agencies in the State for the 
same or similar types of service. See Sec. Sec. 416.1024 and 416.1026.
    (b) If a physician's bill, or a request for payment for a 
physician's services, includes a charge for a laboratory test for which 
payment may be made under this part, the amount payable with respect to 
the test shall be determined as follows:
    (1) If the bill or request for payment indicates that the test was 
personally performed or supervised by the physician who submitted the 
bill (or for whose services the request for payment was made) or by 
another physician with whom that physician shares his or her practice, 
the payment will be based on the physician's usual and customary charge 
for the test or the rates of payment which the State uses for purchasing 
such services, whichever is the lesser amount.
    (2) If the bill or request for payment indicates that the test was 
performed by an independent laboratory, the amount of reimbursement will 
not exceed the billed cost of the independent laboratory or the rate of 
payment which the State uses for purchasing such services, whichever is 
the lesser amount. A nominal payment may be made to the physician for 
collecting, handling and shipping a specimen to the laboratory if the 
physician bills for such a service. The total reimbursement may not 
exceed the rate of payment which the State uses for purchasing such 
services.
    (c) The State will assure that it can support the rate of payment it 
uses. The State shall also be responsible for monitoring and overseeing 
the rate of payment it uses to ensure compliance with paragraphs (a) and 
(b) of this section.

[56 FR 36965, Aug. 1, 1991, as amended at 65 FR 11879, Mar. 7, 2000]



Sec. 416.919m  Diagnostic tests or procedures.

    We will request the results of any diagnostic tests or procedures 
that have been performed as part of a workup by your treating source or 
other medical source and will use the results to help us evaluate 
impairment severity or prognosis. However, we will not order

[[Page 806]]

diagnostic tests or procedures that involve significant risk to you, 
such as myelograms, arteriograms, or cardiac catheterizations for the 
evaluation of disability under the Supplemental Security Income program. 
Also, a State agency medical consultant must approve the ordering of any 
diagnostic test or procedure when there is a chance it may involve 
significant risk. The responsibility for deciding whether to perform the 
examination rests with the medical source designated to perform the 
consultative examination.

[56 FR 36966, Aug. 1, 1991, as amended at 65 FR 11879, Mar. 7, 2000]



Sec. 416.919n  Informing the medical source of examination scheduling, 
report content, and signature requirements.

    The medical sources who perform consultative examinations will have 
a good understanding of our disability programs and their evidentiary 
requirements. They will be made fully aware of their responsibilities 
and obligations regarding confidentiality as described in Sec. 
401.105(e). We will fully inform medical sources who perform 
consultative examinations at the time we first contact them, and at 
subsequent appropriate intervals, of the following obligations:
    (a) Scheduling. In scheduling full consultative examinations, 
sufficient time should be allowed to permit the medical source to take a 
case history and perform the examination, including any needed tests. 
The following minimum scheduling intervals (i.e., time set aside for the 
individual, not the actual duration of the consultative examination) 
should be used.
    (1) Comprehensive general medical examination--at least 30 minutes;
    (2) Comprehensive musculoskeletal or neurological examination--at 
least 20 minutes;
    (3) Comprehensive psychiatric examination--at least 40 minutes;
    (4) Psychological examination--at least 60 minutes (Additional time 
may be required depending on types of psychological tests administered); 
and
    (5) All others--at least 30 minutes, or in accordance with accepted 
medical practices.

We recognize that actual practice will dictate that some examinations 
may require longer scheduling intervals depending on the circumstances 
in a particular situation. We also recognize that these minimum 
intervals may have to be adjusted to allow for those claimants that do 
not attend their scheduled examination. The purpose of these minimum 
scheduling timeframes is to ensure that such examinations are complete 
and that sufficient time is made available to obtain the information 
needed to make an accurate determination in your case. State agencies 
will monitor the scheduling of examinations (through their normal 
consultative examination oversight activities) to ensure that any 
overscheduling is avoided, as overscheduling may lead to examinations 
that are not thorough.
    (b) Report content. The reported results of your medical history, 
examination, requested laboratory findings, discussions and conclusions 
must conform to accepted professional standards and practices in the 
medical field for a complete and competent examination. The facts in a 
particular case and the information and findings already reported in the 
medical and other evidence of record will dictate the extent of detail 
needed in the consultative examination report for that case. Thus, the 
detail and format for reporting the results of a purchased examination 
will vary depending upon the type of examination or testing requested. 
The reporting of information will differ from one type of examination to 
another when the requested examination relates to the performance of 
tests such as ventilatory function tests, treadmill exercise tests, or 
audiological tests. The medical report must be complete enough to help 
us determine the nature, severity, and duration of the impairment, and 
your residual functional capacity (if you are an adult) or your 
functioning (if you are a child). The report should reflect your 
statement of your symptoms, not simply the medical source's statements 
or conclusions. The medical source's report of the consultative 
examination should include the objective medical facts as well as 
observations and opinions.
    (c) Elements of a complete consultative examination. A complete 
consultative

[[Page 807]]

examination is one which involves all the elements of a standard 
examination in the applicable medical specialty. When the report of a 
complete consultative examination is involved, the report should include 
the following elements:
    (1) Your major or chief complaint(s);
    (2) A detailed description, within the area of specialty of the 
examination, of the history of your major complaint(s);
    (3) A description, and disposition, of pertinent ``positive'' and 
``negative'' detailed findings based on the history, examination and 
laboratory tests related to the major complaint(s), and any other 
abnormalities or lack thereof reported or found during examination or 
laboratory testing;
    (4) The results of laboratory and other tests (e.g., X-rays) 
performed according to the requirements stated in the Listing of 
Impairments (see appendix 1 of subpart P of part 404 of this chapter);
    (5) The diagnosis and prognosis for your impairment(s);
    (6) A statement about what you can still do despite your 
impairment(s), unless the claim is based on statutory blindness. If you 
are an adult, this statement should describe the opinion of the medical 
source about your ability, despite your impairment(s), to do work-
related activities, such as sitting, standing, walking, lifting, 
carrying, handling objects, hearing, speaking, and traveling; and, in 
cases of mental impairment(s), the opinion of the medical source about 
your ability to understand, to carry out and remember instructions, and 
to respond appropriately to supervision, coworkers and work pressures in 
a work setting. If you are a child, this statement should describe the 
opinion of the medical source about your functional limitations compared 
to children your age who do not have impairments in acquiring and using 
information, attending and completing tasks, interacting and relating 
with others, moving about and manipulating objects, caring for yourself, 
and health and physical well-being.Although we will ordinarily request, 
as part of the consultative examination process, a medical source 
statement about what you can still do despite your impairment(s), the 
absence of such a statement in a consultative examination report will 
not make the report incomplete. See Sec. 416.927; and
    (7) In addition, the medical source will consider, and provide some 
explanation or comment on, your major complaint(s) and any other 
abnormalities found during the history and examination or reported from 
the laboratory tests. The history, examination, evaluation of laboratory 
test results, and the conclusions will represent the information 
provided by the medical source who signs the report.
    (d) When a complete consultative examination is not required. When 
the evidence we need does not require a complete consultative 
examination (for example, we need only a specific laboratory test result 
to complete the record), we may not require a report containing all of 
the elements in paragraph (c).
    (e) Signature requirements. All consultative examination reports 
will be personally reviewed and signed by the medical source who 
actually performed the examination. This attests to the fact that the 
medical source doing the examination or testing is solely responsible 
for the report contents and for the conclusions, explanations or 
comments provided with respect to the history, examination and 
evaluation of laboratory test results. The signature of the medical 
source on a report annotated ``not proofed'' or ``dictated but not 
read'' is not acceptable. A rubber stamp signature of a medical source 
or the medical source's signature entered by any other person is not 
acceptable.

[56 FR 36966, Aug. 1, 1991, as amended at 62 FR 6421, Feb. 11, 1997; 62 
FR 13733, Mar. 21, 1997; 65 FR 11879, Mar. 7, 2000; 65 FR 54778, Sept. 
11, 2000]



Sec. 416.919o  When a properly signed consultative examination report 
has not been received.

    If a consultative examination report is received unsigned or 
improperly signed we will take the following action.
    (a) When we will make determinations and decisions without a 
properly signed report. We will make a determination or decision in the 
circumstances specified in paragraphs (a)(1) and (a)(2) of

[[Page 808]]

this section without waiting for a properly signed consultative 
examination report. After we have made the determination or decision, we 
will obtain a properly signed report and include it in the file unless 
the medical source who performed the original consultative examination 
has died:
    (1) Continuous period of disability allowance with an onset date as 
alleged or earlier than alleged; or
    (2) Continuance of disability.
    (b) When we will not make determinations and decisions without a 
properly signed report. We will not use an unsigned or improperly signed 
consultative examination report to make the determinations or decisions 
specified in paragraphs (b)(1), (b)(2), (b)(3), and (b)(4) of this 
section. When we need a properly signed consultative examination report 
to make these determinations or decisions, we must obtain such a report. 
If the signature of the medical source who performed the original 
examination cannot be obtained because the medical source is out of the 
country for an extended period of time, or on an extended vacation, 
seriously ill, deceased, or for any other reason, the consultative 
examination will be rescheduled with another medical source:
    (1) Denial; or
    (2) Cessation; or
    (3) Allowance of disability which has ended; or
    (4) Allowance with an onset date later than the filing date.

[56 FR 36967, Aug. 1, 1991, as amended at 65 FR 11880, Mar. 7, 2000]



Sec. 416.919p  Reviewing reports of consultative examinations.

    (a) We will review the report of the consultative examination to 
determine whether the specific information requested has been furnished. 
We will consider the following factors in reviewing the report:
    (1) Whether the report provides evidence which serves as an adequate 
basis for decisionmaking in terms of the impairment it assesses;
    (2) Whether the report is internally consistent; Whether all the 
diseases, impairments and complaints described in the history are 
adequately assessed and reported in the clinical findings; Whether the 
conclusions correlate the findings from your medical history, clinical 
examination and laboratory tests and explain all abnormalities;
    (3) Whether the report is consistent with the other information 
available to us within the specialty of the examination requested; 
Whether the report fails to mention an important or relevant complaint 
within that specialty that is noted in other evidence in the file (e.g., 
your blindness in one eye, amputations, pain, alcoholism, depression);
    (4) Whether this is an adequate report of examination as compared to 
standards set out in the course of a medical education; and
    (5) Whether the report is properly signed.
    (b) If the report is inadequate or incomplete, we will contact the 
medical source who performed the consultative examination, give an 
explanation of our evidentiary needs, and ask that the medical source 
furnish the missing information or prepare a revised report.
    (c) With your permission, or when the examination discloses new 
diagnostic information or test results that reveal a potentially life-
threatening situation, we will refer the consultative examination report 
to your treating source. When we refer the consultative examination 
report to your treating source without your permission, we will notify 
you that we have done so.
    (d) We will perform ongoing special management studies on the 
quality of consultative examinations purchased from major medical 
sources and the appropriateness of the examinations authorized.
    (e) We will take steps to ensure that consultative examinations are 
scheduled only with medical sources who have access to the equipment 
required to provide an adequate assessment and record of the existence 
and level of severity of your alleged impairments.

[56 FR 36967, Aug. 1, 1991, as amended at 65 FR 11880, Mar. 7, 2000]



Sec. 416.919q  Conflict of interest.

    All implications of possible conflict of interest between medical or 
psychological consultants and their medical or psychological practices 
will be avoided. Such consultants are not only

[[Page 809]]

those physicians and psychologists who work for us directly but are also 
those who do review and adjudication work in the State agencies. 
Physicians and psychologists who work for us directly as employees or 
under contract will not work concurrently for a State agency. Physicians 
and psychologists who do review work for us will not perform 
consultative examinations for us without our prior approval. In such 
situations, the physician or psychologist will disassociate himself or 
herself from further involvement in the case and will not participate in 
the evaluation, decision, or appeal actions. In addition, neither they, 
nor any member of their families, will acquire or maintain, either 
directly or indirectly, any financial interest in a medical partnership, 
corporation, or similar relationship in which consultative examinations 
are provided. Sometimes physicians and psychologists who do review work 
for us will have prior knowledge of a case; for example, when the 
claimant was a patient. Where this is so, the physician or psychologist 
will not participate in the review or determination of the case. This 
does not preclude the physician or psychologist from submitting medical 
evidence based on treatment or examination of the claimant.

[56 FR 36967, Aug. 1, 1991]

             Authorizing and Monitoring the Referral Process



Sec. 416.919s  Authorizing and monitoring the consultative examination.

    (a) Day-to-day responsibility for the consultative examination 
process rests with the State agencies that make disability 
determinations for us.
    (b) The State agency will maintain a good working relationship with 
the medical community in order to recruit sufficient numbers of 
physicians and other providers of medical services to ensure ready 
availability of consultative examination providers.
    (c) Consistent with Federal and State laws, the State agency 
administrator will work to achieve appropriate rates of payment for 
purchased medical services.
    (d) Each State agency will be responsible for comprehensive 
oversight management of its consultative examination program, with 
special emphasis on key providers.
    (e) A key consultative examination provider is a provider that meets 
at least one of the following conditions:
    (1) Any consultative examination provider with an estimated annual 
billing to the Social Security and Supplemental Security Income programs 
of at least $100,000; or
    (2) Any consultative examination provider with a practice directed 
primarily towards evaluation examinations rather than the treatment of 
patients; or
    (3) Any consultative examination provider that does not meet the 
above criteria, but is one of the top five consultative examination 
providers in the State by dollar volume, as evidenced by prior year 
data.
    (f) State agencies have flexibility in managing their consultative 
examination programs, but at a minimum will provide:
    (1) An ongoing active recruitment program for consultative 
examination providers;
    (2) A process for orientation, training, and review of new 
consultative examination providers, with respect to SSA's program 
requirements involving consultative examination report content and not 
with respect to medical techniques;
    (3) Procedures for control of scheduling consultative examinations;
    (4) Procedures to ensure that close attention is given to specific 
evaluation issues involved in each case;
    (5) Procedures to ensure that only required examinations and tests 
are authorized in accordance with the standards set forth in this 
subpart;
    (6) Procedures for providing medical or supervisory approval for the 
authorization or purchase of consultative examinations and for 
additional tests or studies requested by consulting medical sources. 
This includes physician approval for the ordering of any diagnostic test 
or procedure where the question of significant risk to the claimant/
beneficiary might be raised. See Sec. 416.919m.
    (7) procedures for the ongoing review of consultative examination 
results to ensure compliance with written guidelines;

[[Page 810]]

    (8) Procedures to encourage active participation by physicians and 
psychologists in the consultative examination oversight program;
    (9) Procedures for handling complaints;
    (10) Procedures for evaluating claimant reactions to key providers; 
and
    (11) A program of systematic, onsite reviews of key providers that 
will include annual onsite reviews of such providers when claimants are 
present for examinations. This provision does not contemplate that such 
reviews will involve participation in the actual examinations but, 
rather, offer an opportunity to talk with claimants at the provider's 
site before and after the examination and to review the provider's 
overall operation.
    (g) The State agencies will cooperate with us when we conduct 
monitoring activities in connection with their oversight management of 
their consultative examination programs.

[56 FR 36967, Aug. 1, 1991, as amended at 65 FR 11880, Mar. 7, 2000]

           Procedures To Monitor the Consultative Examination



Sec. 416.919t  Consultative examination oversight.

    (a) We will ensure that referrals for consultative examinations and 
purchases of consultative examinations are made in accordance with our 
policies. We will also monitor both the referral processes and the 
product of the consultative examinations obtained. This monitoring may 
include reviews by independent medical specialists under direct contract 
with SSA.
    (b) Through our regional offices, we will undertake periodic 
comprehensive reviews of each State agency to evaluate each State's 
management of the consultative examination process. The review will 
involve visits to key providers, with State staff participating, 
including a program physician when the visit will deal with medical 
techniques or judgment, or factors that go to the core of medical 
professionalism.
    (c) We will also perform ongoing special management studies of the 
quality of consultative examinations purchased from key providers and 
other sources and the appropriateness of the examinations authorized.

[56 FR 36968, Aug. 1, 1991]

                        Evaluation of Disability



Sec. 416.920  Evaluation of disability of adults, in general.

    (a) General--(1) Purpose of this section. This section explains the 
five-step sequential evaluation process we use to decide whether you are 
disabled, as defined in Sec. 416.905.
    (2) Applicability of these rules. These rules apply to you if you 
are age 18 or older and you file an application for Supplemental 
Security Income disability benefits.
    (3) Evidence considered. We will consider all evidence in your case 
record when we make a determination or decision whether you are 
disabled.
    (4) The five-step sequential evaluation process. The sequential 
evaluation process is a series of five ``steps'' that we follow in a set 
order. If we can find that you are disabled or not disabled at a step, 
we make our determination or decision and we do not go on to the next 
step. If we cannot find that you are disabled or not disabled at a step, 
we go on to the next step. Before we go from step three to step four, we 
assess your residual functional capacity. (See paragraph (e) of this 
section.) We use this residual functional capacity assessment at both 
step four and at step five when we evaluate your claim at these steps. 
These are the five steps we follow:
    (i) At the first step, we consider your work activity, if any. If 
you are doing substantial gainful activity, we will find that you are 
not disabled. (See paragraph (b) of this section.)
    (ii) At the second step, we consider the medical severity of your 
impairment(s). If you do not have a severe medically determinable 
physical or mental impairment that meets the duration requirement in 
Sec. 416.909, or a combination of impairments that is severe and meets 
the duration requirement, we will find that you are not disabled. (See 
paragraph (c) of this section.)

[[Page 811]]

    (iii) At the third step, we also consider the medical severity of 
your impairment(s). If you have an impairment(s) that meets or equals 
one of our listings in appendix 1 to subpart P of part 404 of this 
chapter and meets the duration requirement, we will find that you are 
disabled. (See paragraph (d) of this section.)
    (iv) At the fourth step, we consider our assessment of your residual 
functional capacity and your past relevant work. If you can still do 
your past relevant work, we will find that you are not disabled. (See 
paragraph (f) of this section and Sec. 416.960(b).)
    (v) At the fifth and last step, we consider our assessment of your 
residual functional capacity and your age, education, and work 
experience to see if you can make an adjustment to other work. If you 
can make an adjustment to other work, we will find that you are not 
disabled. If you cannot make an adjustment to other work, we will find 
that you are disabled. (See paragraph (g) of this section and Sec. 
416.960(c).)
    (5) When you are already receiving disability benefits. If you are 
already receiving disability benefits, we will use a different 
sequential evaluation process to decide whether you continue to be 
disabled. We explain this process in Sec. 416.994(b)(5).
    (b) If you are working. If you are working and the work you are 
doing is substantial gainful activity, we will find that you are not 
disabled regardless of your medical condition or your age, education, 
and work experience.
    (c) You must have a severe impairment. If you do not have any 
impairment or combination of impairments which significantly limits your 
physical or mental ability to do basic work activities, we will find 
that you do not have a severe impairment and are, therefore, not 
disabled. We will not consider your age, education, and work experience.
    (d) When your impairment(s) meets or equals a listed impairment in 
appendix 1. If you have an impairment(s) which meets the duration 
requirement and is listed in appendix 1 or is equal to a listed 
impairment(s), we will find you disabled without considering your age, 
education, and work experience.
    (e) When your impairment(s) does not meet or equal a listed 
impairment. If your impairment(s) does not meet or equal a listed 
impairment, we will assess and make a finding about your residual 
functional capacity based on all the relevant medical and other evidence 
in your case record, as explained in Sec. 416.945. (See paragraph 
(g)(2) of this section and Sec. 416.962 for an exception to this rule.) 
We use our residual functional capacity assessment at the fourth step of 
the sequential evaluation process to determine if you can do your past 
relevant work (paragraph (f) of this section) and at the fifth step of 
the sequential evaluation process (if the evaluation proceeds to this 
step) to determine if you can adjust to other work (paragraph (g) of 
this section).
    (f) Your impairment(s) must prevent you from doing your past 
relevant work. If we cannot make a determination or decision at the 
first three steps of the sequential evaluation process, we will compare 
our residual functional capacity assessment, which we made under 
paragraph (e) of this section, with the physical and mental demands of 
your past relevant work. (See Sec. 416.960(b).) If you can still do 
this kind of work, we will find that you are not disabled.
    (g) Your impairment(s) must prevent you from making an adjustment to 
any other work. (1) If we find that you cannot do your past relevant 
work because you have a severe impairment(s) (or you do not have any 
past relevant work), we will consider the same residual functional 
capacity assessment we made under paragraph (e) of this section, 
together with your vocational factors (your age, education, and work 
experience) to determine if you can make an adjustment to other work. 
(See Sec. 416.960(c).) If you can make an adjustment to other work, we 
will find you not disabled. If you cannot, we will find you disabled.
    (2) We use different rules if you meet one of the two special 
medical-vocational profiles described in Sec. 416.962. If you meet one 
of those profiles, we will

[[Page 812]]

find that you cannot make an adjustment to other work, and that you are 
disabled.

[50 FR 8728, Mar. 5, 1985; 50 FR 19164, May 7, 1985, as amended at 56 FR 
5554, Feb. 11, 1991; 56 FR 36968, Aug. 1, 1991; 65 FR 80308, Dec. 21, 
2000; 68 FR 51164, Aug. 26, 2003]



Sec. 416.920a  Evaluation of mental impairments.

    (a) General. The steps outlined in Sec. Sec. 416.920 and 416.924 
apply to the evaluation of physical and mental impairments. In addition, 
when we evaluate the severity of mental impairments for adults (persons 
age 18 and over) and in persons under age 18 when Part A of the Listing 
of Impairments is used, we must follow a special technique at each level 
in the administrative review process. We describe this special technique 
in paragraphs (b) through (e) of this section. Using this technique 
helps us:
    (1) Identify the need for additional evidence to determine 
impairment severity;
    (2) Consider and evaluate functional consequences of the mental 
disorder(s) relevant to your ability to work; and
    (3) Organize and present our findings in a clear, concise, and 
consistent manner.
    (b) Use of the technique. (1) Under the special technique, we must 
first evaluate your pertinent symptoms, signs, and laboratory findings 
to determine whether you have a medically determinable mental 
impairment(s). See Sec. 416.908 for more information about what is 
needed to show a medically determinable impairment. If we determine that 
you have a medically determinable mental impairment(s), we must specify 
the symptoms, signs, and laboratory findings that substantiate the 
presence of the impairment(s) and document our findings in accordance 
with paragraph (e) of this section.
    (2) We must then rate the degree of functional limitation resulting 
from the impairment(s) in accordance with paragraph (c) of this section 
and record our findings as set out in paragraph (e) of this section.
    (c) Rating the degree of functional limitation. (1) Assessment of 
functional limitations is a complex and highly individualized process 
that requires us to consider multiple issues and all relevant evidence 
to obtain a longitudinal picture of your overall degree of functional 
limitation. We will consider all relevant and available clinical signs 
and laboratory findings, the effects of your symptoms, and how your 
functioning may be affected by factors including, but not limited to, 
chronic mental disorders, structured settings, medication, and other 
treatment.
    (2) We will rate the degree of your functional limitation based on 
the extent to which your impairment(s) interferes with your ability to 
function independently, appropriately, effectively, and on a sustained 
basis. Thus, we will consider such factors as the quality and level of 
your overall functional performance, any episodic limitations, the 
amount of supervision or assistance you require, and the settings in 
which you are able to function. See 12.00C through 12.00H of the Listing 
of Impairments in appendix 1 to subpart P of part 404 of this chapter 
for more information about the factors we consider when we rate the 
degree of your functional limitation.
    (3) We have identified four broad functional areas in which we will 
rate the degree of your functional limitation: Activities of daily 
living; social functioning; concentration, persistence, or pace; and 
episodes of decompensation. See 12.00C of the Listing of Impairments.
    (4) When we rate the degree of limitation in the first three 
functional areas (activities of daily living; social functioning; and 
concentration, persistence, or pace), we will use the following five-
point scale: None, mild, moderate, marked, and extreme. When we rate the 
degree of limitation in the fourth functional area (episodes of 
decompensation), we will use the following four-point scale: None, one 
or two, three, four or more. The last point on each scale represents a 
degree of limitation that is incompatible with the ability to do any 
gainful activity.
    (d) Use of the technique to evaluate mental impairments. After we 
rate the degree of functional limitation resulting from your 
impairment(s), we will determine the severity of your mental 
impairment(s).

[[Page 813]]

    (1) If we rate the degree of your limitation in the first three 
functional areas as ``none'' or ``mild'' and ``none'' in the fourth 
area, we will generally conclude that your impairment(s) is not severe, 
unless the evidence otherwise indicates that there is more than a 
minimal limitation in your ability to do basic work activities (see 
Sec. 416.921).
    (2) If your mental impairment(s) is severe, we must then determine 
if it meets or is equivalent in severity to a listed mental disorder. We 
do this by comparing the medical findings about your impairment(s) and 
the rating of the degree of functional limitation to the criteria of the 
appropriate listed mental disorder. We will record the presence or 
absence of the criteria and the rating of the degree of functional 
limitation on a standard document at the initial and reconsideration 
levels of the administrative review process, or in the decision at the 
administrative law judge hearing and Appeals Council levels (in cases in 
which the Appeals Council issues a decision). See paragraph (e) of this 
section.
    (3) If we find that you have a severe mental impairment(s) that 
neither meets nor is equivalent in severity to any listing, we will then 
assess your residual functional capacity.
    (e) Documenting application of the technique. At the initial and 
reconsideration levels of the administrative review process, we will 
complete a standard document to record how we applied the technique. At 
the administrative law judge hearing and Appeals Council levels (in 
cases in which the Appeals Council issues a decision), we will document 
application of the technique in the decision.
    (1) At the initial and reconsideration levels, except in cases in 
which a disability hearing officer makes the reconsideration 
determination, our medical or psychological consultant has overall 
responsibility for assessing medical severity. The disability examiner, 
a member of the adjudicative team (see Sec. 416.1015), may assist in 
preparing the standard document. However, our medical or psychological 
consultant must review and sign the document to attest that it is 
complete and that he or she is responsible for its content, including 
the findings of fact and any discussion of supporting evidence. When a 
disability hearing officer makes a reconsideration determination, the 
determination must document application of the technique, incorporating 
the disability hearing officer's pertinent findings and conclusions 
based on this technique.
    (2) At the administrative law judge hearing and Appeals Council 
levels, the written decision issued by the administrative law judge or 
Appeals Council must incorporate the pertinent findings and conclusions 
based on the technique. The decision must show the significant history, 
including examination and laboratory findings, and the functional 
limitations that were considered in reaching a conclusion about the 
severity of the mental impairment(s). The decision must include a 
specific finding as to the degree of limitation in each of the 
functional areas described in paragraph (c) of this section.
    (3) If the administrative law judge requires the services of a 
medical expert to assist in applying the technique but such services are 
unavailable, the administrative law judge may return the case to the 
State agency or the appropriate Federal component, using the rules in 
Sec. 416.1441, for completion of the standard document. If, after 
reviewing the case file and completing the standard document, the State 
agency or Federal component concludes that a determination favorable to 
you is warranted, it will process the case using the rules found in 
Sec. 416.1441(d) or (e). If, after reviewing the case file and 
completing the standard document, the State agency or Federal component 
concludes that a determination favorable to you is not warranted, it 
will send the completed standard document and the case to the 
administrative law judge for further proceedings and a decision.

[65 FR 50782, Aug. 21, 2000; 65 FR 60584, Oct. 12, 2000]



Sec. 416.921  What we mean by a not severe impairment(s) in an adult.

    (a) Non-severe impairment(s). An impairment or combination of 
impairments is not severe if it does not significantly limit your 
physical or mental ability to do basic work activities.

[[Page 814]]

    (b) Basic work activities. When we talk about basic work activities, 
we mean the abilities and aptitudes necessary to do most jobs. Examples 
of these include--
    (1) Physical functions such as walking, standing, sitting, lifting, 
pushing, pulling, reaching, carrying, or handling;
    (2) Capacities for seeing, hearing, and speaking;
    (3) Understanding, carrying out, and remembering simple 
instructions;
    (4) Use of judgment;
    (5) Responding appropriately to supervision, co-workers and usual 
work situations; and
    (6) Dealing with changes in a routine work setting.

[50 FR 8729, Mar. 5, 1985, as amended at 56 FR 5554, Feb. 11, 1991]



Sec. 416.922  When you have two or more unrelated impairments--initial 
claims.

    (a) Unrelated severe impairments. We cannot combine two or more 
unrelated severe impairments to meet the 12-month duration test. If you 
have a severe impairment(s) and then develop another unrelated severe 
impairment(s) but neither one is expected to last for 12 months, we 
cannot find you disabled, even though the two impairments in combination 
last for 12 months.
    (b) Concurrent impairments. If you have two or more concurrent 
impairments which, when considered in combination, are severe, we must 
also determine whether the combined effect of your impairments can be 
expected to continue to be severe for 12 months. If one or more of your 
impairments improves or is expected to improve within 12 months, so that 
the combined effect of your remaining impairments is no longer severe, 
we will find that you do not meet the 12-month duration test.

[50 FR 8729, Mar. 5, 1985]



Sec. 416.923  Multiple impairments.

    In determining whether your physical or mental impairment or 
impairments are of a sufficient medical severity that such impairment or 
impairments could be the basis of eligibility under the law, we will 
consider the combined effect of all of your impairments without regard 
to whether any such impairment, if considered separately, would be of 
sufficient severity. If we do find a medically severe combination of 
impairments, the combined impact of the impairments will be considered 
throughout the disability determination process. If we do not find that 
you have a medically severe combination of impairments, we will 
determine that you are not disabled (see Sec. Sec. 416.920 and 
416.924).

[50 FR 8729, Mar. 5, 1985, as amended at 56 FR 5554, Feb. 11, 1991]



Sec. 416.924  How we determine disability for children.

    (a) Steps in evaluating disability. We consider all relevant 
evidence in your case record when we make a determination or decision 
whether you are disabled. If you allege more than one impairment, we 
will evaluate all the impairments for which we have evidence. Thus, we 
will consider the combined effects of all your impairments upon your 
overall health and functioning. We will also evaluate any limitations in 
your functioning that result from your symptoms, including pain (see 
Sec. 416.929). We will also consider all of the relevant factors in 
Sec. Sec. 416.924a and 416.924b whenever we assess your functioning at 
any step of this process. We follow a set order to determine whether you 
are disabled. If you are doing substantial gainful activity, we will 
determine that you are not disabled and not review your claim further. 
If you are not doing substantial gainful activity, we will consider your 
physical or mental impairment(s) first to see if you have an impairment 
or combination of impairments that is severe. If your impairment(s) is 
not severe, we will determine that you are not disabled and not review 
your claim further. If your impairment(s) is severe, we will review your 
claim further to see if you have an impairment(s) that meets, medically 
equals, or functionally equals the listings. If you have such an 
impairment(s), and it meets the duration requirement, we will find that 
you are disabled. If you do not have such an impairment(s), or if it 
does not meet the duration requirement, we will find that you are not 
disabled.

[[Page 815]]

    (b) If you are working. If you are working and the work you are 
doing is substantial gainful activity, we will find that you are not 
disabled regardless of your medical condition or age, education, or work 
experience. (For our rules on how we decide whether you are engaging in 
substantial gainful activity, see Sec. Sec. 416.971 through 416.976.)
    (c) You must have a medically determinable impairment(s) that is 
severe. If you do not have a medically determinable impairment, or your 
impairment(s) is a slight abnormality or a combination of slight 
abnormalities that causes no more than minimal functional limitations, 
we will find that you do not have a severe impairment(s) and are, 
therefore, not disabled.
    (d) Your impairment(s) must meet, medically equal, or functionally 
equal the listings. An impairment(s) causes marked and severe functional 
limitations if it meets or medically equals the severity of a set of 
criteria for an impairment in the listings, or if it functionally equals 
the listings.
    (1) Therefore, if you have an impairment(s) that meets or medically 
equals the requirements of a listing or that functionally equals the 
listings, and that meets the duration requirement, we will find you 
disabled.
    (2) If your impairment(s) does not meet the duration requirement, or 
does not meet, medically equal, or functionally equal the listings, we 
will find that you are not disabled.
    (e) Other rules. We explain other rules for evaluating impairments 
at all steps of this process in Sec. Sec. 416.924a, 416.924b, and 
416.929. We explain our rules for deciding whether an impairment(s) 
meets a listing in Sec. 416.925. Our rules for how we decide whether an 
impairment(s) medically equals a listing are in Sec. 416.926. Our rules 
for deciding whether an impairment(s) functionally equals the listings 
are in Sec. 416.926a.
    (f) If you attain age 18 after you file your disability application 
but before we make a determination or decision. For the period during 
which you are under age 18, we will use the rules in this section. For 
the period starting with the day you attain age 18, we will use the 
disability rules we use for adults who file new claims, in Sec. 
416.920.
    (g) How we will explain our findings. When we make an initial or 
reconsidered determination whether you are disabled under this section 
or whether your disability continues under Sec. 416.994a (except when a 
disability hearing officer makes the reconsideration determination), we 
will complete a standard form, Form SSA-538, Childhood Disability 
Evaluation Form. The form outlines the steps of the sequential 
evaluation process for individuals who have not attained age 18. In 
these cases, the State agency medical or psychological consultant (see 
Sec. 416.1016) or other designee of the Commissioner has overall 
responsibility for the content of the form and must sign the form to 
attest that it is complete and that he or she is responsible for its 
content, including the findings of fact and any discussion of supporting 
evidence. Disability hearing officers, administrative law judges, and 
the administrative appeals judges on the Appeals Council (when the 
Appeals Council makes a decision) will not complete the form but will 
indicate their findings at each step of the sequential evaluation 
process in their determinations or decisions.

[58 FR 47577, Sept. 9, 1993, as amended at 62 FR 6421, Feb. 11, 1997; 65 
FR 54778, Sept. 11, 2000]



Sec. 416.924a  Considerations in determining disability for children.

    (a) Basic considerations. We consider all relevant information 
(i.e., evidence) in your case record. The evidence in your case record 
may include information from medical sources, such as your pediatrician, 
other physician, psychologist, or qualified speech-language pathologist; 
other medical sources not listed in Sec. 416.913(a), such as physical, 
occupational, and rehabilitation therapists; and nonmedical sources, 
such as your parents, teachers, and other people who know you.
    (1) Medical evidence--(i) General. Medical evidence of your 
impairment(s) must describe symptoms, signs, and laboratory findings. 
The medical evidence may include, but is not limited to, formal testing 
that provides information about your development or functioning in terms 
of standard deviations, percentiles, percentages of delay, or age or 
grade equivalents. It

[[Page 816]]

may also include opinions from medical sources about the nature and 
severity of your impairments. (See Sec. 416.927.)
    (ii) Test scores. We consider all of the relevant information in 
your case record and will not consider any single piece of evidence in 
isolation. Therefore, we will not rely on test scores alone when we 
decide whether you are disabled. (See Sec. 416.926a(e) for more 
information about how we consider test scores.)
    (iii) Medical sources. Medical sources will report their findings 
and observations on clinical examination and the results of any formal 
testing. A medical source's report should note and resolve any material 
inconsistencies between formal test results, other medical findings, and 
your usual functioning. Whenever possible and appropriate, the 
interpretation of findings by the medical source should reflect 
consideration of information from your parents or other people who know 
you, including your teachers and therapists. When a medical source has 
accepted and relied on such information to reach a diagnosis, we may 
consider this information to be a clinical sign, as defined in Sec. 
416.928(b).
    (2) Information from other people. Every child is unique, so the 
effects of your impairment(s) on your functioning may be very different 
from the effects the same impairment(s) might have on another child. 
Therefore, whenever possible and appropriate, we will try to get 
information from people who can tell us about the effects of your 
impairment(s) on your activities and how you function on a day-to-day 
basis. These other people may include, but are not limited to:
    (i) Your parents and other caregivers. Your parents and other 
caregivers can be important sources of information because they usually 
see you every day. In addition to your parents, other caregivers may 
include a childcare provider who takes care of you while your parent(s) 
works or an adult who looks after you in a before-or after-school 
program.
    (ii) Early intervention and preschool programs. If you have been 
identified for early intervention services (in your home or elsewhere) 
because of your impairment(s), or if you attend a preschool program 
(e.g., Headstart or a public school kindergarten for children with 
special needs), these programs are also important sources of information 
about your functioning. We will ask for reports from the agency and 
individuals who provide you with services or from your teachers about 
how you typically function compared to other children your age who do 
not have impairments.
    (iii) School. If you go to school, we will ask for information from 
your teachers and other school personnel about how you are functioning 
there on a day-to-day basis compared to other children your age who do 
not have impairments. We will ask for any reports that the school may 
have that show the results of formal testing or that describe any 
special education instruction or services, including home-based 
instruction, or any accommodations provided in a regular classroom.
    (b) Factors we consider when we evaluate the effects of your 
impairment(s) on your functioning--(1) General. We must consider your 
functioning when we decide whether your impairment(s) is ``severe'' and 
when we decide whether your impairment(s) functionally equals the 
listings. We will also consider your functioning when we decide whether 
your impairment(s) meets or medically equals a listing if the listing we 
are considering includes functioning among its criteria.
    (2) Factors we consider when we evaluate your functioning. Your 
limitations in functioning must result from your medically determinable 
impairment(s). The information we get from your medical and nonmedical 
sources can help us understand how your impairment(s) affects your 
functioning. We will also consider any factors that are relevant to how 
you function when we evaluate your impairment or combination of 
impairments. For example, your symptoms (such as pain, fatigue, 
decreased energy, or anxiety) may limit your functioning. (See Sec. 
416.929.) We explain some other factors we may consider when we evaluate 
your functioning in paragraphs (b)(3)-(b)(9) of this section.
    (3) How your functioning compares to the functioning of children 
your age who do not have impairments--(i) General.

[[Page 817]]

When we evaluate your functioning, we will look at whether you do the 
things that other children your age typically do or whether you have 
limitations and restrictions because of your medically determinable 
impairment(s). We will also look at how well you do the activities and 
how much help you need from your family, teachers, or others. 
Information about what you can and cannot do, and how you function on a 
day-to-day basis at home, school, and in the community, allows us to 
compare your activities to the activities of children your age who do 
not have impairments.
    (ii) How we will consider reports of your functioning. When we 
consider the evidence in your case record about the quality of your 
activities, we will consider the standards used by the person who gave 
us the information. We will also consider the characteristics of the 
group to whom you are being compared. For example, if the way you do 
your classwork is compared to other children in a special education 
class, we will consider that you are being compared to children who do 
have impairments.
    (4) Combined effects of multiple impairments. If you have more than 
one impairment, we will sometimes be able to decide that you have a 
``severe'' impairment or an impairment that meets, medically equals, or 
functionally equals the listings by looking at each of your impairments 
separately. When we cannot, we will look comprehensively at the combined 
effects of your impairments on your day-to-day functioning instead of 
considering the limitations resulting from each impairment separately. 
(See Sec. Sec. 416.923 and 416.926a(c) for more information about how 
we will consider the interactive and cumulative effects of your 
impairments on your functioning.)
    (5) How well you can initiate, sustain, and complete your 
activities, including the amount of help or adaptations you need, and 
the effects of structured or supportive settings--(i) Initiating, 
sustaining, and completing activities. We will consider how effectively 
you function by examining how independently you are able to initiate, 
sustain, and complete your activities despite your impairment(s), 
compared to other children your age who do not have impairments. We will 
consider:
    (A) The range of activities you do;
    (B) Your ability to do them independently, including any prompting 
you may need to begin, carry through, and complete your activities;
    (C) The pace at which you do your activities;
    (D) How much effort you need to make to do your activities; and
    (E) How long you are able to sustain your activities.
    (ii) Extra help. We will consider how independently you are able to 
function compared to other children your age who do not have 
impairments. We will consider whether you need help from other people, 
or whether you need special equipment, devices, or medications to 
perform your day-to-day activities. For example, we may consider how 
much supervision you need to keep from hurting yourself, how much help 
you need every day to get dressed or, if you are an infant, how long it 
takes for your parents or other caregivers to feed you. We recognize 
that children are often able to do things and complete tasks when given 
help, but may not be able to do these same things by themselves. 
Therefore, we will consider how much extra help you need, what special 
equipment or devices you use, and the medications you take that enable 
you to participate in activities like other children your age who do not 
have impairments.
    (iii) Adaptations. We will consider the nature and extent of any 
adaptations that you use to enable you to function. Such adaptations may 
include assistive devices or appliances. Some adaptations may enable you 
to function normally or almost normally (e.g., eyeglasses). Others may 
increase your functioning, even though you may still have functional 
limitations (e.g., ankle-foot orthoses, hand or foot splints, and 
specially adapted or custom-made tools, utensils, or devices for self-
care activities such as bathing, feeding, toileting, and dressing). When 
we evaluate your functioning with an adaptation, we will consider the 
degree to which the adaptation enables you to function compared to other 
children your age who do not have impairments,

[[Page 818]]

your ability to use the adaptation effectively on a sustained basis, and 
any functional limitations that nevertheless persist.
    (iv) Structured or supportive settings. (A) If you have a serious 
impairment(s), you may spend some or all of your time in a structured or 
supportive setting, beyond what a child who does not have an impairment 
typically needs.
    (B) A structured or supportive setting may be your own home in which 
family members or other people (e.g., visiting nurses or home health 
workers) make adjustments to accommodate your impairment(s). A 
structured or supportive setting may also be your classroom at school, 
whether it is a regular classroom in which you are accommodated or a 
special classroom. It may also be a residential facility or school where 
you live for a period of time.
    (C) A structured or supportive setting may minimize signs and 
symptoms of your impairment(s) and help to improve your functioning 
while you are in it, but your signs, symptoms, and functional 
limitations may worsen outside this type of setting. Therefore, we will 
consider your need for a structured setting and the degree of limitation 
in functioning you have or would have outside the structured setting. 
Even if you are able to function adequately in the structured or 
supportive setting, we must consider how you function in other settings 
and whether you would continue to function at an adequate level without 
the structured or supportive setting.
    (D) If you have a chronic impairment(s), you may have your 
activities structured in such a way as to minimize stress and reduce the 
symptoms or signs of your impairment(s). You may continue to have 
persistent pain, fatigue, decreased energy, or other symptoms or signs, 
although at a lesser level of severity. We will consider whether you are 
more limited in your functioning than your symptoms and signs would 
indicate.
    (E) Therefore, if your symptoms or signs are controlled or reduced 
in a structured setting, we will consider how well you are functioning 
in the setting and the nature of the setting in which you are 
functioning (e.g., home or a special class); the amount of help you need 
from your parents, teachers, or others to function as well as you do; 
adjustments you make to structure your environment; and how you would 
function without the structured or supportive setting.
    (6) Unusual settings. Children may function differently in 
unfamiliar or one-to-one settings than they do in their usual settings 
at home, at school, in childcare or in the community. You may appear 
more or less impaired on a single examination (such as a consultative 
examination) than indicated by the information covering a longer period. 
Therefore, we will apply the guidance in paragraph (b)(5) of this 
section when we consider how you function in an unusual or one-to-one 
situation. We will look at your performance in a special situation and 
at your typical day-to-day functioning in routine situations. We will 
not draw inferences about your functioning in other situations based 
only on how you function in a one-to-one, new, or unusual situation.
    (7) Early intervention and school programs (i) General. If you are a 
very young child who has been identified for early intervention 
services, or if you attend school (including preschool), the records of 
people who know you or who have examined you are important sources of 
information about your impairment(s) and its effects on your 
functioning. Records from physicians, teachers and school psychologists, 
or physical, occupational, or speech-language therapists are examples of 
what we will consider. If you receive early intervention services or go 
to school or preschool, we will consider this information when it is 
relevant and available to us.
    (ii) School evidence. If you go to school or preschool, we will ask 
your teacher(s) about your performance in your activities throughout 
your school day. We will consider all the evidence we receive from your 
school, including teacher questionnaires, teacher checklists, group 
achievement testing, and report cards.
    (iii) Early intervention and special education programs. If you have 
received a comprehensive assessment for early

[[Page 819]]

intervention services or special education services, we will consider 
information used by the assessment team to make its recommendations. We 
will consider the information in your Individualized Family Service 
Plan, your Individualized Education Program, or your plan for transition 
services to help us understand your functioning. We will examine the 
goals and objectives of your plan or program as further indicators of 
your functioning, as well as statements regarding related services, 
supplementary aids, program modifications, and other accommodations 
recommended to help you function, together with the other relevant 
information in your case record.
    (iv) Special education or accommodations. We will consider the fact 
that you attend school, that you may be placed in a special education 
setting, or that you receive accommodations because of your impairments 
along with the other information in your case record. The fact that you 
attend school does not mean that you are not disabled. The fact that you 
do or do not receive special education services does not, in itself, 
establish your actual limitations or abilities. Children are placed in 
special education settings, or are included in regular classrooms (with 
or without accommodation), for many reasons that may or may not be 
related to the level of their impairments. For example, you may receive 
one-to-one assistance from an aide throughout the day in a regular 
classroom, or be placed in a special classroom. We will consider the 
circumstances of your school attendance, such as your ability to 
function in a regular classroom or preschool setting with children your 
age who do not have impairments. Similarly, we will consider that good 
performance in a special education setting does not mean that you are 
functioning at the same level as other children your age who do not have 
impairments.
    (v) Attendance and participation. We will also consider factors 
affecting your ability to participate in your education program. You may 
be unable to participate on a regular basis because of the chronic or 
episodic nature of your impairment(s) or your need for therapy or 
treatment. If you have more than one impairment, we will look at whether 
the effects of your impairments taken together make you unable to 
participate on a regular basis. We will consider how your temporary 
removal or absence from the program affects your ability to function 
compared to other children your age who do not have impairments.
    (8) The impact of chronic illness and limitations that interfere 
with your activities over time. If you have a chronic impairment(s) that 
is characterized by episodes of exacerbation (worsening) and remission 
(improvement), we will consider the frequency and severity of your 
episodes of exacerbation as factors that may be limiting your 
functioning. Your level of functioning may vary considerably over time. 
Proper evaluation of your ability to function in any domain requires us 
to take into account any variations in your level of functioning to 
determine the impact of your chronic illness on your ability to function 
over time. If you require frequent treatment, we will consider it as 
explained in paragraph (b)(9)(ii) of this section.
    (9) The effects of treatment (including medications and other 
treatment). We will evaluate the effects of your treatment to determine 
its effect on your functioning in your particular case.
    (i) Effects of medications. We will consider the effects of 
medication on your symptoms, signs, laboratory findings, and 
functioning. Although medications may control the most obvious 
manifestations of your impairment(s), they may or may not affect the 
functional limitations imposed by your impairment(s). If your symptoms 
or signs are reduced by medications, we will consider:
    (A) Any of your functional limitations that may nevertheless 
persist, even if there is improvement from the medications;
    (B) Whether your medications create any side effects that cause or 
contribute to your functional limitations;
    (C) The frequency of your need for medication;
    (D) Changes in your medication or the way your medication is 
prescribed; and
    (E) Any evidence over time of how medication helps or does not help 
you

[[Page 820]]

to function compared to other children your age who do not have 
impairments.
    (ii) Other treatment. We will also consider the level and frequency 
of treatment other than medications that you get for your impairment(s). 
You may need frequent and ongoing therapy from one or more medical 
sources to maintain or improve your functional status. (Examples of 
therapy include occupational, physical, or speech and language therapy, 
nursing or home health services, psychotherapy, or psychosocial 
counseling.) Frequent therapy, although intended to improve your 
functioning in some ways, may also interfere with your functioning in 
other ways. Therefore, we will consider the frequency of any therapy you 
must have, and how long you have received or will need it. We will also 
consider whether the therapy interferes with your participation in 
activities typical of other children your age who do not have 
impairments, such as attending school or classes and socializing with 
your peers. If you must frequently interrupt your activities at school 
or at home for therapy, we will consider whether these interruptions 
interfere with your functioning. We will also consider the length and 
frequency of your hospitalizations.
    (iii) Treatment and intervention, in general. With treatment or 
intervention, you may not only have your symptoms or signs reduced, but 
may also maintain, return to, or achieve a level of functioning that is 
not disabling. Treatment or intervention may prevent, eliminate, or 
reduce functional limitations.

[65 FR 54779, Sept. 11, 2000]



Sec. 416.924b  Age as a factor of evaluation in the sequential evaluation 
process for children.

    (a) General. In this section, we explain how we consider age when we 
decide whether you are disabled. Your age may or may not be a factor in 
our determination whether your impairment(s) meets or medically equals a 
listing, depending on the listing we use for comparison. However, your 
age is an important factor when we decide whether your impairment(s) is 
severe (see Sec. 416.924(c)) and whether it functionally equals the 
listings (see Sec. 416.926a). Except in the case of certain premature 
infants, as described in paragraph (b) of this section, age means 
chronological age.
    (1) When we determine whether you have an impairment or combination 
of impairments that is severe, we will compare your functioning to that 
of children your age who do not have impairments.
    (2) When we determine whether your impairment(s) meets a listing, we 
may or may not need to consider your age. The listings describe 
impairments that we consider of such significance that they are presumed 
to cause marked and severe functional limitations.
    (i) If the listing appropriate for evaluating your impairment is 
divided into specific age categories, we will evaluate your impairment 
according to your age when we decide whether your impairment meets that 
listing.
    (ii) If the listing appropriate for evaluating your impairment does 
not include specific age categories, we will decide whether your 
impairment meets the listing without giving consideration to your age.
    (3) When we compare an unlisted impairment or a combination of 
impairments with the listings to determine whether it medically equals 
the severity of a listing, the way we consider your age will depend on 
the listing we use for comparison. We will use the same principles for 
considering your age as in paragraphs (a)(2)(i) and (a)(2)(ii) of this 
section; that is, we will consider your age only if we are comparing 
your impairment(s) to a listing that includes specific age categories.
    (4) We will also consider your age and whether it affects your 
ability to be tested. If your impairment(s) is not amenable to formal 
testing because of your age, we will consider all information in your 
case record that helps us decide whether you are disabled. We will 
consider other generally acceptable methods consistent with the 
prevailing state of medical knowledge and clinical practice that will 
help us evaluate the existence and severity of your impairment(s).
    (b) Correcting chronological age of premature infants. We generally 
use chronological age (that is, a child's age based on birth date) when 
we decide

[[Page 821]]

whether, or the extent to which, a physical or mental impairment or 
combination of impairments causes functional limitations. However, if 
you were born prematurely, we may consider you to be younger than your 
chronological age. When we evaluate the development or linear growth of 
a child born prematurely, we may use a ``corrected'' chronological age; 
that is, the chronological age adjusted by a period of gestational 
prematurity. We consider an infant born at less than 37 weeks' gestation 
to be born prematurely.
    (1) We apply a corrected chronological age in these situations--
    (i) When we evaluate developmental delay in premature children until 
the child's prematurity is no longer a relevant factor; generally no 
later than about chronological age 2 (see paragraph (b)(2) of this 
section);
    (ii) When we evaluate an impairment of linear growth, such as under 
the listings in Sec. 100.00 in appendix 1 of subpart P of part 404 of 
this chapter, until the child is 12 months old. In this situation, we 
refer to neonatal growth charts which have been developed to evaluate 
growth in premature infants (see paragraph (b)(2) of this section).
    (2) We compute a corrected chronological age as follows--
    (i) If you have not attained age 1, we will correct your 
chronological age. We compute the corrected chronological age by 
subtracting the number of weeks of prematurity (i.e., the difference 
between 40 weeks of full-term gestation and the number of actual weeks 
of gestation) from your chronological age. The result is your corrected 
chronological age.
    (ii) If you are over age 1, have a developmental delay, and 
prematurity is still a relevant factor in your case (generally, no later 
than about chronological age 2), we will decide whether to correct your 
chronological age. Our decision will be based on our judgment and all 
the facts of your case. If we decide to correct your chronological age, 
we may correct it by subtracting the full number of weeks of prematurity 
or a lesser number of weeks. We will also decide not to correct your 
chronological age if we can determine from the evidence that your 
developmental delay is the result of your medically determinable 
impairment(s) and is not attributable to your prematurity.
    (3) Notwithstanding the provisions in paragraph (b)(1) of this 
section, we will not compute a corrected chronological age if the 
medical evidence shows that your treating source or other medical source 
has already taken your prematurity into consideration in his or her 
assessment of your development. Also, we will not compute a corrected 
chronological age when we find you disabled using the examples of 
functional equivalence based on low birth weight in Sec. 416.924a(m)(7) 
or (8).

[65 FR 54778, Sept. 11, 2000]

                         Medical Considerations



Sec. 416.925  Listing of Impairments in appendix 1 of subpart P of part 
404 of this chapter.

    (a) Purpose of the Listing of Impairments. The Listing of 
Impairments describes, for each of the major body systems, impairments 
that are considered severe enough to prevent an adult from doing any 
gainful activity or, for a child, that causes marked and severe 
functional limitations. Most of the listed impairments are permanent or 
expected to result in death, or a specific statement of duration is 
made. For all others, the evidence must show that the impairment has 
lasted or is expected to last for a continuous period of at least 12 
months.
    (b) Adult and childhood diseases. The Listing of Impairments 
consists of two parts:
    (1) Part A contains medical criteria that apply to adult persons age 
18 and over. The medical criteria in part A may also be applied in 
evaluating impairments in persons under age 18 if the disease processes 
have a similar effect on adults and younger persons.
    (2) Part B contains additional medical criteria that apply only to 
the evaluation of impairments of persons under age 18. Certain criteria 
in part A do not give appropriate consideration to the particular 
effects of the disease processes in childhood; i.e., when the disease 
process is generally found only in children or when the disease process 
differs in its effect on children than on adults. Additional criteria 
are included

[[Page 822]]

in part B, and the impairment categories are, to the extent possible, 
numbered to maintain a relationship with their counterparts in part A. 
In evaluating disability for a person under age 18, part B will be used 
first. If the medical criteria in part B do not apply, then the medical 
criteria in part A will be used. Although the severity criteria in part 
B of the listings are expressed in different ways for different 
impairments, ``listing-level severity'' generally means the level of 
severity described in Sec. 416.926a(a); i.e., ``marked'' limitations in 
two domains of functioning or an ``extreme'' limitation in one domain. 
(See Sec. 416.926a(e) for the definitions of the terms ``marked'' and 
``extreme'' as they apply to children.) Therefore, in general, a child's 
impairment(s) is of ``listing-level severity'' if it causes marked 
limitations in two broad areas of functioning or extreme limitations in 
one such area. (See Sec. 416.926a for definition of the terms marked 
and extreme as they apply to children.) However, when we decide whether 
your impairment(s) meets the requirements for any listed impairment, we 
will decide that your impairment is of ``listing-level severity'' even 
if it does not result in marked limitations in two broad areas of 
functioning, or extreme limitations in one such area, if the listing 
that we apply does not require such limitations to establish that an 
impairment(s) is disabling.
    (c) How to use the Listing of Impairments. Each section of the 
Listing of Impairments has a general introduction containing definitions 
of key concepts used in that section. Certain specific medical findings, 
some of which are required in establishing a diagnosis or in confirming 
the existence of an impairment for the purpose of this Listing, are also 
given in the narrative introduction. If the medical findings needed to 
support a diagnosis are not given in the introduction or elsewhere in 
the listing, the diagnosis must still be established on the basis of 
medically acceptable clinical and laboratory diagnostic techniques. 
Following the introduction in each section, the required level of 
severity of impairment is shown under ``Category of Impairments'' by one 
or more sets of medical findings. The medical findings consist of 
symptoms, signs, and laboratory findings.
    (d) Diagnoses of impairments. We will not consider your impairment 
to be one listed in appendix 1 of subpart P of part 404 of this chapter 
solely because it has the diagnosis of a listed impairment. It must also 
have the findings shown in the Listing for that impairment.
    (e) Addiction to alcohol or drugs. If you have a condition diagnosed 
as addiction to alcohol or drugs, this will not, by itself, be a basis 
for determining whether you are, or are not, disabled. As with any other 
medical condition, we will decide whether you are disabled based on 
symptoms, signs, and laboratory findings.
    (f) Symptoms as criteria of listed impairment(s). Some listed 
impairment(s) include symptoms usually associated with those 
impairment(s) as criteria. Generally, when a symptom is one of the 
criteria in a listed impairment, it is only necessary that the symptom 
be present in combination with the other criteria. It is not necessary, 
unless the listing specifically states otherwise, to provide information 
about the intensity, persistence or limiting effects of the symptom as 
long as all other findings required by the specific listing are present.

[45 FR 55621, Aug. 20, 1980, as amended at 56 FR 57944, Nov. 14, 1991; 
62 FR 6424, Feb. 11, 1997; 62 FR 13539, Mar. 21, 1997; 65 FR 54782, 
Sept. 11, 2000]



Sec. 416.926  Medical equivalence for adults and children.

    (a) How medical equivalence is determined. We will decide that your 
impairment(s) is medically equivalent to a listed impairment in appendix 
1 of subpart P of part 404 of this chapter if the medical findings are 
at least equal in severity and duration to the listed findings. We will 
compare the symptoms, signs, and laboratory findings about your 
impairment(s), as shown in the medical evidence we have about your 
claim, with the corresponding medical criteria shown for any listed 
impairment. When we make a finding regarding medical equivalence, we 
will consider all relevant evidence in your case record. Medical 
equivalence can be found in two ways:

[[Page 823]]

    (1)(i) If you have an impairment that is described in the Listing of 
Impairments in appendix 1 of subpart P of part 404 of this chapter, 
but--
    (A) You do not exhibit one or more of the medical findings specified 
in the particular listing, or
    (B) You exhibit all of the medical findings, but one or more of the 
findings is not as severe as specified in the listing;
    (ii) We will nevertheless find that your impairment is medically 
equivalent to that listing if you have other medical findings related to 
your impairment that are at least of equal medical significance.
    (2) If you have an impairment that is not described in the Listing 
of Impairments in appendix 1, or you have a combination of impairments, 
no one of which meets or is medically equivalent to a listing, we will 
compare your medical findings with those for closely analogous listed 
impairments. If the medical findings related to your impairment(s) are 
at least of equal medical significance to those of a listed impairment, 
we will find that your impairment(s) is medically equivalent to the 
analogous listing.
    (b) Medical equivalence must be based on medical findings. We will 
always base our decision about whether your impairment(s) is medically 
equal to a listed impairment on medical evidence only. Any medical 
findings in the evidence must be supported by medically acceptable 
clinical and laboratory diagnostic techniques. We will also consider the 
medical opinion given by one or more medical or psychological 
consultants designated by the Commissioner in deciding medical 
equivalence. (See Sec. 416.1016.)
    (c) Who is a designated medical or psychological consultant. A 
medical or psychological consultant designated by the Commissioner 
includes any medical or psychological consultant employed or engaged to 
make medical judgments by the Social Security Administration, the 
Railroad Retirement Board, or a State agency authorized to make 
disability determinations. A medical consultant must be an acceptable 
medical source identified in Sec. 416.913(a)(1) or (a)(3) through 
(a)(5). A psychological consultant used in cases where there is evidence 
of a mental impairment must be a qualified psychologist. (See Sec. 
416.1016 for limitations on what medical consultants who are not 
physicians can evaluate and the qualifications we consider necessary for 
a psychologist to be a consultant.)
    (d) Responsibility for determining medical equivalence. In cases 
where the State agency or other designee of the Commissioner makes the 
initial or reconsideration disability determination, a State agency 
medical or psychological consultant or other designee of the 
Commissioner (see Sec. 416.1016) has the overall responsibility for 
determining medical equivalence. For cases in the disability hearing 
process or otherwise decided by a disability hearing officer, the 
responsibility for determining medical equivalence rests with either the 
disability hearing officer or, if the disability hearing officer's 
reconsideration determination is changed under Sec. 416.1418, with the 
Associate Commissioner for Disability or his or her delegate. For cases 
at the Administrative Law Judge or Appeals Council level, the 
responsibility for deciding medical equivalence rests with the 
Administrative Law Judge or Appeals Council.

[45 FR 55621, Aug. 20, 1980, as amended at 52 FR 33928, Sept. 9, 1987; 
56 FR 5561, Feb. 11, 1991; 62 FR 6424, Feb. 11, 1997; 62 FR 13538, Mar. 
21, 1997; 65 FR 34959, June 1, 2000]



Sec. 416.926a  Functional equivalence for children.

    (a) General. If you have a severe impairment or combination of 
impairments that does not meet or medically equal any listing, we will 
decide whether it results in limitations that functionally equal the 
listings. By ``functionally equal the listings,'' we mean that your 
impairment(s) must be of listing-level severity; i.e., it must result in 
``marked'' limitations in two domains of functioning or an ``extreme'' 
limitation in one domain, as explained in this section. We will assess 
the functional limitations caused by your impairment(s); i.e., what you 
cannot do, have difficulty doing, need help doing, or are restricted 
from doing because of your impairment(s). When we make a finding 
regarding functional

[[Page 824]]

equivalence, we will assess the interactive and cumulative effects of 
all of the impairments for which we have evidence, including any 
impairments you have that are not ``severe.'' (See Sec. 416.924(c).) 
When we assess your functional limitations, we will consider all the 
relevant factors in Sec. Sec. 416.924a, 416.924b, and 416.929 
including, but not limited to:
    (1) How well you can initiate and sustain activities, how much extra 
help you need, and the effects of structured or supportive settings (see 
Sec. 416.924a(b)(5));
    (2) How you function in school (see Sec. 416.924a(b)(7)); and
    (3) The effects of your medications or other treatment (see Sec. 
416.924a(b)(9)).
    (b) How we will consider your functioning. We will look at the 
information we have in your case record about how your functioning is 
affected during all of your activities when we decide whether your 
impairment or combination of impairments functionally equals the 
listings. Your activities are everything you do at home, at school, and 
in your community. We will look at how appropriately, effectively, and 
independently you perform your activities compared to the performance of 
other children your age who do not have impairments.
    (1) We will consider how you function in your activities in terms of 
six domains. These domains are broad areas of functioning intended to 
capture all of what a child can or cannot do. In paragraphs (g) through 
(l), we describe each domain in general terms. For most of the domains, 
we also provide examples of activities that illustrate the typical 
functioning of children in different age groups. For all of the domains, 
we also provide examples of limitations within the domains. However, we 
recognize that there is a range of development and functioning, and that 
not all children within an age category are expected to be able to do 
all of the activities in the examples of typical functioning. We also 
recognize that limitations of any of the activities in the examples do 
not necessarily mean that a child has a ``marked'' or ``extreme'' 
limitation, as defined in paragraph (e) of this section. The domains we 
use are:
    (i) Acquiring and using information;
    (ii) Attending and completing tasks;
    (iii) Interacting and relating with others;
    (iv) Moving about and manipulating objects;
    (v) Caring for yourself; and,
    (vi) Health and physical well-being.
    (2) When we evaluate your ability to function in each domain, we 
will ask for and consider information that will help us answer the 
following questions about whether your impairment(s) affects your 
functioning and whether your activities are typical of other children 
your age who do not have impairments.
    (i) What activities are you able to perform?
    (ii) What activities are you not able to perform?
    (iii) Which of your activities are limited or restricted compared to 
other children your age who do not have impairments?
    (iv) Where do you have difficulty with your activities-at home, in 
childcare, at school, or in the community?
    (v) Do you have difficulty independently initiating, sustaining, or 
completing activities?
    (vi) What kind of help do you need to do your activities, how much 
help do you need, and how often do you need it?
    (3) We will try to get information from sources who can tell us 
about the effects of your impairment(s) and how you function. We will 
ask for information from your treating and other medical sources who 
have seen you and can give us their medical findings and opinions about 
your limitations and restrictions. We will also ask for information from 
your parents and teachers, and may ask for information from others who 
see you often and can describe your functioning at home, in childcare, 
at school, and in your community. We may also ask you to go to a 
consultative examination(s) at our expense. (See Sec. Sec. 416.912-
416.919a regarding medical evidence and when we will purchase a 
consultative examination.)
    (c) The interactive and cumulative effects of an impairment or 
multiple impairments. When we evaluate your functioning and decide which 
domains may

[[Page 825]]

be affected by your impairment(s), we will look first at your activities 
and your limitations and restrictions. Any given activity may involve 
the integrated use of many abilities and skills; therefore, any single 
limitation may be the result of the interactive and cumulative effects 
of one or more impairments. And any given impairment may have effects in 
more than one domain; therefore, we will evaluate the limitations from 
your impairment(s) in any affected domain(s).
    (d) How we will decide that your impairment(s) functionally equals 
the listings. We will decide that your impairment(s) functionally equals 
the listings if it is of listing-level severity. Your impairment(s) is 
of listing-level severity if you have ``marked'' limitations in two of 
the domains in paragraph (b)(1) of this section, or an ``extreme'' 
limitation in one domain. We will not compare your functioning to the 
requirements of any specific listing. We explain what the terms 
``marked'' and ``extreme'' mean in paragraph (e) of this section. We 
explain how we use the domains in paragraph (f) of this section, and 
describe each domain in paragraphs (g)-(l). You must also meet the 
duration requirement. (See Sec. 416.909.)
    (e) How we define ``marked'' and ``extreme'' limitations--(1) 
General. (i) When we decide whether you have a ``marked'' or an 
``extreme'' limitation, we will consider your functional limitations 
resulting from all of your impairments, including their interactive and 
cumulative effects. We will consider all the relevant information in 
your case record that helps us determine your functioning, including 
your signs, symptoms, and laboratory findings, the descriptions we have 
about your functioning from your parents, teachers, and other people who 
know you, and the relevant factors explained in Sec. Sec. 416.924a, 
416.924b, and 416.929.
    (ii) The medical evidence may include formal testing that provides 
information about your development or functioning in terms of 
percentiles, percentages of delay, or age or grade equivalents. Standard 
scores (e.g., percentiles) can be converted to standard deviations. When 
you have such scores, we will consider them together with the 
information we have about your functioning to determine whether you have 
a ``marked'' or ``extreme'' limitation in a domain.
    (2) Marked limitation. (i) We will find that you have a ``marked'' 
limitation in a domain when your impairment(s) interferes seriously with 
your ability to independently initiate, sustain, or complete activities. 
Your day-to-day functioning may be seriously limited when your 
impairment(s) limits only one activity or when the interactive and 
cumulative effects of your impairment(s) limit several activities. 
``Marked'' limitation also means a limitation that is ``more than 
moderate'' but ``less than extreme.'' It is the equivalent of the 
functioning we would expect to find on standardized testing with scores 
that are at least two, but less than three, standard deviations below 
the mean.
    (ii) If you have not attained age 3, we will generally find that you 
have a ``marked'' limitation if you are functioning at a level that is 
more than one-half but not more than two-thirds of your chronological 
age when there are no standard scores from standardized tests in your 
case record.
    (iii) If you are a child of any age (birth to the attainment of age 
18), we will find that you have a ``marked'' limitation when you have a 
valid score that is two standard deviations or more below the mean, but 
less than three standard deviations, on a comprehensive standardized 
test designed to measure ability or functioning in that domain, and your 
day-to-day functioning in domain-related activities is consistent with 
that score. (See paragraph (e)(4) of this section.)
    (iv) For the sixth domain of functioning, ``Health and physical 
well-being,'' we may also consider you to have a ``marked'' limitation 
if you are frequently ill because of your impairment(s) or have frequent 
exacerbations of your impairment(s) that result in significant, 
documented symptoms or signs. For purposes of this domain, ``frequent 
means that you have episodes of illness or exacerbations that occur on 
an average of 3 times a year, or once every 4 months, each lasting 2 
weeks or more. We may also find that you have a ``marked'' limitation if 
you have episodes that occur more often

[[Page 826]]

than 3 times in a year or once every 4 months but do not last for 2 
weeks, or occur less often than an average of 3 times a year or once 
every 4 months but last longer than 2 weeks, if the overall effect 
(based on the length of the episode(s) or its frequency) is equivalent 
in severity.
    (3) Extreme limitation. (i) We will find that you have an 
``extreme'' limitation in a domain when your impairment(s) interferes 
very seriously with your ability to independently initiate, sustain, or 
complete activities. Your day-to-day functioning may be very seriously 
limited when your impairment(s) limits only one activity or when the 
interactive and cumulative effects of your impairment(s) limit several 
activities. ``Extreme'' limitation also means a limitation that is 
``more than marked.'' ``Extreme'' limitation is the rating we give to 
the worst limitations. However, ``extreme limitation'' does not 
necessarily mean a total lack or loss of ability to function. It is the 
equivalent of the functioning we would expect to find on standardized 
testing with scores that are at least three standard deviations below 
the mean.
    (ii) If you have not attained age 3, we will generally find that you 
have an ``extreme'' limitation if you are functioning at a level that is 
one-half of your chronological age or less when there are no standard 
scores from standardized tests in your case record.
    (iii) If you are a child of any age (birth to the attainment of age 
18), we will find that you have an ``extreme'' limitation when you have 
a valid score that is three standard deviations or more below the mean 
on a comprehensive standardized test designed to measure ability or 
functioning in that domain, and your day-to-day functioning in domain-
related activities is consistent with that score. (See paragraph (e)(4) 
of this section.)
    (iv) For the sixth domain of functioning, ``Health and physical 
well-being,'' we may also consider you to have an ``extreme'' limitation 
if you are frequently ill because of your impairment(s) or have frequent 
exacerbations of your impairment(s) that result in significant, 
documented symptoms or signs substantially in excess of the requirements 
for showing a ``marked'' limitation in paragraph (e)(2)(iv) of this 
section. However, if you have episodes of illness or exacerbations of 
your impairment(s) that we would rate as ``extreme'' under this 
definition, your impairment(s) should meet or medically equal the 
requirements of a listing in most cases. See Sec. Sec. 416.925 and 
416.926.
    (4) How we will consider your test scores. (i) As indicated in Sec. 
416.924a(a)(1)(ii), we will not rely on any test score alone. No single 
piece of information taken in isolation can establish whether you have a 
``marked'' or an ``extreme'' limitation in a domain.
    (ii) We will consider your test scores together with the other 
information we have about your functioning, including reports of 
classroom performance and the observations of school personnel and 
others.
    (A) We may find that you have a ``marked'' or ``extreme'' limitation 
when you have a test score that is slightly higher than the level 
provided in paragraph (e)(2) or (e)(3) of this section, if other 
information in your case record shows that your functioning in day-to-
day activities is seriously or very seriously limited because of your 
impairment(s). For example, you may have IQ scores above the level in 
paragraph (e)(2), but other evidence shows that your impairment(s) 
causes you to function in school, home, and the community far below your 
expected level of functioning based on this score.
    (B) On the other hand, we may find that you do not have a ``marked'' 
or ``extreme'' limitation, even if your test scores are at the level 
provided in paragraph (e)(2) or (e)(3) of this section, if other 
information in your case record shows that your functioning in day-to-
day activities is not seriously or very seriously limited by your 
impairment(s). For example, you may have a valid IQ score below the 
level in paragraph (e)(2), but other evidence shows that you have 
learned to drive a car, shop independently, and read books near your 
expected grade level.
    (iii) If there is a material inconsistency between your test scores 
and other information in your case record,

[[Page 827]]

we will try to resolve it. The interpretation of the test is primarily 
the responsibility of the psychologist or other professional who 
administered the test. But it is also our responsibility to ensure that 
the evidence in your case is complete and consistent or that any 
material inconsistencies have been resolved. Therefore, we will use the 
following guidelines when we resolve concerns about your test scores:
    (A) We may be able to resolve the inconsistency with the information 
we have. We may need to obtain additional information; e.g., by 
recontact with your medical source(s), by purchase of a consultative 
examination to provide further medical information, by recontact with a 
medical source who provided a consultative examination, or by 
questioning individuals familiar with your day-to-day functioning.
    (B) Generally, we will not rely on a test score as a measurement of 
your functioning within a domain when the information we have about your 
functioning is the kind of information typically used by medical 
professionals to determine that the test results are not the best 
measure of your day-to-day functioning. When we do not rely on test 
scores, we will explain our reasons for doing so in your case record or 
in our decision.
    (f) How we will use the domains to help us evaluate your 
functioning. (1) When we consider whether you have ``marked'' or 
``extreme'' limitations in any domain, we examine all the information we 
have in your case record about how your functioning is limited because 
of your impairment(s), and we compare your functioning to the typical 
functioning of children your age who do not have impairments.
    (2) The general descriptions of each domain in paragraphs (g)-(l) 
help us decide whether you have limitations in any given domain and 
whether these limitations are ``marked'' or ``extreme.''
    (3) The domain descriptions also include examples of some activities 
typical of children in each age group and some functional limitations 
that we may consider. These examples also help us decide whether you 
have limitations in a domain because of your impairment(s). The examples 
are not all-inclusive, and we will not require our adjudicators to 
develop evidence about each specific example. When you have limitations 
in a given activity or activities in the examples, we may or may not 
decide that you have a ``marked'' or ``extreme'' limitation in the 
domain. We will consider the activities in which you are limited because 
of your impairment(s) and the extent of your limitations under the rules 
in paragraph (e) of this section. We will also consider all of the 
relevant provisions of Sec. Sec. 416.924a, 416.924b, and 416.929.
    (g) Acquiring and using information. In this domain, we consider how 
well you acquire or learn information, and how well you use the 
information you have learned.
    (1) General--(i) Learning and thinking begin at birth. You learn as 
you explore the world through sight, sound, taste, touch, and smell. As 
you play, you acquire concepts and learn that people, things, and 
activities have names. This lets you understand symbols, which prepares 
you to use language for learning. Using the concepts and symbols you 
have acquired through play and learning experiences, you should be able 
to learn to read, write, do arithmetic, and understand and use new 
information.
    (ii) Thinking is the application or use of information you have 
learned. It involves being able to perceive relationships, reason, and 
make logical choices. People think in different ways. When you think in 
pictures, you may solve a problem by watching and imitating what another 
person does. When you think in words, you may solve a problem by using 
language to talk your way through it. You must also be able to use 
language to think about the world and to understand others and express 
yourself; e.g., to follow directions, ask for information, or explain 
something.
    (2) Age group descriptors. (i) Newborns and young infants (birth to 
attainment of age 1). At this age, you should show interest in, and 
explore, your environment. At first, your actions are random; for 
example, when you accidentally touch the mobile over your crib. 
Eventually, your actions should become deliberate and purposeful, as

[[Page 828]]

when you shake noisemaking toys like a bell or rattle. You should begin 
to recognize, and then anticipate, routine situations and events, as 
when you grin with expectation at the sight of your stroller. You should 
also recognize and gradually attach meaning to everyday sounds, as when 
you hear the telephone or your name. Eventually, you should recognize 
and respond to familiar words, including family names and what your 
favorite toys and activities are called.
    (ii) Older infants and toddlers (age 1 to attainment of age 3). At 
this age, you are learning about the world around you. When you play, 
you should learn how objects go together in different ways. You should 
learn that by pretending, your actions can represent real things. This 
helps you understand that words represent things, and that words are 
simply symbols or names for toys, people, places, and activities. You 
should refer to yourself and things around you by pointing and 
eventually by naming. You should form concepts and solve simple problems 
through purposeful experimentation (e.g., taking toys apart), imitation, 
constructive play (e.g., building with blocks), and pretend play 
activities. You should begin to respond to increasingly complex 
instructions and questions, and to produce an increasing number of words 
and grammatically correct simple sentences and questions.
    (iii) Preschool children (age 3 to attainment of age 6). When you 
are old enough to go to preschool or kindergarten, you should begin to 
learn and use the skills that will help you to read and write and do 
arithmetic when you are older. For example, listening to stories, 
rhyming words, and matching letters are skills needed for learning to 
read. Counting, sorting shapes, and building with blocks are skills 
needed to learn math. Painting, coloring, copying shapes, and using 
scissors are some of the skills needed in learning to write. Using words 
to ask questions, give answers, follow directions, describe things, 
explain what you mean, and tell stories allows you to acquire and share 
knowledge and experience of the world around you. All of these are 
called ``readiness skills,'' and you should have them by the time you 
begin first grade.
    (iv) School-age children (age 6 to attainment of age 12). When you 
are old enough to go to elementary and middle school, you should be able 
to learn to read, write, and do math, and discuss history and science. 
You will need to use these skills in academic situations to demonstrate 
what you have learned; e.g., by reading about various subjects and 
producing oral and written projects, solving mathematical problems, 
taking achievement tests, doing group work, and entering into class 
discussions. You will also need to use these skills in daily living 
situations at home and in the community (e.g., reading street signs, 
telling time, and making change). You should be able to use increasingly 
complex language (vocabulary and grammar) to share information and ideas 
with individuals or groups, by asking questions and expressing your own 
ideas, and by understanding and responding to the opinions of others.
    (v) Adolescents (age 12 to attainment of age 18). In middle and high 
school, you should continue to demonstrate what you have learned in 
academic assignments (e.g., composition, classroom discussion, and 
laboratory experiments). You should also be able to use what you have 
learned in daily living situations without assistance (e.g., going to 
the store, using the library, and using public transportation). You 
should be able to comprehend and express both simple and complex ideas, 
using increasingly complex language (vocabulary and grammar) in learning 
and daily living situations (e.g., to obtain and convey information and 
ideas). You should also learn to apply these skills in practical ways 
that will help you enter the workplace after you finish school (e.g., 
carrying out instructions, preparing a job application, or being 
interviewed by a potential employer).
    (3) Examples of limited functioning in acquiring and using 
information. The following examples describe some limitations we may 
consider in this domain. Your limitations may be different from the ones 
listed here. Also, the examples do not necessarily describe a ``marked'' 
or ``extreme'' limitation. Whether an

[[Page 829]]

example applies in your case may depend on your age and developmental 
stage; e.g., an example below may describe a limitation in an older 
child, but not a limitation in a younger one. As in any case, your 
limitations must result from your medically determinable impairment(s). 
However, we will consider all of the relevant information in your case 
record when we decide whether your medically determinable impairment(s) 
results in a ``marked'' or ``extreme'' limitation in this domain.
    (i) You do not demonstrate understanding of words about space, size, 
or time; e.g., in/under, big/little, morning/night.
    (ii) You cannot rhyme words or the sounds in words.
    (iii) You have difficulty recalling important things you learnedin 
school yesterday.
    (iv) You have difficulty solving mathematics questions or computing 
arithmetic answers.
    (v) You talk only in short, simple sentences and have difficulty 
explaining what you mean.
    (h) Attending and completing tasks. In this domain, we consider how 
well you are able to focus and maintain your attention, and how well you 
begin, carry through, and finish your activities, including the pace at 
which you perform activities and the ease with which you change them.
    (1) General. (i) Attention involves regulating your levels of 
alertness and initiating and maintaining concentration. It involves the 
ability to filter out distractions and to remain focused on an activity 
or task at a consistent level of performance. This means focusing long 
enough to initiate and complete an activity or task, and changing focus 
once it is completed. It also means that if you lose or change your 
focus in the middle of a task, you are able to return to the task 
without other people having to remind you frequently to finish it.
    (ii) Adequate attention is needed to maintain physical and mental 
effort and concentration on an activity or task. Adequate attention 
permits you to think and reflect before starting or deciding to stop an 
activity. In other words, you are able to look ahead and predict the 
possible outcomes of your actions before you act. Focusing your 
attention allows you to attempt tasks at an appropriate pace. It also 
helps you determine the time needed to finish a task within an 
appropriate timeframe.
    (2) Age group descriptors--(i) Newborns and young infants (birth to 
attainment of age 1). You should begin at birth to show sensitivity to 
your environment by responding to various stimuli (e.g., light, touch, 
temperature, movement). Very soon, you should be able to fix your gaze 
on a human face. You should stop your activity when you hear voices or 
sounds around you. Next, you should begin to attend to and follow 
various moving objects with your gaze, including people or toys. You 
should be listening to your family's conversations for longer and longer 
periods of time. Eventually, as you are able to move around and explore 
your environment, you should begin to play with people and toys for 
longer periods of time. You will still want to change activities 
frequently, but your interest in continuing interaction or a game should 
gradually expand.
    (ii) Older infants and toddlers (age 1 to attainment of age 3). At 
this age, you should be able to attend to things that interest you and 
have adequate attention to complete some tasks by yourself. As a 
toddler, you should demonstrate sustained attention, such as when 
looking at picture books, listening to stories, or building with blocks, 
and when helping to put on your clothes.
    (iii) Preschool children (age 3 to attainment of age 6). As a 
preschooler, you should be able to pay attention when you are spoken to 
directly, sustain attention to your play and learning activities, and 
concentrate on activities like putting puzzles together or completing 
art projects. You should also be able to focus long enough to do many 
more things by yourself, such as getting your clothes together and 
dressing yourself, feeding yourself, or putting away your toys. You 
should usually be able to wait your turn and to change your activity 
when a caregiver or teacher says it is time to do something else.

[[Page 830]]

    (iv) School-age children (age 6 to attainment of age 12). When you 
are of school age, you should be able to focus your attention in a 
variety of situations in order to follow directions, remember and 
organize your school materials, and complete classroom and homework 
assignments. You should be able to concentrate on details and not make 
careless mistakes in your work (beyond what would be expected in other 
children your age who do not have impairments). You should be able to 
change your activities or routines without distracting yourself or 
others, and stay on task and in place when appropriate. You should be 
able to sustain your attention well enough to participate in group 
sports, read by yourself, and complete family chores. You should also be 
able to complete a transition task (e.g., be ready for the school bus, 
change clothes after gym, change classrooms) without extra reminders and 
accommodation.
    (v) Adolescents (age 12 to attainment of age 18). In your later 
years of school, you should be able to pay attention to increasingly 
longer presentations and discussions, maintain your concentration while 
reading textbooks, and independently plan and complete long-range 
academic projects. You should also be able to organize your materials 
and to plan your time in order to complete school tasks and assignments. 
In anticipation of entering the workplace, you should be able to 
maintain your attention on a task for extended periods of time, and not 
be unduly distracted by your peers or unduly distracting to them in a 
school or work setting.
    (3) Examples of limited functioning in attending and completing 
tasks. The following examples describe some limitations we may consider 
in this domain. Your limitations may be different from the ones listed 
here. Also, the examples do not necessarily describe a ``marked'' or 
``extreme'' limitation. Whether an example applies in your case may 
depend on your age and developmental stage; e.g., an example below may 
describe a limitation in an older child, but not a limitation in a 
younger one. As in any case, your limitations must result from your 
medically determinable impairment(s). However, we will consider all of 
the relevant information in your case record when we decide whether your 
medically determinable impairment(s) results in a ``marked'' or 
``extreme'' limitation in this domain.
    (i) You are easily startled, distracted, or overreactive to sounds, 
sights, movements, or touch.
    (ii) You are slow to focus on, or fail to complete activities of 
interest to you, e.g., games or art projects.
    (iii) You repeatedly become sidetracked from your activities or you 
frequently interrupt others.
    (iv) You are easily frustrated and give up on tasks, including ones 
you are capable of completing.
    (v) You require extra supervision to keep you engaged in an 
activity.
    (i) Interacting and relating with others. In this domain, we 
consider how well you initiate and sustain emotional connections with 
others, develop and use the language of your community, cooperate with 
others, comply with rules, respond to criticism, and respect and take 
care of the possessions of others.
    (1) General. (i) Interacting means initiating and responding to 
exchanges with other people, for practical or social purposes. You 
interact with others by using facial expressions, gestures, actions, or 
words. You may interact with another person only once, as when asking a 
stranger for directions, or many times, as when describing your day at 
school to your parents. You may interact with people one-at-a-time, as 
when you are listening to another student in the hallway at school, or 
in groups, as when you are playing with others.
    (ii) Relating to other people means forming intimate relationships 
with family members and with friends who are your age, and sustaining 
them over time. You may relate to individuals, such as your siblings, 
parents or best friend, or to groups, such as other children in 
childcare, your friends in school, teammates in sports activities, or 
people in your neighborhood.
    (iii) Interacting and relating require you to respond appropriately 
to a variety of emotional and behavioral cues. You must be able to speak 
intelligibly and fluently so that others can understand you; participate 
in verbal

[[Page 831]]

turntaking and nonverbal exchanges; consider others' feelings and points 
of view; follow social rules for interaction and conversation; and 
respond to others appropriately and meaningfully.
    (iv) Your activities at home or school or in your community may 
involve playing, learning, and working cooperatively with other 
children, one-at-a-time or in groups; joining voluntarily in activities 
with the other children in your school or community; and responding to 
persons in authority (e.g., your parent, teacher, bus driver, coach, or 
employer).
    (2) Age group descriptors--(i) Newborns and young infants (birth to 
attainment of age 1). You should begin to form intimate relationships at 
birth by gradually responding visually and vocally to your caregiver(s), 
through mutual gaze and vocal exchanges, and by physically molding your 
body to the caregiver's while being held. You should eventually initiate 
give-and-take games (such as pat-a-cake, peek-a-boo) with your 
caregivers, and begin to affect others through your own purposeful 
behavior (e.g., gestures and vocalizations). You should be able to 
respond to a variety of emotions (e.g., facial expressions and vocal 
tone changes). You should begin to develop speech by using vowel sounds 
and later consonants, first alone, and then in babbling.
    (ii) Older infants and toddlers (age 1 to attainment of age 3). At 
this age, you are dependent upon your caregivers, but should begin to 
separate from them. You should be able to express emotions and respond 
to the feelings of others. You should begin initiating and maintaining 
interactions with adults, but also show interest in, then play 
alongside, and eventually interact with other children your age. You 
should be able to spontaneously communicate your wishes or needs, first 
by using gestures, and eventually by speaking words clearly enough that 
people who know you can understand what you say most of the time.
    (iii) Preschool children (age 3 to attainment of age 6). At this 
age, you should be able to socialize with children as well as adults. 
You should begin to prefer playmates your own age and start to develop 
friendships with children who are your age. You should be able to use 
words instead of actions to express yourself, and also be better able to 
share, show affection, and offer to help. You should be able to relate 
to caregivers with increasing independence, choose your own friends, and 
play cooperatively with other children, one-at-a-time or in a group, 
without continual adult supervision. You should be able to initiate and 
participate in conversations, using increasingly complex vocabulary and 
grammar, and speaking clearly enough that both familiar and unfamiliar 
listeners can understand what you say most of the time.
    (iv) School-age children (age 6 to attainment of age 12). When you 
enter school, you should be able to develop more lasting friendships 
with children who are your age. You should begin to understand how to 
work in groups to create projects and solve problems. You should have an 
increasing ability to understand another's point of view and to tolerate 
differences. You should be well able to talk to people of all ages, to 
share ideas, tell stories, and to speak in a manner that both familiar 
and unfamiliar listeners readily understand.
    (v) Adolescents (age 12 to attainment of age 18). By the time you 
reach adolescence, you should be able to initiate and develop 
friendships with children who are your age and to relate appropriately 
to other children and adults, both individually and in groups. You 
should begin to be able to solve conflicts between yourself and peers or 
family members or adults outside your family. You should recognize that 
there are different social rules for you and your friends and for 
acquaintances or adults. You should be able to intelligibly express your 
feelings, ask for assistance in getting your needs met, seek 
information, describe events, and tell stories, in all kinds of 
environments (e.g., home, classroom, sports, extra-curricular 
activities, or part-time job), and with all types of people (e.g., 
parents, siblings, friends, classmates, teachers, employers, and 
strangers).
    (3) Examples of limited functioning in interacting and relating with 
others. The

[[Page 832]]

following examples describe some limitations we may consider in this 
domain. Your limitations may be different from the ones listed here. 
Also, the examples do not necessarily describe a ``marked'' or 
``extreme'' limitation. Whether an example applies in your case may 
depend on your age and developmental stage; e.g., an example below may 
describe a limitation in an older child, but not a limitation in a 
younger one. As in any case, your limitations must result from your 
medically determinable impairment(s). However, we will consider all of 
the relevant information in your case record when we decide whether your 
medically determinable impairment(s) results in a ``marked'' or 
``extreme'' limitation in this domain.
    (i) You do not reach out to be picked up and held by your caregiver.
    (ii) You have no close friends, or your friends are all older or 
younger than you.
    (iii) You avoid or withdraw from people you know, or you are overly 
anxious or fearful of meeting new people or trying new experiences.
    (iv) You have difficulty playing games or sports with rules.
    (v) You have difficulty communicating with others; e.g., in using 
verbal and nonverbal skills to express yourself, carrying on a 
conversation, or in asking others for assistance.
    (vi) You have difficulty speaking intelligibly or with adequate 
fluency.
    (j) Moving about and manipulating objects. In this domain, we 
consider how you move your body from one place to another and how you 
move and manipulate things. These are called gross and fine motor 
skills.
    (1) General. (i) Moving your body involves several different kinds 
of actions: Rolling your body; rising or pulling yourself from a sitting 
to a standing position; pushing yourself up; raising your head, arms, 
and legs, and twisting your hands and feet; balancing your weight on 
your legs and feet; shifting your weight while sitting or standing; 
transferring yourself from one surface to another; lowering yourself to 
or toward the floor as when bending, kneeling, stooping, or crouching; 
moving yourself forward and backward in space as when crawling, walking, 
or running, and negotiating different terrains (e.g., curbs, steps, and 
hills).
    (ii) Moving and manipulating things involves several different kinds 
of actions: Engaging your upper and lower body to push, pull, lift, or 
carry objects from one place to another; controlling your shoulders, 
arms, and hands to hold or transfer objects; coordinating your eyes and 
hands to manipulate small objects or parts of objects.
    (iii) These actions require varying degrees of strength, 
coordination, dexterity, pace, and physical ability to persist at the 
task. They also require a sense of where your body is and how it moves 
in space; the integration of sensory input with motor output; and the 
capacity to plan, remember, and execute controlled motor movements.
    (2) Age group descriptors--(i) Newborns and infants (birth to 
attainment of age 1). At birth, you should begin to explore your world 
by moving your body and by using your limbs. You should learn to hold 
your head up, sit, crawl, and stand, and sometimes hold onto a stable 
object and stand actively for brief periods. You should begin to 
practice your developing eye-hand control by reaching for objects or 
picking up small objects and dropping them into containers.
    (ii) Older infants and toddlers (age 1 to attainment of age 3). At 
this age, you should begin to explore actively a wide area of your 
physical environment, using your body with steadily increasing control 
and independence from others. You should begin to walk and run without 
assistance, and climb with increasing skill. You should frequently try 
to manipulate small objects and to use your hands to do or get something 
that you want or need. Your improved motor skills should enable you to 
play with small blocks, scribble with crayons, and feed yourself.
    (iii) Preschool children (age 3 to attainment of age 6). As a 
preschooler, you should be able to walk and run with ease. Your gross 
motor skills should let you climb stairs and playground equipment with 
little supervision, and let you play more independently; e.g., you 
should be able to swing by yourself and may start learning to ride a 
tricycle. Your fine motor skills should also be

[[Page 833]]

developing. You should be able to complete puzzles easily, string beads, 
and build with an assortment of blocks. You should be showing increasing 
control of crayons, markers, and small pieces in board games, and should 
be able to cut with scissors independently and manipulate buttons and 
other fasteners.
    (iv) School-age children (age 6 to attainment of age 12). As a 
school-age child, your developing gross motor skills should let you move 
at an efficient pace about your school, home, and neighborhood. Your 
increasing strength and coordination should expand your ability to enjoy 
a variety of physical activities, such as running and jumping, and 
throwing, kicking, catching and hitting balls in informal play or 
organized sports. Your developing fine motor skills should enable you to 
do things like use many kitchen and household tools independently, use 
scissors, and write.
    (v) Adolescents (age 12 to attainment of age 18). As an adolescent, 
you should be able to use your motor skills freely and easily to get 
about your school, the neighborhood, and the community. You should be 
able to participate in a full range of individual and group physical 
fitness activities. You should show mature skills in activities 
requiring eye-hand coordination, and should have the fine motor skills 
needed to write efficiently or type on a keyboard.
    (3) Examples of limited functioning in moving about and manipulating 
objects. The following examples describe some limitations we may 
consider in this domain. Your limitations may be different from the ones 
listed here. Also, the examples do not necessarily describe a ``marked'' 
or ``extreme'' limitation. Whether an example applies in your case may 
depend on your age and developmental stage; e.g., an example below may 
describe a limitation in an older child, but not a limitation in a 
younger one. As in any case, your limitations must result from your 
medically determinable impairment(s). However, we will consider all of 
the relevant information in your case record when we decide whether your 
medically determinable impairment(s) results in a ``marked'' or 
``extreme'' limitation in this domain.
    (i) You experience muscle weakness, joint stiffness, or sensory loss 
(e.g., spasticity, hypotonia, neuropathy, or paresthesia) that 
interferes with your motor activities (e.g., you unintentionally drop 
things).
    (ii) You have trouble climbing up and down stairs, or have jerky or 
disorganized locomotion or difficulty with your balance.
    (iii) You have difficulty coordinating gross motor movements (e.g., 
bending, kneeling, crawling, running, jumping rope, or riding a bike).
    (iv) You have difficulty with sequencing hand or finger movements.
    (v) You have difficulty with fine motor movement (e.g., gripping or 
grasping objects).
    (vi) You have poor eye-hand coordination when using a pencil or 
scissors.
    (k) Caring for yourself. In this domain, we consider how well you 
maintain a healthy emotional and physical state, including how well you 
get your physical and emotional wants and needs met in appropriate ways; 
how you cope with stress and changes in your environment; and whether 
you take care of your own health, possessions, and living area.
    (1) General. (i) Caring for yourself effectively, which includes 
regulating yourself, depends upon your ability to respond to changes in 
your emotions and the daily demands of your environment to help yourself 
and cooperate with others in taking care of your personal needs, health 
and safety. It is characterized by a sense of independence and 
competence. The effort to become independent and competent should be 
observable throughout your childhood.
    (ii) Caring for yourself effectively means becoming increasingly 
independent in making and following your own decisions. This entails 
relying on your own abilities and skills, and displaying consistent 
judgment about the consequences of caring for yourself. As you mature, 
using and testing your own judgment helps you develop confidence in your 
independence and competence. Caring for yourself includes using your 
independence and competence to meet your physical needs, such as 
feeding, dressing, toileting, and bathing, appropriately for your age.

[[Page 834]]

    (iii) Caring for yourself effectively requires you to have a basic 
understanding of your body, including its normal functioning, and of 
your physical and emotional needs. To meet these needs successfully, you 
must employ effective coping strategies, appropriate to your age, to 
identify and regulate your feelings, thoughts, urges, and intentions. 
Such strategies are based on taking responsibility for getting your 
needs met in an appropriate and satisfactory manner.
    (iv) Caring for yourself means recognizing when you are ill, 
following recommended treatment, taking medication as prescribed, 
following safety rules, responding to your circumstances in safe and 
appropriate ways, making decisions that do not endanger yourself, and 
knowing when to ask for help from others.
    (2) Age group descriptors--(i) Newborns and infants (birth to 
attainment of age 1. Your sense of independence and competence begins in 
being able to recognize your body's signals (e.g., hunger, pain, 
discomfort), to alert your caregiver to your needs (e.g., by crying), 
and to console yourself (e.g., by sucking on your hand) until help 
comes. As you mature, your capacity for self-consolation should expand 
to include rhythmic behaviors (e.g., rocking). Your need for a sense of 
competence also emerges in things you try to do for yourself, perhaps 
before you are ready to do them, as when insisting on putting food in 
your mouth and refusing your caregiver's help.
    (ii) Older infants and toddlers (age 1 to attainment of age 3). As 
you grow, you should be trying to do more things for yourself that 
increase your sense of independence and competence in your environment. 
You might console yourself by carrying a favorite blanket with you 
everywhere. You should be learning to cooperate with your caregivers 
when they take care of your physical needs, but you should also want to 
show what you can do; e.g., pointing to the bathroom, pulling off your 
coat. You should be experimenting with your independence by showing some 
degree of contrariness (e.g., ``No! No!'') and identity (e.g., hoarding 
your toys).
    (iii) Preschool children (age 3 to attainment of age 6). You should 
want to take care of many of your physical needs by yourself (e.g., 
putting on your shoes, getting a snack), and also want to try doing some 
things that you cannot do fully (e.g., tying your shoes, climbing on a 
chair to reach something up high, taking a bath). Early in this age 
range, it may be easy for you to agree to do what your caregiver asks. 
Later, that may be difficult for you because you want to do things your 
way or not at all. These changes usually mean that you are more 
confident about your ideas and what you are able to do. You should also 
begin to understand how to control behaviors that are not good for you 
(e.g., crossing the street without an adult).
    (iv) School-age children (age 6 to attainment of age 12). You should 
be independent in most day-to-day activities (e.g., dressing yourself, 
bathing yourself), although you may still need to be reminded sometimes 
to do these routinely. You should begin to recognize that you are 
competent in doing some activities and that you have difficulty with 
others. You should be able to identify those circumstances when you feel 
good about yourself and when you feel bad. You should begin to develop 
understanding of what is right and wrong, and what is acceptable and 
unacceptable behavior. You should begin to demonstrate consistent 
control over your behavior, and you should be able to avoid behaviors 
that are unsafe or otherwise not good for you. You should begin to 
imitate more of the behavior of adults you know.
    (v) Adolescents (age 12 to attainment of age 18). You should feel 
more independent from others and should be increasingly independent in 
all of your day-to-day activities. You may sometimes experience 
confusion in the way you feel about yourself. You should begin to notice 
significant changes in your body's development, and this can result in 
anxiety or worrying about yourself and your body. Sometimes these 
worries can make you feel angry or frustrated. You should begin to 
discover appropriate ways to express your feelings, both good and bad 
(e.g., keeping a diary to sort out angry feelings or listening to music 
to calm yourself down). You should begin to think seriously about your 
future plans, and

[[Page 835]]

what you will do when you finish school.
    (3) Examples of limited functioning in caring for yourself. The 
following examples describe some limitations we may consider in this 
domain. Your limitations may be different from the ones listed here. 
Also, the examples do not necessarily describe a ``marked'' or 
``extreme'' limitation. Whether an example applies in your case may 
depend on your age and developmental stage; e.g., an example below may 
describe a limitation in an older child, but not a limitation in a 
younger one. As in any case, your limitations must result from your 
medically determinable impairment(s). However, we will consider all of 
the relevant information in your case record when we decide whether your 
medically determinable impairment(s) results in a ``marked'' or 
``extreme'' limitation in this domain.
    (i) You continue to place non-nutritive or inedible objects in your 
mouth.
    (ii) You often use self-soothing activities showing developmental 
regression (e.g., thumbsucking, re-chewing food), or you have 
restrictive or stereotyped mannerisms (e.g., body rocking, headbanging).
    (iii) You do not dress or bathe yourself appropriately for your age 
because you have an impairment(s) that affects this domain.
    (iv) You engage in self-injurious behavior (e.g., suicidal thoughts 
or actions, self-inflicted injury, or refusal to take your medication), 
or you ignore safety rules.
    (v) You do not spontaneously pursue enjoyable activities or 
interests.
    (vi) You have disturbance in eating or sleeping patterns.
    (l) Health and physical well-being. In this domain, we consider the 
cumulative physical effects of physical or mental impairments and their 
associated treatments or therapies on your functioning that we did not 
consider in paragraph (j) of this section. When your physical 
impairment(s), your mental impairment(s), or your combination of 
physical and mental impairments has physical effects that cause 
``extreme'' limitation in your functioning, you will generally have an 
impairment(s) that ``meets'' or ``medically equals'' a listing.
    (1) A physical or mental disorder may have physical effects that 
vary in kind and intensity, and may make it difficult for you to perform 
your activities independently or effectively. You may experience 
problems such as generalized weakness, dizziness, shortness of breath, 
reduced stamina, fatigue, psychomotor retardation, allergic reactions, 
recurrent infection, poor growth, bladder or bowel incontinence, or 
local or generalized pain.
    (2) In addition, the medications you take (e.g., for asthma or 
depression) or the treatments you receive (e.g., chemotherapy or 
multiple surgeries) may have physical effects that also limit your 
performance of activities.
    (3) Your illness may be chronic with stable symptoms, or episodic 
with periods of worsening and improvement. We will consider how you 
function during periods of worsening and how often and for how long 
these periods occur. You may be medically fragile and need intensive 
medical care to maintain your level of health and physical well-being. 
In any case, as a result of the illness itself, the medications or 
treatment you receive, or both, you may experience physical effects that 
interfere with your functioning in any or all of your activities.
    (4) Examples of limitations in health and physical well-being. The 
following examples describe some limitations we may consider in this 
domain. Your limitations may be different from the ones listed here. 
Also, the examples do not necessarily describe a ``marked'' or 
``extreme'' limitation. Whether an example applies in your case may 
depend on your age and developmental stage; e.g., an example below may 
describe a limitation in an older child, but not a limitation in a 
younger one. As in any case, your limitations must result from your 
medically determinable impairment(s). However, we will consider all of 
the relevant information in your case record when we decide whether your 
medically determinable impairment(s) results in a ``marked'' or 
``extreme'' limitation in this domain.
    (i) You have generalized symptoms, such as weakness, dizziness, 
agitation (e.g., excitability), lethargy (e.g., fatigue or loss of 
energy or stamina), or

[[Page 836]]

psychomotor retardation because of your impairment(s).
    (ii) You have somatic complaints related to your impairments (e.g., 
seizure or convulsive activity, headaches, incontinence, recurrent 
infections, allergies, changes in weight or eating habits, stomach 
discomfort, nausea, headaches, or insomnia).
    (iii) You have limitations in your physical functioning because of 
your treatment (e.g., chemotherapy, multiple surgeries, chelation, 
pulmonary cleansing, or nebulizer treatments).
    (iv) You have exacerbations from one impairment or a combination of 
impairments that interfere with your physical functioning.
    (v) You are medically fragile and need intensive medical care to 
maintain your level of health and physical well-being.
    (m) Examples of impairments that functionally equal the listings. 
The following are some examples of impairments and limitations that 
functionally equal the listings. Findings of equivalence based on the 
disabling functional limitations of a child's impairment(s) are not 
limited to the examples in this paragraph, because these examples do not 
describe all possible effects of impairments that might be found to 
functionally equal the listings. As with any disabling impairment, the 
duration requirement must also be met (see Sec. Sec. 416.909 and 
416.924(a)).
    (1) Documented need for major organ transplant (e.g., liver).
    (2) Any condition that is disabling at the time of onset, requiring 
continuing surgical management within 12 months after onset as a life-
saving measure or for salvage or restoration of function, and such major 
function is not restored or is not expected to be restored within 12 
months after onset of this condition.
    (3) Frequent need for a life-sustaining device (e.g., central venous 
alimentation catheter), at home or elsewhere.
    (4) Effective ambulation possible only with obligatory bilateral 
upper limb assistance.
    (5) Any physical impairment(s) or combination of physical and mental 
impairments causing complete inability to function independently outside 
the area of one's home within age-appropriate norms.
    (6) Requirement for 24-hour-a-day supervision for medical (including 
psychological) reasons.
    (7) Infants weighing less than 1200 grams at birth, until attainment 
of 1 year of age.
    (8) Infants weighing at least 1200 but less than 2000 grams at 
birth, and who are small for gestational age, until attainment of 1 year 
of age. (Small for gestational age means a birth weight that is at or 
more than 2 standard deviations below the mean or that is below the 3rd 
growth percentile for the gestational age of the infant.)
    (9) Major congenital organ dysfunction which could be expected to 
result in death within the first year of life without surgical 
correction, and the impairment is expected to be disabling (because of 
residual impairment following surgery, or the recovery time required, or 
both) until attainment of 1 year of age.
    (10) Gastrostomy in a child who has not attained age 3.
    (n) Responsibility for determining functional equivalence. In cases 
where the State agency or other designee of the Commissioner makes the 
initial or reconsideration disability determination, a State agency 
medical or psychological consultant or other designee of the 
Commissioner (see Sec. 416.1016) has the overall responsibility for 
determining functional equivalence. For cases in the disability hearing 
process or otherwise decided by a disability hearing officer, the 
responsibility for determining functional equivalence rests with either 
the disability hearing officer or, if the disability hearing officer's 
reconsideration determination is changed under Sec. 416.1418, with the 
Associate Commissioner for Disability or his or her delegate. For cases 
at the Administrative Law Judge or Appeals Council level, the 
responsibility for deciding functional equivalence rests with the 
Administrative Law Judge or Appeals Council.

[62 FR 6424, Feb. 11, 1997; 62 FR 13538, 13733, Mar. 21, 1997, as 
amended at 65 FR 54782, Sept. 11, 2000; 65 FR 80308, Dec. 21, 2000; 66 
FR 58045, Nov. 19, 2001]



Sec. 416.927  Evaluating opinion evidence.

    (a) General. (1) If you are an adult, you can only be found disabled 
if you

[[Page 837]]

are unable to do any substantial gainful activity by reason of any 
medically determinable physical or mental impairment which can be 
expected to result in death or which has lasted or can be expected to 
last for a continuous period of not less than 12 months. (See Sec. 
416.905.) If you are a child, you can be found disabled only if you have 
a medically determinable physical or mental impairment(s) that causes 
marked and severe functional limitations and that can be expected to 
result in death or that has lasted or can be expected to last for a 
continuous period of not less than 12 months. (See Sec. 416.906.) Your 
impairment must result from anatomical, physiological, or psychological 
abnormalities which are demonstrable by medically acceptable clinical 
and laboratory diagnostic techniques. (See Sec. 416.908.)
    (2) Evidence that you submit or that we obtain may contain medical 
opinions. Medical opinions are statements from physicians and 
psychologists or other acceptable medical sources that reflect judgments 
about the nature and severity of your impairment(s), includinq your 
symptoms, diagnosis and prognosis, what you can still do despite 
impairment(s), and your physical or mental restrictions.
    (b) How we consider medical opinions. In deciding whether you are 
disabled, we will always consider the medical opinions in your case 
record together with the rest of the relevant evidence we receive.
    (c) Making disability determinations. After we review all of the 
evidence relevant to your claim, including medical opinions, we make 
findings about what the evidence shows.
    (1) If all of the evidence we receive, including all medical 
opinion(s), is consistent, and there is sufficient evidence for us to 
decide whether you are disabled, we will make our determination or 
decision based on that evidence.
    (2) If any of the evidence in your case record, including any 
medical opinion(s), is inconsistent with other evidence or is internally 
inconsistent, we will weigh all of the evidence and see whether we can 
decide whether you are disabled based on the evidence we have.
    (3) If the evidence is consistent but we do not have sufficient 
evidence to decide whether you are disabled, or, if after weighing the 
evidence we decide we cannot reach a conclusion about whether you are 
disabled, we will try to obtain additional evidence under the provisions 
of Sec. Sec. 416.912 and 416.919 through 416.919h. We will request 
additional existing records, recontact your treating sources or any 
other examining sources, ask you to undergo a consultative examination 
at our expense, or ask you or others for more information. We will 
consider any additional evidence we receive together with the evidence 
we already have.
    (4) When there are inconsistencies in the evidence that cannot be 
resolved, or when despite efforts to obtain additional evidence the 
evidence is not complete, we will make a determination or decision based 
on the evidence we have.
    (d) How we weigh medical opinions. Regardless of its source, we will 
evaluate every medical opinion we receive. Unless we give a treating 
source's opinion controlling weight under paragraph (d)(2) of this 
section, we consider all of the following factors in deciding the weight 
we give to any medical opinion.
    (1) Examining relationship. Generally, we give more weight to the 
opinion of a source who has examined you than to the opinion of a source 
who has not examined you.
    (2) Treatment relationship. Generally, we give more weight to 
opinions from your treating sources, since these sources are likely to 
be the medical professionals most able to provide a detailed, 
longitudinal picture of your medical impairment(s) and may bring a 
unique perspective to the medical evidence that cannot be obtained from 
the objective medical findings alone or from reports of individual 
examinations, such as consultative examinations or brief 
hospitalizations. If we find that a treating source's opinion on the 
issue(s) of the nature and severity of your impairment(s) is well-
supported by medically acceptable clinical and laboratory diagnostic 
techniques and is not inconsistent with the other substantial evidence 
in your case record, we will give it controlling weight. When we do not 
give the treating source's opinion controlling weight, we apply the 
factors listed in

[[Page 838]]

paragraphs (d)(2)(i) and (d)(2)(ii) of this section, as well as the 
factors in paragraphs (d)(3) through (d)(6) of this section in 
determining the weight to give the opinion. We will always give good 
reasons in our notice of determination or decision for the weight we 
give your treating source's opinion.
    (i) Length of the treatment relationship and the frequency of 
examination. Generally, the longer a treating source has treated you and 
the more times you have been seen by a treating source, the more weight 
we will give to the source's medical opinion. When the treating source 
has seen you a number of times and long enough to have obtained a 
longitudinal picture of your impairment, we will give the source's 
opinion more weight than we would give it if it were from a nontreating 
source.
    (ii) Nature and extent of the treatment relationship. Generally, the 
more knowledge a treating source has about your impairment(s) the more 
weight we will give to the source's medical opinion. We will look at the 
treatment the source has provided and at the kinds and extent of 
examinations and testing the source has performed or ordered from 
specialists and independent laboratories. For example, if your 
ophthalmologist notices that you have complained of neck pain during 
your eye examinations, we will consider his or her opinion with respect 
to your neck pain, but we will give it less weight than that of another 
physician who has treated you for the neck pain. When the treating 
source has reasonable knowledge of your impairment(s), we will give the 
source's opinion more weight than we would give it if it were from a 
nontreating source.
    (3) Supportability. The more a medical source presents relevant 
evidence to support an opinion, particularly medical signs and 
laboratory findings, the more weight we will give that opinion. The 
better an explanation a source provides for an opinion, the more weight 
we will give that opinion. Furthermore, because nonexamining sources 
have no examining or treating relationship with you, the weight we will 
give their opinions will depend on the degree to which they provide 
supporting explanations for their opinions. We will evaluate the degree 
to which these opinions consider all of the pertinent evidence in your 
claim, including opinions of treating and other examining sources.
    (4) Consistency. Generally, the more consistent an opinion is with 
the record as a whole, the more weight we will give to that opinion.
    (5) Specialization. We generally give more weight to the opinion of 
a specialist about medical issues related to his or her area of 
specialty than to the opinion of a source who is not a specialist.
    (6) Other factors. When we consider how much weight to give to a 
medical opinion, we will also consider any factors you or others bring 
to our attention, or of which we are aware, which tend to support or 
contradict the opinion. For example, the amount of understanding of our 
disability programs and their evidentiary requirements that an 
acceptable medical source has, regardless of the source of that 
understanding, and the extent to which an acceptable medical source is 
familiar with the other information in your case record are relevant 
factors that we will consider in deciding the weight to give to a 
medical opinion.
    (e) Medical source opinions on issues reserved to the Commissioner. 
Opinions on some issues, such as the examples that follow, are not 
medical opinions, as described in paragraph (a)(2) of this section, but 
are, instead, opinions on issues reserved to the Commissioner because 
they are administrative findings that are dispositive of a case; i.e., 
that would direct the determination or decision of disability.
    (1) Opinions that you are disabled. We are responsible for making 
the determination or decision about whether you meet the statutory 
definition of disability. In so doing, we review all of the medical 
findings and other evidence that support a medical source's statement 
that you are disabled. A statement by a medical source that you are 
``disabled'' or ``unable to work'' does not mean that we will determine 
that you are disabled.
    (2) Other opinions on issues reserved to the Commissioner. We use 
medical sources, including your treating source, to provide evidence, 
including

[[Page 839]]

opinions, on the nature and severity of your impairment(s). Although we 
consider opinions from medical sources on issues such as whether your 
impairment(s) meets or equals the requirements of any impairment(s) in 
the Listing of Impairments in appendix 1 to subpart P of part 404 of 
this chapter, your residual functional capacity (see Sec. Sec. 416.945 
and 416.946), or the application of vocational factors, the final 
responsibility for deciding these issues is reserved to the 
Commissioner.
    (3) We will not give any special significance to the source of an 
opinion on issues reserved to the Commissioner described in paragraphs 
(e)(1) and (e)(2) of this section.
    (f) Opinions of nonexamining sources. We consider all evidence from 
nonexamining sources to be opinion evidence. When we consider the 
opinions of nonexamining sources, we apply the rules in paragraphs (a) 
through (e) of this section. In addition, the following rules apply to 
State agency medical and psychological consultants, other program 
physicians and psychologists, and medical experts we consult in 
connection with administrative law judge hearings and Appeals Council 
review:
    (1) At the initial and reconsideration steps in the administrative 
review process, except in disability hearings, State agency medical and 
psychological consultants are members of the teams that make the 
determinations of disability. A State agency medical or psychological 
consultant will consider the evidence in your case record and make 
findings of fact about the medical issues, including, but not limited 
to, the existence and severity of your impairment(s), the existence and 
severity of your symptoms, whether your impairment(s) meets or equals 
the requirements for any impairment listed in appendix 1 to subpart P of 
part 404 of this chapter, and your residual functional capacity. These 
administrative findings of fact are based on the evidence in your case 
record but are not themselves evidence at these steps.
    (2) Administrative law judges are responsible for reviewing the 
evidence and making findings of fact and conclusions of law. They will 
consider opinions of State agency medical or psychological consultants, 
other program physicians and psychologists, and medical experts as 
follows:
    (i) Administrative law judges are not bound by any findings made by 
State agency medical or psychological consultants, or other program 
physicians or psychologists. However, State agency medical and 
psychological consultants and other program physicians and psychologists 
are highly qualified physicians and psychologists who are also experts 
in Social Security disability evaluation. Therefore, administrative law 
judges must consider findings of State agency medical and psychological 
consultants or other program physicians or psychologists as opinion 
evidence, except for the ultimate determination about whether you are 
disabled. See Sec. 416.912(b)(6).
    (ii) When an administrative law judge considers findings of a State 
agency medical or psychological consultant or other program physician or 
psychologist, the administrative law judge will evaluate the findings 
using relevant factors in paragraphs (a) through (e) of this section, 
such as the physician's or psychologist's medical specialty and 
expertise in our rules, the supporting evidence in the case record, 
supporting explanations provided by the physician or psychologist, and 
any other factors relevant to the weighing of the opinions. Unless the 
treating source's opinion is given controlling weight, the 
administrative law judge must explain in the decision the weight given 
to the opinions of a State agency medical or psychological consultant or 
other program physician or psychologist, as the administrative law judge 
must do for any opinions from treating sources, nontreating sources, and 
other nonexamining sources who do not work for us.
    (iii) Administrative law judges may also ask for and consider 
opinions from medical experts on the nature and severity of your 
impairment(s) and on whether your impairment(s) equals the requirements 
of any impairment listed in appendix 1 to subpart P of part 404 of this 
chapter. When administrative law judges consider these opinions, they 
will evaluate them using the rules in paragraphs (a) through (e) of this 
section.

[[Page 840]]

    (3) When the Appeals Council makes a decision, it will follow the 
same rules for considering opinion evidence as administrative law judges 
follow.

[56 FR 36968, Aug. 1, 1991, as amended at 62 FR 6428, Feb. 11, 1997; 62 
FR 13538, Mar. 21, 1997; 62 FR 38454, July 18, 1997; 65 FR 11880, Mar. 
7, 2000]



Sec. 416.928  Symptoms, signs, and laboratory findings.

    Medical findings consist of symptoms, signs, and laboratory 
findings:
    (a) Symptoms are your own description of your physical or mental 
impairment. If you are a child under age 18 and are unable to adequately 
describe your symptom(s), we will accept as a statement of this 
symptom(s) the description given by the person who is most familiar with 
you, such as a parent, other relative, or guardian. Your statements (or 
those of another person) alone, however, are not enough to establish 
that there is a physical or mental impairment.
    (b) Signs are anatomical, physiological, or psychological 
abnormalities which can be observed, apart from your statements 
(symptoms). Signs must be shown by medically acceptable clinical 
diagnostic techniques. Psychiatric signs are medically demonstrable 
phenomena that indicate specific psychological abnormalities, e.g., 
abnormalities of behavior, mood, thought, memory, orientation, 
development, or perception. They must also be shown by observable facts 
that can be medically described and evaluated.
    (c) Laboratory findings are anatomical, physiological, or 
psychological phenomena which can be shown by the use of a medically 
acceptable laboratory diagnostic techniques. Some of these diagnostic 
techniques include chemical tests, electrophysiological studies 
(electrocardiogram, electroencephalogram, etc.), roentgenological 
studies (X-rays), and psychological tests.

[45 FR 55621, Aug. 20, 1980, as amended at 58 FR 47586, Sept. 9, 1993; 
65 FR 50783, Aug. 21, 2000]



Sec. 416.929  How we evaluate symptoms, including pain.

    (a) General. In determining whether you are disabled, we consider 
all your symptoms, including pain, and the extent to which your symptoms 
can reasonably be accepted as consistent with the objective medical 
evidence, and other evidence. By objective medical evidence, we mean 
medical signs and laboratory findings as defined in Sec. 416.928 (b) 
and (c). By other evidence, we mean the kinds of evidence described in 
Sec. Sec. 416.912(b) (2) through (6) and 416.913(b) (1), (4), and (5) 
and (e). These include statements or reports from you, your treating or 
examining physician or psychologist, and others about your medical 
history, diagnosis, prescribed treatment, daily activities, efforts to 
work, and any other evidence showing how your impairment(s) and any 
related symptoms affect your ability to work (or if you are a child, 
your functioning). We will consider all of your statements about your 
symptoms, such as pain, and any description you, your physician, your 
psychologist, or other persons may provide about how the symptoms affect 
your activities of daily living and your ability to work (or if you are 
a child, your functioning). However, statements about your pain or other 
symptoms will not alone establish that you are disabled; there must be 
medical signs and laboratory findings which show that you have a medical 
impairment(s) which could reasonably be expected to produce the pain or 
other symptoms alleged and which, when considered with all of the other 
evidence (including statements about the intensity and persistence of 
your pain or other symptoms which may reasonably be accepted as 
consistent with the medical signs and laboratory findings), would lead 
to a conclusion that you are disabled. In evaluating the intensity and 
persistence of your symptoms, including pain, we will consider all of 
the available evidence, including your medical history, the medical 
signs and laboratory findings and statements about how your symptoms 
affect you. (Section 416.927 explains how we consider opinions of your 
treating source and other medical opinions on the existence and severity 
of your symptoms, such as pain.) We will then determine the extent to 
which your alleged functional limitations and restrictions due to pain 
or other symptoms can reasonably be

[[Page 841]]

accepted as consistent with the medical signs and laboratory findings 
and other evidence to decide how your symptoms affect your ability to 
work (or if you are a child, your functioning).
    (b) Need for medically determinable impairment that could reasonably 
be expected to produce your symptoms, such as pain. Your symptoms, such 
as pain, fatigue, shortness of breath, weakness, or nervousness, will 
not be found to affect your ability to do basic work activities unless 
medical signs or laboratory findings show that a medically determinable 
impairment(s) is present. Medical signs and laboratory findings, 
established by medically acceptable clinical or laboratory diagnostic 
techniques, must show the existence of a medical impairment(s) which 
results from anatomical, physiological, or psychological abnormalities 
and which could reasonably be expected to produce the pain or other 
symptoms alleged. At the initial or reconsideration step in the 
administrative review process (except in disability hearings), a State 
agency medical or psychological consultant (or other medical or 
psychological consultant designated by the Commissioner) directly 
participates in determining whether your medically determinable 
impairment(s) could reasonably be expected to produce your alleged 
symptoms. In the disability hearing process, a medical or psychological 
consultant may provide an advisory assessment to assist a disability 
hearing officer in determining whether your impairment(s) could 
`reasonably be expected to produce your alleged symptoms. At the 
administrative law judge hearing or Appeals Council level, the 
administrative law judge or the Appeals Council may ask for and consider 
the opinion of a medical advisor concerning whether your impairment(s) 
could reasonably be expected to produce your alleged symptoms. The 
finding that your impairment(s) could reasonably be expected to produce 
your pain or other symptoms does not involve a determination as to the 
intensity, persistence, or functionally limiting effects of your 
symptoms. We will develop evidence regarding the possibility of a 
medically determinable mental impairment when we have information to 
suggest that such an impairment exists, and you allege pain or other 
symptoms but the medical signs and laboratory findings do not 
substantiate any physical impairment(s) capable of producing the pain or 
other symptoms.
    (c) Evaluating the intensity and persistence of your symptoms, such 
as pain, and determining the extent to which your symptoms limit your 
capacity for work or, if you are a child, your functioning--(1) General. 
When the medical signs or laboratory findings show that you have a 
medically determinable impairment(s) that could reasonably be expected 
to produce your symptoms, such as pain, we must then evaluate the 
intensity and persistence of your symptoms so that we can determine how 
your symptoms limit your capacity for work or, if you are a child, your 
functioning. In evaluating the intensity and persistence of your 
symptoms, we consider all of the available evidence, including your 
medical history, the medical signs and laboratory findings, and 
statements from you, your treating or examining physician or 
psychologist, or other persons about how your symptoms affect you. We 
also consider the medical opinions of your treating source and other 
medical opinions as explained in Sec. 416.927. Paragraphs (c)(2) 
through (c)(4) of this section explain further how we evaluate the 
intensity and persistence of your symptoms and how we determine the 
extent to which your symptoms limit your capacity for work (or, if you 
are a child, your functioning) when the medical signs or laboratory 
findings show that you have a medically determinable impairment(s) that 
could reasonably be expected to produce your symptoms, such as pain.
    (2) Consideration of objective medical evidence. Objective medical 
evidence is evidence obtained from the application of medically 
acceptable clinical and laboratory diagnostic techniques, such as 
evidence of reduced joint motion, muscle spasm, sensory deficit or motor 
disruption. Objective medical evidence of this type is a useful 
indicator to assist us in making reasonable conclusions about the 
intensity and persistence of your symptoms and the effect those 
symptoms, such as pain, may have on your ability to work or, if you

[[Page 842]]

are a child, your functioning. We must always attempt to obtain 
objective medical evidence and, when it is obtained, we will consider it 
in reaching a conclusion as to whether you are disabled. However, we 
will not reject your statements about the intensity and persistence of 
your pain or other symptoms or about the effect your symptoms have on 
your ability to work (or if you are a child, to function independently, 
appropriately, and effectively in an age-appropriate manner) solely 
because the available objective medical evidence does not substantiate 
your statements.
    (3) Consideration of other evidence. Since symptoms sometimes 
suggest a greater severity of impairment than can be shown by objective 
medical evidence alone, we will carefully consider any other information 
you may submit about your symptoms. The information that you, your 
treating or examining physician or psychologist, or other persons 
provide about your pain or other symptoms (e.g., what may precipitate or 
aggravate your symptoms, what medications, treatments or other methods 
you use to alleviate them, and how the symptoms may affect your pattern 
of daily living) is also an important indicator of the intensity and 
persistence of your symptoms. Because symptoms, such as pain, are 
subjective and difficult to quantify, any symptom-related functional 
limitations and restrictions which you, your treating or examining 
physician or psychologist, or other persons report, which can reasonably 
be accepted as consistent with the objective medical evidence and other 
evidence, will be taken into account as explained in paragraph (c)(4) of 
this section in reaching a conclusion as to whether you are disabled. We 
will consider all of the evidence presented, including information about 
your prior work record, your statements about your symptoms, evidence 
submitted by your treating, examining or consulting physician or 
psychologist, and observations by our employees and other persons. If 
you are a child, we will also consider all of the evidence presented, 
including evidence submitted by your treating, examining or consulting 
physician or psychologist, information from educational agencies and 
personnel, statements from parents and other relatives, and evidence 
submitted by social welfare agencies, therapists, and other 
practitioners. Section 416.927 explains in detail how we consider and 
weigh treating source and other medical opinions about the nature and 
severity of your impairment(s) and any related symptoms, such as pain. 
Factors relevant to your symptoms, such as pain, which we will consider 
include:
    (i) Your daily activities;
    (ii) The location, duration, frequency, and intensity of your pain 
or other symptoms;
    (iii) Precipitating and aggravating factors;
    (iv) The type, dosage, effectiveness, and side effects of any 
medication you take or have taken to alleviate your pain or other 
symptoms;
    (v) Treatment, other than medication, you receive or have received 
for relief of your pain or other symptoms;
    (vi) Any measures you use or have used to relieve your pain or other 
symptoms (e.g., lying flat on your back, standing for 15 to 20 minutes 
every hour, sleeping on a board, etc.); and
    (vii) Other factors concerning your functional limitations and 
restrictions due to pain or other symptoms.
    (4) How we determine the extent to which symptoms, such as pain, 
affect your capacity to perform basic work activities, or, if you are a 
child, your functioning). In determining the extent to which your 
symptoms, such as pain, affect your capacity to perform basic work 
activities (or if you are a child, your functioning), we consider all of 
the available evidence described in paragraphs (c)(1) through (c)(3) of 
this section. We will consider your statements about the intensity, 
persistence, and limiting effects of your symptoms, and we will evaluate 
your statements in relation to the objective medical evidence and other 
evidence, in reaching a conclusion as to whether you are disabled. We 
will consider whether there are any inconsistencies in the evidence and 
the extent to which there are any conflicts between your statements and 
the rest of the evidence, including your medical history, the medical 
signs and laboratory findings, and

[[Page 843]]

statements by your treating or examining physician or psychologist or 
other persons about how your symptoms affect you. Your symptoms, 
including pain, will be determined to diminish your capacity for basic 
work activities (or, if you are a child, your functioning) to the extent 
that your alleged functional limitations and restrictions due to 
symptoms, such as pain, can reasonably be accepted as consistent with 
the objective medical evidence and other evidence.
    (d) Consideration of symptoms in the disability determination 
process. We follow a set order of steps to determine whether you are 
disabled. If you are not doing substantial gainful activity, we consider 
your symptoms, such as pain, to evaluate whether you have a severe 
physical or mental impairment(s), and at each of the remaining steps in 
the process. Sections 416.920 and 416.920a (for adults) and 416.924 (for 
children) explain this process in detail. We also consider your 
symptoms, such as pain, at the appropriate steps in our review when we 
consider whether your disability continues. The procedure we follow in 
reviewing whether your disability continues is explained in Sec. 
416.994 (for adults) and Sec. 416.994a (for children).
    (1) Need to establish a severe medically determinable impairment(s). 
Your symptoms, such as pain, fatigue, shortness of breath, weakness, or 
nervousness, are considered in making a determination as to whether your 
impairment or combination of impairment(s) is severe.(See Sec. 
416.920(c) for adults and Sec. 416.924(c) for children.)
    (2) Decision whether the Listing of Impairments is met. Some listed 
impairment(s) include symptoms, such as pain, as criteria. Section 
416.925(f) explains how we consider your symptoms when your symptoms are 
included as criteria for a listed impairment.
    (3) Decision whether the Listing of Impairments is equaled. If your 
impairment is not the same as a listed impairment, we must determine 
whether your impairment(s) is medically equivalent to a listed 
impairment. Section 416.926 explains how we make this determination. 
Under Sec. 416.926(b), we will consider equivalence based on medical 
evidence only. In considering whether your symptoms, signs, and 
laboratory findings are medically equal to the symptoms, signs, and 
laboratory findings of a listed impairment, we will look to see whether 
your symptoms, signs, and laboratory findings are at least equal in 
severity to the listed criteria. However, we will not substitute your 
allegations of pain or other symptoms for a missing or deficient sign or 
laboratory finding to raise the severity of your impairment(s) to that 
of a listed impairment. (If you are a child and we cannot find 
equivalence based on medical evidence only, we will consider pain and 
other symptoms under Sec. Sec. 416.924a and 416.926a in determining 
whether you have an impairment(s) that functionally equals the 
listings.) Regardless of whether you are an adult or a child, if the 
symptoms, signs, and laboratory findings of your impairment(s) are 
equivalent in severity to those of a listed impairment, we will find you 
disabled. (If you are a child and your impairment(s) functionally equals 
the listings under the rules in Sec. 416.926a, we will also find you 
disabled.) If they are not, we will consider the impact of your symptoms 
on your residual functional capacity if you are an adult. If they are 
not, we will consider the impact of your symptoms on your residual 
functional capacity if you are an adult. (See paragraph (d)(4) of this 
section.)
    (4) Impact of symptoms (including pain) on residual functional 
capacity or, if you are a child, on your functioning. If you have a 
medically determinable severe physical or mental impairment(s), but your 
impairment(s) does not meet or equal an impairment listed in appendix 1 
of subpart P of part 404 of this chapter, we will consider the impact of 
your impairment(s) and any related symptoms, including pain, or your 
residual functional capacity, if you are an adult, or, on your 
functioning if you are a child. (See Sec. Sec. 416.945 and 416.924a-
416.924b.)

[56 FR 57944, Nov. 14, 1991, as amended at 62 FR 6429, Feb. 11, 1997; 62 
FR 13538, Mar. 21, 1997; 62 FR 38454, July 18, 1997; 65 FR 16814, Mar. 
30, 2000; 65 FR 54789, Sept. 11, 2000]

[[Page 844]]



Sec. 416.930  Need to follow prescribed treatment.

    (a) What treatment you must follow. In order to get benefits, you 
must follow treatment prescribed by your physician if this treatment can 
restore your ability to work, or, if you are a child, if the treatment 
can reduce your functional limitations so that they are no longer marked 
and severe.
    (b) When you do not follow prescribed treatment. If you do not 
follow the prescribed treatment without a good reason, we will not find 
you disabled or blind or, if you are already receiving benefits, we will 
stop paying you benefits.
    (c) Acceptable reasons for failure to follow prescribed treatment. 
We will consider your physical, mental, educational, and linguistic 
limitations (including any lack of facility with the English language) 
when determining if you have an acceptable reason for failure to follow 
prescribed treatment. The following are examples of a good reason for 
not following treatment:
    (1) The specific medical treatment is contrary to the established 
teaching and tenets of your religion.
    (2) The prescribed treatment would be cataract surgery for one eye 
when there is an impairment of the other eye resulting in a severe loss 
of vision and is not subject to improvement through treatment.
    (3) Surgery was previously performed with unsuccessful results and 
the same surgery is again being recommended for the same impairment.
    (4) The treatment because of its enormity (e.g. open heart surgery), 
unusual nature (e.g., organ transplant), or other reason is very risky 
for you; or
    (5) The treatment involves amputation of an extremity, or a major 
part of an extremity.

[45 FR 55621, Aug. 20, 1980, as amended at 59 FR 1636, Jan. 12, 1994; 62 
FR 6429, Feb. 11, 1997]

                  Presumptive Disability and Blindness



Sec. 416.931  The meaning of presumptive disability or presumptive blindness.

    If you are applying for supplemental security income benefits on the 
basis of disability or blindness, we may pay you benefits before we make 
a formal finding of whether or not you are disabled or blind. In order 
to receive these payments, we must find that you are presumptively 
disabled or presumptively blind. You must also meet all other 
eligibility requirements for supplemental security income benefits. We 
may make these payments to you for a period not longer than 6 months. 
These payments will not be considered overpayments if we later find that 
you are not disabled or blind.

[45 FR 55621, Aug. 20, 1980, as amended at 57 FR 53853, Nov. 13, 1992]



Sec. 416.932  When presumptive payments begin and end.

    We may make payments to you on the basis of presumptive disability 
or presumptive blindness before we make a formal determination about 
your disability or blindness. The payments can not be made for more than 
6 months. They start for a period of not more than 6 months beginning in 
the month we make the presumptive disability or presumptive blindness 
finding. The payments end the earliest of--
    (a) The month in which we make a formal finding on whether or not 
you are disabled or blind;
    (b) The month for which we make the sixth monthly payment based on 
presumptive disability or presumptive blindness to you; or
    (c) The month in which you no longer meet one of the other 
eligibility requirements (e.g., your income exceeds the limits).

[45 FR 55621, Aug. 20, 1980, as amended at 57 FR 53853, Nov. 13, 1992]



Sec. 416.933  How we make a finding of presumptive disability or 
presumptive blindness.

    We may make a finding of presumptive disability or presumptive 
blindness if the evidence available at the time we make the presumptive 
disability or presumptive blindness finding reflects a high degree of 
probability that you are disabled or blind. In the case of readily 
observable impairments (e.g., total blindness), we will find that you 
are disabled or blind for purposes of this section without medical or 
other evidence. For example, for claims

[[Page 845]]

involving the human immunodeficiency virus (HIV), the Social Security 
Field Office may make a finding of presumptive disability if your 
medical source provides us with information that confirms that your 
disease manifestations meet the severity of listing-level criteria for 
HIV. Of course, regardless of the specific HIV manifestations, the State 
agency may make a finding of presumptive disability if the medical 
evidence or other information reflects a high degree of probability that 
you are disabled.

[58 FR 36063, July 2, 1993, as amended at 66 FR 58046, Nov. 19, 2001]



Sec. 416.934  Impairments which may warrant a finding of presumptive 
disability or presumptive blindness.

    We may make findings of presumptive disability and presumptive 
blindness in specific impairment categories without obtaining any 
medical evidence. These specific impairment categories are--
    (a) Amputation of a leg at the hip;
    (b) Allegation of total deafness;
    (c) Allegation of total blindness;
    (d) Allegation of bed confinement or immobility without a 
wheelchair, walker, or crutches, due to a longstanding condition, 
excluding recent accident and recent surgery;
    (e) Allegation of a stroke (cerebral vascular accident) more than 3 
months in the past and continued marked difficulty in walking or using a 
hand or arm;
    (f) Allegation of cerebral palsy, muscular dystrophy or muscle 
atrophy and marked difficulty in walking (e.g., use of braces), 
speaking, or coordination of the hands or arms.
    (g) Allegation of Down syndrome.
    (h) Allegation of severe mental deficiency made by another 
individual filing on behalf of a claimant who is at least 7 years of 
age. For example, a mother filing for benefits for her child states that 
the child attends (or attended) a special school, or special classes in 
school, because of mental deficiency or is unable to attend any type of 
school (or if beyond school age, was unable to attend), and requires 
care and supervision of routine daily activities.
    (i) Allegation of amyotrophic lateral sclerosis (ALS, Lou Gehrig's 
disease).

[45 FR 55621, Aug. 20, 1980, as amended at 50 FR 5574, Feb. 11, 1985; 53 
FR 3741, Feb. 9, 1988; 56 FR 65684, Dec. 18, 1991; 67 FR 58046, Nov. 19, 
2001; 68 FR 51693, Aug. 28, 2003]

                      Drug Addiction and Alcoholism



Sec. 416.935  How we will determine whether your drug addiction or 

alcoholism is a contributing factor material to the determination 
of disability.

    (a) General. If we find that you are disabled and have medical 
evidence of your drug addiction or alcoholism, we must determine whether 
your drug addiction or alcoholism is a contributing factor material to 
the determination of disability, unless we find that you are eligible 
for benefits because of your age or blindness.
    (b) Process we will follow when we have medical evidence of your 
drug addiction or alcoholism. (1) The key factor we will examine in 
determining whether drug addiction or alcoholism is a contributing 
factor material to the determination of disability is whether we would 
still find you disabled if you stopped using drugs or alcohol.
    (2) In making this determination, we will evaluate which of your 
current physical and mental limitations, upon which we based our current 
disability determination, would remain if you stopped using drugs or 
alcohol and then determine whether any or all of your remaining 
limitations would be disabling.
    (i) If we determine that your remaining limitations would not be 
disabling, we will find that your drug addiction or alcoholism is a 
contributing factor material to the determination of disability.
    (ii) If we determine that your remaining limitations are disabling, 
you are disabled independent of your drug addiction or alcoholism and we 
will find that your drug addiction or alcoholism is not a contributing 
factor material to the determination of disability.

[60 FR 8151, Feb. 10, 1995]

[[Page 846]]



Sec. 416.936  Treatment required for individuals whose drug addiction 

or alcoholism is a contributing factor material to the determination 
of disability.

    (a) If we determine that you are disabled and drug addiction or 
alcoholism is a contributing factor material to the determination of 
disability, you must avail yourself of appropriate treatment for your 
drug addiction or alcoholism at an institution or facility approved by 
us when this treatment is available and make progress in your treatment. 
Generally, you are not expected to pay for this treatment. You will not 
be paid benefits for any month after the month we have notified you in 
writing that--
    (1) You did not comply with the terms, conditions and requirements 
of the treatment which has been made available to you; or
    (2) You did not avail yourself of the treatment after you had been 
notified that it is available to you.
    (b) If your benefits are suspended for failure to comply with 
treatment requirements, your benefits can be reinstated in accordance 
with the rules in Sec. 416.1326.

[60 FR 8151, Feb. 10, 1995]



Sec. 416.937  What we mean by appropriate treatment.

    By appropriate treatment, we mean treatment for drug addiction or 
alcoholism that serves the needs of the individual in the least 
restrictive setting possible consistent with your treatment plan. These 
settings range from outpatient counseling services through a variety of 
residential treatment settings including acute detoxification, short-
term intensive residential treatment, long-term therapeutic residential 
treatment, and long-term recovery houses. Appropriate treatment is 
determined with the involvement of a State licensed or certified 
addiction professional on the basis of a detailed assessment of the 
individual's presenting symptomatology, psychosocial profile, and other 
relevant factors. This assessment may lead to a determination that more 
than one treatment modality is appropriate for the individual. The 
treatment will be provided or overseen by an approved institution or 
facility. This treatment may include (but is not limited to)--
    (a) Medical examination and medical management;
    (b) Detoxification;
    (c) Medication management to include substitution therapy (e.g., 
methadone);
    (d) Psychiatric, psychological, psychosocial, vocational, or other 
substance abuse counseling in a residential or outpatient treatment 
setting; or
    (e) Relapse prevention.

[60 FR 8151, Feb. 10, 1995]



Sec. 416.938  What we mean by approved institutions or facilities.

    Institutions or facilities that we may approve include--
    (a) An institution or facility that furnishes medically recognized 
treatment for drug addiction or alcoholism in conformity with applicable 
Federal or State laws and regulations;
    (b) An institution or facility used by or licensed by an appropriate 
State agency which is authorized to refer persons for treatment of drug 
addiction or alcoholism;
    (c) State licensed or certified care providers;
    (d) Programs accredited by the Commission on Accreditation for 
Rehabilitation Facilities (CARF) and/or the Joint Commission for the 
Accreditation of Healthcare Organizations (JCAHO) for the treatment of 
drug addiction or alcoholism;
    (e) Medicare or Medicaid certified care providers; or
    (f) Nationally recognized self-help drug addiction or alcoholism 
recovery programs (e.g., Alcoholics Anonymous or Narcotics Anonymous) 
when participation in these programs is specifically prescribed by a 
treatment professional at an institution or facility described in 
paragraphs (a) through (e) of this section as part of an individual's 
treatment plan.

[60 FR 8151, Feb. 10, 1995]



Sec. 416.939  How we consider whether treatment is available.

    Our determination about whether treatment is available to you for 
your drug addiction or your alcoholism will depend upon--

[[Page 847]]

    (a) The capacity of an approved institution or facility to admit you 
for appropriate treatment;
    (b) The location of the approved institution or facility, or the 
place where treatment, services or resources could be provided to you;
    (c) The availability and cost of transportation for you to the place 
of treatment;
    (d) Your general health, including your ability to travel and 
capacity to understand and follow the prescribed treatment;
    (e) Your particular condition and circumstances; and
    (f) The treatment that is prescribed for your drug addiction or 
alcoholism.

[60 FR 8151, Feb. 10, 1995]



Sec. 416.940  Evaluating compliance with the treatment requirements.

    (a) General. Generally, we will consider information from the 
treatment institution or facility to evaluate your compliance with your 
treatment plan. The treatment institution or facility will--
    (1) Monitor your attendance at and participation in treatment 
sessions;
    (2) Provide reports of the results of any clinical testing (such as, 
hematological or urinalysis studies for individuals with drug addiction 
and hematological studies and breath analysis for individuals with 
alcoholism) when such tests are likely to yield important information;
    (3) Provide observational reports from the treatment professionals 
familiar with your individual case (subject to verification and Federal 
confidentiality requirements); or
    (4) Provide their assessment or views on your noncompliance with 
treatment requirements.
    (b) Measuring progress. Generally, we will consider information from 
the treatment institution or facility to evaluate your progress in 
completing your treatment plan. Examples of milestones for measuring 
your progress with the treatment which has been prescribed for your drug 
addiction or alcoholism may include (but are not limited to)--
    (1) Abstinence from drug or alcohol use (initial progress may 
include significant reduction in use);
    (2) Consistent attendance at and participation in treatment 
sessions;
    (3) Improved social functioning and levels of gainful activity;
    (4) Participation in vocational rehabilitation activities; or
    (5) Avoidance of criminal activity.

[60 FR 8151, Feb. 10, 1995]



Sec. 416.941  Establishment and use of referral and monitoring agencies.

    We will contract with one or more agencies in each of the States and 
the District of Columbia to provide services to individuals whose 
disabilities are based on a determination that drug addiction or 
alcoholism is a contributing factor material to the determination of 
disability (as described in Sec. 416.935) and to submit information to 
us which we will use to make decisions about these individuals' 
benefits. These agencies will be known as referral and monitoring 
agencies. Their duties and responsibilities include (but are not limited 
to)--
    (a) Identifying appropriate treatment placements for individuals we 
refer to them;
    (b) Referring these individuals for treatment;
    (c) Monitoring the compliance and progress with the appropriate 
treatment of these individuals; and
    (d) Promptly reporting to us any individual's failure to comply with 
treatment requirements as well as failure to achieve progress through 
the treatment.

[60 FR 8152, Feb. 10, 1995]

                      Residual Functional Capacity



Sec. 416.945  Your residual functional capacity.

    (a) General--(1) Residual functional capacity assessment. Your 
impairment(s), and any related symptoms, such as pain, may cause 
physical and mental limitations that affect what you can do in a work 
setting. Your residual functional capacity is the most you can still do 
despite your limitations. We will assess your residual functional 
capacity based on all the relevant evidence in your case record. (See 
Sec. 416.946.)

[[Page 848]]

    (2) If you have more than one impairment. We will consider all of 
your medically determinable impairments of which we are aware, including 
your medically determinable impairments that are not ``severe,'' as 
explained in Sec. Sec. 416.920(c), 416.921, and 416.923, when we assess 
your residual functional capacity. (See paragraph (e) of this section.)
    (3) Evidence we use to assess your residual functional capacity. We 
will assess your residual functional capacity based on all of the 
relevant medical and other evidence. In general, you are responsible for 
providing the evidence we will use to make a finding about your residual 
functional capacity. (See Sec. 416.912(c).) However, before we make a 
determination that you are not disabled, we are responsible for 
developing your complete medical history, including arranging for a 
consultative examination(s) if necessary, and making every reasonable 
effort to help you get medical reports from your own medical sources. 
(See Sec. Sec. 416.912(d) through (f).) We will consider any statements 
about what you can still do that have been provided by medical sources, 
whether or not they are based on formal medical examinations. (See Sec. 
416.913.) We will also consider descriptions and observations of your 
limitations from your impairment(s), including limitations that result 
from your symptoms, such as pain, provided by you, your family, 
neighbors, friends, or other persons. (See paragraph (e) of this section 
and Sec. 416.929.)
    (4) What we will consider in assessing residual functional capacity. 
When we assess your residual functional capacity, we will consider your 
ability to meet the physical, mental, sensory, and other requirements of 
work, as described in paragraphs (b), (c), and (d) of this section.
    (5) How we will use our residual functional capacity assessment. (i) 
We will first use our residual functional capacity assessment at step 
four of the sequential evaluation process to decide if you can do your 
past relevant work. (See Sec. Sec. 416.920(f) and 416.960(b).)
    (ii) If we find that you cannot do your past relevant work (or you 
do not have any past relevant work), we will use the same assessment of 
your residual functional capacity at step five of the sequential 
evaluation process to decide if you can make an adjustment to any other 
work that exists in the national economy. (See Sec. Sec. 416.920(g) and 
416.966.) At this step, we will not use our assessment of your residual 
functional capacity alone to decide if you are disabled. We will use the 
guidelines in Sec. Sec. 416.960 through 416.969a, and consider our 
residual functional capacity assessment together with the information 
about your vocational background to make our disability determination or 
decision. For our rules on residual functional capacity assessment in 
deciding whether your disability continues or ends, see Sec. 416.994.
    (b) Physical abilities. When we assess your physical abilities, we 
first assess the nature and extent of your physical limitations and then 
determine your residual functional capacity for work activity on a 
regular and continuing basis. A limited ability to perform certain 
physical demands of work activity, such as sitting, standing, walking, 
lifting, carrying, pushing, pulling, or other physical functions 
(including manipulative or postural functions, such as reaching, 
handling, stooping or crouching), may reduce your ability to do past 
work and other work.
    (c) Mental abilities. When we assess your mental abilities, we first 
assess the nature and extent of your mental limitations and restrictions 
and then determine your residual functional capacity for work activity 
on a regular and continuing basis. A limited ability to carry out 
certain mental activities, such as limitations in understanding, 
remembering, and carrying out instructions, and in responding 
appropriately to supervision, coworkers, and work pressures in a work 
setting, may reduce your ability to do past work and other work.
    (d) Other abilities affected by impairment(s). Some medically 
determinable impairment(s), such as skin impairment(s), epilepsy, 
impairment(s) of vision, hearing or other senses, and impairment(s) 
which impose environmental restrictions, may cause limitations and 
restrictions which affect other work-related abilities. If you have this 
type of impairment(s), we consider any resulting limitations and

[[Page 849]]

restrictions which may reduce your ability to do past work and other 
work in deciding your residual functional capacity.
    (e) Total limiting effects. When you have a severe impairment(s), 
but your symptoms, signs, and laboratory findings do not meet or equal 
those of a listed impairment in appendix 1 of subpart P of part 404 of 
this chapter, we will consider the limiting effects of all your 
impairment(s), even those that are not severe, in determining your 
residual functional capacity. Pain or other symptoms may cause a 
limitation of function beyond that which can be determined on the basis 
of the anatomical, physiological or psychological abnormalities 
considered alone; e.g., someone with a low back disorder may be fully 
capable of the physical demands consistent with those of sustained 
medium work activity, but another person with the same disorder, because 
of pain, may not be capable of more than the physical demands consistent 
with those of light work activity on a sustained basis. In assessing the 
total limiting effects of your impairment(s) and any related symptoms, 
we will consider all of the medical and nonmedical evidence, including 
the information described in Sec. 416.929(c).

[56 FR 57947, Nov. 14, 1991, as amended at 68 FR 51165, Aug. 26, 2003]



Sec. 416.946  Responsibility for assessing your residual functional capacity.

    (a) Responsibility for assessing residual functional capacity at the 
State agency. When a State agency makes the disability determination, a 
State agency medical or psychological consultant(s) is responsible for 
assessing your residual functional capacity.
    (b) Responsibility for assessing residual functional capacity in the 
disability hearings process. If your case involves a disability hearing 
under Sec. 416.1414, a disability hearing officer is responsible for 
assessing your residual functional capacity. However, if the disability 
hearing officer's reconsidered determination is changed under Sec. 
416.1418, the Associate Commissioner for the Office of Disability 
Determinations or his or her delegate is responsible for assessing your 
residual functional capacity.
    (c) Responsibility for assessing residual functional capacity at the 
administrative law judge hearing or Appeals Council level. If your case 
is at the administrative law judge hearing level under Sec. 416.1429 or 
at the Appeals Council review level under Sec. 416.1467, the 
administrative law judge or the administrative appeals judge at the 
Appeals Council (when the Appeals Council makes a decision) is 
responsible for assessing your residual functional capacity.

[68 FR 51165, Aug. 26, 2003]

                        Vocational Considerations



Sec. 416.960  When we will consider your vocational background.

    (a) General. If you are age 18 or older and applying for 
supplemental security income benefits based on disability, and we cannot 
decide whether you are disabled at one of the first three steps of the 
sequential evaluation process (see Sec. 416.920), we will consider your 
residual functional capacity together with your vocational background, 
as discussed in paragraphs (b) and (c) of this section.
    (b) Past relevant work. We will first compare our assessment of your 
residual functional capacity with the physical and mental demands of 
your past relevant work.
    (1) Definition of past relevant work. Past relevant work is work 
that you have done within the past 15 years, that was substantial 
gainful activity, and that lasted long enough for you to learn to do it. 
(See Sec. 416.965(a).)
    (2) Determining whether you can do your past relevant work. We will 
ask you for information about work you have done in the past. We may 
also ask other people who know about your work. (See Sec. 416.965(b).) 
We may use the services of vocational experts or vocational specialists, 
or other resources, such as the ``Dictionary of Occupational Titles'' 
and its companion volumes and supplements, published by the Department 
of Labor, to obtain evidence we need to help us determine whether you 
can do your past relevant work, given your residual functional capacity. 
A vocational expert or specialist may offer relevant evidence

[[Page 850]]

within his or her expertise or knowledge concerning the physical and 
mental demands of a claimant's past relevant work, either as the 
claimant actually performed it or as generally performed in the national 
economy. Such evidence may be helpful in supplementing or evaluating the 
accuracy of the claimant's description of his past work. In addition, a 
vocational expert or specialist may offer expert opinion testimony in 
response to a hypothetical question about whether a person with the 
physical and mental limitations imposed by the claimant's medical 
impairment(s) can meet the demands of the claimant's previous work, 
either as the claimant actually performed it or as generally performed 
in the national economy.
    (3) If you can do your past relevant work. If we find that you have 
the residual functional capacity to do your past relevant work, we will 
determine that you can still do your past work and are not disabled. We 
will not consider your vocational factors of age, education, and work 
experience or whether your past relevant work exists in significant 
numbers in the national economy.
    (c) Other work. (1) If we find that your residual functional 
capacity is not enough to enable you to do any of your past relevant 
work, we will use the same residual functional capacity assessment we 
used to decide if you could do your past relevant work when we decide if 
you can adjust to any other work. We will look at your ability to adjust 
to other work by considering your residual functional capacity and your 
vocational factors of age, education, and work experience. Any other 
work (jobs) that you can adjust to must exist in significant numbers in 
the national economy (either in the region where you live or in several 
regions in the country).
    (2) In order to support a finding that you are not disabled at this 
fifth step of the sequential evaluation process, we are responsible for 
providing evidence that demonstrates that other work exists in 
significant numbers in the national economy that you can do, given your 
residual functional capacity and vocational factors. We are not 
responsible for providing additional evidence about your residual 
functional capacity because we will use the same residual functional 
capacity assessment that we used to determine if you can do your past 
relevant work.

[68 FR 51166, Aug. 26, 2003]



Sec. 416.962  Medical-vocational profiles showing an inability to make 
an adjustment to other work.

    (a) If you have done only arduous unskilled physical labor. If you 
have no more than a marginal education (see Sec. 416.964) and work 
experience of 35 years or more during which you did only arduous 
unskilled physical labor, and you are not working and are no longer able 
to do this kind of work because of a severe impairment(s) (see 
Sec. Sec. 416.920(c), 416.921, and 416.923), we will consider you 
unable to do lighter work, and therefore, disabled.

    Example to paragraph (a): B is a 58-year-old miner's helper with a 
fourth grade education who has a lifelong history of unskilled arduous 
physical labor. B says that he is disabled because of arthritis of the 
spine, hips, and knees, and other impairments. Medical evidence shows a 
``severe'' combination of impairments that prevents B from performing 
his past relevant work. Under these circumstances, we will find that B 
is disabled.
    (b) If you are at least 55 years old, have no more than a limited 
education, and have no past relevant work experience. If you have a 
severe, medically determinable impairment(s) (see Sec. Sec. 416.920(c), 
416.921, and 416.923), are of advanced age (age 55 or older, see Sec. 
416.963), have a limited education or less (see Sec. 416.964), and have 
no past relevant work experience (see Sec. 416.965), we will find you 
disabled. If the evidence shows that you meet this profile, we will not 
need to assess your residual functional capacity or consider the rules 
in appendix 2 to subpart P of part 404 of this chapter.

[68 FR 51166, Aug. 26, 2003]



Sec. 416.963  Your age as a vocational factor.

    (a) General. ``Age'' means your chronological age. When we decide 
whether you are disabled under Sec. 416.920(g)(1), we will consider 
your chronological age in combination with your residual functional 
capacity, education, and work experience. We will not consider your 
ability to adjust to other work on the

[[Page 851]]

basis of your age alone. In determining the extent to which age affects 
a person's ability to adjust to other work, we consider advancing age to 
be an increasingly limiting factor in the person's ability to make such 
an adjustment, as we explain in paragraphs (c) through (e) of this 
section. If you are unemployed but you still have the ability to adjust 
to other work, we will find that you are not disabled. In paragraphs (b) 
through (e) of this section and in appendix 2 of subpart P of part 404 
of this chapter, we explain in more detail how we consider your age as a 
vocational factor.
    (b) How we apply the age categories. When we make a finding about 
your ability to do other work under Sec. 416.920(f)(1), we will use the 
age categories in paragraphs (c) through (e) of this section. We will 
use each of the age categories that applies to you during the period for 
which we must determine if you are disabled. We will not apply the age 
categories mechanically in a borderline situation. If you are within a 
few days to a few months of reaching an older age category, and using 
the older age category would result in a determination or decision that 
you are disabled, we will consider whether to use the older age category 
after evaluating the overall impact of all the factors of your case.
    (c) Younger person. If you are a younger person (under age 50), we 
generally do not consider that your age will seriously affect your 
ability to adjust to other work. However, in some circumstances, we 
consider that persons age 45-49 are more limited in their ability to 
adjust to other work than persons who have not attained age 45. See Rule 
201.17 in appendix 2 of subpart P of part 404 of this chapter.
    (d) Person closely approaching advanced age. If you are closely 
approaching advanced age (age 50-54), we will consider that your age 
along with a severe impairment(s) and limited work experience may 
seriously affect your ability to adjust to other work.
    (e) Person of advanced age. We consider that at advanced age (age 55 
or older) age significantly affects a person's ability to adjust to 
other work. We have special rules for persons of advanced age and for 
persons in this category who are closely approaching retirement age (age 
60-64). See Sec. 416.968(d)(4).
    (f) Information about your age. We will usually not ask you to prove 
your age. However, if we need to know your exact age to determine 
whether you get disability benefits, we will ask you for evidence of 
your age.

[45 FR 55621, Aug. 20, 1980, as amended at 65 FR 18001, Apr. 6, 2000; 68 
FR 51166, Aug. 26, 2003]



Sec. 416.964  Your education as a vocational factor.

    (a) General. Education is primarily used to mean formal schooling or 
other training which contributes to your ability to meet vocational 
requirements, for example, reasoning ability, communication skills, and 
arithmetical ability. However, if you do not have formal schooling, this 
does not necessarily mean that you are uneducated or lack these 
abilities. Past work experience and the kinds of responsibilities you 
had when you were working may show that you have intellectual abilities, 
although you may have little formal education. Your daily activities, 
hobbies, or the results of testing may also show that you have 
significant intellectual ability that can be used to work.
    (b) How we evaluate your education. The importance of your 
educational background may depend upon how much time has passed between 
the completion of your formal education and the beginning of your 
physical or mental impairment(s) and by what you have done with your 
education in a work or other setting. Formal education that you 
completed many years before your impairment began, or unused skills and 
knowledge that were a part of your formal education, may no longer be 
useful or meaningful in terms of your ability to work. Therefore, the 
numerical grade level that you completed in school may not represent 
your actual educational abilities. These may be higher or lower. 
However, if there is no other evidence to contradict it, we will use 
your numerical grade level to determine your educational abilities. The 
term education also includes how well you are able to communicate in 
English since this

[[Page 852]]

ability is often acquired or improved by education. In evaluating your 
educational level, we use the following categories:
    (1) Illiteracy. Illiteracy means the inability to read or write. We 
consider someone illiterate if the person cannot read or write a simple 
message such as instructions or inventory lists even though the person 
can sign his or her name. Generally, an illiterate person has had little 
or no formal schooling.
    (2) Marginal education. Marginal education means ability in 
reasoning, arithmetic, and language skills which are needed to do 
simple, unskilled types of jobs. We generally consider that formal 
schooling at a 6th grade level or less is a marginal education.
    (3) Limited education. Limited education means ability in reasoning, 
arithmetic, and language skills, but not enough to allow a person with 
these educational qualifications to do most of the more complex job 
duties needed in semi-skilled or skilled jobs. We generally consider 
that a 7th grade through the 11th grade level of formal education is a 
limited education.
    (4) High school education and above. High school education and above 
means abilities in reasoning, arithmetic, and language skills acquired 
through formal schooling at a 12th grade level or above. We generally 
consider that someone with these educational abilities can do semi-
skilled through skilled work.
    (5) Inability to communicate in English. Since the ability to speak, 
read and understand English is generally learned or increased at school, 
we may consider this an educational factor. Because English is the 
dominant language of the country, it may be difficult for someone who 
doesn't speak and understand English to do a job, regardless of the 
amount of education the person may have in another language. Therefore, 
we consider a person's ability to communicate in English when we 
evaluate what work, if any, he or she can do. It generally doesn't 
matter what other language a person may be fluent in.
    (6) Information about your education. We will ask you how long you 
attended school and whether you are able to speak, understand, read and 
write in English and do at least simple calculations in arithmetic. We 
will also consider other information about how much formal or informal 
education you may have had through your previous work, community 
projects, hobbies, and any other activities which might help you to 
work.



Sec. 416.965  Your work experience as a vocational factor.

    (a) General. Work experience means skills and abilities you have 
acquired through work you have done which show the type of work you may 
be expected to do. Work you have already been able to do shows the kind 
of work that you may be expected to do. We consider that your work 
experience applies when it was done within the last 15 years, lasted 
long enough for you to learn to do it, and was substantial gainful 
activity. We do not usually consider that work you did 15 years or more 
before the time we are deciding whether you are disabled applies. A 
gradual change occurs in most jobs so that after 15 years it is no 
longer realistic to expect that skills and abilities acquired in a job 
done then continue to apply. The 15-year guide is intended to insure 
that remote work experience is not currently applied. If you have no 
work experience or worked only off-and-on or for brief periods of time 
during the 15-year period, we generally consider that these do not 
apply. If you have acquired skills through your past work, we consider 
you to have these work skills unless you cannot use them in other 
skilled or semi-skilled work that you can now do. If you cannot use your 
skills in other skilled or semi-skilled work, we will consider your work 
background the same as unskilled. However, even if you have no work 
experience, we may consider that you are able to do unskilled work 
because it requires little or no judgment and can be learned in a short 
period of time.
    (b) Information about your work. Under certain circumstances, we 
will ask you about the work you have done in the past. If you cannot 
give us all of the information we need, we will try, with your 
permission, to get it from your employer or other person who knows about 
your work, such as a

[[Page 853]]

member of your family or a co-worker. When we need to consider your work 
experience to decide whether you are able to do work that is different 
from what you have done in the past, we will ask you to tell us about 
all of the jobs you have had in the last 15 years. You must tell us the 
dates you worked, all of the duties you did, and any tools, machinery, 
and equipment you used. We will need to know about the amount of 
walking, standing, sitting, lifting and carrying you did during the work 
day, as well as any other physical or mental duties of your job. If all 
of your work in the past 15 years has been arduous and unskilled, and 
you have very little education, we will ask you to tell us about all of 
your work from the time you first began working. This information could 
help you to get disability benefits.



Sec. 416.966  Work which exists in the national economy.

    (a) General. We consider that work exists in the national economy 
when it exists in significant numbers either in the region where you 
live or in several other regions of the country. It does not matter 
whether--
    (1) Work exists in the immediate area in which you live;
    (2) A specific job vacancy exists for you; or
    (3) You would be hired if you applied for work.
    (b) How we determine the existence of work. Work exists in the 
national economy when there is a significant number of jobs (in one or 
more occupations) having requirements which you are able to meet with 
your physical or mental abilities and vocational qualifications. 
Isolated jobs that exist only in very limited numbers in relatively few 
locations outside of the region where you live are not considered work 
which exists in the national economy. We will not deny you disability 
benefits on the basis of the existence of these kinds of jobs. If work 
that you can do does not exist in the national economy, we will 
determine that you are disabled. However, if work that you can do does 
exist in the national economy, we will determine that you are not 
disabled.
    (c) Inability to obtain work. We will determine that you are not 
disabled if your residual functional capacity and vocational abilities 
make it possible for you to do work which exists in the national 
economy, but you remain unemployed because of--
    (1) Your inability to get work;
    (2) Lack of work in your local area;
    (3) The hiring practices of employers;
    (4) Technological changes in the industry in which you have worked;
    (5) Cyclical economic conditions;
    (6) No job openings for you;
    (7) You would not actually be hired to do work you could otherwise 
do, or;
    (8) You do not wish to do a particular type of work.
    (d) Administrative notice of job data. When we determine that 
unskilled, sedentary, light, and medium jobs exist in the national 
economy (in significant numbers either in the region where you live or 
in several regions of the country), we will take administrative notice 
of reliable job information available from various governmental and 
other publications. For example, we will take notice of--
    (1) Dictionary of Occupational Titles, published by the Department 
of Labor;
    (2) County Business Patterns, published by the Bureau of the Census;
    (3) Census Reports, also published by the Bureau of the Census;
    (4) Occupational Analyses prepared for the Social Security 
Administration by various State employment agencies; and
    (5) Occupational Outlook Handbook, published by the Bureau of Labor 
Statistics.
    (e) Use of vocational experts and other specialists. If the issue in 
determining whether you are disabled is whether your work skills can be 
used in other work and the specific occupations in which they can be 
used, or there is a similarly complex issue, we may use the services of 
a vocational expert or other specialist. We will decide whether to use a 
vocational expert or other specialist.



Sec. 416.967  Physical exertion requirements.

    To determine the physical exertion requirments of work in the 
national economy, we classify jobs as sedentary,

[[Page 854]]

light, medium, heavy, and very heavy. These terms have the same meaning 
as they have in the Dictionary of Occupational Titles, published by the 
Department of Labor. In making disability determinations under this 
subpart, we use the following definitions:
    (a) Sedentary work. Sedentary work involves lifting no more than 10 
pounds at a time and occasionally lifting or carrying articles like 
docket files, ledgers, and small tools. Although a sedentary job is 
defined as one which involves sitting, a certain amount of walking and 
standing is often necessary in carrying out job duties. Jobs are 
sedentary if walking and standing are required occasionally and other 
sedentary criteria are met.
    (b) Light work. Light work involves lifting no more than 20 pounds 
at a time with frequent lifting or carrying of objects weighing up to 10 
pounds. Even though the weight lifted may be very little, a job is in 
this category when it requires a good deal of walking or standing, or 
when it involves sitting most of the time with some pushing and pulling 
of arm or leg controls. To be considered capable of performing a full or 
wide range of light work, you must have the ability to do substantially 
all of these activities. If someone can do light work, we determine that 
he or she can also do sedentary work, unless there are additional 
limiting factors such as loss of fine dexterity or inability to sit for 
long periods of time.
    (c) Medium work. Medium work involves lifting no more than 50 pounds 
at a time with frequent lifting or carrying of objects weighing up to 25 
pounds. If someone can do medium work, we determine that he or she can 
also do sedentary and light work.
    (d) Heavy work. Heavy work involves lifting no more than 100 pounds 
at a time with frequent lifting or carrying of objects weighing up to 50 
pounds. If someone can do heavy work, we determine that he or she can 
also do medium, light, and sedentary work.
    (e) Very heavy work. Very heavy work involves lifting objects 
weighing more than 100 pounds at a time with frequent lifting or 
carrying of objects weighing 50 pounds or more. If someone can do very 
heavy work, we determine that he or she can also do heavy, medium, 
light, and sedentary work.



Sec. 416.968  Skill requirements.

    In order to evaluate your skills and to help determine the existence 
in the national economy of work you are able to do, occupations are 
classified as unskilled, semi-skilled, and skilled. In classifying these 
occupations, we use materials published by the Department of Labor. When 
we make disability determinations under this subpart, we use the 
following definitions:
    (a) Unskilled work. Unskilled work is work which needs little or no 
judgment to do simple duties that can be learned on the job in a short 
period of time. The job may or may not require considerable strength. 
For example, we consider jobs unskilled if the primary work duties are 
handling, feeding and offbearing (that is, placing or removing materials 
from machines which are automatic or operated by others), or machine 
tending, and a person can usually learn to do the job in 30 days, and 
little specific vocational preparation and judgment are needed. A person 
does not gain work skills by doing unskilled jobs.
    (b) Semi-skilled work. Semi-skilled work is work which needs some 
skills but does not require doing the more complex work duties. Semi-
skilled jobs may require alertness and close attention to watching 
machine processes; or inspecting, testing or otherwise looking for 
irregularities; or tending or guarding equipment, property, materials, 
or persons against loss, damage or injury; or other types of activities 
which are similarly less complex than skilled work, but more complex 
than unskilled work. A job may be classified as semi-skilled where 
coordination and dexterity are necessary, as when hands or feet must be 
moved quickly to do repetitive tasks.
    (c) Skilled work. Skilled work requires qualifications in which a 
person uses judgment to determine the machine and manual operations to 
be performed in order to obtain the proper form, quality, or quantity of 
material to be produced. Skilled work may require laying out work, 
estimating quality, determining the suitability and needed quantities of 
materials, making precise

[[Page 855]]

measurements, reading blueprints or other specifications, or making 
necessary computations or mechanical adjustments to control or regulate 
the work. Other skilled jobs may require dealing with people, facts, or 
figures or abstract ideas at a high level of complexity.
    (d) Skills that can be used in other work (transferability)--(1) 
What we mean by transferable skills. We consider you to have skills that 
can be used in other jobs, when the skilled or semi-skilled work 
activities you did in past work can be used to meet the requirements of 
skilled or semi-skilled work activities of other jobs or kinds of work. 
This depends largely on the similarity of occupationally significant 
work activities among different jobs.
    (2) How we determine skills that can be transferred to other jobs. 
Transferability is most probable and meaningful among jobs in which--
    (i) The same or a lesser degree of skill is required;
    (ii) The same or similar tools and machines are used; and
    (iii) The same or similar raw materials, products, processes, or 
services are involved.
    (3) Degrees of transferability. There are degrees of transferability 
of skills ranging from very close similarities to remote and incidental 
similarities among jobs. A complete similarity of all three factors is 
not necessary for transferability. However, when skills are so 
specialized or have been acquired in such an isolated vocational setting 
(like many jobs in mining, agriculture, or fishing) that they are not 
readily usable in other industries, jobs, and work settings, we consider 
that they are not transferable.
    (4) Transferability of skills for individuals of advanced age. If 
you are of advanced age (age 55 or older), and you have a severe 
impairment(s) that limits you to sedentary or light work, we will find 
that you cannot make an adjustment to other work unless you have skills 
that you can transfer to other skilled or semiskilled work (or you have 
recently completed education which provides for direct entry into 
skilled work) that you can do despite your impairment(s). We will decide 
if you have transferable skills as follows. If you are of advanced age 
and you have a severe impairment(s) that limits you to no more than 
sedentary work, we will find that you have skills that are transferable 
to skilled or semiskilled sedentary work only if the sedentary work is 
so similar to your previous work that you would need to make very 
little, if any, vocational adjustment in terms of tools, work processes, 
work settings, or the industry. (See Sec. 416.967(a) and Rule 201.00(f) 
of appendix 2 of subpart P of part 404 of this chapter.) If you are of 
advanced age but have not attained age 60, and you have a severe 
impairment(s) that limits you to no more than light work, we will apply 
the rules in paragraphs (d)(1) through (d)(3) of this section to decide 
if you have skills that are transferable to skilled or semiskilled light 
work (see Sec. 416.967(b)). If you are closely approaching retirement 
age (age 60-64) and you have a severe impairment(s) that limits you to 
no more than light work, we will find that you have skills that are 
transferable to skilled or semiskilled light work only if the light work 
is so similar to your previous work that you would need to make very 
little, if any, vocational adjustment in terms of tools, work processes, 
work settings, or the industry. (See Sec. 416.967(b) and Rule 202.00(f) 
of appendix 2 of subpart P of part 404 of this chapter.)

[45 FR 55621, Aug. 20, 1980, as amended at 65 FR 18001, Apr. 6, 2000]



Sec. 416.969  Listing of Medical-Vocational Guidelines in appendix 2 
of subpart P of part 404 of this chapter.

    The Dictionary of Occupational Titles includes information about 
jobs (classified by their exertional and skill requirements) that exist 
in the national economy. Appendix 2 provides rules using this data 
reflecting major functional and vocational patterns. We apply these 
rules in cases where a person is not doing substantial gainful activity 
and is prevented by a severe medically determinable impairment from 
doing vocationally relevant past work. The rules in appendix 2 do not 
cover all possible variations of factors. Also, as we explain in Sec. 
200.00 of appendix 2, we do not apply these rules if one

[[Page 856]]

of the findings of fact about the person's vocational factors and 
residual functional capacity is not the same as the corresponding 
criterion of a rule. In these instances, we give full consideration to 
all relevant facts in accordance with the definitions and discussions 
under vocational considerations. However, if the findings of fact made 
about all factors are the same as the rule, we use that rule to decide 
whether a person is disabled.



Sec. 416.969a  Exertional and nonexertional limitations.

    (a) General. Your impairment(s) and related symptoms, such as pain, 
may cause limitations of function or restrictions which limit your 
ability to meet certain demands of jobs. These limitations may be 
exertional, nonexertional, or a combination of both. Limitations are 
classified as exertional if they affect your ability to meet the 
strength demands of jobs. The classification of a limitation as 
exertional is related to the United States Department of Labor's 
classification of jobs by various exertional levels (sedentary, light, 
medium, heavy, and very heavy) in terms of the strength demands for 
sitting, standing, walking, lifting, carrying, pushing, and pulling. 
Sections 416.967 and 416.969 explain how we use the classification of 
jobs by exertional levels (strength demands) which is contained in the 
Dictionary of Occupational Titles published by the Department of Labor, 
to determine the exertional requirements of work which exists in the 
national economy. Limitations or restrictions which affect your ability 
to meet the demands of jobs other than the strength demands, that is, 
demands other than sitting, standing, walking, lifting, carrying, 
pushing or pulling, are considered nonexertional. When we decide whether 
you can do your past relevant work (see Sec. Sec. 416.920(f) and 
416.994(b)(5)(vi)), we will compare our assessment of your residual 
functional capacity with the demands of your past relevant work. If you 
cannot do your past relevant work, we will use the same residual 
functional capacity assessment along with your age, education, and work 
experience to decide if you can adjust to any other work which exists in 
the national economy. (See Sec. Sec. 416.920(g) and 
416.994(b)(5)(vii).) Paragraphs (b), (c), and (d) of this section 
explain how we apply the medical-vocational guidelines in appendix 2 of 
subpart P of part 404 of this chapter in making this determination, 
depending on whether the limitations or restrictions imposed by your 
impairment(s) and related symptoms, such as pain, are exertional, 
nonexertional, or a combination of both.
    (b) Exertional limitations. When the limitations and restrictions 
imposed by your impairment(s) and related symptoms, such as pain, affect 
only your ability to meet the strength demands of jobs (sitting, 
standing, walking, lifting, carrying, pushing, and pulling), we consider 
that you have only exertional limitations. When your impairment(s) and 
related symptoms only impose exertional limitations and your specific 
vocational profile is listed in a rule contained in appendix 2, we will 
directly apply that rule to decide whether you are disabled.
    (c) Nonexertional limitations. (1) When the limitations and 
restrictions imposed by your impairment(s) and related symptoms, such as 
pain, affect only your ability to meet the demands of jobs other than 
the strength demands, we consider that you have only nonexertional 
limitations or restrictions. Some examples of nonexertional limitations 
or restrictions include the following:
    (i) You have difficulty functioning because you are nervous, 
anxious, or depressed;
    (ii) You have difficulty maintaining attention or concentrating;
    (iii) You have difficulty understanding or remembering detailed 
instructions;
    (iv) You have difficulty in seeing or hearing;
    (v) You have difficulty tolerating some physical feature(s) of 
certain work settings, e.g., you cannot tolerate dust or fumes; or
    (vi) You have difficulty performing the manipulative or postural 
functions of some work such as reaching, handling, stooping, climbing, 
crawling, or crouching.
    (2) If your impairment(s) and related symptoms, such as pain, only 
affect

[[Page 857]]

your ability to perform the nonexertional aspects of work-related 
activities, the rules in appendix 2 do not direct factual conclusions of 
disabled or not disabled. The determination as to whether disability 
exists will be based on the principles in the appropriate sections of 
the regulations, giving consideration to the rules for specific case 
situations in appendix 2.
    (d) Combined exertional and nonexertional limitations. When the 
limitations and restrictions imposed by your impairment(s) and related 
symptoms, such as pain, affect your ability to meet both the strength 
and demands of jobs other than the strength demands, we consider that 
you have a combination of exertional and nonexertional limitations or 
restrictions. If your impairment(s) and related symptoms, such as pain, 
affect your ability to meet both the strength and demands of jobs other 
than the strength demands, we will not directly apply the rules in 
appendix 2 unless there is a rule that directs a conclusion that you are 
disabled based upon your strength limitations; otherwise the rules 
provide a framework to guide our decision.

[56 FR 57947, Nov. 14, 1991, as amended at 68 FR 51166, Aug. 26, 2003]

                      Substantial Gainful Activity



Sec. 416.971  General.

    The work, without regard to legality, that you have done during any 
period in which you believe you are disabled may show that you are able 
to work at the substantial gainful activity level. If you are able to 
engage in substantial gainful activity, we will find that you are not 
disabled. (We explain the rules for persons who are statutorily blind in 
Sec. 416.984.) Even if the work you have done was not substantial 
gainful activity, it may show that you are able to do more work than you 
actually did. We will consider all of the medical and vocational 
evidence in your file to decide whether or not you have the ability to 
engage in substantial gainful activity.

[45 FR 55621, Aug. 20, 1980, as amended at 65 FR 42788, July 11, 2000]



Sec. 416.972  What we mean by substantial gainful activity.

    Substantial gainful activity is work activity that is both 
substantial and gainful:
    (a) Substantial work activity. Substantial work activity is work 
activity that involves doing significant physical or mental activities. 
Your work may be substantial even if it is done on a part-time basis or 
if you do less, get paid less, or have less responsibility than when you 
worked before.
    (b) Gainful work activity. Gainful work activity is work activity 
that you do for pay or profit. Work activity is gainful if it is the 
kind of work usually done for pay or profit, whether or not a profit is 
realized.
    (c) Some other activities. Generally, we do not consider activities 
like taking care of yourself, household tasks, hobbies, therapy, school 
attendance, club activities, or social programs to be substantial 
gainful activity.



Sec. 416.973  General information about work activity.

    (a) The nature of your work. If your duties require use of your 
experience, skills, supervision and responsibilities, or contribute 
substantially to the operation of a business, this tends to show that 
you have the ability to work at the substantial gainful activity level.
    (b) How well you perform. We consider how well you do your work when 
we determine whether or not you are doing substantial gainful activity. 
If you do your work satisfactorily, this may show that you are working 
at the substantial gainful activity level. If you are unable, because of 
your impairments, to do ordinary or simple tasks satisfactorily without 
more supervision or assistance than is usually given other people doing 
similar work, this may show that you are not working at the substantial 
gainful activity level. If you are doing work that involves minimal 
duties that make little or no demands on you and that are of little or 
no use to your employer, or to the operation of a business if you are 
self-employed, this does not show that you are working at the 
substantial gainful activity level.
    (c) If your work is done under special conditions. The work you are 
doing may

[[Page 858]]

be done under special conditions that take into account your impairment, 
such as work done in a sheltered workshop or as a patient in a hospital. 
If your work is done under special conditions, we may find that it does 
not show that you have the ability to do substantial gainful activity. 
Also, if you are forced to stop or reduce your work because of the 
removal of special conditions that were related to your impairment and 
essential to your work, we may find that your work does not show that 
you are able to do substantial gainful activity. However, work done 
under special conditions may show that you have the necessary skills and 
ability to work at the substantial gainful activity level. Examples of 
the special conditions that may relate to your impairment include, but 
are not limited to, situations in which--
    (1) You required and received special assistance from other 
employees in performing your work;
    (2) You were allowed to work irregular hours or take frequent rest 
periods;
    (3) You were provided with special equipment or were assigned work 
especially suited to your impairment;
    (4) You were able to work only because of specially arranged 
circumstances, for example, other persons helped you prepare for or get 
to and from your work;
    (5) You were permitted to work at a lower standard of productivity 
or efficiency than other employees; or
    (6) You were given the opportunity to work, despite your impairment, 
because of family relationship, past association with your employer, or 
your employer's concern for your welfare.
    (d) If you are self-employed. Supervisory, managerial, advisory or 
other significant personal services that you perform as a self-employed 
individual may show that you are able to do substantial gainful 
activity.
    (e) Time spent in work. While the time you spend in work is 
important, we will not decide whether or not you are doing substantial 
gainful activity only on that basis. We will still evaluate the work to 
decide whether it is substantial and gainful regardless of whether you 
spend more time or less time at the job than workers who are not 
impaired and who are doing similar work as a regular means of their 
livelihood.

[45 FR 55621, Aug. 20, 1980, as amended at 65 FR 42788, July 11, 2000]



Sec. 416.974  Evaluation guides if you are an employee.

    (a) We use several guides to decide whether the work you have done 
shows that you are able to do substantial gainful activity. If you are 
working or have worked as an employee, we will use the provisions in 
paragraphs (a) through (d) of this section that are relevant to your 
work activity. We will use these provisions whenever they are 
appropriate in connection with your application for supplemental 
security income benefits (when we make an initial determination on your 
application and throughout any appeals you may request) to determine if 
you are eligible.
    (1) Your earnings may show you have done substantial gainful 
activity. Generally, in evaluating your work activity for substantial 
gainful activity purposes, our primary consideration will be the 
earnings you derive from the work activity. We will use your earnings to 
determine whether you have done substantial gainful activity unless we 
have information from you, your employer, or others that shows that we 
should not count all of your earnings. The amount of your earnings from 
work you have done (regardless of whether it is unsheltered or sheltered 
work) may show that you have engaged in substantial gainful activity. 
Generally, if you worked for substantial earnings, we will find that you 
are able to do substantial gainful activity. However, the fact that your 
earnings were not substantial will not necessarily show that you are not 
able to do substantial gainful activity. We generally consider work that 
you are forced to stop or to reduce below the substantial gainful 
activity level after a short time because of your impairment to be an 
unsuccessful work attempt. Your earnings from an unsuccessful work 
attempt will not show that you are able to do substantial gainful 
activity. We will use the criteria in paragraph (c) of this section to 
determine if the work

[[Page 859]]

you did was an unsuccessful work attempt.
    (2) We consider only the amounts you earn. When we decide whether 
your earnings show that you have done substantial gainful activity, we 
do not consider any income that is not directly related to your 
productivity. When your earnings exceed the reasonable value of the work 
you perform, we consider only that part of your pay which you actually 
earn. If your earnings are being subsidized, we do not consider the 
amount of the subsidy when we determine if your earnings show that you 
have done substantial gainful activity. We consider your work to be 
subsidized if the true value of your work, when compared with the same 
or similar work done by unimpaired persons, is less than the actual 
amount of earnings paid to you for your work. For example, when a person 
with a serious impairment does simple tasks under close and continuous 
supervision, our determination of whether that person has done 
substantial gainful activity will not be based only on the amount of the 
wages paid. We will first determine whether the person received a 
subsidy; that is, we will determine whether the person was being paid 
more than the reasonable value of the actual services performed. We will 
then subtract the value of the subsidy from the person's gross earnings 
to determine the earnings we will use to determine if he or she has done 
substantial gainful activity.
    (3) If you are working in a sheltered or special environment. If you 
are working in a sheltered workshop, you may or may not be earning the 
amounts you are being paid. The fact that the sheltered workshop or 
similar facility is operating at a loss or is receiving some charitable 
contributions or governmental aid does not establish that you are not 
earning all you are being paid. Since persons in military service being 
treated for severe impairments usually continue to receive full pay, we 
evaluate work activity in a therapy program or while on limited duty by 
comparing it with similar work in the civilian work force or on the 
basis of reasonable worth of the work, rather than on the actual amount 
of the earnings.
    (b) Earnings guidelines--(1) General. If you are an employee, we 
first consider the criteria in paragraph (a) of this section and Sec. 
416.976, and then the guides in paragraphs (b)(2), (3), (4), (5), and 
(6) of this section. When we review your earnings to determine if you 
have been performing substantial gainful activity, we will subtract the 
value of any subsidized earnings (see paragraph (a)(2) of this section) 
and the reasonable cost of any impairment-related work expenses from 
your gross earnings (see Sec. 416.976). The resulting amount is the 
amount we use to determine if you have done substantial gainful 
activity. We will generally average your earnings for comparison with 
the earnings guidelines in paragraphs (b)(2), (3), (4), and (6) of this 
section. See Sec. 416.974a for our rules on averaging earnings.
    (2) Earnings that will ordinarily show that you have engaged in 
substantial gainful activity. We will consider that your earnings from 
your work activity as an employee (including earnings from sheltered 
work, see paragraph (b)(4) of this section) show that you engaged in 
substantial gainful activity if:
    (i) Before January 1, 2001, they averaged more than the amount(s) in 
Table 1 of this section for the time(s) in which you worked.
    (ii) Beginning January 1, 2001, and each year thereafter, they 
average more than the larger of:
    (A) The amount for the previous year, or
    (B) An amount adjusted for national wage growth, calculated by 
multiplying $700 by the ratio of the national average wage index for the 
year 2 calendar years before the year for which the amount is being 
calculated to the national average wage index for the year 1998. We will 
then round the resulting amount to the next higher multiple of $10 where 
such amount is a multiple of $5 but not of $10 and to the nearest 
multiple of $10 in any other case.

                                 Table 1
------------------------------------------------------------------------
                                                                 Your
                                                               monthly
                        For months:                            earnings
                                                               averaged
                                                              more than:
------------------------------------------------------------------------
In calendar years before 1976..............................         $200
In calendar year 1976......................................          230

[[Page 860]]

 
In calendar year 1977......................................          240
In calendar year 1978......................................          260
In calendar year 1979......................................          280
In calendar years 1980-1989................................          300
January 1990-June 1999.....................................          500
July 1999-December 2000....................................          700
------------------------------------------------------------------------

    (3) Earnings that will ordinarily show that you have not engaged in 
substantial gainful activity. If your earnings for months beginning 
January, 2001, are equal to or less than the amount(s) determined under 
paragraph (b)(2)(ii) of this section for the year(s) in which you work, 
we will generally consider that the earnings from your work as an 
employee will show that you have not engaged in substantial gainful 
activity. If your earnings for month before January, 2001, were less 
than the amount(s) in Table 2 of this section for the year(s) in which 
you worked, we will generally consider that the earnings from your work 
as an employee will show that you have not engaged in substantial 
gainful activity.

                                 Table 2
------------------------------------------------------------------------
                                                                 Your
                                                               monthly
                        For months:                            earnings
                                                               averaged
                                                              less than:
------------------------------------------------------------------------
In calendar years before 1976..............................         $130
In calendar year 1976......................................          150
In calendar year 1977......................................          160
In calendar year 1978......................................          170
In calendar year 1979......................................          180
In calendar years 1980-1989................................          190
In calendar years 1990-2000................................          300
------------------------------------------------------------------------

    (4) Before January 1, 2001, if you worked in a sheltered workshop. 
Before January 1, 2001, if you worked in a sheltered workshop or a 
comparable facility especially set up for severely impaired persons, we 
will ordinarily consider that your earnings from this work show that you 
have engaged in substantial gainful activity if your earnings averaged 
more than the amounts in the table in paragraph (b)(2) of this section. 
Average monthly earnings from a sheltered workshop or a comparable 
facility that are equal to or less than those amounts indicated in table 
1 of paragraph (b)(2) of this section will ordinarily show that you have 
not engaged in substantial gainful activity without the need to consider 
other information, as described in paragraph (b)(6) of this section, 
regardless of whether they are more or less than those indicated in 
paragraph (b)(3) of this section. When your earnings from a sheltered 
workshop or comparable facility are equal to or less than those amounts 
indicated in table 1 of paragraph (b)(2), we will consider the 
provisions of paragraph (b)(6) of this section only if there is evidence 
showing that you may have engaged in substantial gainful activity. For 
work performed in a sheltered workshop in months beginning January 2001, 
the rules of paragraphs (b)(2), (3), and (6) apply the same as they do 
to any other work done by an employee.
    (5) If there is evidence showing that you may have done substantial 
gainful activity. If there is evidence showing that you may have done 
substantial gainful activity, we will apply the critera in paragraph 
(b)(6) of this section regarding comparability and value of services.
    (6) Earnings that are not high enough to ordinarily show that you 
engaged in substantial gainful activity.--(i) Before January 1, 2001, if 
your average monthly earnings were between the amounts shown in 
paragraphs (b)(2) and (3) of this section, we will generally consider 
other information in addition to your earnings (see paragraph 
(b)(6)(iii) of this section). This rule generally applies to employees 
who did not work in a sheltered workshop or a comparable facility, 
although we may apply it to some people who work in sheltered workshops 
or comparable facilities (see paragraph (b)(4) of this section).
    (ii) Beginning January 1, 2001, if your average monthly earnings are 
equal to or less than the amounts determined under paragraph (b)(2) of 
this section, we will generally not consider other information in 
addition to your earnings unless there is evidence indicating that you 
may be engaging in substantial gainful activity or that you are in a 
position to defer or suppress your earnings.
    (iii) Examples of other information we may consider include, 
whether--

[[Page 861]]

    (A) Your work is comparable to that of unimpaired people in your 
community who are doing the same or similar occupations as their means 
of livelihood, taking into account the time, energy, skill, and 
responsibility involved in the work, and
    (B) Your work, although significantly less than that done by 
unimpaired people, is clearly worth the amounts shown in paragraph 
(b)(2) of this section, according to pay scales in your community.
    (c) The unsuccessful work attempt--(1) General. Ordinarily, work you 
have done will not show that you are able to do substantial gainful 
activity if, after working for a period of 6 months or less, you were 
forced by your impairment to stop working or to reduce the amount of 
work you do so that your earnings from such work fall below the 
substantial gainful activity earnings level in paragraph (b)(2) of this 
section and you meet the conditions described in paragraphs (c)(2), (3), 
(4), and (5) of this section.
    (2) Event that must precede an unsuccessful work attempt. There must 
be a significant break in the continuity of your work before we will 
consider you to have begun a work attempt that later proved 
unsuccessful. You must have stopped working or reduced your work and 
earnings below the substantial gainful activity earnings level because 
of your impairment or because of the removal of special conditions that 
were essential to the further performance of your work. We explain what 
we mean by special conditions in Sec. 416.973(c). We will consider your 
prior work to be ``discontinued'' for a significant period if you were 
out of work at least 30 consecutive days. We will also consider your 
prior work to be ``discontinued'' if, because of your impairment, you 
were forced to change to another type of work or another employer.
    (3) If you worked 3 months or less. We will consider work of 3 
months or less to be an unsuccessful work attempt if you stopped 
working, or you reduced your work and earnings below the substantial 
gainful activity earnings level, because of your impairment or because 
of the removal of special conditions which took into account your 
impairment and permitted you to work.
    (4) If you worked between 3 and 6 months. We will consider work that 
lasted longer than 3 months to be an unsuccessful work attempt if it 
ended, or was reduced below the substantial gainful activity earnings 
level, within 6 months because of your impairment or because of the 
removal of special conditions which took into account your impairment 
and permitted you to work and--
    (i) You were frequently absent from work because of your impairment;
    (ii) Your work was unsatisfactory because of your impairment;
    (iii) You worked during a period of temporary remission of your 
impairment; or
    (iv) You worked under special conditions that were essential to your 
performance and these conditions were removed.
    (5) If you worked more than 6 months. We will not consider work you 
performed at the substantial gainful activity earnings level for more 
than 6 months to be an unsuccessful work attempt regardless of why it 
ended or was reduced below the substantial gainful activity earnings 
level.
    (d) Work activity in certain volunteer programs. If you work as a 
volunteer in certain programs administered by the Federal government 
under the Domestic Volunteer Service Act of 1973 or the Small Business 
Act, we will not count any payments you receive from these programs as 
earnings when we determine whether you are engaging in substantial 
gainful activity. These payments may include a minimal stipend, payments 
for supportive services such as housing, supplies and equipment, an 
expense allowance, or reimbursement of out-of-pocket expenses. We will 
also disregard the services you perform as a volunteer in applying any 
of the substantial gainful activity tests discussed in paragraph (b)(6) 
of this section. This exclusion from the substantial gainful activity 
provisions will apply only if you are a volunteer in a program 
explicitly mentioned in the Domestic Volunteer Service Act of 1973 or 
the Small Business Act. Programs explicitly mentioned in those Acts 
include

[[Page 862]]

Volunteers in Service to America, University Year for ACTION, Special 
Volunteer Programs, Retired Senior Volunteer Program, Foster Grandparent 
Program, Service Corps of Retired Executives, and Active Corps of 
Executives. We will not exclude under this paragraph volunteer work you 
perform in other programs or any nonvolunteer work you may perform, 
including nonvolunteer work under one of the specified programs. For 
civilians in certain government-sponsored job training and employment 
programs, we evaluate the work activity on a case-by-case basis under 
the substantial gainful activity earnings test. In programs such as 
these, subsidies often occur. We will subtract the value of any subsidy 
and use the remainder to determine if you have done substantial gainful 
activity. See paragraphs (a)(2)-(3) of this section.

[46 FR 4871, Jan. 19, 1981, as amended at 48 FR 21939, May 16, 1983; 49 
FR 22274, May 29, 1984; 54 FR 53605, Dec. 29, 1989; 64 FR 18570, Apr. 
15, 1999; 64 FR 22903, Apr. 28, 1999; 65 FR 42789, July 11, 2000; 65 FR 
82911, Dec. 29, 2000]



Sec. 416.974a  When and how we will average your earnings.

    (a) To determine your initial eligibility for benefits, we will 
average any earnings you make during the month you file for benefits and 
any succeeding months to determine if you are doing substantial gainful 
activity. If your work as an employee or as a self-employed person was 
continuous without significant change in work patterns or earnings, and 
there has been no change in the substantial gainful activity earnings 
levels, your earnings will be averaged over the entire period of work 
requiring evaluation to determine if you have done substantial gainful 
activity.
    (b) If you work over a period of time during which the substantial 
gainful activity earnings levels change, we will average your earnings 
separately for each period in which a different substantial gainful 
activity earnings level applies.
    (c) If there is a significant change in your work pattern or 
earnings during the period of work requiring evaluation, we will average 
your earnings over each separate period of work to determine if any of 
your work efforts were substantial gainful activity.

[65 FR 42790, July 11, 2000]



Sec. 416.975  Evaluation guides if you are self-employed.

    (a) If you are a self-employed person. If you are working or have 
worked as a self-employed person, we will use the provisions in 
paragraphs (a) through (d) of this section that are relevant to your 
work activity. We will use these provisions whenever they are 
appropriate in connection with your application for supplemental 
security income benefits (when we make an initial determination on your 
application and throughout any appeals you may request). We will 
consider your activities and their value to your business to decide 
whether you have engaged in substantial gainful activity if you are 
self-employed. We will not consider your income alone because the amount 
of income you actually receive may depend on a number of different 
factors, such as capital investment and profit-sharing agreements. We 
will generally consider work that you were forced to stop or reduce to 
below substantial gainful activity after 6 months or less because of 
your impairment as an unsuccessful work attempt. See paragraph (d) of 
this section. We will evaluate your work activity based on the value of 
your services to the business regardless of whether you receive an 
immediate income for your services. We determine whether you have 
engaged in substantial gainful activity by applying three tests. If you 
have not engaged in substantial gainful activity under test one, then we 
will consider tests two and three. The tests are as follows:
    (1) Test One: You have engaged in substantial gainful activity if 
you render services that are significant to the operation of the 
business and receive a substantial income from the business. Paragraphs 
(b) and (c) of this section explain what we mean by significant services 
and substantial income for purposes of this test.
    (2) Test Two: You have engaged in substantial gainful activity if 
your work activity, in terms of factors such as hours, skills, energy 
output, efficiency, duties, and responsibilities, is

[[Page 863]]

comparable to that of unimpaired individuals in your community who are 
in the same or similar businesses as their means of livelihood.
    (3) Test Three: You have engaged in substantial gainful activity if 
your work activity, although not comparable to that of unimpaired 
individuals, is clearly worth the amount shown in Sec. 416.974(b)(2) 
when considered in terms of its value to the business, or when compared 
to the salary that an owner would pay to an employee to do the work you 
are doing.
    (b) What we mean by significant services. (1) If you are not a farm 
landlord and you operate a business entirely by yourself, any services 
that you render are significant to the business. If your business 
involves the services of more than one person, we will consider you to 
be rendering significant services if you contribute more than half the 
total time required for the management of the business, or you render 
management services for more than 45 hours a month regardless of the 
total management time required by the business.
    (2) If you are a farm landlord, that is, you rent farm land to 
another, we will consider you to be rendering significant services if 
you materially participate in the production or the management of the 
production of the things raised on the rented farm. (See Sec. 404.1082 
of this chapter for an explanation of ``material participation''.) If 
you were given social security earnings credits because you materially 
participated in the activities of the farm and you continue these same 
activities, we will consider you to be rendering significant services.
    (c) What we mean by substantial income. We deduct your normal 
business expenses from your gross income to determine net income. Once 
net income is determined, we deduct the reasonable value of any 
significant amount of unpaid help furnished by your spouse, children, or 
others. Miscellaneous duties that ordinarily would not have commercial 
value would not be considered significant. We deduct impairment-related 
work expenses that have not already been deducted in determining your 
net income. Impairment-related work expenses are explained in Sec. 
416.976. We deduct unincurred business expenses paid for you by another 
individual or agency. An unincurred business expense occurs when a 
sponsoring agency or another person incurs responsibility for the 
payment of certain business expenses, e.g., rent, utilities, or 
purchases and repair of equipment, or provides you with equipment, 
stock, or other material for the operation of your business. We deduct 
soil bank payments if they were included as farm income. That part of 
your income remaining after we have made all applicable deductions 
represents the actual value of work performed. The resulting amount is 
the amount we use to determine if you have done substantial gainful 
activity. We will generally average your income for comparison with the 
earnings guidelines in Sec. Sec. 416.974(b)(2) and 416.974(b)(3). See 
Sec. 416.974a for our rules on averaging of earnings. We will consider 
this amount to be substantial if--
    (1) It averages more than the amounts described in Sec. 
416.974(b)(2); or
    (2) It averages less than the amounts described in Sec. 
416.974(b)(2) but it is either comparable to what it was before you 
became seriously impaired if we had not considered your earnings or is 
comparable to that of unimpaired self-employed persons in your community 
who are in the same or a similar business as their means of livelihood.
    (d) The unsuccessful work attempt--(1) General. Ordinarily, work you 
have done will not show that you are able to do substantial gainful 
activity if, after working for a period of 6 months or less, you were 
forced by your impairment to stop working or to reduce the amount of 
work you do so that you are no longer performing substantial gainful 
activity and you meet the conditions described in paragraphs (d)(2), 
(3), (4), and (5) of this section.
    (2) Event that must precede an unsuccessful work attempt. There must 
be a significant break in the continuity of your work before we will 
consider you to have begun a work attempt that later proved 
unsuccessful. You must have stopped working or reduced your work and 
earnings below substantial gainful activity because of your impairment 
or because of the removal of

[[Page 864]]

special conditions which took into account your impairment and permitted 
you to work. Examples of such special conditions may include any 
significant amount of unpaid help furnished by your spouse, children, or 
others, or unincurred business expenses, as described in paragraph (c) 
of this section, paid for you by another individual or agency. We will 
consider your prior work to be ``discontinued'' for a significant period 
if you were out of work at least 30 consecutive days. We will also 
consider your prior work to be ``discontinued'' if, because of your 
impairment, you were forced to change to another type of work.
    (3) If you worked 3 months or less. We will consider work of 3 
months or less to be an unsuccessful work attempt if it ended, or was 
reduced below substantial gainful activity, because of your impairment 
or because of the removal of special conditions which took into account 
your impairment and permitted you to work.
    (4) If you work between 3 and 6 months. We will consider work that 
lasted longer than 3 months to be an unsuccessful work attempt if it 
ended, or was reduced below substantial gainful activity, within 6 
months because of your impairment or because of the removal of special 
conditions which took into account your impairment and permitted you to 
work and--
    (i) You were frequently unable to work because of your impairment;
    (ii) Your work was unsatisfactory because of your impairment;
    (iii) You worked during a period of temporary remission of your 
impairment; or
    (iv) You worked under special conditions that were essential to your 
performance and these conditions were removed.
    (5) If you worked more than 6 months. We will not consider work you 
performed at the substantial gainful activity level for more than 6 
months to be an unsuccessful work attempt regardless of why it ended or 
was reduced below the substantial gainful activity level.

[46 FR 4872, Jan. 19, 1981, as amended at 48 FR 21940, May 16, 1983; 49 
FR 22274, May 29, 1984; 65 FR 42790, July 11, 2000]



Sec. 416.976  Impairment-related work expenses.

    (a) General. When we figure your earnings in deciding if you have 
done substantial gainful activity, and in determining your countable 
earned income (see Sec. 416.1112(c)(5)), we will subtract the 
reasonable costs to you of certain items and services which, because of 
your impairment(s), you need and use to enable you to work. The costs 
are deductible even though you also need or use the items and services 
to carry out daily living functions unrelated to your work. Paragraph 
(b) of this section explains the conditions for deducting work expenses. 
Paragraph (c) of this section describes the expenses we will deduct. 
Paragraph (d) of this section explains when expenses may be deducted. 
Paragraph (e) of this section describes how expenses may be allocated. 
Paragraph (f) of this section explains the limitations on deducting 
expenses. Paragraph (g) of this section explains our verification 
procedures.
    (b) Conditions for deducting impairment-related work expenses. We 
will deduct impairment-related work expenses if--
    (1) You are otherwise disabled as defined in Sec. Sec. 416.905 
through 416.907;
    (2) The severity of your impairment(s) requires you to purchase (or 
rent) certain items and services in order to work;
    (3) You pay the cost of the item or service. No deduction will be 
allowed to the extent that payment has been or will be made by another 
source. No deduction will be allowed to the extent that you have been, 
could be, or will be reimbursed for such cost by any other source (such 
as through a private insurance plan, Medicare or Medicaid, or other plan 
or agency). For example, if you purchase crutches for $80 but you were, 
could be, or will be reimbursed $64 by some agency, plan, or program, we 
will deduct only $16;
    (4) You pay for the item or service in accordance with paragraph (d) 
of this section; and
    (5) Your payment is in cash (including checks or other forms of 
money). Payment in kind is not deductible.
    (c) What expenses may be deducted--(1) Payments for attendant care 
services. (i) If because of your impairment(s) you

[[Page 865]]

need assistance in traveling to and from work, or while at work you need 
assistance with personal functions (e.g., eating, toileting) or with 
work-related functions (e.g., reading, communicating), the payments you 
make for those services may be deducted.
    (ii) If because of your impairment(s) you need assistance with 
personal functions (e.g., dressing, administering medications) at home 
in preparation for going to and assistance in returning from work, the 
payments you make for those services may be deducted.
    (iii)(A) We will deduct payments you make to a family member for 
attendant care services only if such person, in order to perform the 
services, suffers an economic loss by terminating his or her employment 
or by reducing the number of hours he or she worked.
    (B) We consider a family member to be anyone who is related to you 
by blood, marriage or adoption, whether or not that person lives with 
you.
    (iv) If only part of your payment to a person is for services that 
come under the provisions of paragraph (c)(1) of this section, we will 
only deduct that part of the payment which is attributable to those 
services. For example, an attendant gets you ready for work and helps 
you in returning from work, which takes about 2 hours a day. The rest of 
his or her 8 hour day is spent cleaning your house and doing your 
laundry, etc. We would only deduct one-fourth of the attendant's daily 
wages as an impairment-related work expense.
    (2) Payments for medical devices. If your impairment(s) requires 
that you utilize medical devices in order to work, the payments you make 
for those devices may be deducted. As used in this subparagraph, medical 
devices include durable medical equipment which can withstand repeated 
use, is customarily used for medical purposes, and is generally not 
useful to a person in the absence of an illness or injury. Examples of 
durable medical equipment are wheelchairs, hemodialysis equipment, 
canes, crutches, inhalators and pacemakers.
    (3) Payments for prosthetic devices. If your impairment(s) requires 
that you utilize a prosthetic device in order to work, the payments you 
make for that device may be deducted. A prosthetic device is that which 
replaces an internal body organ or external body part. Examples of 
prosthetic devices are artificial replacements of arms, legs and other 
parts of the body.
    (4) Payments for equipment--(i) Work-related equipment. If your 
impairment(s) requires that you utilize special equipment in order to do 
your job, the payments you make for that equipment may be deducted. 
Examples of work-related equipment are one-hand typewriters, 
telecommunication devices for the deaf and tools specifically designed 
to accommodate a person's impairment(s).
    (ii) Residential modifications. If your impairment(s) requires that 
you make modifications to your residence, the location of your place of 
work will determine if the cost of these modifications will be deducted. 
If you are employed away from home, only the cost of changes made 
outside of your home to permit you to get to your means of 
transportation (e.g., the installation of an exterior ramp for a wheel-
chair confined person or special exterior railings or pathways for 
someone who requires crutches) will be deducted. Costs relating to 
modifications of the inside of your home will not be deducted. If you 
work at home, the costs of modifying the inside of your home in order to 
create a working space to accommodate your impairment(s) will be 
deducted to the extent that the changes pertain specifically to the 
space in which you work. Examples of such changes are the enlargement of 
a doorway leading into the work space or modification of the work space 
to accommodate problems in dexterity. However, if you are self-employed 
at home, any cost deducted as a business expense cannot be deducted as 
an impairment-related work expense.
    (iii) Nonmedical appliances and equipment. Expenses for appliances 
and equipment which you do not ordinarily use for medical purposes are 
generally not deductible. Examples of these items are portable room 
heaters, air conditioners, humidifiers, dehumidifiers, and electric air 
cleaners. However, expenses for such items may be deductible when 
unusual circumstances

[[Page 866]]

clearly establish an impairment-related and medically verified need for 
such an item because it is essential for the control of your disabling 
condition, thus enabling you to work. To be considered essential, the 
item must be of such a nature that if it were not available to you there 
would be an immediate adverse impact on your ability to function in your 
work activity. In this situation, the expense is deductible whether the 
item is used at home or in the working place. An example would be the 
need for an electric air cleaner by an individual with severe 
respiratory disease who cannot function in a non-purified air 
environment. An item such as an exercycle is not deductible if used for 
general physical fitness. If it is prescribed and used as necessary 
treatment of your impairment and necessary to enable you to work, we 
will deduct payments you make toward its cost.
    (5) Payments for drugs and medical services. (i) If you must use 
drugs or medical services (including diagnostic procedures) to control 
your impairment(s), the payments you make for them may be deducted. The 
drugs or services must be prescribed (or utilized) to reduce or 
eliminate symptoms of your impairment(s) or to slow down its 
progression. The diagnostic procedures must be performed to ascertain 
how the impairment(s) is progressing or to determine what type of 
treatment should be provided for the impairment(s).
    (ii) Examples of deductible drugs and medical services are 
anticonvulsant drugs to control epilepsy or anticonvulsant blood level 
monitoring; antidepressant medication for mental disorders; medication 
used to allay the side effects of certain treatments; radiation 
treatment or chemotherapy for cancer patients; corrective surgery for 
spinal disorders; electroencephalograms and brain scans related to a 
disabling epileptic condition; tests to determine the efficacy of 
medication on a diabetic condition; and immunosuppressive medications 
that kidney transplant patients regularly take to protect against graft 
rejection.
    (iii) We will only deduct the costs of drugs or services that are 
directly related to your impairment(s). Examples of non-deductible items 
are routine annual physical examinations, optician services (unrelated 
to a disabling visual impairment) and dental examinations.
    (6) Payments for similar items and services--(i) General. If you are 
required to utilize items and services not specified in paragraph (c) 
(1) through (5) of this section but which are directly related to your 
impairment(s) and which you need to work, their costs are deductible. 
Examples of such items and services are medical supplies and services 
not discussed above, and transportation.
    (ii) Medical supplies and services not described above. We will 
deduct payments you make for expendable medical supplies, such as 
incontinence pads, catheters, bandages, elastic stockings, face masks, 
irrigating kits, and disposable sheets and bags. We will also deduct 
payments you make for physical therapy which you require because of your 
impairment(s) and which you need in order to work.
    (iii) Payments for transportation costs. We will deduct 
transportation costs in these situations:
    (A) Your impairment(s) requires that in order to get to work you 
need a vehicle that has structural or operational modifications. The 
modifications must be critical to your operation or use of the vehicle 
and directly related to your impairment(s). We will deduct the costs of 
the modifications, but not the cost of the vehicle. We will also deduct 
a mileage allowance for the trip to and from work. The allowance will be 
based on data compiled by the Federal Highway Administration relating to 
vehicle operating costs.
    (B) Your impairment(s) requires you to use driver assistance, 
taxicabs or other hired vehicles in order to work. We will deduct 
amounts paid to the driver and, if your own vehicle is used, we will 
also deduct a mileage allowance, as provided in paragraph (c)(6)(iii)(A) 
of this section, for the trip to and from work.
    (C) Your impairment(s) prevents your taking available public 
transportation to and from work and you must drive your (unmodified) 
vehicle to work. If we can verify through your physician or other 
sources that the need to drive

[[Page 867]]

is caused by your impairment(s) (and not due to the unavailability of 
public transportation), we will deduct a mileage allowance as provided 
in paragraph (c)(6)(iii)(A) of this section, for the trip to and from 
work.
    (7) Payments for installing, maintaining, and repairing deductible 
items. If the device, equipment, appliance, etc., that you utilize 
qualifies as a deductible item as described in paragraphs (c)(2), (3), 
(4), and (6) of this section, the costs directly related to installing, 
maintaining and repairing these items are also deductible. (The costs 
which are associated with modifications to a vehicle are deductible. 
Except for a mileage allowance, as provided for in paragraph (c)(6)(iii) 
of this section, the costs which are associated with the vehicle itself 
are not deductible.)
    (d) When expenses may be deducted--(1) Effective date. To be 
deductible an expense must be incurred after November 30, 1980. An 
expense may be considered incurred after that date if it is paid 
thereafter even though pursuant to a contract or other arrangement 
entered into before December 1, 1980.
    (2) Payments for services. For the purpose of determining SGA, a 
payment you make for services may be deducted if the services are 
received while you are working and the payment is made in a month you 
are working. We consider you to be working even though you must leave 
work temporarily to receive the services. For the purpose of determining 
your SSI monthly payment amount, a payment you make for services may be 
deducted if the payment is made in the month your earned income is 
received and the earned income is for work done in the month you 
received the services. If you begin working and make a payment before 
the month earned income is received, the payment is also deductible. If 
you make a payment after you stop working, and the payment is made in 
the month you received earned income for work done in the month you 
received the services, the payment is also deductible.
    (3) Payment for items. For the purpose of determining SGA, a payment 
you make toward the cost of a deductible item (regardless of when it is 
acquired) may be deducted if payment is made in a month you are working. 
For the purpose of determining your SSI monthly payment amount, a 
payment you make toward the cost of a deductible item (regardless of 
when it is acquired) may be deducted if the payment is made in the month 
your earned income is received and the earned income is for work done in 
the month you used the item. If you begin working and make a payment 
before the month earned income is received, the payment is also 
deductible. If you make a payment after you stop working, and the 
payment is made in the month you received earned income for work done in 
the month you used the item, the payment is also deductible. See 
paragraph (e)(4) of this section when purchases are made in anticipation 
of work.
    (e) How expenses are allocated--(1) Re cur ring expenses. You may 
pay for services on a regular periodic basis, or you may purchase an 
item on credit and pay for it in regular periodic installments or you 
may rent an item. If so, each payment you make for the services and each 
payment you make toward the purchase or rental (including interest) is 
deductible as described in paragraph (d) of this section.

    Example: B starts work in October 1981 at which time she purchases a 
medical device at a cost of $4,800 plus interest charges of $720. Her 
monthly payments begin in October. She earns and receives $400 a month. 
The term of the installment contract is 48 months. No downpayment is 
made. The monthly allowable deduction for the item would be $115 ($5520 
divided by 48) for each month of work (for SGA purposes) and for each 
month earned income is received (for SSI payment purposes) during the 48 
months.

    (2) Nonrecurring expenses. Part or all of your expenses may not be 
recurring. For example, you may make a one-time payment in full for an 
item or service or make a downpayment. For the purpose of determining 
SGA, if you are working when you make the payment we will either deduct 
the entire amount in the month you pay it or allocate the amount over a 
12 consecutive month period beginning with the month of payment, 
whichever you select. For the purpose of determining your SSI monthly 
payment amount, if you are working in the month you make the payment and 
the payment is

[[Page 868]]

made in a month earned income is received, we will either deduct the 
entire amount in that month, or we will allocate the amount over a 12 
consecutive month period, beginning with that month, whichever you 
select. If you begin working and do not receive earned income in the 
month you make the payment, we will either deduct or begin allocating 
the payment amount in the first month you do receive earned income. If 
you make a payment for services or items after you stopped working, we 
will deduct the payment if it was made in the month you received earned 
income for work done in the month you received the services or used the 
item.

    Example: A begins working in October 1981 and earns and receives 
$525 a month. In the same month he purchases and pays for a deductible 
item at a cost of $250. In this situation we could allow a $250 
deduction for both SGA and SSI payment purposes for October 1981, 
reducing A's earnings below the SGA level for that month.
    If A's earnings had been $15 above the SGA earnings amount, A 
probably would select the option of projecting the $250 payment over the 
12-month period, October 1981-September 1982, giving A an allowable 
deduction of $20.83 a month for each month of work (for SGA purposes) 
and for each month earned income is received (for SSI payment purposes) 
during that period. This deduction would reduce A's earnings below the 
SGA level for 12 months.

    (3) Allocating downpayments. If you make a downpayment we will, if 
you choose, make a separate calculation for the downpayment in order to 
provide for uniform monthly deductions. In these situations we will 
determine the total payment that you will make over a 12 consecutive 
month period beginning with the month of the downpayment and allocate 
that amount over the 12 months. Beginning with the 13th month, the 
regular monthly payment will be deductible. This allocation process will 
be for a shorter period if your regular monthly payments will extend 
over a period of less than 12 months.

    Example 1. C starts working in October 1981, at which time he 
purchases special equipment at a cost of $4,800, paying $1,200 down. The 
balance of $3,600, plus interest of $540, is to be repaid in 36 
installments of $115 a month beginning November 1981. C earns and 
receives $500 a month. He chooses to have the downpayment allocated. In 
this situation we would allow a deduction of $205.42 a month for each 
month of work (for SGA purposes) and for each month earned income is 
received (for SSI payment purposes) during the period October 1981 
through September 1982. After September 1982, the deduction amount would 
be the regular monthly payment of $115 for each month of work (for SGA 
purposes) and for each month earned income is received (for SSI payment 
purposes) during the remaining installment period.

Explanation:
  Downpayment in 10/81..........................      $1,200  ..........
  Monthly payments 11/81 through 09/82..........       1,265  ..........
                                                 ------------
                                                   12) 2,465   =$205.42.
 

    Example 2. D, while working, buys a deductible item in July 1981, 
paying $1,450 down. (D earns and receives $500 a month.) However, his 
first monthly payment of $125 is not due until September 1981. D chooses 
to have the downpayment allocated. In this situation we would allow a 
deduction of $225 a month for each month of work (for SGA purposes) and 
for each month earned income is received (for SSI payment purposes) 
during the period July 1981 through June 1982. After June 1982, the 
deduction amount would be the regular monthly payment of $125 for each 
month of work (for SGA purposes) and for each month earned income is 
received (for SSI payment purposes).

Explanation:
  Downpayment in 07/81..........................      $1,450  ..........
  Monthly payments 09/81 through 06/82..........       1,250  ..........
                                                 ------------
                                                   12) 2,700       =225.
 

    (4) Payments made in anticipation of work. A payment toward the cost 
of a deductible item that you made in any of the 11 months preceding the 
month you started working will be taken into account in determining your 
impairment-related work expenses. When an item is paid for in full 
during the 11 months preceding the month you started working the payment 
will be allocated over the 12-consecutive month period beginning with 
the month of the payment. However, the only portion of the payment which 
may be deductible is the portion allocated to the month work begins and 
the following months. For example, if an item is purchased 3 months 
before the month work began and is paid for with a one-time payment of 
$600, the deductible amount would be $450 ($600 divided by 12, 
multiplied by 9). Installment payments (including a downpayment) that 
you made for a particular item during the 11

[[Page 869]]

months preceding the month you started working will be totaled and 
considered to have been made in the month of your first payment for that 
item within this 11 month period. The sum of these payments will be 
allocated over the 12-consecutive month period beginning with the month 
of your first payment (but never earlier than 11 months before the month 
work began). However, the only portion of the total which may be 
deductible is the portion allocated to the month work begins and the 
following months. For example, if an item is purchased 3 months before 
the month work began and is paid for in 3 monthly installments of $200 
each, the total payment of $600 will be considered to have been made in 
the month of the first payment, that is, 3 months before the month work 
began. The deductible amount would be $450 ($600 divided by 12, 
multiplied by 9). The amount, as determined by these formulas, will then 
be considered to have been paid in the first month of work for the 
purpose of determining SGA and in the first month earned income is 
received for the purpose of determining the SSI monthly payment amount. 
For the purpose of determining SGA, we will deduct either the entire 
amount in the first month of work or allocate it over a 12 consecutive 
month period beginning with the first month of work, whichever you 
select. In the above examples, the individual would have the choice of 
having the entire $450 deducted in the first month of work or of having 
$37.50 a month ($450 divided by 12) deducted for each month that he 
works over a 12-consecutive month period, beginning with the first month 
of work. For the purpose of determining the SSI payment amount, we will 
either deduct the entire amount in the first month earned income is 
received or allocate it over a 12-consecutive month period beginning 
with the first month earned income is received, whichever you select. In 
the above examples, the individual would have the choice of having the 
entire $450 deducted in the first month earned income is received or of 
having $37.50 a month ($450 divided by 12) deducted for each month he 
receives earned income (for work) over a 12-consecutive month period, 
beginning with the first month earned income is received. To be 
deductible the payments must be for durable items such as medical 
devices, prostheses, work-related equipment, residential modifications, 
nonmedical appliances and vehicle modifications. Payments for services 
and expendable items such as drugs, oxygen, diagnostic procedures, 
medical supplies and vehicle operating costs are not deductible for 
purposes of this paragraph.
    (f) Limits on deductions. (1) We will deduct the actual amounts you 
pay toward your impairment-related work expenses unless the amounts are 
unreasonable. With respect to durable medical equipment, prosthetic 
devices, medical services, and similar medically related items and 
services, we will apply the prevailing charges under Medicare (part B of 
title XVIII, Health Insurance for the Aged and Disabled) to the extent 
that this information is readily available. Where the Medicare guides 
are used, we will consider the amount that you pay to be reasonable if 
it is no more than the prevailing charge for the same item or service 
under the Medicare guidelines. If the amount you actually pay is more 
than the prevailing charge for the same item under the Medicare 
guidelines, we will deduct from your earnings the amount you paid to the 
extent you establish that the amount is consistent with the standard or 
normal charge for the same or similar item or service in your community. 
For items and services that are not listed in the Medicare guidelines, 
and for items and services that are listed in the Medicare guidelines 
but for which such guides cannot be used because the information is not 
readily available, we will consider the amount you pay to be reasonable 
if it does not exceed the standard or normal charge for the same or 
similar item(s) or service(s) in your community.
    (2) The decision as to whether you performed substantial gainful 
activity in a case involving impairment-related work expenses for items 
or services necessary for you to work generally will be based upon your 
``earnings'' and not on the value of ``services'' you rendered. (See 
Sec. Sec. 416.974(b)(6) (i) and (ii), and 416.975(a)). This is not 
necessarily

[[Page 870]]

so, however, if you are in a position to control or manipulate your 
earnings.
    (3) The amount of the expenses to be deducted must be determined in 
a uniform manner in both the disability insurance and SSI programs. The 
amount of deductions must, therefore, be the same for determinations as 
to substantial gainful activity under both programs. The deductions that 
apply in determining the SSI payment amounts, though determined in the 
same manner as for SGA determinations, are applied so that they 
correspond to the timing of the receipt of the earned income to be 
excluded.
    (4) No deduction will be allowed to the extent that any other source 
has paid or will pay for an item or service. No deduction will be 
allowed to the extent that you have been, could be, or will be, 
reimbursed for payments you made. (See paragraph (b)(3) of this 
section.)
    (5) The provisions described in the foregoing paragraphs of this 
section are effective with respect to expenses incurred on and after 
December 1, 1980, although expenses incurred after November 1980 as a 
result of contractual or other arrangements entered into before December 
1980, are deductible. For months before December 1980 we will deduct 
impairment-related work expenses from your earnings only to the extent 
they exceeded the normal work-related expenses you would have had if you 
did not have your impairment(s). We will not deduct expenses, however, 
for those things which you needed even when you were not working.
    (g) Verification. We will verify your need for items or services for 
which deductions are claimed, and the amount of the charges for those 
items or services. You will also be asked to provide proof that you paid 
for the items or services.

[48 FR 21940, May 16, 1983, as amended at 65 FR 42791, July 11, 2000]

                                Blindness



Sec. 416.981  Meaning of blindness as defined in the law.

    We will consider you blind under the law for payment of supplemental 
security income benefits if we determine that you are statutorily blind. 
Statutory blindness is central visual acuity of 20/200 or less in the 
better eye with the use of a correcting lens. An eye which has a 
limitation in the field of vision so that the widest diameter of the 
visual field subtends an angle no greater than 20 degrees is considered 
to have a central visual acuity of 20/200 or less.



Sec. 416.982  Blindness under a State plan.

    We shall also consider you blind for the purposes of payment of 
supplemental security income benefits if--
    (a) You were found to be blind as defined under a State plan 
approved under title X or title XVI of the Social Security Act, as in 
effect for October 1972;
    (b) You received aid under the State plan because of your blindness 
for the month of December 1973; and
    (c) You continue to be blind as defined under the State plan.



Sec. 416.983  How we evaluate statutory blindness.

    We will find that you are blind if you are statutorily blind within 
the meaning of Sec. 416.981. For us to find that you are statutorily 
blind, it is not necessary--
    (a) That your blindness meet the duration requirement; or
    (b) That you be unable to do any substantial gainful activity.



Sec. 416.984  If you are statutorily blind and still working.

    There is no requirement that you be unable to work in order for us 
to find that you are blind. However, if you are working, your earnings 
will be considered under the income and resources rules in subparts K 
and L of this part. This means that if your income or resources exceed 
the limitations, you will not be eligible for benefits, even though you 
are blind.



Sec. 416.985  How we evaluate other visual impairments.

    If you are not blind as defined in the law, we will evaluate a 
visual impairment the same as we evaluate other impairments in 
determining disability. Although you will not qualify for benefits on 
the basis of blindness, you may still be eligible for benefits if we 
find

[[Page 871]]

that you are disabled as defined in Sec. Sec. 416.905 through 416.907.



Sec. 416.986  Why and when we will find that you are no longer entitled 
to benefits based on statutory blindness.

    (a) If your vision does not meet the definition of blindness. If you 
become entitled to payments as a statutorily blind person and your 
statutory blindness ends, your eligibility for payments generally will 
end 2 months after your blindness ends. We will find that your statutory 
blindness has ended beginning with the earliest of the following 
months--
    (1) The month your vision, based on current medical evidence, does 
not meet the definition of blindness and you were disabled only for a 
specified period of time in the past;
    (2) The month your vision based on current medical evidence, does 
not meet the definition of blindness, but not earlier than the month in 
which we mail you a notice saying that the information we have shows 
that you are not now blind; or
    (3) The first month in which you fail to follow prescribed treatment 
that can restore your ability to work (see Sec. 416.930).
    (b) If you were found blind as defined in a State plan. If you 
become eligible for payments because you were blind as defined in a 
State plan, we will find that your blindness has ended beginning with 
the first month in which your vision, as shown by medical or other 
evidence, does not meet the criteria of the appropriate State plan or 
the first month in which your vision does not meet the definition of 
statutory blindness (Sec. 416.981), whichever is later, and in neither 
event earlier than the month in which we mail you a notice saying that 
we have determined that you are not now blind under a State plan or not 
now statutorily blind, as appropriate.
    (c) If you do not cooperate with us. If you are asked to give us 
medical or other evidence or to go for a physical or mental examination 
by a certain date, we will find that your blindness ended if you fail, 
without good cause, to do what we ask. Section 416.1411 explains the 
factors we consider and how we will determine generally whether you have 
good cause for failure to cooperate. In addition, Sec. 416.918 
discusses how we determine whether you have good cause for failing to 
attend a consultative examination. The month in which your blindness 
ends will be the month in which you fail to do what we asked.
    (d) Before we stop your payments. Before we stop payment of your 
benefits we will give you a chance to give us your reasons why we should 
not stop payment. Subpart M of this part describes your rights and the 
procedures we will follow.

[45 FR 55621, Aug. 20, 1980, as amended at 50 FR 50137, Dec. 6, 1985; 51 
FR 7603, Feb. 28, 1986; 59 FR 1636, Jan. 12, 1994]

      Disability Redeterminations for Individuals Who Attain Age 18



Sec. 416.987  Disability redeterminations for individuals who attain age 18.

    (a) Who is affected by this section? (1) We must redetermine your 
eligibility if you are eligible for SSI disability benefits and:
    (i) You are at least 18 years old; and
    (ii) You became eligible for SSI disability benefits as a child 
(i.e., before you attained age 18); and
    (iii) You were eligible for such benefits for the month before the 
month in which you attained age 18.
    (2) We may find that you are not now disabled even though we 
previously found that you were disabled.
    (b) What are the rules for age-18 redeterminations? When we 
redetermine your eligibility, we will use the rules for adults 
(individuals age 18 or older) who file new applications explained in 
Sec. Sec. 416.920(c) through (f). We will not use the rule in Sec. 
416.920(b) for people who are doing substantial gainful activity, and we 
will not use the rules in Sec. 416.994 for determining whether 
disability continues. If you are working and we find that you are 
disabled under Sec. 416.920(d) or (f), we will apply the rules in 
Sec. Sec. 416.260ff.
    (c) When will my eligibility be redetermined? We will redetermine 
your eligibility either during the 1-year period beginning on your 18th 
birthday or, in lieu of a continuing disability review, whenever we 
determine that your case

[[Page 872]]

is subject to redetermination under the Act.
    (d) Will I be notified? (1) We will notify you in writing before we 
begin your disability redetermination. We will tell you:
    (i) That we are redetermining your eligibility for payments;
    (ii) Why we are redetermining your eligibility;
    (iii) Which disability rules we will apply;
    (iv) That our review could result in a finding that your SSI 
payments based on disability could be terminated;
    (v) That you have the right to submit medical and other evidence for 
our consideration during the redetermination; and
    (vi) That we will notify you of our determination, your right to 
appeal the determination, and your right to request continuation of 
benefits during appeal.
    (2) We will notify you in writing of the results of the disability 
redetermination. The notice will tell you what our determination is, the 
reasons for our determination, and your right to request reconsideration 
of the determination. If our determination shows that we should stop 
your SSI payments based on disability, the notice will also tell you of 
your right to request that your benefits continue during any appeal. Our 
initial disability redetermination will be binding unless you request a 
reconsideration within the stated time period or we revise the initial 
determination.
    (e) When will we find that your disability ended? If we find that 
you are not disabled, we will find that your disability ended in the 
earliest of:
    (1) The month the evidence shows that you are not disabled under the 
rules in this section, but not earlier than the month in which we mail 
you a notice saying that you are not disabled.
    (2) The first month in which you failed without good cause to follow 
prescribed treatment under the rules in Sec. 416.930.
    (3) The first month in which you failed without good cause to do 
what we asked. Section 416.1411 explains the factors we will consider 
and how we will determine generally whether you have good cause for 
failure to cooperate. In addition, Sec. 416.918 discusses how we 
determine whether you have good cause for failing to attend a 
consultative examination.

[65 FR 54789, Sept. 11, 2000]

             Continuing or Stopping Disability or Blindness



Sec. 416.988  Your responsibility to tell us of events that may change 
your disability or blindness status.

    If you are entitled to payments because you are disabled or blind, 
you should promptly tell us if--
    (a) Your condition improves;
    (b) Your return to work;
    (c) You increase the amount of your work; or
    (d) Your earnings increase.



Sec. 416.989  We may conduct a review to find out whether you continue 
to be disabled.

    After we find that you are disabled, we must evaluate your 
impairment(s) from time to time to determine if you are still eligible 
for payments based on disability. We call this evaluation a continuing 
disability review. We may begin a continuing disability review for any 
number of reasons including your failure to follow the provisions of the 
Social Security Act or these regulations. When we begin such a review, 
we will notify you that we are reviewing your eligibility for payments, 
why we are reviewing your eligibility, that in medical reviews the 
medical improvement review standard will apply, that our review could 
result in the termination of your payments, and that you have the right 
to submit medical and other evidence for our consideration during the 
continuing disability review. In doing a medical review, we will develop 
a complete medical history of at least the preceding 12 months in any 
case in which a determination is made that you are no longer under a 
disability. If this review shows that we should stop your payments, we 
will notify you in writing and give you an opportunity to appeal. In 
Sec. 416.990 we describe those events that may prompt us to review 
whether you continue to be disabled.

[51 FR 16826, May 7, 1986]

[[Page 873]]



Sec. 416.989a  We may conduct a review to find out whether you continue 
to be blind.

    After we find that you are blind, we must evaluate your 
impairment(s) from time to time to determine if you are still eligible 
for payments based on blindness. We call this evaluation a continuing 
disability review. We may begin a continuing disability review for any 
number of reasons including your failure to follow the provisions of the 
Social Security Act or these regulations. When we begin such a review, 
we will notify you that we are reviewing your eligibility for payments, 
why we are reviewing your eligibility, that our review could result in 
the termination of your payments, and that you have the right to submit 
medical and other evidence for our consideration during the continuing 
disability review. In doing a medical review, we will develop a complete 
medical history of at least the preceding 12 months in any case in which 
a determination is made that you are no longer blind. If this review 
shows that we should stop your payments, we will notify you in writing 
and give you an opportunity to appeal. In Sec. 416.990 we describe 
those events that may prompt us to review whether you continue to be 
blind.

[51 FR 16826, May 7, 1986]



Sec. 416.990  When and how often we will conduct a continuing disability 
review.

    (a) General. We conduct continuing disability reviews to determine 
whether or not you continue to meet the disability or blindness 
requirements of the law. Payment ends if the medical or other evidence 
shows that you are not disabled or blind as determined under the 
standards set out in section 1614(a) of the Social Security Act if you 
receive benefits based on disability or Sec. 416.986 of this subpart if 
you receive benefits based on blindness.
    (b) When we will conduct a continuing disability review. A 
continuing disability review will be started if--
    (1) You have been scheduled for a medical improvement expected diary 
review;
    (2) You have been scheduled for a periodic review (medical 
improvement possible or medical improvement not expected) in accordance 
with the provisions of paragraph (d) of this section;
    (3) We need a current medical or other report to see if your 
disability continues. (This could happen when, for example, an advance 
in medical technology, such as improved treatment for Alzheimer's 
disease, or a change in vocational therapy or technology raises a 
disability issue);
    (4) You return to work and successfully complete a period of trial 
work;
    (5) Substantial earnings are reported to your wage record;
    (6) You tell us that you have recovered from your disability or that 
you have returned to work;
    (7) Your State Vocational Rehabilitation Agency tells us that--
    (i) The services have been completed; or
    (ii) You are now working; or
    (iii) You are able to work;
    (8) Someone in a position to know of your physical or mental 
condition tells us that you are not disabled or blind, that you are not 
following prescribed treatment, that you have returned to work, or that 
you are failing to follow the provisions of the Social Security Act or 
these regulations, and it appears that the report could be substantially 
correct;
    (9) Evidence we receive raises a question whether your disability or 
blindness continues;
    (10) You have been scheduled for a vocational reexamination diary 
review; or
    (11) By your first birthday, if you are a child whose low birth 
weight was a contributing factor material to our determination that you 
were disabled; i.e., whether we would have found you disabled if we had 
not considered your low birth weight. However, we will conduct your 
continuing disability review later if at the time of our initial 
determination that you were disabled:
    (i) We determine that you have an impairment that is not expected to 
improve by your first birthday; and
    (ii) We schedule you for a continuing disability review after your 
first birthday.
    (c) Definitions. As used in this section--
    Medical improvement expected diary--refers to a case which is 
scheduled for

[[Page 874]]

review at a later date because the individual's impairment(s) is 
expected to improve. Generally, the diary period is set for not less 
than 6 months or for not more than 18 months. Examples of cases likely 
to be scheduled for medical improvement expected diary are fractures and 
cases in which corrective surgery is planned and recovery can be 
anticipated.
    Permanent impairment--medical improvement not expected--refers to a 
case in which any medical improvement in a person's impairment(s) is not 
expected. This means an extremely severe condition determined on the 
basis of our experience in administering the disability programs to be 
at least static, but more likely to be progressively disabling either by 
itself or by reason of impairment complications, and unlikely to improve 
so as to permit the individual to engage in substantial gainful activity 
or, if you are a child, unlikely to improve to the point that you will 
no longer have marked and severe functional limitations. The interaction 
of the individual's age, impairment consequences and the lack of recent 
attachment to the labor market may also be considered in determining 
whether an impairment is permanent. Improvement which is considered 
temporary under Sec. 416.994(b)(2)(iv)(D) or Sec. 416.994(c)(2)(iv), 
as appropriate, will not be considered in deciding if an impairment is 
permanent. Examples of permanent impairments taken from the list 
contained in our other written guidelines which are available for public 
review are as follows and are not intended to be all inclusive:
    (1) Parkinsonian Syndrome which has reached the level of severity 
necessary to meet the Listing in appendix 1 of subpart P or part 404 of 
this chapter.
    (2) Amyotrophic Lateral Sclerosis which has reached the level of 
severity necessary to meet the Listing in appendix 1 of subpart P of 
part 404 of this chapter.
    (3) Diffuse pulmonary fibrosis in an individual age 55 or over which 
has reached the level of severity necessary to meet the Listing in 
appendix 1 of subpart P of part 404 of this chapter.
    (4) Amputation of leg at hip.
    Nonpermanent impairment--refers to a case in which any medical 
improvement in the person's impairment(s) is possible. This means an 
impairment for which improvement cannot be predicted based on current 
experience and the facts of the particular case but which is not at the 
level of severity of an impairment that is considered permanent. 
Examples of nonpermanent impairments are: Regional enteritis, 
hyperthyroidism, and chronic ulcerative colitis.
    Vocational reexamination diary--refers to a case which is scheduled 
for review at a later date because the individual is undergoing 
vocational therapy, training or an educational program which may improve 
his or her ability to work so that the disability or blindness 
requirement of the law is no longer met. Generally, the diary period 
will be set for the length of the training, therapy, or program of 
education.
    (d) Frequency of review. If your impairment is expected to improve, 
generally we will review your continuing eligibility for payments based 
on disability or blindness at intervals from 6 months to 18 months 
following our most recent decision. Our notice to you about the review 
of your case will tell you more precisely when the review will be 
conducted. If your disability is not considered permanent but is such 
that any medical improvement in your impairment(s) cannot be accurately 
predicted, we will review your continuing eligibility for payments at 
least once every 3 years. If your disability is considered permanent, we 
will review your continuing eligibility for payments no less frequently 
than once every 7 years but no more frequently than once every 5 years. 
Regardless of your classification we will conduct an immediate 
continuing disability review if a question of continuing disability is 
raised pursuant to paragraph (b) of this section.
    (e) Change in classification of impairment. If the evidence 
developed during a continuing disability review demonstrates that your 
impairment has improved, is expected to improve, or has worsened since 
the last review, we may reclassify your impairment to reflect this 
change in severity. A change

[[Page 875]]

in the classification of your impairment will change the frequency with 
which we will review your case. We may also reclassify certain 
impairments because of improved tests, treatment, and other technical 
advances concerning those impairments.
    (f) Review after administrative appeal. If you were found eligible 
to receive or to continue to receive, payments on the basis of a 
decision by an administrative law judge, the Appeals Council or a 
Federal court, we will not conduct a continuing disability review 
earlier than 3 years after that decision unless your case should be 
scheduled for a medical improvement expected or vocational reexamination 
diary review or a question of continuing disability is raised pursuant 
to paragraph (b) of this section.
    (g) Waiver of timeframes. All cases involving a nonpermanent 
impairment will be reviewed by us at least once every 3 years unless we, 
after consultation with the State agency, determine that the requirement 
should be waived to ensure that only the appropriate number of cases are 
reviewed. The appropriate number of cases to be reviewed is to be based 
on such considerations as the backlog of pending reviews, the projected 
number of new applications, and projected staffing levels. Such waiver 
shall be given only after good faith effort on the part of the State to 
meet staffing requirements and to process the reviews on a timely basis. 
Availability of independent medical resources may also be a factor. A 
waiver in this context refers to our administrative discretion to 
determine the appropriate number of cases to be reviewed on a State by 
State basis. Therefore, your continuing disability review may be delayed 
longer than 3 years following our original decision or other review 
under certain circumstances. Such a delay would be based on our need to 
ensure that backlogs, reviews required to be performed by the Social 
Security Disability Benefits Reform Act (Pub. L. 98-460), and new 
disability claims workloads are accomplished within available medical 
and other resources in the State agency and that such reviews are done 
carefully and accurately.

[51 FR 16826, May 7, 1986, as amended at 62 FR 6430, Feb. 11, 1997; 65 
FR 54790, Sept. 11, 2000]



Sec. 416.991  If your medical recovery was expected and you returned to work.

    If your impairment was expected to improve and you returned to full-
time work with no significant medical limitations and acknowledge that 
medical improvement has occurred, we may find that your disability ended 
in the month you returned to work. Unless there is evidence showing that 
your disability has not ended, we will use the medical and other 
evidence already in your file and the fact that you returned to full-
time work without significant limitations to determine that you are no 
longer disabled.

    Example: Evidence obtained during the processing of your claim 
showed that you had an impairment that was expected to improve about 18 
months after your disability began. We, therefore, told you that your 
claim would be reviewed again at that time. However, before the time 
arrived for your scheduled medical re-examination, you told us that you 
had returned to work and your impairment had improved. We reviewed your 
claim immediately and found that, in the 16th month after your 
disability began, you returned to full-time work without any significant 
medical restrictions. Therefore, we would find that your disability 
ended in the first month you returned to full-time work.

[50 FR 50137, Dec. 6, 1985, as amended at 65 FR 42791, July 11, 2000]



Sec. Sec. 416.992-416.992a  [Reserved]



Sec. 416.993  Medical evidence in continuing disability review cases.

    (a) General. If you are entitled to benefits because you are 
disabled, we will have your case file with the supporting medical 
evidence previously used to establish or continue your entitlement. 
Generally, therefore, the medical evidence we will need for a continuing 
disability review will be that required to make a current determination 
or decision as to whether you are still disabled, as defined under the 
medical improvement review standard. See Sec. Sec. 416.987 and 416.994.
    (b) Obtaining evidence from your medical sources. You must provide 
us with

[[Page 876]]

reports from your physician, psychologist, or others who have treated or 
evaluated you, as well as any other evidence that will help us determine 
if you are still disabled. See Sec. 416.912. You must have a good 
reason for not giving us this information or we may find that your 
disability has ended. See Sec. 416.994(e)(2). lf we ask you, you must 
contact your medical sources to help us get the medical reports. We will 
make every reasonable effort to help you in getting medical reports when 
you give us permission to request them from your physician, 
psychologist, or other medical sources. See Sec. 416.912(d)(1) 
concerning what we mean by every reasonable effort. In some instances, 
such as when a source is known to be unable to provide certain tests or 
procedures or is known to be nonproductive or uncooperative, we may 
order a consultative examination while awaiting receipt of medical 
source evidence. Before deciding that your disability has ended, we will 
develop a complete medical history covering at least the 12 months 
preceding the date you sign a report about your continuing disability 
status. See Sec. 416.912(c).
    (c) When we will purchase a consultative examination. A consultative 
examination may be purchased when we need additional evidence to 
determine whether or not your disability continues. As a result, we may 
ask you, upon our request and reasonable notice, to undergo consultative 
examinations and tests to help us determine if you are still disabled. 
See Sec. 416.917. We will decide whether or not to purchase a 
consultative examination in accordance with the standards in Sec. Sec. 
416.919a through 416.919b.

[56 FR 36970, Aug. 1, 1991, as amended at 65 FR 16815, Mar. 30, 2000]



Sec. 416.994  How we will decide whether your disability continues or 
ends, disabled adults.

    (a) General. There is a statutory requirement that, if you are 
entitled to disability benefits, your continued entitlement to such 
benefits must be reviewed periodically. Our rules for deciding whether 
your disability continues are set forth in paragraph (b) of this 
section. Additional rules apply if you were found disabled under a State 
plan, as set forth in paragraph (c) of this section.
    (b) Disabled persons age 18 or over (adults). If you are entitled to 
disability benefits as a disabled person age 18 or over (adult) there 
are a number of factors we consider in deciding whether your disability 
continues. We must determine if there has been any medical improvement 
in your impairment(s) and, if so, whether this medical improvement is 
related to your ability to work. If your impairment(s) has not so 
medically improved, we must consider whether one or more of the 
exceptions to medical improvement applies. If medical improvement 
related to your ability to work has not occurred and no exception 
applies, your benefits will continue. Even where medical improvement 
related to your ability to work has occurred or an exception applies, in 
most cases, (see paragraph (b)(4) of this section for exceptions) we 
must also show that you are currently able to engage in substantial 
gainful activity before we can find that you are no longer disabled.
    (1) Terms and definitions. There are several terms and definitions 
which are important to know in order to understand how we review whether 
your disability continues.
    (i) Medical improvement. Medical improvement is any decrease in the 
medical severity of your impairment(s) which was present at the time of 
the most recent favorable medical decision that you were disabled or 
continued to be disabled. A determination that there has been a decrease 
in medical severity must be based on changes (improvement) in the 
symptoms, signs and/or laboratory findings associated with your 
impairment(s) (see Sec. 416.928).

    Example 1: You were awarded disability benefits due to a herniated 
nucleus pulposus. At the time of our prior decision granting you 
benefits you had had a laminectomy. Postoperatively, a myelogram still 
shows evidence of a persistent deficit in your lumbar spine. You had 
pain in your back, and pain and a burning sensation in your right foot 
and leg. There were no muscle weakness or neurological changes and a 
modest decrease in motion in your back and leg. When we reviewed your 
claim your treating physician reported that he had seen you regularly 
every 2 to 3 months for the past 2 years. No

[[Page 877]]

further myelograms had been done, complaints of pain in the back and 
right leg continued especially on sitting or standing for more than a 
short period of time. Your doctor further reported a moderately 
decreased range of motion in your back and right leg, but again no 
muscle atrophy or neurological changes were reported. Medical 
improvement has not occurred because there has been no decrease in the 
severity of your back impairment as shown by changes in symptoms, signs 
or laboratory findings.
    Example 2: You were awarded disability benefits due to rheumatoid 
arthritis. At the time, laboratory findings were positive for this 
condition. Your doctor reported persistent swelling and tenderness of 
your fingers and wrists and that you complained of joint pain. Current 
medical evidence shows that while laboratory tests are still positive 
for rheumatoid arthritis, your impairment has responded favorably to 
therapy so that for the last year your fingers and wrists have not been 
significantly swollen or painful. Medical improvement has occurred 
because there has been a decrease in the severity of your impairment as 
documented by the current symptoms and signs reported by your physician. 
Although your impairment is subject to temporary remissions and 
exacerbations, the improvement that has occurred has been sustained long 
enough to permit a finding of medical improvement. We would then 
determine if this medical improvement is related to your ability to 
work.

    (ii) Medical improvement not related to ability to do work. Medical 
improvement is not related to your ability to work if there has been a 
decrease in the severity of the impairment(s) as defined in paragraph 
(b)(1)(i) of this section, present at the time of the most recent 
favorable medical decision, but no increase in your functional capacity 
to do basic work activities as defined in paragraph (b)(1)(iv) of this 
section. If there has been any medical improvement in your 
impairment(s), but it is not related to your ability to do work and none 
of the exceptions applies, your benefits will be continued.

    Example: You are 65 inches tall and weighed 246 pounds at the time 
your disability was established. You had venous insufficiency and 
persistent edema in your legs. At the time, your ability to do basic 
work activities was affected because you were able to sit for 6 hours, 
but were able to stand or walk only occasionally. At the time of our 
continuing disability review, you had undergone a vein stripping 
operation. You now weigh 220 pounds and have intermittent edema. You are 
still able to sit for 6 hours at a time and to stand or work only 
occasionally although you report less discomfort on walking. Medical 
improvement has occurred because there has been a decrease in the 
severity of the existing impairment as shown by your weight loss and the 
improvement in your edema. This medical improvement is not related to 
your ability to work, however, because your functional capacity to do 
basic work activities (i.e., the ability to sit, stand and walk) has not 
increased.

    (iii) Medical improvement that is related to ability to do work. 
Medical improvement is related to your ability to work if there has been 
a decrease in the severity, as defined in paragraph (b)(1)(i) of this 
section, of the impairment(s) present at the time of the most recent 
favorable medical decision and an increase in your functional capacity 
to do basic work activities as discussed in paragraph (b)(1)(iv) of this 
section. A determination that medical improvement related to your 
ability to do work has occurred does not, necessarily, mean that your 
disability will be found to have ended unless it is also shown that you 
are currently able to engage in substantial gainful activity as 
discussed in paragraph (b)(1)(v) of this section.

    Example 1: You have a back impairment and had a laminectomy to 
relieve the nerve root impingement and weakness in your left leg. At the 
time of our prior decision, basic work activities were affected because 
you were able to stand less than 6 hours, and sit no more than \1/2\ 
hour at a time. You had a successful fusion operation on your back about 
1 year before our review of your entitlement. At the time of our review, 
the weakness in your leg has decreased. Your functional capacity to 
perform basic work activities now is unimpaired because you now have no 
limitation on your ability to sit, walk, or stand. Medical improvement 
has occurred because there has been a decrease in the severity of your 
impairment as demonstrated by the decreased weakness in your leg. This 
medical improvement is related to your ability to work because there has 
also been an increase in your functional capacity to perform basic work 
activities (or residual functional capacity) as shown by the absence of 
limitation on your ability to sit, walk, or stand. Whether or not your 
disability is found to have ended, however, will depend on our 
determination as to whether you can currently engage in substantial 
gainful activity.
    Example 2: You were injured in an automobile accident receiving a 
compound fracture to your right femur and a fractured pelvis. When you 
applied for disability benefits

[[Page 878]]

10 months after the accident your doctor reported that neither fracture 
had yet achieved solid union based on his clinical examination. X-rays 
supported this finding. Your doctor estimated that solid union and a 
subsequent return to full weight bearing would not occur for at least 3 
more months. At the time of our review 6 months later, solid union had 
occurred and you had been returned to weight-bearing for over a month. 
Your doctor reported this and the fact that your prior fractures no 
longer placed any limitation on your ability to walk, stand, lift, etc., 
and, that in fact, you could return to fulltime work if you so desired.
    Medical improvement has occurred because there has been a decrease 
in the severity of your impairments as shown by X-ray and clinical 
evidence of solid union and your return to full weight-bearing. This 
medical improvement is related to your ability to work because you no 
longer meet the same listed impairment in appendix 1 of subpart P of 
part 404 of this chapter (see paragraph (b)(2)(iii)(A) of this section). 
In fact, you no longer have an impairment which is severe (see Sec. 
416.921) and your disability will be found to have ended.

    (iv) Functional capacity to do basic work activities. Under the law, 
disability is defined, in part, as the inability to do any substantial 
gainful activity by reason of any medically determinable physical or 
mental impairment(s). In determining whether you are disabled under the 
law, we must measure, therefore, how and to what extent your 
impairment(s) has affected your ability to do work. We do this by 
looking at how your functional capacity for doing basic work activities 
has been affected. Basic work activities means the abilities and 
aptitudes necessary to do most jobs. Included are exertional abilities 
such as walking, standing, pushing, pulling, reaching and carrying, and 
nonexertional abilities and aptitudes such as seeing, hearing, speaking, 
remembering, using judgment, dealing with changes and dealing with both 
supervisors and fellow workers. A person who has no impairment(s) would 
be able to do all basic work activities at normal levels; he or she 
would have an unlimited functional capacity to do basic work activities. 
Depending on its nature and severity, an impairment will result in some 
limitation to the functional capacity to do one or more of these basic 
work activities. Diabetes, for example, can result in circulatory 
problems which could limit the length of time a person could stand or 
walk and damage to his or her eyes as well, so that the person also had 
limited vision. What a person can still do despite an impairment, is 
called his or her residual functional capacity. How the residual 
functional capacity is assessed is discussed in more detail in Sec. 
416.945. Unless an impairment is so severe that it is deemed to prevent 
you from doing substantial gainful activity (see Sec. Sec. 416.925 and 
416.926) it is this residual functional capacity that is used to 
determine whether you can still do your past work or, in conjunction 
with your age, education and work experience, any other work.
    (A) A decrease in the severity of an impairment as measured by 
changes (improvement) in symptoms, signs or laboratory findings can, if 
great enough, result in an increase in the functional capacity to do 
work activities. Vascular surgery (e.g., femoropopliteal bypass) may 
sometimes reduce the severity of the circulatory complications of 
diabetes so that better circulation results and the person can stand or 
walk for longer periods. When new evidence showing a change in symptoms, 
signs and laboratory findings establishes that both medical improvement 
has occurred and your functional capacity to perform basic work 
activities, or residual functional capacity, has increased, we say that 
medical improvement which is related to your ability to do work has 
occurred. A residual functional capacity assessment is also used to 
determine whether you can engage in substantial gainful activity and, 
thus, whether you continue to be disabled (see paragraph (b)(1)(vi) of 
this section).
    (B) Many impairment-related factors must be considered in assessing 
your functional capacity for basic work activities. Age is one key 
factor. Medical literature shows that there is a gradual decrease in 
organ function with age; that major losses and deficits become 
irreversible over time and that maximum exercise performance diminishes 
with age. Other changes related to sustained periods of inactivity and 
the aging process include muscle atrophy, degenerative joint changes, 
decrease in range of motion, and changes in the

[[Page 879]]

cardiac and respiratory systems which limit the exertional range.
    (C) Studies have also shown that the longer an individual is away 
from the workplace and is inactive, the more difficult it becomes to 
return to ongoing gainful employment. In addition, a gradual change 
occurs in most jobs so that after about 15 years, it is no longer 
realistic to expect that skills and abilities acquired in these jobs 
will continue to apply to the current workplace. Thus, if you are age 50 
or over and have been receiving disability benefits for a considerable 
period of time, we will consider this factor along with your age in 
assessing your residual functional capacity. This will ensure that the 
disadvantages resulting from inactivity and the aging process during a 
long period of disability will be considered. In some instances where 
available evidence does not resolve what you can or cannot do on a 
sustained basis, we will provide special work evaluations or other 
appropriate testing.
    (v) Ability to engage in substantial gainful activity. In most 
instances, we must show that you are able to engage in substantial 
gainful activity before your benefits are stopped. When doing this, we 
will consider all your current impairments not just that impairment(s) 
present at the time of the most recent favorable determination. If we 
cannot determine that you are still disabled based on medical 
consideration alone (as discussed in Sec. Sec. 416.925 and 416.926), we 
will use the new symptoms, signs and laboratory findings to make an 
objective assessment of your functional capacity to do basic work 
activities or residual functional capacity and we will consider your 
vocational factors. See Sec. Sec. 416.945 through 416.969.
    (vi) Evidence and basis for our decision. Our decisions under this 
section will be made on a neutral basis without any initial inference as 
to the presence or absence of disability being drawn from the fact that 
you have previously been determined to be disabled. We will consider all 
evidence you submit, as well as all evidence we obtain from your 
treating physician(s) and other medical or nonmedical sources. What 
constitutes ``evidence'' and our procedures for obtaining it are set out 
in Sec. Sec. 416.912 through 416.918. Our determination regarding 
whether your disability continues will be made on the basis of the 
weight of the evidence.
    (vii) Point of comparison. For purpose of determining whether 
medical improvement has occurred, we will compare the current medical 
severity of that impairment(s) which was present at the time of the most 
recent favorable medical decision that you were disabled or continued to 
be disabled to the medical severity of that impairment(s) at that time. 
If medical improvement has occurred, we will compare your current 
functional capacity to do basic work activities (i.e., your residual 
functional capacity) based on the previously existing impairments with 
your prior residual functional capacity in order to determine whether 
the medical improvement is related to your ability to do work. The most 
recent favorable medical decision is the latest decision involving a 
consideration of the medical evidence and the issue of whether you were 
disabled or continued to be disabled which became final.
    (2) Determining medical improvement and its relationship to your 
abilities to do work. Paragraphs (b)(1)(i) through (b)(1)(iii) of this 
section discuss what we mean by medical improvement, medical improvement 
not related to your ability to work, and medical improvement that is 
related to your ability to work. How we will arrive at the decision that 
medical improvement has occurred and its relationship to the ability to 
do work, is discussed below.
    (i) Medical improvement. Medical improvement is any decrease in the 
medical severity of impairment(s) present at the time of the most recent 
favorable medical decision that you were disabled or continued to be 
disabled and is determined by a comparison of prior and current medical 
evidence which must show that there have been changes (improvement) in 
the symptoms, signs or laboratory findings associated with that 
impairment(s).
    (ii) Determining if medical improvement is related to ability to 
work. If there is a decrease in medical severity as shown by the 
symptoms, signs and laboratory findings, we then must determine if it is 
related to your ability to do work. In

[[Page 880]]

paragraph (b)(1)(iv) of this section, we explain the relationship 
between medical severity and limitation on functional capacity to do 
basic work activities (or residual functional capacity) and how changes 
in medical severity can affect your residual functional capacity. In 
determining whether medical improvement that has occurred is related to 
your ability to do work, we will assess your residual functional 
capacity (in accordance with paragraph (b)(1)(iv) of this section) based 
on the current severity of the impairment(s) which was present at your 
last favorable medical decision.
    (iii) Your new residual functional capacity will then be compared to 
your residual functional capacity at the time of our most recent 
favorable medical decision. Unless an increase in the current residual 
functional capacity is based on actual changes in the signs, symptoms, 
or laboratory findings any medical improvement that has occurred will 
not be considered to be related to your ability to do work.
    (iv) Following are some additional factors and considerations which 
we will apply in making these determinations.
    (A) Previous impairment met or equaled listings. If our most recent 
favorable decision was based on the fact that your impairment(s) at the 
time met or equaled the severity contemplated by the Listing of 
Impairments in appendix 1 of subpart P of part 404 of this chapter, an 
assessment of your residual functional capacity would not have been 
made. If medical improvement has occurred and the severity of the prior 
impairment(s) no longer meets or equals the same listing section used to 
make our most recent favorable decision, we will find that the medical 
improvement was related to your ability to work. Appendix 1 of subpart P 
of part 404 of this chapter describes impairments which, if severe 
enough, affect a person's ability to work. If the appendix level 
severity is met or equaled the individual is deemed, in the absence of 
evidence to the contrary, to be unable to engage in gainful activity. If 
there has been medical improvement to the degree that the requirement of 
the listing section is no longer met or equaled, then the medical 
improvement is related to your ability to work. We must, of course, also 
establish that you can currently engage in substantial gainful activity 
before finding that your disability has ended.
    (B) Prior residual functional capacity assessment made. The residual 
functional capacity assessment used in making the most recent favorable 
medical decision will be compared to the residual functional capacity 
assessment based on current evidence in order to determine if your 
functional capacity for basic work activities has increased. There will 
be no attempt made to reassess the prior residual functional capacity.
    (C) Prior residual functional capacity assessment should have been 
made, but was not. If the most recent favorable medical decision should 
have contained an assessment of your residual functional capacity (i.e., 
your impairments did not meet or equal the level of severity 
contemplated by the Listing of Impairments in appendix 1 of subpart P of 
part 404 of this chapter) but does not, either because this assessment 
is missing from your file or because it was not done, we will 
reconstruct the residual functional capacity. This reconstructed 
residual functional capacity will accurately and objectively assess your 
functional capacity to do basic work activities. We will assign the 
maximum functional capacity consistent with a decision of allowance.

    Example: You were previously found to be disabled on the basis that 
``while your impairment did not meet or equal a listing, it did prevent 
you from doing your past or any other work.'' The prior adjudicator did 
not, however, include a residual functional capacity assessment in the 
rationale of this decision and a review of the prior evidence does not 
show that such an assessment was ever made. If a decrease in medical 
severity, i.e., medical improvement, has occurred, the residual 
functional capacity based on the current level of severity of your 
impairment will have to be compared with your residual functional 
capacity based on its prior severity in order to determine if the 
medical improvement is related to your ability to do work. In order to 
make this comparison, we will review the prior evidence and make an 
objective assessment of your residual functional capacity at the time of 
our most recent favorable medical determination, based

[[Page 881]]

on the symptoms, signs and laboratory findings as they then existed.

    (D) Impairment subject to temporary remission. In some cases the 
evidence shows that an individual's impairments are subject to temporary 
remission. In assessing whether medical improvement has occurred in 
persons with this type of impairment, we will be careful to consider the 
longitudinal history of the impairment, including the occurrence of 
prior remission, and prospects for future worsenings. Improvement in 
such impairments that is only temporary will not warrant a finding of 
medical improvement.
    (E) Prior file cannot be located. If the prior file cannot be 
located, we will first determine whether you are able to now engage in 
substantial gainful activity based on all your current impairments. (In 
this way, we will be able to determine that your disability continues at 
the earliest point without addressing the often lengthy process of 
reconstructing prior evidence.) If you cannot engage in substantial 
gainful activity currently, your benefits will continue unless one of 
the second group of exceptions applies (see paragraph (b)(4) of this 
section). If you are able to engage in substantial gainful activity, we 
will determine whether an attempt should be made to reconstruct those 
portions of the missing file that were relevant to our most recent 
favorable medical decision (e.g., work history, medical evidence from 
treating sources and the results of consultative examinations). This 
determination will consider the potential availability of old records in 
light of their age, whether the source of the evidence is still in 
operation , and whether reconstruction efforts will yield a complete 
record of the basis for the most recent favorable medical decision. If 
relevant parts of the prior record are not reconstructed either because 
it is determined not to attempt reconstruction or because such efforts 
fail, medical improvement cannot be found. The documentation of your 
current impairments will provide a basis for any future reviews. If the 
missing file is later found, it may serve as a basis for reopening any 
decision under this section in accordance with Sec. 416.988.
    (3) First group of exceptions to medical improvement. The law 
provides for certain limited situations when your disability can be 
found to have ended even though medical improvement has not occurred, if 
you can engage in substantial gainful activity. These exceptions to 
medical improvement are intended to provide a way of finding that a 
person is no longer disabled in those limited situations where, even 
though there has been no decrease in severity of the impairment(s), 
evidence shows that the person should no longer be considered disabled 
or never should have been considered disabled. If one of these 
exceptions applies, we must also show that, taking all your current 
impairment(s) into account, not just those that existed at the time of 
our most recent favorable medical decision, you are now able to engage 
in substantial gainful activity before your disability can be found to 
have ended. As part of the review process, you will be asked about any 
medical or vocational therapy you received or are receiving. Your 
answers and the evidence gathered as a result as well as all other 
evidence, will serve as the basis for the finding that an exception 
applies.
    (i) Substantial evidence shows that you are the beneficiary of 
advances in medical or vocational therapy or technology (related to your 
ability to work). Advances in medical or vocational therapy or 
technology are improvements in treatment or rehabilitative methods which 
have increased your ability to do basic work activities. We will apply 
this exception when substantial evidence shows that you have been the 
beneficiary of services which reflect these advances and they have 
favorably affected the severity of your impairment or your ability to do 
basic work activities. This decision will be based on new medical 
evidence and a new residual functional capacity assessment. (See Sec. 
416.945.) This exception does not apply if you are eligible to receive 
special Supplemental Security Income cash benefits as explained in Sec. 
416.261. In many instances, an advanced medical therapy or technology 
will result in a decrease in severity as shown by symptoms, signs and 
laboratory findings

[[Page 882]]

which will meet the definition of medical improvement. This exception 
will, therefore, see very limited application.
    (ii) Substantial evidence shows that you have undergone vocational 
therapy (related to your ability to work). Vocational therapy (related 
to your ability to work) may include, but is not limited to, additional 
education, training, or work experience that improves your ability to 
meet the vocational requirements of more jobs. This decision will be 
based on substantial evidence which includes new medical evidence and a 
new residual functional capacity assessment. (See Sec. 416.945.) This 
exception does not apply if you are eligible to receive special 
Supplemental Security Income cash benefits as explained in Sec. 
416.261. If, at the time of our review, you have not completed 
vocational therapy which could affect the continuance of your 
disability, we will review your claim upon completion of the therapy.

    Example 1: You were found to be disabled because the limitations 
imposed on you by your impairment allowed you to only do work that was 
at a sedentary level of exertion. Your prior work experience was work 
that required a medium level of exertion. Your age and education at the 
time would not have qualified you for work that was below this medium 
level of exertion. You enrolled in and completed a specialized training 
course which qualifies you for a job in data processing as a computer 
programmer in the period since you were awarded benefits. On review of 
your claim, current evidence shows that there is no medical improvement 
and that you can still do only sedentary work. As the work of a computer 
programmer is sedentary in nature, you are now able to engage in 
substantial gainful activity when your new skills are considered.
    Example 2: You were previously entitled to benefits because the 
medical evidence and assessment of your residual functional capacity 
showed you could only do light work. Your prior work was considered to 
be heavy in nature and your age, education and the nature of your prior 
work qualified you for work which was no less than medium in exertion. 
The current evidence and residual functional capacity show there has 
been no medical improvement and that you can still do only light work. 
Since you were originally entitled to benefits, your vocational 
rehabilitation agency enrolled you in and you successfully completed a 
trade school course so that you are now qualified to do small appliance 
repair. This work is light in nature, so when your new skills are 
considered, you are now able to engage in substantial gainful activity 
even though there has been no change in your residual functional 
capacity.

    (iii) Substantial evidence shows that based on new or improved 
diagnostic or evaluative techniques your impairment(s) is not as 
disabling as it was considered to be at the time of the most recent 
favorable decision. Changing methodologies and advances in medical and 
other diagnostic or evaluative techniques have given, and will continue 
to give, rise to improved methods for measuring and documenting the 
effect of various impairments on the ability to do work. Where, by such 
new or improved methods, substantial evidence shows that your 
impairment(s) is not as severe as was determined at the time of our most 
recent favorable medical decision, such evidence may serve as a basis 
for finding that you are no longer disabled, if you can currently engage 
in substantial gainful activity. In order to be used under this 
exception, however, the new or improved techniques must have become 
generally available after the date of our most recent favorable medical 
decision.
    (A) How we will determine which methods are new or improved 
techniques and when they become generally available. New or improved 
diagnostic techniques or evaluations will come to our attention by 
several methods. In reviewing cases, we often become aware of new 
techniques when their results are presented as evidence. Such techniques 
and evaluations are also discussed and acknowledged in medical 
literature by medical professional groups and other governmental 
entities. Through these sources, we develop listings of new techniques 
and when they become generally available. For example, we will consult 
the Health Care Financing Administration for its experience regarding 
when a technique is recognized for payment under Medicare and when they 
began paying for the technique.
    (B) How you will know which methods are new or improved techniques 
and when they become generally available. We will let you know which 
methods we consider to be new or improved techniques and when they 
become available through two vehicles.

[[Page 883]]

    (1) Some of the future changes in the Listing of Impairments in 
appendix 1 of subpart P of part 404 of this chapter will be based on new 
or improved diagnostic or evaluation techniques. Such listings changes 
will clearly state this fact as they are published as Notices of 
Proposed Rulemaking and the new or improved techniques will be 
considered generally available as of the date of the final publication 
of that particular listing in the Federal Register.
    (2) A cumulative list since 1970 of new or approved diagnostic 
techniques or evaluations, how they changed the evaluation of the 
applicable impairment and the month and year they became generally 
available, will be published in the Notices section of the Federal 
Register. Included will be any changes in the Listing of Impairments 
published in the Code of Federal Regulations since 1970 which are 
reflective of new or improved techniques. No cases will be processed 
under this exception until this cumulative listing is so published. 
Subsequent changes to the list will be published periodically. The 
period will be determined by the volume of changes needed.

    Example: The electrocardiographic exercise test has replaced the 
Master's 2-step test as a measurement of heart function since the time 
of your last favorable medical decision. Current evidence could show 
that your condition, which was previously evaluated based on the 
Master's 2-step test, is not now as disabling as was previously thought. 
If, taking all your current impairments into account, you are now able 
to engage in substantial gainful activity, this exception would be used 
to find that you are no longer disabled even if medical improvement has 
not occurred.

    (iv) Substantial evidence demonstrates that any prior disability 
decision was in error. We will apply the exception to medical 
improvement based on error if substantial evidence (which may be 
evidence on the record at the time any prior determination of the 
entitlement to benefits based on disability was made, or newly obtained 
evidence which relates to that determination) demonstrates that a prior 
determination was in error. A prior determination will be found in error 
only if:
    (A) Substantial evidence shows on its face that the decision in 
question should not have been made (e.g., the evidence in your file such 
as pulmonary function study values was misread or an adjudicative 
standard such as a listing in appendix 1 of subpart P of part 404 of 
this chapter or a medical/vocational rule in appendix 2 of subpart P of 
part 404 of this chapter was misapplied).

    Example 1: You were granted benefits when it was determined that 
your epilepsy met Listing 11.02. This listing calls for a finding of 
major motor seizures more frequently than once a month as documented by 
electroencephalogram evidence and by a detailed description of a typical 
seizure pattern. A history of either diurnal episodes or nocturnal 
episodes with residuals interfering with daily activities is also 
required. On review, it is found that a history of the frequency of your 
seizures showed that they occurred only once or twice a year. The prior 
decision would be found to be in error, and whether you were still 
considered to be disabled would be based on whether you could currently 
engage in substantial gainful activity.
    Example 2: Your prior award of benefits was based on vocational rule 
201.12 in appendix 2 of subpart P of part 404 of this chapter. This rule 
applies to a person age 50-54 who has at least a high school education, 
whose previous work was entirely at a semiskilled level, and who can do 
only sedentary work. On review, it is found that at the time of the 
prior determination you were actually only age 46 and vocational rule 
201.21 should have been used. This rule would have called for a denial 
of your claim and the prior decision is found to have been in error. 
Continuation of your disability would depend on a finding of your 
current ability to engage in substantial gainful activity.

    (B) At the time of the prior evaluation, required and material 
evidence of the severity of your impairment(s) was missing. That 
evidence becomes available upon review, and substantial evidence 
demonstrates that had such evidence been present at the time of the 
prior determination, disability would not have been found.

    Example: You were found disabled on the basis of chronic obstructive 
pulmonary disease. The severity of your impairment was documented 
primarily by pulmonary function testing results. The evidence showed 
that you could do only light work. Spirometric tracings of this testing, 
although required, were not obtained, however. On review, the original 
report is resubmitted by the consultative examining physician along with 
the corresponding spirometric tracings. A review of the tracings shows 
that the test

[[Page 884]]

was invalid. Current pulmonary function testing supported by spirometric 
tracings reveals that your impairment does not limit your ability to 
perform basic work activities in any way. Error is found based on the 
fact that required, material evidence which was originally missing now 
becomes available and shows that if it had been available at the time of 
the prior determination, disability would not have been found.

    (C) Substantial evidence which is new evidence which relates to the 
prior determination (of allowance or continuance) refutes the 
conclusions that were based upon the prior evidence (e.g., a tumor 
thought to be malignant was later shown to have actually been benign). 
Substantial evidence must show that had the new evidence, (which relates 
to the prior determination) been considered at the time of the prior 
decision, the claim would not have been allowed or continued. A 
substitution of current judgment for that used in the prior favorable 
decision will not be the basis for applying this exception.

    Example: You were previously found entitled to benefits on the basis 
of diabetes mellitus which the prior adjudicator believed was equivalent 
to the level of severity contemplated in the Listing of Impairments. The 
prior record shows that you had ``brittle'' diabetes for which you were 
taking insulin. Your urine was 3+ for sugar, and you alleged occasional 
hypoglycemic attacks caused by exertion. On review, symptoms, signs and 
laboratory findings are unchanged. The current adjudicator feels, 
however, that your impairment clearly does not equal the severity 
contemplated by the listings. Error cannot be found because it would 
represent a substitution of current judgment for that of the prior 
adjudicator that your impairment equaled a listing.

    (D) The exception for error will not be applied retroactively under 
the conditions set out above unless the conditions for reopening the 
prior decision (see Sec. Sec. 416.1488 through 416.1489) are met.
    (4) Second group of exceptions to medical improvement. In addition 
to the first group of exceptions to medical improvement, the following 
exceptions may result in a determination that you are no longer 
disabled. In these situations the decision will be made without a 
determination that you have medically improved or can engage in 
substantial gainful activity.
    (i) A prior determination or decision was fraudulently obtained. If 
we find that any prior favorable determination or decision was obtained 
by fraud, we may find that you are not disabled. In addition, we may 
reopen your claim under the rules in Sec. 416.1488. In determining 
whether a prior favorable determination or decision was fraudulently 
obtained, we will take into account any physical, mental, educational, 
or linguistic limitations (including any lack of facility with the 
English language) which you may have had at the time.
    (ii) You do not cooperate with us. If there is a question about 
whether you continue to be disabled and we ask you to give us medical or 
other evidence or to go for a physical or mental examination by a 
certain date, we will find that your disability has ended if you fail, 
without good cause, to do what we ask. Section 416.1411 explains the 
factors we consider and how we will determine generally whether you have 
good cause for failure to cooperate. In addition, Sec. 416.918 
discusses how we determine whether you have good cause for failing to 
attend a consultative examination. The month in which your disability 
ends will be the first month in which you failed to do what we asked.
    (iii) We are unable to find you. If there is a question about 
whether you continue to be disabled and we are unable to find you to 
resolve the question, we will suspend your payments. The month your 
payments are suspended will be the first month in which the question 
arose and we could not find you.
    (iv) You fail to follow prescribed treatment which would be expected 
to restore your ability to engage in substantial gainful activity. If 
treatment has been prescribed for you which would be expected to restore 
your ability to work, you must follow that treatment in order to be paid 
benefits. If you are not following that treatment and you do not have 
good cause for failing to follow that treatment, we will find that your 
disability has ended (see Sec. 416.930(c)). The month your disability 
ends will be the first month in which you failed to follow the 
prescribed treatment.

[[Page 885]]

    (5) Evaluation steps. To assure that disability reviews are carried 
out in a uniform manner, that a decision of continuing disability can be 
made in the most expeditious and administratively efficient way, and 
that any decisions to stop disability benefits are made objectively, 
neutrally, and are fully documented, we will follow specific steps in 
reviewing the question of whether your disability continues. Our review 
may cease and benefits may be continued at any point if we determine 
there is sufficient evidence to find that you are still unable to engage 
in substantial gainful activity. The steps are:
    (i) Step 1. Do you have an impairment or combination of impairments 
which meets or equals the severity of an impairment listed in appendix 1 
of subpart P of part 404 of this chapter? If you do, your disability 
will be found to continue.
    (ii) Step 2. If you do not, has there been medical improvement as 
defined in paragraph (b)(1)(i) of this section? If there has been 
medical improvement as shown by a decrease in medical severity, see step 
3 in paragraph (b)(5)(iii) of this section. If there has been no 
decrease in medical severity, there has been no medical improvement. 
(See step 4 in paragraph (b)(5)(iv) of this section.)
    (iii) Step 3. If there has been medical improvement, we must 
determine whether it is related to your ability to do work in accordance 
with paragraphs (b)(1)(i) through (b)(1)(iv) of this section; i.e., 
whether or not there has been an increase in the residual functional 
capacity based on the impairment(s) that was present at the time of the 
most recent favorable medical determination. If medical improvement is 
not related to your ability to do work, see step 4 in paragraph 
(b)(5)(iv) of this section. If medical improvement is related to your 
ability to do work, see step 5 in paragraph (b)(5)(v) of this section.
    (iv) Step 4. If we found at step 2 in paragraph (b)(5)(ii) of this 
section that there has been no medical improvement or if we found at 
step 3 in paragraph (b)(5)(iii) of this section that the medical 
improvement is not related to your ability to work, we consider whether 
any of the exceptions in paragraphs (b)(3) and (b)(4) of this section 
apply. If none of them apply, your disability will be found to continue. 
If one of the first group of exceptions to medical improvement applies, 
see step 5 in paragraph (b)(5)(v) of this section. If an exception from 
the second group of exceptions to medical improvement applies, your 
disability will be found to have ended. The second group of exceptions 
to medical improvement may be considered at any point in this process.
    (v) Step 5. If medical improvement is shown to be related to your 
ability to do work or if one of the first group of exceptions to medical 
improvement applies, we will determine whether all your current 
impairments in combination are severe (see Sec. 416.921). This 
determination will consider all your current impairments and the impact 
of the combination of these impairments on your ability to function. If 
the residual functional capacity assessment in step 3 in paragraph 
(b)(5)(iii) of this section shows significant limitation of your ability 
to do basic work activities, see step 6 in paragraph (b)(5)(vi) of this 
section. When the evidence shows that all your current impairments in 
combination do not significantly limit your physical or mental abilities 
to do basic work activities, these impairments will not be considered 
severe in nature. If so, you will no longer be considered to be 
disabled.
    (vi) Step 6. If your impairment(s) is severe, we will assess your 
current ability to do substantial gainful activity in accordance with 
Sec. 416.960. That is, we will assess your residual functional capacity 
based on all your current impairments and consider whether you can still 
do work you have done in the past. If you can do such work, disability 
will be found to have ended.
    (vii) Step 7. If you are not able to do work you have done in the 
past, we will consider one final step. Given the residual functional 
capacity assessment and considering your age, education, and past work 
experience, can you do other work? If you can, disability will be found 
to have ended. If you cannot, disability will be found to continue.
    (6) The month in which we will find you are no longer disabled. If 
the evidence shows that you are no longer disabled,

[[Page 886]]

we will find that your disability ended in the earliest of the following 
months.
    (i) The month the evidence shows that you are no longer disabled 
under the rules set out in this section, and you were disabled only for 
a specified period of time in the past;
    (ii) The month the evidence shows that you are no longer disabled 
under the rules set out in this section, but not earlier than the month 
in which we mail you a notice saying that the information we have shows 
that you are not disabled;
    (iii) The month in which you return to full-time work, with no 
significant medical restrictions and acknowledge that medical 
improvement has occurred, and we expected your impairment(s) to improve 
(see Sec. 416.991);
    (iv) The first month in which you fail without good cause to follow 
prescribed treatment, when the rule set out in paragraph (b)(4)(iv) of 
this section applies;
    (v) The first month you were told by your physician that you could 
return to work, provided there is no substantial conflict between your 
physician's and your statements regarding your awareness of your 
capacity for work and the earlier date is supported by substantial 
evidence; or
    (vi) The first month in which you failed without good cause to do 
what we asked, when the rule set out in paragraph (b)(4)(ii) of this 
section applies.
    (7) Before we stop your benefits. If we find you are no longer 
disabled, before we stop your benefits, we will give you a chance to 
explain why we should not do so. Subparts M and N of this part describe 
your rights and the procedures we will follow.
    (c) Persons who were found disabled under a State plan. If you 
became entitled to benefits because you were found to be disabled under 
a State plan, we will first evaluate your impairment(s) under the rules 
explained in paragraph (b) of this section. We will apply the same steps 
as described in paragraph (b) of this section to the last decision 
granting or affirming entitlement to benefits under the State plan. If 
we are not able to find that your disability continues on the basis of 
these rules, we will then evaluate your impairment(s) under the 
appropriate State plan. If we are not able to find that your disability 
continues under these State plan criteria, we will find that your 
disability ends. Disability will be found to end the month the evidence 
shows that you are no longer disabled under the criteria in paragraph 
(b) of this section (or appropriate State plan criteria), subject to the 
rules set out in paragraph (b)(6) of this section.

[50 FR 50137, Dec. 6, 1985; 51 FR 7063, Feb. 28, 1986; 51 FR 16015, Apr. 
30, 1986, as amended at 52 FR 44971, Nov. 24, 1987; 56 FR 5562, Feb. 11, 
1991; 59 FR 1636, Jan. 12, 1994; 65 FR 42791, July 11, 2000; 68 FR 
51167, Aug. 26, 2003; 68 FR 53219, Sept. 9, 2003]



Sec. 416.994a  How we will determine whether your disability continues 

or ends, and whether you are and have been receiving treatment that is 
medically necessary and available, disabled children.

    (a) Evaluation of continuing disability, in general. There is a 
statutory requirement that, if you are eligible for disability benefits 
as a disabled child, your continued eligibility for such benefits must 
be reviewed periodically. There are a number of factors we consider when 
we decide whether your disability continues.
    (1) We will first consider whether there has been medical 
improvement in your impairment(s). We define ``medical improvement'' in 
paragraph (c) of this section. If there has been no medical improvement, 
we will find you are still disabled unless one of the exceptions in 
paragraphs (e) or (f) of this section applies. If there has been medical 
improvement, we will consider whether the impairments(s) you had at the 
time of our most recent favorable determination or decision now meets or 
medically or functionally equals the severity of the listing it met or 
equalled at that time. If so, we will find you are still disabled, 
unless one of the exceptions in paragraphs (e) or (f) of this section 
applies. If not, we will consider whether your current impairment(s) are 
disabling under the rules in Sec. 416.924. These steps are described in 
more detail in paragraph (b) of this section. Even where medical 
improvement or an exception applies, in most cases, we will find that 
your disability has

[[Page 887]]

ended only if we also find that you are not currently disabled.
    (2) Our determinations and decisions under this section will be made 
on a neutral basis, without any initial inference as to the presence or 
absence of disability being drawn from the fact that you have been 
previously found disabled. We will consider all evidence you submit, as 
well as all evidence we obtain from your treating physician(s) and other 
medical and nonmedical sources. What constitutes ``evidence'' and our 
procedures for obtaining it are set out in Sec. Sec. 416.912 through 
416.918. Our determination regarding whether your disability continues 
will be made on the basis of the weight of the evidence.
    (b) Sequence of evaluation. To ensure that disability reviews are 
carried out in a uniform manner, that decisions of continuing disability 
can be made in the most expeditious and administratively efficient way, 
and that any decisions to stop disability benefits are made objectively, 
neutrally, and are fully documented, we follow specific steps in 
determining whether your disability continues. However, we may skip 
steps in the sequence if it is clear this would lead to a more prompt 
finding that your disability continues. For example, we might not 
consider the issue of medical improvement if it is obvious on the face 
of the evidence that a current impairment meets the severity of a listed 
impairment. If we can make a favorable determination or decision at any 
point in the sequence, we do not review further. The steps are:
    (1) Has there been medical improvement in your condition(s)? We will 
determine whether there has been medical improvement in the 
impairment(s) you had at the time of our most recent favorable 
determination or decision. (The term medical improvement is defined in 
paragraph (c) of this section.) If there has been no medical 
improvement, we will find that your disability continues, unless one of 
the exceptions to medical improvement described in paragraph (e) or (f) 
of this section applies.
    (i) If one of the first group of exceptions to medical improvement 
applies, we will proceed to step 3.
    (ii) If one of the second group of exceptions to medical improvement 
applies, we may find that your disability has ended.
    (2) Does your impairment(s) still meet or equal the severity of the 
listed impairment that it met or equaled before? If there has been 
medical improvement, we will consider whether the impairment(s) that we 
considered at the time of our most recent favorable determination or 
decision still meets or equals the severity of the listed impairment it 
met or equaled at that time. In making this decision, we will consider 
the current severity of the impairment(s) present and documented at the 
time of our most recent favorable determination or decision, and the 
same listing section used to make that determination or decision as it 
was written at that time, even if it has since been revised or removed 
from the Listing of Impairments. If that impairment(s) does not still 
meet or equal the severity of that listed impairment, we will proceed to 
the next step. If that impairment(s) still meets or equals the severity 
of that listed impairment as it was written at that time, we will find 
that you are still disabled, unless one of the exceptions to medical 
improvement described in paragraphs (e) or (f) of this section applies.
    (i) If one of the first group of exceptions to medical improvement 
applies, we will proceed to step 3.
    (ii) If one of the second group of exceptions to medical improvement 
applies, we may find that your disability has ended.
    (3) Are you currently disabled? If there has been medical 
improvement in the impairment(s) that we considered at the time of our 
most recent favorable determination or decision, and if that 
impairment(s) no longer meets or equals the severity of the listed 
impairment that it met or equaled at that time, we will consider whether 
you are disabled under the rules in Sec. Sec. 416.924(c) and (d). In 
determining whether you are currently disabled, we will consider all 
impairments you now have, including any you did not have at the time of 
our most recent favorable determination or decision, or that we did not

[[Page 888]]

consider at that time. The steps in determining current disability are 
summarized as follows:
    (i) Do you have a severe impairment or combination of impairment? If 
there has been medical improvement in your impairment(s), or if one of 
the first group of exceptions applies, we will determine whether your 
current impairment(s) is severe, as defined in Sec. 416.924(c). If your 
impairment(s) is not severe, we will find that your disability has 
ended. If your impairment(s) is severe, we will then consider whether it 
meets or medically equals the severity of a listed impairment.
    (ii) Does your impairment(s) meet or medically equal the severity of 
any impairment listed in appendix 1 of subpart P of part 404 of this 
chapter? If your current impairment(s) meets or medically equals the 
severity of any listed impairment, as described in Sec. Sec. 416.925 
and 416.926, we will find that your disability continues. If not, we 
will consider whether it functionally equals the listings.
    (iii) Does your impairment(s) functionally equal the listings? If 
your current impairment(s) functionally equals the listings, as 
described in Sec. 416.926a, we will find that your disability 
continues. If not, we will find that your disability has ended.
    (c) What we mean by medical improvement. Medical improvement is any 
decrease in the medical severity of your impairment(s) which was present 
at the time of the most recent favorable decision that you were disabled 
or continued to be disabled. Although the decrease in severity may be of 
any quantity or degree, we will disregard minor changes in your signs, 
symptoms, and laboratory findings that obviously do not represent 
medical improvement and could not result in a finding that your 
disability has ended. A determination that there has been a decrease in 
medical severity must be based on changes (improvement) in the symptoms, 
signs, or laboratory findings associated with your impairment(s).
    (1) The most recent favorable decision is the latest final 
determination or decision involving a consideration of the medical 
evidence and whether you were disabled or continued to be disabled.
    (2) The terms symptoms, signs, and laboratory findings are defined 
in Sec. 416.928. For children, our definitions of the terms symptoms, 
signs, and laboratory findings may include any abnormalities of physical 
and mental functioning that we used in making our most recent favorable 
decision.
    (3) Some impairments are subject to temporary remissions, which can 
give the appearance of medical improvement when in fact there has been 
none. If you have the kind of impairment that is subject to temporary 
remissions, we will be careful to consider the longitudinal history of 
the impairment, including the occurrence of prior remissions and 
prospects for future worsenings, when we decide whether there has been 
medical improvement. Improvements that are only temporary will not 
warrant a finding of medical improvement.
    (d) Prior file cannot be located. If we cannot locate your prior 
file, we will first determine whether you are currently disabled under 
the sequence set forth in Sec. 416.924. (In this way, we will determine 
that your benefits continue at the earliest time without reconstructing 
prior evidence.) If so, your benefits will continue unless one of the 
second group of exceptions applies (see paragraph (f) of this section). 
If not, we will determine whether an attempt should be made to 
reconstruct those portions of the missing file that were relevant to our 
most recent favorable determination or decision (e.g., school records, 
medical evidence from treating sources, and the results of consultative 
examinations). This determination will consider the potential 
availability of old records in light of their age, whether the source of 
the evidence is still in operation, and whether reconstruction efforts 
will yield a complete record of the basis for the most recent favorable 
decision. If relevant parts of the prior record are not reconstructed, 
either because we decide not to attempt reconstruction or because our 
efforts failed, we will not find that you have medically improved. The 
documentation of your current impairment(s) will provide a basis for any 
future reviews. If the missing file is later found, it may serve as a 
basis for reopening any determination or decision

[[Page 889]]

under this section, in accordance with Sec. 416.1488.
    (e) First group of exceptions to medical improvement. The law 
provides certain limited situations when your disability can be found to 
have ended even though medical improvement has not occurred, if your 
impairment(s) no longer results in marked and severe functional 
limitations. These exceptions to medical improvement are intended to 
provide a way of finding that a person is no longer disabled in those 
situations where, even though there has been no decrease in severity of 
the impairment(s), evidence shows that the person should no longer be 
considered disabled or never should have been considered disabled. If 
one of these exceptions applies, we must also show that your 
impairment(s) does not now result in marked and severe functional 
limitations, before we can find you are no longer disabled, taking all 
your current impairments into account, not just those that existed at 
the time of our most recent favorable determination or decision. The 
evidence we gather will serve as the basis for the finding that an 
exception applies.
    (1) Substantial evidence shows that, based on new or improved 
diagnostic techniques or evaluations, your impairment(s) is not as 
disabling as it was considered to be at the time of the most recent 
favorable decision. Changing methodologies and advances in medical and 
other diagnostic techniques or evaluations have given rise to, and will 
continue to give rise to, improved methods for determining the causes of 
(i.e., diagnosing) and measuring and documenting the effects of various 
impairments on children and their functioning. Where, by such new or 
improved methods, substantial evidence shows that your impairment(s) is 
not as severe as was determined at the time of our most recent favorable 
decision, such evidence may serve as a basis for a finding that you are 
no longer disabled, provided that you do not currently have an 
impairment(s) that meets, medically equals, or functionally equals the 
listings, and therefore results in marked and severe functional 
limitations. In order to be used under this exception, however, the new 
or improved techniques must have become generally available after the 
date of our most recent favorable decision.
    (i) How we will determine which methods are new or improved 
techniques and when they become generally available. New or improved 
diagnostic techniques or evaluations will come to our attention by 
several methods. In reviewing cases, we often become aware of new 
techniques when their results are presented as evidence. Such techniques 
and evaluations are also discussed and acknowledged in medical 
literature by medical professional groups and other governmental 
entities. Through these sources, we develop listings of new techniques 
and when they become generally available. For example, we will consult 
the Health Care Financing Administration for its experience regarding 
when a technique is recognized for payment under Medicare and when they 
began paying for the technique.
    (ii) How you will know which methods are new or improved techniques 
and when they become generally available. We will let you know which 
methods we consider to be new or improved techniques and when they 
become available through two vehicles.
    (A) Some of the future changes in the Listing of Impairments in 
appendix 1 of subpart P of part 404 of this chapter will be based on new 
or improved diagnostic or evaluative techniques. Such listings changes 
will clearly state this fact as they are published as Notices of 
Proposed Rulemaking and the new or improved technique will be considered 
generally available as of the date of the final publication of that 
particular listing in the Federal Register.
    (B) From time to time, we will publish in the Federal Register 
cumulative lists of new or approved diagnostic techniques or evaluations 
that have been in use since 1970, how they changed the evaluation of the 
applicable impairment and the month and year they became generally 
available. We will include any changes in the Listing of Impairments 
published in the Code of Federal Regulations since 1970 that are 
reflective of new or improved techniques. We will not process any cases 
under this exception using a new or improved diagnostic technique that 
we have not included in a published notice until we have published

[[Page 890]]

an updated cumulative list. The period between publications will be 
determined by the volume of changes needed.
    (2) Substantial evidence demonstrates that any prior disability 
decision was in error. We will apply the exception to medical 
improvement based on error if substantial evidence (which may be 
evidence on the record at the time any prior determination or decision 
of the entitlement to benefits based on disability was made, or newly 
obtained evidence which relates to that determination or decision) 
demonstrates that a prior determination or decision (of allowance or 
continuance) was in error. A prior determination or decision will be 
found in error only if:
    (i) Substantial evidence shows on its face that the determination or 
decision in question should not have been made (e.g., the evidence in 
your file, such as pulmonary function study values, was misread, or an 
adjudicative standard, such as a listing in appendix 1 of subpart P of 
part 404 of this chapter, was misapplied).
    (ii) At the time of the prior evaluation, required and material 
evidence of the severity of your impairment(s) was missing. That 
evidence becomes available upon review, and substantial evidence 
demonstrates that, had such evidence been present at the time of the 
prior determination or decision, disability would not have been found.
    (iii) New substantial evidence that relates to the prior 
determination or decision refutes the conclusions that were based upon 
the prior evidence at the time of that determination or decision (e.g., 
a tumor thought to be malignant was later shown to have actually been 
benign). Substantial evidence must show that, had the new evidence 
(which relates to the prior determination or decision) been considered 
at the time of the prior determination or decision, the claim would not 
have been allowed or continued. A substitution of current judgment for 
that used in the prior favorable determination or decision will not be 
the basis for applying this exception.
    (iv) The exception for error will not be applied retroactively under 
the conditions set out above unless the conditions for reopening the 
prior decision (see Sec. Sec. 416.1488 and 416.1489) are met.
    (f) Second group of exceptions to medical improvement. In addition 
to the first group of exceptions to medical improvement, the following 
exceptions may result in a determination or decision that you are no 
longer disabled. In these situations, the determination or decision will 
be made without a finding that you have demonstrated medical improvement 
or that you are currently not disabled under the rules in Sec. 416.924. 
There is no set point in the continuing disability review sequence 
described in paragraph (b) of this section at which we must consider 
these exceptions; exceptions in the second group may be considered at 
any point in the process.
    (1) A prior determination or decision was fraudulently obtained. If 
we find that any prior favorable determination or decision was obtained 
by fraud, we may find that you are not disabled. In addition, we may 
reopen your claim under the rules in Sec. 416.1488. In determining 
whether a prior favorable determination or decision was fraudulently 
obtained, we will take into account any physical, mental, educational, 
or linguistic limitations (including any lack of facility with the 
English language) which you may have had at the time.
    (2) You do not cooperate with us. If there is a question about 
whether you continue to be disabled and we ask you to give us medical or 
other evidence or to go for a physical or mental examination by a 
certain date, we will find that your disability has ended if you fail, 
without good cause, to do what we ask. Section 416.1411 explains the 
factors we consider and how we will determine generally whether you have 
good cause for failure to cooperate. In addition, Sec. 416.918 
discusses how we determine whether you have good cause for failing to 
attend a consultative examination. The month in which your disability 
ends will be the first month in which you failed to do what we asked.
    (3) We are unable to find you. If there is a question about whether 
you continue to be disabled and we are unable to find you to resolve the 
question, we will suspend your payments. The month your payments are 
suspended will be the first month in which the

[[Page 891]]

question arose and we could not find you.
    (4) You fail to follow prescribed treatment which would be expected 
to improve your impairment(s) so that it no longer results in marked and 
severe functional limitations. If treatment has been prescribed for you 
which would be expected to improve your impairment(s) so that it no 
longer results in marked and severe functional limitations, you must 
follow that treatment in order to be paid benefits. If you are not 
following that treatment and you do not have good cause for failing to 
follow that treatment, we will find that your disability has ended (see 
Sec. 416.930(c)). The month your disability ends will be the first 
month in which you failed to follow the prescribed treatment.
    (g) The month in which we will find you are no longer disabled. If 
the evidence shows that you are no longer disabled, we will find that 
your disability ended in the following month--
    (1) The month the evidence shows that you are no longer disabled 
under the rules set out in this section, and you were disabled only for 
a specified period of time in the past;
    (2) The month the evidence shows that you are no longer disabled 
under the rules set out in this section, but not earlier than the month 
in which we mail you a notice saying that the information we have shows 
that you are not disabled;
    (3) The month in which you return to, or begin, full-time work with 
no significant medical restrictions, and acknowledge that medical 
improvement has occurred, and we expected your impairment(s) to improve 
(see Sec. 416.991);
    (4) The first month in which you fail without good cause to follow 
prescribed treatment, when the rule set out in paragraph (f)(4) of this 
section applies;
    (5) The first month in which you were told by your physician that 
you could return to normal activities, provided there is no substantial 
conflict between your physician's and your statements regarding your 
awareness of your capacity, and the earlier date is supported by 
substantial evidence; or
    (6) The first month in which you failed without good cause to do 
what we asked, when the rule set out in paragraph (f)(2) of this section 
applies.
    (h) Before we stop your benefits. If we find you are no longer 
disabled, before we stop your benefits, we will give you a chance to 
explain why we should not do so. Subparts M and N of this part describe 
your rights and the procedures we will follow.
    (i) Requirement for treatment that is medically necessary and 
available. If you have a representative payee, the representative payee 
must, at the time of the continuing disability review, present evidence 
demonstrating that you are and have been receiving treatment, to the 
extent considered medically necessary and available, for the 
condition(s) that was the basis for providing you with SSI benefits, 
unless we determine that requiring your representative payee to provide 
such evidence would be inappropriate or unnecessary considering the 
nature of your impairment(s). If your representative payee refuses 
without good cause to comply with this requirement, and if we decide 
that it is in your best interests, we may pay your benefits to another 
representative payee or to you directly.
    (1) What we mean by treatment that is medically necessary. Treatment 
that is medically necessary means treatment that is expected to improve 
or restore your functioning and that was prescribed by a treating 
source, as defined in Sec. 416.902. If you do not have a treating 
source, we will decide whether there is treatment that is medically 
necessary that could have been prescribed by a treating source. The 
treatment may include (but is not limited to)--
    (i) Medical management;
    (ii) Psychological or psychosocial counseling;
    (iii) Physical therapy; and
    (iv) Home therapy, such as administering oxygen or giving 
injections.
    (2) How we will consider whether medically necessary treatment is 
available. When we decide whether medically necessary treatment is 
available, we will consider such things as (but not limited to)--
    (i) The location of an institution or facility or place where 
treatment, services, or resources could be provided to

[[Page 892]]

you in relationship to where you reside;
    (ii) The availability and cost of transportation for you and your 
payee to the place of treatment;
    (iii) Your general health, including your ability to travel for the 
treatment;
    (iv) The capacity of an institution or facility to accept you for 
appropriate treatment;
    (v) The cost of any necessary medications or treatments that are not 
paid for by Medicaid or another insurer or source; and
    (vi) The availability of local community resources (e.g., clinics, 
charitable organizations, public assistance agencies) that would provide 
free treatment or funds to cover treatment.
    (3) When we will not require evidence of treatment that is medically 
necessary and available. We will not require your representative payee 
to present evidence that you are and have been receiving treatment if we 
find that the condition(s) that was the basis for providing you benefits 
is not amenable to treatment.
    (4) Removal of a payee who does not provide evidence that a child is 
and has been receiving treatment that is medically necessary and 
available. If your representative payee refuses without good cause to 
provide evidence that you are and have been receiving treatment that is 
medically necessary and available, we may, if it is in your best 
interests, suspend payment of benefits to the representative payee, and 
pay benefits to another payee or to you. When we decide whether your 
representative payee had good cause, we will consider factors such as 
the acceptable reasons for failure to follow prescribed treatment in 
Sec. 416.930(c) and other factors similar to those describing good 
cause for missing deadlines in Sec. 416.1411.
    (5) If you do not have a representative payee. If you do not have a 
representative payee and we make your payments directly to you, the 
provisions of this paragraph do not apply to you. However, we may still 
decide that you are failing to follow prescribed treatment under the 
provisions of Sec. 416.930, if the requirements of that section are 
met.

[56 FR 5562, Feb. 11, 1991; 56 FR 13266, 13365, Apr. 1, 1991, as amended 
at 58 FR 47586, Sept. 9, 1993; 59 FR 1637, Jan. 12, 1994; 62 FR 6430, 
Feb. 11, 1997; 62 FR 13538, 13733, Mar. 21, 1997; 65 FR 16815, Mar. 30, 
2000; 65 FR 54790, Setp. 11, 2000]



Sec. 416.995  If we make a determination that your physical or mental 

impairment(s) has ceased, did not exist or is no longer disabling (Medical 
Cessation Determination).

    If we make a determination that the physical or mental impairment(s) 
on the basis of which disability or blindness benefits were payable has 
ceased, did not exist or is no longer disabling (a medical cessation 
determination), your benefits will stop. You will receive a written 
notice explaining this determination and the month your benefits will 
stop. The written notice will also explain your right to appeal if you 
disagree with our determination and your right to request that your 
disability or blindness benefits be continued under Sec. 416.996. The 
continued benefit provisions of this section do not apply to an initial 
determination on an application for disability or blindness benefits or 
to a determination that you were disabled or blind only for a specified 
period of time.

[53 FR 29023, Aug. 2, 1988]



Sec. 416.996  Continued disability or blindness benefits pending appeal 
of a medical cessation determination.

    (a) General. If we determine that you are not eligible for 
disability or blindness benefits because the physical or mental 
impairment(s) on the basis of which such benefits were payable is found 
to have ceased, not to have existed, or to no longer be disabling, and 
you appeal that determination, you may choose to have your disability or 
blindness benefits, including special cash benefits or special SSI 
eligibility status under Sec. Sec. 416.261 and 416.264, continued 
pending reconsideration and/or a hearing before an administrative law 
judge on the disability/blindness cessation determination. If you appeal 
a medical cessation under both title II and title XVI (a concurrent 
case), the

[[Page 893]]

title II claim will be handled in accordance with title II regulations 
while the title XVI claim will be handled in accordance with the title 
XVI regulations.
    (1) Benefits may be continued under this section only if the 
determination that your physical or mental impairment(s) has ceased, has 
never existed, or is no longer disabling is made after October 1984.
    (2) Continued benefits under this section will stop effective with 
the earlier of: (i) The month before the month in which an 
administrative law judge's hearing decision finds that your physical or 
mental impairment(s) has ceased, has never existed, or is no longer 
disabling or the month before the month of a new administrative law 
judge decision (or final action is taken by the Appeals Council on the 
administrative law judge's recommended decision) if your case was sent 
back to an administrative law judge for further action; or (ii) the 
month before the month in which no timely request for reconsideration or 
administrative law judge hearing is pending after notification of our 
initial or reconsideration cessation determination. These benefits may 
be stopped or adjusted because of certain events (such as, change in 
income or resources or your living arrangements) which may occur while 
you are receiving these continued benefits, in accordance with Sec. 
416.1336(b).
    (b) Statement of choice. If you or another party (see Sec. 
416.1432(a)) request reconsideration under Sec. 416.1409 or a hearing 
before an administrative law judge in accordance with Sec. 416.1433 on 
our determination that your physical or mental impairment(s) has ceased, 
has never existed, or is no longer disabling, or if your case is sent 
back (remanded) to an administrative law judge for further action, we 
will explain your right to receive continued benefits and ask you to 
complete a statement indicating that you wish to have benefits continued 
pending the outcome of the reconsideration or administrative law judge 
hearing. If you request reconsideration and/or hearing but you do not 
want to receive continued benefits, we will ask you to complete a 
statement declining continued benefits indicating that you do not want 
to have your benefits continued during the appeal. A separate election 
must be made at each level of appeal.
    (c) What you must do to receive continued benefits pending notice of 
our reconsideration determination. (1) If you want to receive continued 
benefits pending the outcome of your request for reconsideration, you 
must request reconsideration and continuation of benefits no later than 
10 days after the date you receive the notice of our initial 
determination that your physical or mental impairment(s) has ceased, has 
never existed, or is no longer disabling. Reconsideration must be 
requested as provided in Sec. 416.1409, and you must request continued 
benefits using a statement in accordance with paragraph (b) of this 
section.
    (2) If you fail to request reconsideration and continued benefits 
within the 10-day period required by paragraph (c)(1) of this section, 
but later ask that we continue your benefits pending a reconsidered 
determination, we will use the rules in Sec. 416.1411 to determine 
whether good cause exists for your failing to request benefit 
continuation within 10 days after receipt of the notice of the initial 
cessation determination. If you request continued benefits after the 10-
day period, we will consider the request to be timely and will pay 
continued benefits only if good cause for delay is established.
    (d) What you must do to receive continued benefits pending an 
administrative law judge's decision. (1) To receive continued benefits 
pending an administrative law judge's decision on our reconsideration 
determination, you must request a hearing and continuation of benefits 
no later than 10 days after the date you receive the notice of our 
reconsideration determination that your physical or mental impairment(s) 
has ceased, has never existed, or is no longer disabling. A hearing must 
be requested as provided in Sec. 416.1433, and you must request 
continued benefits using a statement in accordance with paragraph (b) of 
this section.
    (2) If you fail to request a hearing and continued benefits within 
the 10-day period required under paragraph (d)(1) of this section, but 
you later ask that we continue your benefits pending an administrative 
law judge's decision,

[[Page 894]]

we will use the rules as provided in Sec. 416.1411 to determine whether 
good cause exists for your failing to request benefit continuation 
within 10 days after receipt of the reconsideration determination. If 
you request continued benefits after the 10-day period, we will consider 
the delayed request to be timely and will pay continued benefits only if 
good cause for delay is established.
    (e) What you must do when your case is remanded to an administrative 
law judge. If we send back (remand) your case to an administrative law 
judge for further action under the rules provided in Sec. 416.1477, and 
the administrative law judge's decision or dismissal order issued on 
your medical cessation appeal is vacated and is no longer in effect, you 
may be eligible for continued benefits pending a new decision by the 
administrative law judge or final action by the Appeals Council on the 
administrative law judge's recommended decision.
    (1) When your case is remanded to an administrative law judge, and 
you have elected to receive continued benefits, we will contact you to 
update our file to verify that you continue to meet the nonmedical 
requirements to receive benefits based on disability or blindness. To 
determine your correct payment amount, we will ask you to provide 
information about events such as changes in living arrangements, income, 
or resources since our last contact with you. If you have returned to 
work, we will request additional information about this work activity. 
Unless your earnings cause your income to be too much to receive 
benefits, your continued benefits will be paid while your appeal of the 
medical cessation of your disability/blindness is still pending, unless 
you have completed a trial work period and are engaging in substantial 
gainful activity. If you have completed a trial work period and 
previously received continued benefits you may still be eligible for 
special cash benefits under Sec. 416.261 or special SSI eligibility 
status under Sec. 416.264. (Effective July 1, 1987, a title XVI 
individual is no longer subject to a trial work period or cessation 
based on engaging in substantial gainful activity in order to be 
eligible for special benefits under Sec. 416.261 or special status 
under Sec. 416.264.) If we determine that you no longer meet a 
requirement to receive benefits, we will send you a written notice. The 
written notice will explain why your continued benefits will not be 
reinstated or will be for an amount less than you received before the 
prior administrative law judge's decision. The notice will also explain 
your right to reconsideration under Sec. 416.1407, if you disagree. If 
you request a reconsideration, you will have the chance to explain why 
you believe your benefits should be reinstated or should be at a higher 
amount. If the final decision on your appeal of your medical cessation 
is a favorable one, we will send you a written notice in which we will 
advise you of any right to reentitlement to benefits including special 
benefits under Sec. 416.261 or special status under Sec. 416.264. If 
you disagree with our determination on your appeal, you will have the 
right to appeal this decision.
    (2) After we verify that you meet all the nonmedical requirements to 
receive benefits as stated in paragraph (e)(1) of this section, and if 
you previously elected to receive continued benefits pending the 
administrative law judge's decision, we will start continued benefits 
again. We will send you a notice telling you this. You do not have to 
complete a request to have these same benefits continued through the 
month before the month the new decision or order of dismissal is issued 
by the administrative law judge or through the month before the month 
the Appeals Council takes final action on the administrative law judge's 
recommended decision. These continued benefits will begin again with the 
first month of nonpayment based on the prior administrative law judge 
hearing decision or dismissal order. Our notice explaining continued 
benefits will also tell you to report to us any changes or events that 
affect your receipt of benefits.
    (3) When your case is remanded to an administrative law judge, and 
if you did not previously elect to have benefits continued pending an 
administrative law judge decision, we will send you a notice telling you 
that if you want to change that election, you must request to do so no 
later than 10 days

[[Page 895]]

after you receive our notice. If you do make this new election, and 
after we verify that you meet all the nonmedical requirements as 
explained in paragraph (e)(1) of this section, benefits will begin with 
the month of the Appeals Council remand order and will continue as 
stated in paragraph (e)(2) of this section.
    (4) If a court orders that your case be sent back to us (remanded) 
and your case is sent to an administrative law judge for further action 
under the rules provided in Sec. 416.1483, the administrative law 
judge's decision or dismissal order on your medical cessation appeal is 
vacated and is no longer in effect. You may be eligible for continued 
benefits pending a new decision by the administrative law judge or final 
action by the Appeals Council on the administrative law judge's 
recommended decision. In these court-remanded cases reaching the 
administrative law judge, we will follow the same rules provided in 
paragraph (e) (1), (2), and (3) of this section.
    (f) What if your benefits are suspended, reduced or terminated for 
other reasons. If we determine that your payments should be reduced, 
suspended or terminated for reasons not connected with your medical 
condition (see subpart M of Regulations No. 16) benefits may be 
continued under the procedure described in Sec. 416.1336.
    (g) Responsibility to pay back continued benefits. (1) If the final 
decision of the Secretary affirms the determination that you are not 
entitled to benefits, you will be asked to pay back any continued 
benefits you receive. However, you will have the right to ask that you 
not be required to pay back the benefits as described in the overpayment 
recovery and waiver provisions of subpart E of this part.
    (2) Waiver of recovery of an overpayment resulting from continued 
benefits to you may be considered as long as the cessation determination 
was appealed in good faith. We will assume that your appeal was made in 
good faith and, therefore, you have the right to waiver consideration 
unless you fail to cooperate in connection with the appeal, e.g., if you 
fail (without good reason) to give us medical or other evidence we 
request, or to go for a physical or mental examination when requested, 
in connection with the appeal. In determining whether you have good 
cause for failure to cooperate and, thus, whether an appeal was made in 
good faith, we will take into account any physical, mental, educational, 
or linguistic limitations (including any lack of facility with the 
English language) you may have which may have caused your failure to 
cooperate.

[53 FR 29023, Aug. 2, 1988; 53 FR 39015, Oct. 4, 1988, as amended at 59 
FR 1637, Jan. 12, 1994]



Sec. 416.998  If you become disabled by another impairment(s).

    If a new severe impairment(s) begins in or before the month in which 
your last impairment(s) ends, we will find that your disability is 
continuing. The new impairment(s) need not be expected to last 12 months 
or to result in death, but it must be severe enough to keep you from 
doing substantial gainful activity, or severe enough so that you are 
still disabled under Sec. 416.994, or, if you are a child, to result in 
marked and severe functional limitations.

[62 FR 6432, Feb. 11, 1997]



                 Subpart J_Determinations of Disability

    Authority: Secs. 702(a)(5), 1614, 1631, and 1633 of the Social 
Security Act (42 U.S.C. 902(a)(5), 1382c, 1383, and 1383b).

    Source: 46 FR 29211, May 29, 1981, unless otherwise noted.

                           General Provisions



Sec. 416.1001  Purpose and scope.

    This subpart describes the standards of performance and 
administrative requirements and procedures for States making 
determinations of disability for the Commissioner under title XVI of the 
Act. It also establishes the Commissioner's responsibilities in carrying 
out the disability determination function.
    (a) Sections 416.1001 through 416.1003 describe the purpose of the 
regulations and the meaning of terms frequently used in the regulations. 
They also briefly set forth the responsibilities of the Commissioner and 
the States covered in detail in other sections.

[[Page 896]]

    (b) Sections 416.1010 through 416.1018 describe the Commissioner's 
and the State's responsibilities in performing the disability 
determination function.
    (c) Sections 416.1020 through 416.1033 describe the administrative 
responsibilities and requirements of the States. The corresponding role 
of the Commissioner is also set out.
    (d) Sections 416.1040 through 416.1050 describe the performance 
accuracy and processing time standards for measuring State agency 
performance.
    (e) Sections 416.1060 through 416.1061 describe when and what kind 
of assistance the Commissioner will provide State agencies to help them 
improve performance.
    (f) Sections 416.1070 through 416.1075 describe the level of 
performance below which the Commissioner will consider a State agency to 
be substantially failing to make disability determinations consistent 
with the regulations and other written guidelines and the resulting 
action the Commissioner will take.
    (g) Sections 416.1080 through 416.1083 describe the rules for 
resolving disputes concerning fiscal issues and providing hearings when 
we propose to find that a State is in substantial failure.
    (h) Sections 416.1090 through 416.1094 describe when and what action 
the Commissioner will take and what action the State will be expected to 
take if the Commissioner assumes the disability determination function 
from a State agency.

[46 FR 29211, May 29, 1981, as amended at 62 FR 38454, July 18, 1997]



Sec. 416.1002  Definitions.

    For purposes of this subpart:
    Act means the Social Security Act, as amended.
    Class or classes of cases means the categories into which disability 
claims are divided according to their characteristics.
    Commissioner means the Commissioner of Social Security or his or her 
authorized designee.
    Determination of disability or disability determination means one or 
more of the following decisions:
    (a) Whether or not a person is under a disability;
    (b) The date a person's disability began; or
    (c) The date a person's disability ended.
    Disability means disability or blindness as defined in sections 
1614(a) (2) and (3) of the Act.
    Disability determination function means making determinations as to 
disability or blindness and carrying out related administrative and 
other responsibilities.
    Disability program means the Federal program for providing 
supplemental security income benefits for the blind and disabled under 
title XVI of the Act, as amended.
    Initial means the first level of disability or blindness 
adjudication.
    Other written guidelines means written issuances such as Social 
Security Rulings and memoranda by the Commissioner of Social Security, 
the Deputy Commissioner for Programs and Policy, or the Associate 
Commissioner for Disability and the procedures, guides, and operating 
instructions in the Disability Insurance sections of the Program 
Operations Manual System that are instructive, interpretive, clarifying, 
and/or administrative and not designated as advisory or discretionary. 
The purpose of including the foregoing material in the definition is to 
assure uniform national application of program standards and service 
delivery to the public.
    Regulations means regulations in this subpart issued under sections 
1102, 1631(c) and 1633(a) of the Act, unless otherwise indicated.
    State means any of the 50 States of the United States and the 
District of Columbia. It includes the State agency.
    State agency means that agency of a State which has been designated 
by the State to carry out the disability determination function.
    We, us, and our refers to the Social Security Administration (SSA).

[46 FR 29211, May 29, 1981, as amended at 56 FR 11021, Mar. 14, 1991; 62 
FR 38454, July 18, 1997]



Sec. 416.1003  Basic responsibilities for us and the State.

    (a) General. We will work with the State to provide and maintain an 
effective system for processing claims of

[[Page 897]]

those who apply for and who are receiving benefits under the disability 
program. We will provide program standards, leadership, and oversight. 
We do not intend to become involved in the State's ongoing management of 
the program except as is necessary and in accordance with these 
regulations. The State will comply with our regulations and other 
written guidelines.
    (b) Our responsibilities. We will:
    (1) Periodically review the regulations and other written guidelines 
to determine whether they insure effective and uniform administration of 
the disability program. To the extent feasible, we will consult with and 
take into consideration the experience of the States in issuing 
regulations and guidelines necessary to insure effective and uniform 
administration of the disability program;
    (2) Provide training materials or in some instances conduct or 
specify training (see Sec. 416.1022);
    (3) Provide funds to the State agency for the necessary cost of 
performing the disability determination function (see Sec. 416.1026);
    (4) Monitor and evaluate the performance of the State agency under 
the established standards (see Sec. Sec. 416.1044 and 416.1045); and
    (5) Maintain liaison with the medical profession nationally and with 
national organizations and agencies whose interests or activities may 
affect the disability program.
    (c) Responsibilities of the State. The State will:
    (1) Provide management needed to insure that the State agency 
carries out the disability determination function so that disability 
determinations are made accurately and promptly;
    (2) Provide an organizational structure, adequate facilities, 
qualified personnel, medical consultant services, and a quality 
assurance function (Sec. Sec. 416.1020 through 416.1024);
    (3) Furnish reports and records relating to the administration of 
the disability program (Sec. 416.1025);
    (4) Submit budgets (Sec. 416.1026);
    (5) Cooperate with audits (Sec. 416.1027);
    (6) Insure that all applicants for and recipients of disability 
benefits are treated equally and courteously;
    (7) Be responsible for property used for disability program purposes 
(Sec. 416.1028);
    (8) Take part in the research and demonstration projects (Sec. 
416.1029);
    (9) Coordinate with other agencies (Sec. 416.1030);
    (10) Safeguard the records created by the State in performing the 
disability determination function (Sec. 416.1031);
    (11) Comply with other provisions of the Federal law and regulations 
that apply to the State in performing the disability determination 
function;
    (12) Comply with other written guidelines (Sec. 416.1033);
    (13) Maintain liaison with the medical profession and organizations 
that may facilitate performing the disability determination function; 
and
    (14) Assist us in other ways that we determine may promote the 
objectives of effective and uniform administration.

  Responsibilities for Performing the Disability Determination Function



Sec. 416.1010  How a State notifies us that it wishes to perform the 
disability determination function.

    (a) Deemed notice. Any State that has in effect as of June 1, 1981, 
an agreement with us to make disability determinations will be deemed to 
have given us notice that it wishes to perform the disability 
determination function, in lieu of continuing the agreement in effect 
after June 1, 1981.
    (b) Written notice. After June 1, 1981, a State not making 
disability determinations that wishes to perform the disability 
determination function under these regulations must notify us in 
writing. The notice must be from an official authorized to act for the 
State for this purpose. The State will provide an opinion from the 
State's Attorney General verifying the authority of the official who 
sent the notice to act for the State.



Sec. 416.1011  How we notify a State whether it may perform the disability 
determination function.

    (a) If a State notifies us in writing that it wishes to perform the 
disability determination function, we will notify the State in writing 
whether or not it may perform the function. The State

[[Page 898]]

will begin performing the disability determination function beginning 
with the month we and the State agree upon.
    (b) If we have previously found that a State agency has 
substantially failed to make disability determinations in accordance 
with the law or these regulations and other written guidelines or if the 
State has previously notified us in writing that it does not wish to 
make disability determinations, the notice will advise the State whether 
the State agency may again make the disability determinations and, if 
so, the date and the conditions under which the State may again make 
them.



Sec. 416.1013  Disability determinations the State makes.

    (a) General rule. A State agency will make determinations of 
disability with respect to all persons in the State except those 
individuals whose cases are in a class specifically excluded by our 
written guidelines. A determination of disability made by the State is 
the determination of the Commissioner, except as described in Sec. 
416.903(d)(1).
    (b) New classes of cases. Where any new class or classes of cases 
arise requiring determinations of disability, we will determine the 
conditions under which a State may choose not to make the disability 
determinations. We will provide the State with the necessary funding to 
do the additional work.
    (c) Temporary transfer of classes of cases. We will make disability 
determinations for classes of cases temporarily transferred to us by the 
State agency if the State agency asks us to do so and we agree. The 
State agency will make written arrangements with us which will specify 
the period of time and the class or classes of cases we will do.

[46 FR 29211, May 29, 1981, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.1014  Responsibilities for obtaining evidence to make disability 
determinations.

    (a) The State agency will secure from the claimant, or other 
sources, any evidence it needs to make a disability determination.
    (b) We will secure from the claimant or other special arrangement 
sources, any evidence we can obtain as adequately and more readily than 
the State agency. We will furnish the evidence to the State agency for 
use in making a disability determination
    (c) At our request, the State agency will obtain and furnish medical 
or other evidence and provide assistance as may be necessary for us to 
carry out our responsibility for making disability determinations in 
those classes of cases described in the written guidelines for which the 
State agency does not make the determination.



Sec. 416.1015  Making disability determinations.

    (a) When making a disability determination, the State agency will 
apply subpart I, part 416, of our regulations.
    (b) The State agency will make disability determinations based only 
on the medical and nonmedical evidence in its files.
    (c) Disability determinations will be made by either:
    (1) A State agency medical or psychological consultant and a State 
agency disability examiner;
    (2) A State agency disability examiner alone when there is no 
medical evidence to be evaluated (i.e., no medical evidence exists or we 
are unable, despite making every reasonable effort, to obtain any 
medical evidence that may exist) and the individual fails or refuses, 
without a good reason, to attend a consultative examination (see Sec. 
416.918); or
    (3) A State agency disability hearing officer.

See Sec. 416.1016 for the definition of medical or psychological 
consultant and Sec. 416.1415 for the definition of disability hearing 
officer. The State agency disability examiner and disability hearing 
officer must be qualified to interpret and evaluate medical reports and 
other evidence relating to the claimant's physical or mental impairments 
and as necessary to determine the capacities of the claimant to perform 
substantial gainful activity. See Sec. 416.972 for what we mean by 
substantial gainful activity.
    (d) An initial determination by the State agency that an individual 
is not disabled, in any case where there is evidence which indicates the 
existence of

[[Page 899]]

a mental impairment, will be made only after every reasonable effort has 
been made to ensure that a qualified psychiatrist or psychologist has 
completed the medical portion of the case review and any applicable 
residual functional capacity assessment. (See Sec. 416.1016 for the 
qualifications we consider necessary for a psychologist to be a 
psychological consultant and Sec. 416.1017 for what we mean by 
reasonable effort.) If the services of qualified psychiatrists or 
psychologists cannot be obtained because of impediments at the State 
level, the Commissioner may contract directly for the services. In a 
case where there is evidence of mental and nonmental impairments and a 
qualified psychologist serves as a psychological consultant, the 
psychologist will evaluate only the mental impairment, and a physician 
will evaluate the nonmental impairment.
    (e) In making a determination under title XVI with respect to the 
disability of a child to whom paragraph (d) of this section does not 
apply, we will make reasonable efforts to ensure that a qualified 
pediatrician or other individual who specializes in a field of medicine 
appropriate to the child's impairment(s) evaluates the case of the 
child.
    (f) The State agency will certify each determination of disability 
to us on forms we provide.
    (g) The State agency will furnish us with all the evidence it 
considered in making its determination.
    (h) The State agency will not be responsible for defending in court 
any determination made, or any procedure for making determinations, 
under these regulations.

[52 FR 23928, Sept. 9, 1987, as amended at 56 FR 11021, Mar. 14, 1991; 
58 FR 47587, Sept. 9, 1993; 61 FR 11136, Mar. 19, 1996; 62 FR 38455, 
July 18, 1997; 65 FR 34959, June 1, 2000]



Sec. 416.1016  Medical or psychological consultants.

    (a) What is a medical consultant? A medical consultant is a person 
who is a member of a team that makes disability determinations in a 
State agency, as explained in Sec. 416.1015, or who is a member of a 
team that makes disability determinations for us when we make disability 
determinations ourselves.
    (b) What qualifications must a medical consultant have? A medical 
consultant must be an acceptable medical source identified in Sec. 
416.913(a)(1) or (a)(3) through (a)(5); that is, a licensed physician 
(medical or osteopathic), a licensed optometrist, a licensed podiatrist, 
or a qualified speech-language pathologist. The medical consultant must 
meet any appropriate qualifications for his or her specialty as 
explained in Sec. 416.913(a).
    (c) Are there any limitations on what medical consultants who are 
not physicians can evaluate? Medical consultants who are not physicians 
are limited to evaluating the impairments for which they are qualified, 
as described in Sec. 416.913(a). Medical consultants who are not 
physicians also are limited as to when they may serve as a member of a 
team that makes a disability determination. For example, a speech-
language pathologist who is a medical consultant in a State agency may 
be a member of a team that makes a disability determination in a claim 
only if a speech or language impairment is the only impairment in the 
claim or if there is a combination of a speech or language impairment 
with another impairment but the speech or language impairment alone 
would justify a finding of disability. In all other cases, a physician 
will be a member of the team that makes a disability determination, 
except in cases in which this function may be performed by a 
psychological consultant as discussed in paragraph (f) of this section 
and Sec. 416.1015(d).
    (d) What is a psychological consultant? A psychological consultant 
is a psychologist who has the same responsibilities as a medical 
consultant explained in paragraph (a) of this section, but who can 
evaluate only mental impairments.
    (e) What qualifications must a psychological consultant have? A 
psychological consultant used in cases where there is evidence of a 
mental impairment must be a qualified psychologist. For disability 
program purposes, a psychologist will not be considered qualified unless 
he or she:
    (1) Is licensed or certified as a psychologist at the independent 
practice level of psychology by the State in which he or she practices; 
and

[[Page 900]]

    (2)(i) Possesses a doctorate degree in psychology from a program in 
clinical psychology of an educational institution accredited by an 
organization recognized by the Council on Post-Secondary Accreditation; 
or
    (ii) Is listed in a national register of health service providers in 
psychology which the Commissioner of Social Security deems appropriate; 
and
    (3) Possesses 2 years of supervised clinical experience as a 
psychologist in health service, at least 1 year of which is post masters 
degree.
    (f) Are there any limitations on what a psychological consultant can 
evaluate? Psychological consultants are limited to the evaluation of 
mental impairments, as explained in Sec. 416.1015(d). Psychological 
consultants also are limited as to when they can serve as a member of a 
team that makes a disability determination. They may do so only when a 
mental impairment is the only impairment in the claim or when there is a 
combination of a mental impairment with another impairment but the 
mental impairment alone would justify a finding of disability.

[65 FR 34959, June 1, 2000]



Sec. 416.1017  Reasonable efforts to obtain review by a qualified 
psychiatrist or psychologist.

    (a) The State agency must determine if additional qualified 
psychiatrists and psychologists are needed to make the necessary reviews 
(see Sec. 416.1015(d)). Where it does not have sufficient resources to 
make the necessary reviews, the State agency must attempt to obtain the 
resources needed. If the State agency is unable to obtain additional 
psychiatrists and psychologists because of low salary rates or fee 
schedules it should attempt to raise the State agency's levels of 
compensation to meet the prevailing rates for psychiatrists' and 
psychologists' services. If these efforts are unsuccessful, the State 
agency will seek assistance from us. We will assist the State agency as 
necessary. We will also monitor the State agency's efforts and where the 
State agency is unable to obtain the necessary services, we will make 
every reasonable effort to provide the services using Federal resources.
    (b) Federal resources may include the use of Federal contracts for 
the services of qualified psychiatrists and psychologists to review 
mental impairment cases. Where Federal resources are required to perform 
these reviews, which are a basic State agency responsibility, and where 
appropriate, the State agency's budget will be reduced accordingly.
    (c) Where every reasonable effort is made to obtain the services of 
a qualified psychiatrist or psychologist to review a mental impairment 
case, but the professional services are not obtained, a physician who is 
not a psychiatrist will review the mental impairment case. For these 
purposes, every reasonable effort to ensure that a qualified 
psychiatrist or psychologist review mental impairment cases will be 
considered to have been made only after efforts by both State and 
Federal agencies as set forth in paragraphs (a) and (b) of this section 
are made.

[52 FR 23928, Sept. 9, 1987]



Sec. 416.1018  Notifying claimant of the disability determination.

    The State agency will prepare denial notices in accordance with 
subpart N of this part whenever it makes a disability determination 
which is wholly or partly unfavorable to the claimant.

            Administrative Responsibilities and Requirements



Sec. 416.1020  General administrative requirements.

    (a) The State will provide the organizational structure, qualified 
personnel, medical consultant services, and a quality assurance function 
sufficient to ensure that disability determinations are made accurately 
and promptly. We may impose specific administrative requirements in 
these areas and in those under ``Administrative Responsibilities and 
Requirements'' in order to establish uniform, national administrative 
practices or to correct the areas of deficiencies which may later cause 
the State to be substantially failing to comply with our regulations or 
other written guidelines. We will notify the State, in writing, of the 
administrative requirements being imposed and of any

[[Page 901]]

administrative deficiencies it is required to correct. We will allow the 
State 90 days from the date of this notice to make appropriate 
corrections. Once corrected, we will monitor the State's administrative 
practices for 180 days. If the State does not meet the requirements or 
correct all of the deficiencies, or, if some of the deficiencies recur, 
we may initiate procedures to determine if the State is substantially 
failing to follow our regulations or other written guidelines.
    (b) The State is responsible for making accurate and prompt 
disability determinations.

[46 FR 29211, May 29, 1981, as amended at 56 FR 11021, Mar. 14, 1991; 56 
FR 13365, Apr. 1, 1991]



Sec. 416.1021  Personnel.

    (a) Equal Employment Opportunity. The State will comply with all 
applicable Federal statutes, executive orders and regulations concerned 
with equal employment opportunities.
    (b) Selection, tenure, and compensation. The State agency will, 
except as may be inconsistent with paragraph (a) of this section, adhere 
to applicable State approved personnel standards in the selection, 
tenure, and compensation of any individual employed in the disability 
program.
    (c) Travel. The State will make personnel available to attend 
meetings or workshops as may be sponsored or approved by us for 
furthering the purposes of the disability program.
    (d) Restrictions. Subject to appropriate Federal funding, the State 
will, to the best of its ability, facilitate the processing of 
disability claims by avoiding personnel freezes, restrictions against 
overtime work, or curtailment of facilities or activities.



Sec. 416.1022  Training.

    The State will insure that all employees have an acceptable level of 
competence. We will provide training and other instructional materials 
to facilitate basic and advanced technical proficiency of disability 
staff in order to insure uniformity and effectiveness in the 
administration of the disability program. We will conduct or specify 
training, as appropriate but only if:
    (a) A State agency's performance approaches unacceptable levels or
    (b) The material required for the training is complex or the 
capacity of the State to deliver the training is in doubt and uniformity 
of the training is essential.



Sec. 416.1023  Facilities.

    (a) Space, equipment, supplies, and other services. Subject to 
appropriate Federal funding, the State will provide adequate space, 
equipment, supplies, and other services to facilitate making accurate 
and prompt disability determinations.
    (b) Location of facilities. Subject to appropriate Federal funding, 
the State will determine the location where the disability determination 
function is to be performed so that disability determinations are made 
accurately and promptly.
    (c) Access. The State will permit us access to the premises where 
the disability determination function is performed and also where it is 
managed for the purposes of inspecting and obtaining information about 
the work and activities required by our regulations and assuring 
compliance with pertinent Federal statutes and regulations. Access 
includes personal onsite visits and other means, such as 
telecommunications, of contacting the State agency to obtain information 
about its functions. We will contact the State agency and give 
reasonable prior notice of the times and purposes of any visits.

[46 FR 29211, May 29, 1981, as amended at 56 FR 11022, Mar. 14, 1991]



Sec. 416.1024  Medical and other purchased services.

    The State will determine the rates of payment to be used for 
purchasing medical or other services necessary to make determinations of 
disability. The rates may not exceed the highest rate paid by Federal or 
other agencies in the State for the same or similar type of service. The 
State will maintain documentation to support the rates of payment it 
uses.



Sec. 416.1025  Records and reports.

    (a) The State will establish and maintain the records and furnish 
the

[[Page 902]]

schedules, financial, cost, and other reports relating to the 
administration of the disability programs as we may require.
    (b) The State will permit us and the Comptroller General of the 
United States (including duly authorized representatives) access to and 
the right to examine records relating to the work which the State 
performs under these regulations. These records will be retained by the 
State for the periods of time specified for retention of records in the 
Federal Procurement Regulations (41 CFR parts 1-20).



Sec. 416.1026  Fiscal.

    (a) We will give the State funds, in advance or by way of 
reimbursement, for necessary costs in making disability determinations 
under these regulations. Necessary costs are direct as well as indirect 
costs as defined in 41 CFR part 1-15, subpart 1-15.7 of the Federal 
Procurement Regulations System for costs incurred before April 1, 1984; 
and 48 CFR part 31, subpart 31.6 of the Federal Acquisition Regulations 
System and Federal Management Circular A-74-4 \1\ as amended or 
superseded for costs incurred after March 31, 1984.
---------------------------------------------------------------------------

    \1\ The circular is available from the Office of Administration, 
Publications Unit, Rm. G-236, New Executive Office Bldg., Washington, DC 
20503.
---------------------------------------------------------------------------

    (b) The State will submit estimates of anticipated costs in the form 
of a budget at the time and in the manner we require.
    (c) We will notify the State of the amount which will be made 
available to it as well as what anticipated costs are being approved.
    (d) The State may not incur or make expenditures for items of cost 
not approved by us or in excess of the amount we make available to the 
State.
    (e) After the close of a period for which funds have been made 
available to the State, the State will submit a report of its 
expenditures. Based on an audit arranged by the State under Pub. L. 98-
502, the Single Audit Act of 1984, or by the Inspector General of the 
Social Security Administration or based on an audit or review by the 
Social Security Administration (see Sec. 416.1027), we will determine 
whether the expenditures were consistent with cost principles described 
in 41 CFR part 1-15, subpart 1-15.7 for costs incurred before April 1, 
1984; and 48 CFR part 31, subpart 31.6 and Federal Management Circular 
A-74-4 for costs incurred after March 31, 1984; and in other applicable 
written guidelines in effect at the time the expenditures were made or 
incurred.
    (f) Any monies paid to the State which are used for purposes not 
within the scope of these regulations will be paid back to the Treasury 
of the United States.

[46 FR 29211, May 29, 1981, as amended at 56 FR 11022, Mar. 14, 1991; 62 
FR 38455, July 18, 1997]



Sec. 416.1027  Audits.

    (a) Audits performed by the State--(1) Generally. Audits of account 
and records pertaining to the administration of the disability program 
under the Act, will be performed by the States in accordance with the 
Single Audit Act of 1984 (Pub. L. 98-502) which establishes audit 
requirements for States receiving Federal assistance. If the audit 
performed by the State meets our program requirements, we will accept 
the findings and recommendations of the audit. The State will make every 
effort to act upon and resolve any items questioned in the audit.
    (2) Questioned items. Items questioned as a result of an audit under 
the Single Audit Act of 1984 of a cross-cutting nature will be resolved 
by the Department of Health and Human Services, Office of Grant and 
Contract Financial Management. A cross-cutting issue is one that 
involves more than one Federal awarding agency. Questioned items 
affecting only the disability program will be resolved by SSA in accord 
with paragraph (b)(2) of this section.
    (3) State appeal of audit determinations. The Office of Grant and 
Contract Financial Management will notify the State of its determination 
on questioned cross-cutting items. If the State disagrees with that 
determination, it may appeal in writing within 60 days of receiving the 
determination. State appeals of a cross-cutting issue as a result of an 
audit under the Single Audit Act of 1984 will be made to the Department 
of Health and Human Services'

[[Page 903]]

Departmental Appeals Board. The rules for hearings and appeals are 
provided in 45 CFR part 16.
    (b) Audits performed by the Commissioner--(1) Generally. If the 
State does not perform an audit under the Single Audit Act of 1984 or 
the audit performed is not satisfactory for disability program purposes, 
the books of account and records in the State pertaining to the 
administration of the disability programs under the Act will be audited 
by the SSA's Inspector General or audited or reviewed by SSA as 
appropriate. These audits or reviews will be conducted to determine 
whether the expenditures were made for the intended purposes and in 
amounts necessary for the proper and efficient administration of the 
disability programs. Audits or reviews will also be made to inspect the 
work and activities required by the regulations to ensure compliance 
with pertinent Federal statutes and regulations. The State will make 
every effort to act upon and resolve any items questioned in an audit or 
review.
    (2) Questioned items. Expenditures of State agencies will be audited 
or reviewed, as appropriate, on the basis of cost principles and written 
guidelines in effect at the time the expenditures were made or incurred. 
Both the State and the State agency will be informed and given a full 
explanation of any items questioned. They will be given reasonable time 
to explain items questioned. Any explanation furnished by the State or 
State agency will be given full consideration before a final 
determination is made on the audit or review report.
    (3) State appeal of audit determinations. The appropriate Social 
Security Administration Regional Commissioner will notify the State of 
his or her determination on the audit or review report. If the State 
disagrees with that determination, the State may request reconsideration 
in writing within 60 days of the date of the Regional Commissioner's 
notice of the determination. The written request may be made, through 
the Associate Commissioner, Office of Disability, to the Commissioner of 
Social Security, Room 900, Altmeyer Building, 6401 Security Boulevard, 
Baltimore, MD 21235. The Commissioner will make a determination and 
notify the State of the decision in writing no later than 90 days from 
the date the Social Security Administration receives the State's appeal 
and all supporting documents. The decision by the Commissioner on other 
than monetary disallowances will be final and binding upon the State. 
The decision by the Commissioner on monetary disallowances will be final 
and binding upon the State unless the State appeals the decision in 
writing to the Department of Health and Human Services' Departmental 
Appeals Board within 30 days after receiving the Commissioner's 
decision. See Sec. 416.1083.

[56 FR 11022, Mar. 14, 1991, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.1028  Property.

    The State will have title to equipment purchased for disability 
program purposes. The State will be responsible for maintaining all 
property it acquires or which we furnish to it for performing the 
disability determination function. The State will identify the equipment 
by labeling and by inventory and will credit the SSA account with the 
fair market value of disposed property. In the event we assume the 
disability determination function from a State, ownership of all 
property and equipment acquired with SSA funds will be transferred to us 
effective on the date the State is notified that we are assuming the 
disability determination function or we are notified that the State is 
terminating the relationship.



Sec. 416.1029  Participation in research and demonstration projects.

    We will invite State participation in federally funded research and 
demonstration projects to assess the effectiveness of the disability 
program and to ascertain the effect of program policy changes. Where we 
determine that State participation is necessary for the project to be 
complete, for example, to provide national uniformity in a claims 
process, State participation is mandatory.

[[Page 904]]



Sec. 416.1030  Coordination with other agencies.

    (a) The State will establish cooperative working relationships with 
other agencies concerned with serving the disabled and, insofar as 
practicable, use their services, facilities, and records to:
    (1) Assist the State in developing evidence and making 
determinations of disability; and
    (2) Insure that referral of disabled or blind persons for 
rehabilitation services will be carried out effectively.
    (b) The State may pay these agencies for the services, facilities, 
or records they provide. The State will include these costs in its 
estimates of anticipated costs and reports of actual expenditures.



Sec. 416.1031  Confidentiality of information and records.

    The State will comply with the confidentiality of information, 
including the security of systems, and records requirements described in 
20 CFR part 401 and pertinent written guidelines (see Sec. 416.1033).



Sec. 416.1032  Other Federal laws and regulations.

    The State will comply with the provisions of other Federal laws and 
regulations that directly affect its responsibilities in carrying out 
the disability determination function; for example, Treasury Department 
regulations on letters of credit (31 CFR part 205).



Sec. 416.1033  Policies and operating instructions.

    (a) We will provide the State agency with written guidelines 
necessary for it to carry out its responsibilities in performing the 
disability determination function.
    (b) The State agency making determinations of disability will comply 
with our written guidelines that are not designated as advisory or 
discretionary. (See Sec. 416.1002 for what we mean by written 
guidelines.)
    (c) A representative group of State agencies will be given an 
opportunity to participate in formulating disability program policies 
that have an effect on their role in carrying out the disability 
determination function. State agencies will also be given an opportunity 
to comment before changes are made in written guidelines unless delay in 
issuing a change may impair service to the public.

[46 FR 29211, May 29, 1981, as amended at 56 FR 11023, Mar. 14, 1991]

                          Performance Standards



Sec. 416.1040  General.

    The following sections provide the procedures and guidelines we use 
to determine whether the State agency is substantially complying with 
our regulations and other written guidelines, including meeting 
established national performance standards. We use performance standards 
to help assure effective and uniform administration of our disability 
program and to measure whether the performance of the disability 
determination function by each State agency is acceptable. Also, the 
standards are designed to improve overall State agency performance in 
the disability determination process and to ensure that benefits are 
made available to all eligible persons in an accurate and efficient 
manner. We measure the performance of a State agency in two areas--
processing time and quality of documentation and decisions on claims. 
State agency compliance is also judged by State agency adherence to 
other program requirements.

[56 FR 11023, Mar. 14, 1991]



Sec. 416.1041  Standards of performance.

    (a) General. The performance standards include both a target level 
of performance and a threshold level of performance for the State 
agency. The target level represents a level of performance that we and 
the States will work to attain in the future. The threshold level is the 
minimum acceptable level of performance. Performance below the threshold 
level will be the basis for the Commissioner's taking from the State 
agency partial or complete responsibility for performing the disability 
determination function. Intermediate State agency goals are designed to 
help each State agency move from its current performance levels to the 
target levels.

[[Page 905]]

    (b) The target level. The target level is the optimum level of 
performance. There are three targets--one for combined title II and 
title XVI initial performance accuracy, one for title II initial 
processing time, and one for title XVI initial processing time.
    (c) The threshold level. The threshold level is the minimum 
acceptable level of performance. There are three thresholds--one for 
combined title II and title XVI initial performance accuracy, one for 
title II initial processing time, and one for title XVI initial 
processing time.
    (d) Intermediate goals. Intermediate goals are levels of performance 
between the threshold levels and the target levels established by our 
appropriate Regional Commissioner after negotiation with each State 
agency. The intermediate goals are designed to help the State agencies 
reach the target levels. Failure to meet these goals is not a cause for 
considering the State agency to be substantially failing to comply with 
the performance standards. However, failure to meet the intermediate 
goals may result in consultation and an offer of optional performance 
support depending on the availability of our resources.

[46 FR 29211, May 29, 1981, as amended at 56 FR 11023, Mar. 14, 1991; 62 
FR 38455, July 18, 1997]



Sec. 416.1042  Processing time standards.

    (a) General. Title II processing time refers to the average number 
of days (including Saturdays, Sundays, and holidays) it takes a State 
agency to process an initial disability claim from the day the case 
folder is received in the State agency until the day it is released to 
us by the State agency. Title XVI processing time refers to the average 
number of days, including Saturdays, Sundays, and holidays, from the day 
of receipt of the initial disability claim in the State agency until 
systems input of a presumptive disability decision or the day the case 
folder is released to us by the State agency, whichever is earlier.
    (b) Target levels. The processing time target levels are:
    (1) 37 days for title II initial claims.
    (2) 43 days for title XVI initial claims.
    (c) Threshold levels. The processing time threshold levels are:
    (1) 49.5 days for title II initial claims.
    (2) 57.9 days for title XVI initial claims.

[46 FR 29211, May 29, 1981, as amended at 56 FR 11023, Mar. 14, 1991]



Sec. 416.1043  Performance accuracy standard.

    (a) General. Performance accuracy refers to the percentage of cases 
that do not have to be returned to State agencies for further 
development or correction of decisions based on evidence in the files 
and as such represents the reliability of State agency adjudication. The 
definition of performance accuracy includes the measurement of factors 
that have a potential for affecting a decision, as well as the 
correctness of the decision. For example, if a particular item of 
medical evidence should have been in the file but was not included, even 
though its inclusion does not change the result in the case, that is a 
performance error. Performance accuracy, therefore, is a higher standard 
than decisional accuracy. As a result, the percentage of correct 
decisions is significantly higher than what is reflected in the error 
rate established by SSA's quality assurance system.
    (b) Target level. The State agency initial performance accuracy 
target level for combined title II and title XVI cases is 97 percent 
with a corresponding decision accuracy rate of 99 percent.
    (c) Intermediate goals. These goals will be established annually by 
SSA's regional commissioner after negotiation with the State and should 
be used as stepping stones to progress towards our targeted level of 
performance.
    (d) Threshold levels. The State agency initial performance accuracy 
threshold level for combined title II and title XVI cases is 90.6 
percent.



Sec. 416.1044  How and when we determine whether the processing time 
standards are met.

    (a) How we determine processing times. For all initial title II 
cases, we calculate the mean number of days, including Saturdays, 
Sundays, and holidays, from the day the case folder is received in the 
State agency until the

[[Page 906]]

day it is released to us by the State agency. For initial title XVI 
cases, we calculate the mean number of days, including Saturdays, 
Sundays, and holidays, from the day the case folder is received in the 
State agency until the day there is systems input of a presumptive 
disability decision or the day the case folder is released to us by the 
State agency, whichever is earlier.
    (b) Frequency of review. Title II processing times and title XVI 
processing times are monitored separately on a quarterly basis. The 
determination as to whether or not the processing time thresholds have 
been met is made at the end of each quarter each year. Quarterly State-
by-State mean processing times are compared with the threshold levels 
for both title II and title XVI.

[46 FR 29211, May 29, 1981, as amended at 56 FR 11023, Mar. 14, 1991]



Sec. 416.1045  How and when we determine whether the performance accuracy 
standard is met.

    (a) How we determine performance accuracy. We determine a State 
agency's performance accuracy rate on the basis of decision and 
documentation errors identified in our review of the sample cases.
    (b) Frequency of review. Title II and title XVI initial performance 
accuracy are monitored together on a quarterly basis. The determinations 
as to whether the performance accuracy threshold has been met is made at 
the end of each quarter each year. Quarterly State-by-State combined 
initial performance accuracy rates are compared to the established 
threshold level.



Sec. 416.1050  Action we will take if a State agency does not meet the 
standards.

    If a State agency does not meet two of the three established 
threshold levels (one of which must be performance accuracy) for two or 
more consecutive calendar quarters, we will notify the State agency in 
writing that it is not meeting the standards. Following our 
notification, we will provide the State agency appropriate performance 
support described in Sec. Sec. 416.1060, 416.1061 and 416.1062 for a 
period of up to 12 months.

[56 FR 11023, Mar. 14, 1991]

                   Performance Monitoring and Support



Sec. 416.1060  How we will monitor.

    We will regularly analyze State agency combined title II and title 
XVI initial performance accuracy rate, title II initial processing time, 
and title XVI initial processing time. Within budgeted resources, we 
will also routinely conduct fiscal and administrative management reviews 
and special onsite reviews. A fiscal and administrative management 
review is a fact-finding mission to review particular aspects of State 
agency operations. During these reviews we will also review the quality 
assurance function. This regular monitoring and review program will 
allow us to determine the progress each State is making and the type and 
extent of performance support we will provide to help the State progress 
toward threshold, intermediate, and/or target levels.

[56 FR 11023, Mar. 14, 1991]



Sec. 416.1061  When we will provide performance support.

    (a) Optional support. We may offer, or a State may request, 
performance support at any time that the regular monitoring and review 
process reveals that support could enhance performance. The State does 
not have to be below the initial performance accuracy rate of 90.6 
percent to receive performance support. Support will be offered, or 
granted upon request, based on available resources.
    (b) Mandatory support. (1) We will provide a State agency with 
performance support if regular monitoring and review reveal that two of 
three threshold levels (one of which must be performance accuracy) are 
not met for two consecutive calendar quarters.
    (2) We may also decide to provide a State agency with mandatory 
performance support if regular monitoring and review reveal that any one 
of the three threshold levels is not met for two consecutive calendar 
quarters. Support will be provided based on available resources.
    (3) The threshold levels are:
    (i) Combined title II and title XVI initial performance accuracy 
rate--90.6 percent,

[[Page 907]]

    (ii) Title II initial processing time--49.5 days, and
    (iii) Title XVI initial processing time--57.9 days.

[56 FR 11023, Mar. 14, 1991]



Sec. 416.1062  What support we will provide.

    Performance support may include, but is not limited to, any or all 
of the following:
    (a) An onsite review of cases processed by the State agency 
emphasizing adherence to written guidelines.
    (b) A request that necessary administrative measures be implemented 
(e.g., filling staffing vacancies, using overtime, assisting with 
training activities, etc.).
    (c) Provisions for Federal personnel to perform onsite reviews, 
conduct training, or perform other functions needed to improve 
performance.
    (d) Provisions for fiscal aid to allow for overtime, temporary 
hiring of additional staff, etc., above the authorized budget.

[56 FR 11024, Mar. 14, 1991]

                           Substantial Failure



Sec. 416.1070  General.

    After a State agency falls below two of three established threshold 
levels, one being performance accuracy, for two consecutive quarters, 
and after the mandatory performance support period, we will give the 
State agency a 3-month adjustment period. During this 3-month period we 
will not require the State agency to meet the threshold levels. 
Following the adjustment period, if the State agency again falls below 
two of three threshold levels, one being performance accuracy, in two 
consecutive quarters during the next 12 months, we will notify the State 
that we propose to find that the State agency has substantially failed 
to comply with our standards and advise it that it may request a hearing 
on that issue. After giving the State notice and an opportunity for a 
hearing, if it is found that a State agency has substantially failed to 
make disability determinations consistent with the Act, our regulations, 
or other written guidelines, we will assume partial or complete 
responsibility for performing the disability determination function 
after we have complied with Sec. Sec. 416.1090 and 416.1092.

[56 FR 11024, Mar. 14, 1991]



Sec. 416.1071  Good cause for not following the Act, our regulations, 
or other written guidelines.

    If a State has good cause for not following the Act, our 
regulations, or other written guidelines, we will not find that the 
State agency has substantially failed to meet our standards. We will 
determine if good cause exists. Some of the factors relevant to good 
cause are:
    (a) Disasters such as fire, flood, or civil disorder, that--
    (1) Require the diversion of significant personnel normally assigned 
to the disability determination function, or
    (2) Destroyed or delayed access to significant records needed to 
make accurate disability determinations;
    (b) Strikes of State agency staff or other government or private 
personnel necessary to the performance of the disability determination 
function;
    (c) Sudden and unanticipated workload changes which result from 
changes in Federal law, regulations, or written guidelines, systems 
modification or systems malfunctions, or rapid, unpredictable caseload 
growth for a 6-month period or longer.

[56 FR 11024, Mar. 14, 1991]



Sec. 416.1075  Finding of substantial failure.

    A finding of substantial failure with respect to a State may not be 
made unless and until the State is afforded an opportunity for a 
hearing.

                          Hearings and Appeals



Sec. 416.1080  Notice of right to hearing on proposed finding of substantial 
failure.

    If, following the mandatory performance support period and the 3-
month adjustment period, a State agency again falls below two of three 
threshold levels (one being performance accuracy) in two consecutive 
quarters in the succeeding 12 months, we will notify the State in 
writing that we will

[[Page 908]]

find that the State agency has substantially failed to meet our 
standards unless the State submits a written request for a hearing with 
the Department of Health and Human Services' Departmental Appeals Board 
within 30 days after receiving the notice. The notice will identify the 
threshold levels that were not met by the State agency, the period 
during which the thresholds were not met, and the accuracy and 
processing time levels attained by the State agency during this period. 
If a hearing is not requested, the State agency will be found to have 
substantially failed to meet our standards, and we will implement our 
plans to assume the disability determination function.

[56 FR 11024, Mar. 14, 1991]



Sec. 416.1081  Disputes on matters other than substantial failure.

    Disputes concerning monetary disallowances will be resolved in 
proceedings before the Department of Health and Human Services, 
Departmental Appeals Board if the issue cannot be resolved between us 
and the State. Disputes other than monetary disallowances will be 
resolved through an appeal to the Commissioner of Social Security, who 
will make the final decision. (See Sec. 416.1027.)

[56 FR 11024, Mar. 14, 1991]



Sec. 416.1082  Who conducts the hearings.

    If a hearing is required, it will be conducted by the Department of 
Health and Human Services' Departmental Appeals Board (the Board).

[46 FR 29211, May 29, 1981, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.1083  Hearings and appeals process.

    The rules for hearings and appeals before the Board are provided in 
45 CFR part 16. A notice under Sec. 416.1080 of this subpart will be 
considered a ``final written decision'' for purposes of Board review.

             Assumption of Disability Determination Function



Sec. 416.1090  Assumption when we make a finding of substantial failure.

    (a) Notice to State. When we find that substantial failure exists, 
we will notify the State in writing that we will assume responsibility 
for performing the disability determination function from the State 
agency, whether the assumption will be partial or complete, and the date 
on which the assumption will be effective.
    (b) Effective date of assumption. The date of any partial or 
complete assumption of the disability determination function from a 
State agency may not be earlier than 180 days after our finding of 
substantial failure, and not before compliance with the requirements of 
Sec. 416.1092.



Sec. 416.1091  Assumption when State no longer wishes to perform the 
disability determination function.

    (a) Notice to the Commissioner. If a State no longer wishes to 
perform the disability determination function, it will notify us in 
writing. The notice must be from an official authorized to act for the 
State for this purpose. The State will provide an opinion from the 
State's Attorney General verifying the authority of the official who 
gave the notice.
    (b) Effective date of assumption. The State agency will continue to 
perform whatever activities of the disability determination function it 
is performing at the time the notice referred to in paragraph (a) of 
this section is given for not less than 180 days or, if later, until we 
have complied with the requirements of Sec. 416.1092. For example, if 
the State is not making disability determinations (because we previously 
assumed responsibility for making them) but is performing other 
activities related to the disability determination function at the time 
it gives notice, the State will continue to do these activities until 
the requirements of this paragraph are met. Thereafter, we will assume 
complete responsibility

[[Page 909]]

for performing the disability determination function.

[46 FR 29211, May 29, 1981, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.1092  Protection of State employees.

    (a) Hiring preference. We will develop and initiate procedures to 
implement a plan to partially or completely assume the disability 
determination function from the State agency under Sec. 416.1090 or 
Sec. 416.1091, as appropriate. Except for the State agency's 
administrator, deputy administrator, or assistant administrator (or his 
equivalent), we will give employees of the State agency who are capable 
of performing duties in the disability determination function preference 
over any other persons in filling positions with us for which they are 
qualified. We may also give a preference in hiring to the State agency's 
administrator, deputy administrator, or assistant administrator (or his 
equivalent). We will establish a system for determining the hiring 
priority among the affected State agency employees in those instances 
where we are not hiring all of them.
    (b) Determination by Secretary of Labor. We will not assume 
responsibility for performing the disability determination function from 
a State until the Secretary of Labor determines that the State has made 
fair and equitable arrangements under applicable Federal, State and 
local law to protect the interests of employees who will be displaced 
from their employment because of the assumption and who we will not 
hire.



Sec. 416.1093  Limitation on State expenditures after notice.

    The State agency may not, after it receives the notice referred to 
in Sec. 416.1090, or gives the notice referred to in Sec. 416.1091, 
make any new commitments to spend funds allocated to it for performing 
the disability determination function without the approval of the 
appropriate SSA regional commissioner. The State will make every effort 
to close out as soon as possible all existing commitments that relate to 
performing the disability determination function.



Sec. 416.1094  Final accounting by the State.

    The State will submit its final claims to us as soon as possible, 
but in no event later than 1 year from the effective date of our 
assumption of the disability determination function unless we grant an 
extension of time. When the final claim(s) is submitted, a final 
accounting will be made by the State of any funds paid to the State 
under Sec. 416.1026 which have not been spent or committed prior to the 
effective date of our assumption of the disability determination 
function. Disputes concerning final accounting issues which cannot be 
resolved between the State and us will be resolved in proceedings before 
the Grant Appeals Board as described in 45 CFR part 416.



                            Subpart K_Income

    Authority: Secs. 702(a)(5), 1602, 1611, 1612, 1613, 1614(f), 1621, 
and 1631 of the Social Security Act (42 U.S.C. 902(a)(5), 1381a, 1382, 
1382a, 1382b, 1382c(f), 1382j, and 1383); sec. 211, Pub. L. 93-66, 87 
Stat. 154 (42 U.S.C. 1382 note).

    Source: 45 FR 65547, Oct. 3, 1980, unless otherwise noted.

                                 General



Sec. 416.1100  Income and SSI eligibility.

    You are eligible for supplemental security income (SSI) benefits if 
you are an aged, blind, or disabled person who meets the requirements 
described in subpart B and who has limited income and resources. Thus, 
the amount of income you have is a major factor in deciding whether you 
are eligible for SSI benefits and the amount of your benefit. We count 
income on a monthly basis. Generally, the more income you have the less 
your benefit will be. If you have too much income, you are not eligible 
for a benefit. However, we do not count all of your income to determine 
your eligibility and benefit amount. We explain in the following 
sections how we treat your income for the SSI program. These rules apply 
to the Federal benefit and to any optional State supplement paid by us 
on behalf of a State (Sec. 416.2025) except as noted in subpart T and 
in the Federal-State agreements with individual States. While this 
subpart explains how we

[[Page 910]]

count income, subpart D of these regulations explains how we determine 
your benefits, including the provision that we generally use countable 
income in a prior month to determine how much your benefit amount will 
be for a month in which you are eligible (Sec. 416.420).

[50 FR 48573, Nov. 26, 1985]



Sec. 416.1101  Definition of terms.

    As used in this subpart--
    Calendar quarter means a period of three full calendar months 
beginning with January, April, July, or October.
    Child means someone who is not married, is not the head of a 
household, and is either under age 18 or is under age 22 and a student. 
(See Sec. 416.1856)
    Couple means an eligible individual and his or her eligible spouse.
    Current market value means the price of an item on the open market 
in your locality.
    Federal benefit rate means the monthly payment rate for an eligible 
individual or couple. It is the figure from which we substract countable 
income to find out how much your Federal SSI benefit should be. The 
Federal benefit rate does not include the rate for any State supplement 
paid by us on behalf of a State.
    Institution means an establishment which makes available some 
treatment or services beyond food and shelter to four or more persons 
who are not related to the proprietor. (See Sec. 416.201)
    Spouse means someone who lives with another person as that person's 
husband or wife. (See Sec. 416.1806)
    We, Us, or Our means the Social Security Administration.
    You or Your means a person who is applying for, or already 
receiving, SSI benefits.

[45 FR 65547, Oct. 3, 1980, as amended at 50 FR 48573, Nov. 26, 1985; 51 
FR 10616, Mar. 28, 1986; 60 FR 16375, Mar. 30, 1995]



Sec. 416.1102  What is income.

    Income is anything you receive in cash or in kind that you can use 
to meet your needs for food, clothing, and shelter. Sometimes income 
also includes more or less than you actually receive (see Sec. 416.1110 
and Sec. 416.1123(b)). In-kind income is not cash, but is actually 
food, clothing, or shelter, or something you can use to get one of 
these.

[56 FR 3212, Jan. 29, 1991]



Sec. 416.1103  What is not income.

    Some things you receive are not income because you cannot use them 
as food, clothing, or shelter, or use them to obtain food, clothing, or 
shelter. In addition, what you receive from the sale or exchange of your 
own property is not income; it remains a resource. The following are 
some items that are not income:
    (a) Medical care and services. Medical care and services are not 
income if they are any of the following:
    (1) Given to you free of charge or paid for directly to the provider 
by someone else;
    (2) Room and board you receive during a medical confinement;
    (3) Assistance provided in cash or in kind (including food, 
clothing, or shelter) under a Federal, State, or local government 
program, whose purpose is to provide medical care or services (including 
vocational rehabilitation);
    (4) In-kind assistance (except food, clothing, or shelter) provided 
under a nongovernmental program whose purpose is to provide medical care 
or medical services;
    (5) Cash provided by any nongovernmental medical care or medical 
services program or under a health insurance policy (except cash to 
cover food, clothing, or shelter) if the cash is either:
    (i) Repayment for program-approved services you have already paid 
for; or
    (ii) A payment restricted to the future purchase of a program-
approved service.

    Example: If you have paid for prescription drugs and get the money 
back from your health insurance, the money is not income.

    (6) Direct payment of your medical insurance premiums by anyone on 
your behalf.
    (7) Payments from the Department of Veterans Affairs resulting from 
unusual medical expenses.
    (b) Social services. Social services are not income if they are any 
of the following:
    (1) Assistance provided in cash or in kind (but not received in 
return for a

[[Page 911]]

service you perform) under any Federal, State, or local government 
program whose purpose is to provide social services including vocational 
rehabilitation (Example: Cash given you by the Department of Veterans 
Affairs to purchase aid and attendance);
    (2) In-kind assistance (except food, clothing, or shelter) provided 
under a nongovernmental program whose purpose is to provide social 
services; or
    (3) Cash provided by a nongovernmental social services program 
(except cash to cover food, clothing, or shelter) if the cash is either:
    (i) Repayment for program-approved services you already have paid 
for; or
    (ii) A payment restricted to the future purchase of a program-
approved service.

    Example: If you are unable to do your own household chores and a 
private social services agency provides you with cash to pay a homemaker 
the cash is not income.

    (c) Receipts from the sale, exchange, or replacement of a resource. 
Receipts from the sale, exchange, or replacement of a resource are not 
income but are resources that have changed their form. This includes any 
cash or in-kind item that is provided to replace or repair a resource 
(see subpart L) that has been lost, damaged, or stolen. Sections 
416.1150 and 416.1151 discuss treatment of receipts to replace or repair 
a resource following a major disaster or following some other event 
causing damage or loss of a resource.

    Example: If you sell your automobile, the money you receive is not 
income; it is another form of a resource.

    (d) Income tax refunds. Any amount refunded on income taxes you have 
already paid is not income.
    (e) Payments by credit life or credit disability insurance. Payments 
made under a credit life or credit disability insurance policy on your 
behalf are not income.

    Example: If a credit disability policy pays off the mortgage on your 
home after you become disabled in an accident, we do not consider either 
the payment or your increased equity in the home to be income.

    (f) Proceeds of a loan. Money you borrow or money you receive as 
repayment of a loan is not income. However, interest you receive on 
money you have lent is income. Buying on credit is treated as though you 
were borrowing money and what you purchase this way is not income.
    (g) Bills paid for you. Payment of your bills by someone else 
directly to the supplier is not income. However, we count the value of 
anything you receive because of the payment if it is in-kind income as 
defined in Sec. 416.1102.

    Examples: If your daughter uses her own money to pay the grocer to 
provide you with food, the payment itself is not your income because you 
do not receive it. However, because of your daughter's payment, the 
grocer provides you with food; the food is in-kind income to you. 
Similarly, if you buy clothing on credit and your son later pays the 
bill, the payment to the store is not income to you but the clothing is 
in-kind income to you. In this example, if your son pays for the 
clothing in a quarter after the quarter of purchase, we will count the 
in-kind income to you in the quarter in which he pays the bill. On the 
other hand, if your brother pays a lawn service to mow your grass, the 
payment is not income to you because the mowing cannot be used to meet 
your needs for food, clothing, or shelter. Therefore, it is not in-kind 
income as defined in Sec. 416.1102.

    (h) Replacement of income you have already received. If income is 
lost, destroyed, or stolen and you receive a replacement, the 
replacement is not income.

    Example: If your paycheck is stolen and you get a replacement check, 
we count the first check as income. The replacement check is not income.

    (i) Weatherization assistance. Weatherization assistance (Examples: 
Insulation, storm doors and windows) is not income.
    (j) Receipt of certain noncash items. Any item you receive (except 
shelter as defined in Sec. 416.1130, food, or clothing) which would be 
an excluded nonliquid resource (as described in subpart L of this part) 
if you kept it, is not income.

    Example 1: A community takes up a collection to buy you a specially 
equipped van which is your only vehicle. The value of this gift is not 
income because the van does not provide you with food, clothing, or 
shelter and will become an excluded nonliquid resource under Sec. 
416.1218 in the month following the month of receipt.
    Example 2: You inherit a house which is your principal place of 
residence. The value of this inheritance is income because the house 
provides you with shelter and shelter

[[Page 912]]

is income. However, we value the house under the rule in Sec. 416.1140.

[45 FR 65547, Oct. 3, 1980, as amended at 49 FR 48038, Dec. 10, 1984; 57 
FR 53850, Nov. 13, 1992; 59 FR 33907, July 1, 1994]



Sec. 416.1104  Income we count.

    We have described generally what income is and is not for SSI 
purposes (Sec. 416.1103). There are different types of income, earned 
and unearned, and we have rules for counting each. The earned income 
rules are described in Sec. Sec. 416.1110 through 416.1112 and the 
unearned income rules are described in Sec. Sec. 416.1120 through 
416.1124. One type of unearned income is in-kind support and maintenance 
(food, clothing, or shelter). The way we value it depends on your living 
arrangement. These rules are described in Sec. Sec. 416.1130 through 
416.1148 of this part. In some situations we must consider the income of 
certain people with whom you live as available to you and part of your 
income. These rules are described in Sec. Sec. 416.1160 through 
416.1169. We use all of these rules to determine the amount of your 
countable income--the amount that is left after we subtract what is not 
income or is not counted.

[45 FR 65547, Oct. 3, 1980, as amended at 65 FR 16815, Mar. 30, 2000]

                              Earned Income



Sec. 416.1110  What is earned income.

    Earned income may be in cash or in kind. We may include more of your 
earned income than you actually receive. We include more than you 
actually receive if amounts are withheld from earned income because of a 
garnishment or to pay a debt or other legal obligation, or to make any 
other payments. Earned income consists of the following types of 
payments:
    (a) Wages. Wages are what you receive (before any deductions) for 
working as someone else's employee. Wages are the same for SSI purposes 
as for the earnings test in the social security retirement program. (See 
Sec. 404.429(c) of this chapter.) Wages include salaries, commissions, 
bonuses, severance pay, and any other special payments received because 
of your employment. They may also include the value of food, clothing, 
or shelter, or other items provided instead of cash. We refer to this as 
in-kind earned income. However, if you are a domestic or agricultural 
worker, the law requires us to treat your in-kind pay as unearned 
income.
    (b) Net earnings from self-employment. Net earnings from self-
employment are your gross income from any trade or business that you 
operate, less allowable deductions for that trade or business. Net 
earnings also include your share of profit or loss in any partnership to 
which you belong. These are the same net earnings that we would count 
under the social security retirement insurance program and that you 
would report on your Federal income tax return. (See Sec. 404.1080 of 
this chapter.)
    (c) Refunds of Federal income taxes and advance payments by 
employers made in accordance with the earned income credit provisions of 
the Internal Revenue Code. Refunds on account of earned income credits 
are payments made to you under the provisions of section 43 of the 
Internal Revenue Code of 1954, as amended. These refunds may be greater 
than taxes you have paid. You may receive earned income tax credit 
payments along with any other Federal income tax refund you receive 
because of overpayment of your income tax, (Federal income tax refunds 
made on the basis of taxes you have already paid are not income to you 
as stated in Sec. 416.1103(d).) Advance payments of earned income tax 
credits are made by your employer under the provisions of section 3507 
of the same code. You can receive earned income tax credit payments only 
if you meet certain requirements of family composition and income 
limits.
    (d) Payments for services performed in a sheltered workshop or work 
activities center. Payments for services performed in a sheltered 
workshop or work activities center are what you receive for 
participating in a program designed to help you become self-supporting.
    (e) Certain royalties and honoraria. Royalties that are earned 
income are payments to an individual in connection with any publication 
of the work of the individual. (See Sec. 416.1110(b) if you receive a 
royalty as part of your trade or business. See Sec. 416.1121(c) if you 
receive another type of royalty.)

[[Page 913]]

Honoraria that are earned income are those portions of payments, such as 
an honorary payment, reward, or donation, received in consideration of 
services rendered for which no payment can be enforced by law. (See 
Sec. 416.1120 if you receive another type of honorarium.)

[45 FR 65547, Oct. 3, 1980, as amended at 48 FR 23179, May 24, 1983; 50 
FR 48574, Nov. 26, 1985; 56 FR 3212, Jan. 29, 1991; 59 FR 43471, Aug. 
24, 1994]



Sec. 416.1111  How we count earned income.

    (a) Wages. We count wages at the earliest of the following points: 
when you receive them or when they are credited to your account or set 
aside for your use. We determine wages for each month.
    (b) Net earnings from self-employment. We count net earnings from 
self-employment on a taxable year basis. However, we divide the total of 
these earnings equally among the months in the taxable year to get your 
earnings for each month. For example, if your net earnings for a taxable 
year are $2,400, we consider that you received $200 in each month. If 
you have net losses from self-employment, we divide them over the 
taxable year in the same way, and we deduct them only from your other 
earned income.
    (c) Payments for services in a sheltered workshop or activities 
center. We count payments you receive for services performed in a 
sheltered workshop or work activities center when you receive them or 
when they are set aside for your use. We determine the amount of the 
payments for each calendar quarter.
    (d) In-kind earned income. We use the current market value of in-
kind earned income for SSI purposes. (See Sec. 416.1101 for a 
definition of current market value.) If you receive an item that is not 
fully paid for and are responsible for the unpaid balance, only the 
paid-up value is income to you. (See the example in Sec. 416.1123(c)).
    (e) Royalties and honoraria. We count payments of royalties to you 
in connection with any publication of your work, and honoraria, to the 
extent received for services rendered, at the earliest of the following 
points: when you receive them, when they are credited to your account, 
or when they are set aside for your use. (See Sec. 416.1111(b) if you 
receive royalties as part of your trade or business.)

[45 FR 65547, Oct. 3, 1980, as amended at 48 FR 23179, May 24, 1983; 48 
FR 30357, July 1, 1983; 50 FR 48574, Nov. 26, 1985; 58 FR 63889, Dec. 3, 
1993; 59 FR 43471, Aug. 24, 1994]



Sec. 416.1112  Earned income we do not count.

    (a) General. While we must know the source and amount of all of your 
earned income for SSI, we do not count all of it to determine your 
eligibility and benefit amount. We first exclude income as authorized by 
other Federal laws (see paragraph (b) of this section). Then we apply 
the other exclusions in the order listed in paragraph (c) of this 
section to the rest of your income in the month. We never reduce your 
earned income below zero or apply any unused earned income exclusion to 
unearned income.
    (b) Other Federal laws. Some Federal laws other than the Social 
Security Act provide that we cannot count some of your earned income for 
SSI purposes. We list the laws and exclusions in the appendix to this 
subpart which we update periodically.
    (c) Other earned income we do not count. We do not count as earned 
income--
    (1) Any refund of Federal income taxes you receive under section 32 
of the Internal Revenue Code (relating to earned income tax credit) and 
any payment you receive from an employer under section 3507 of the 
Internal Revenue Code (relating to advance payment of earned income tax 
credit);
    (2) Up to $10 of earned income in a month if it is infrequent or 
irregular; that is, if you receive it only once in a calendar quarter 
from a single source or if you cannot reasonably expect it. If the total 
amount of your infrequent or irregular earned income for a month exceeds 
$10, we cannot use this exclusion;
    (3) If you are a blind or disabled child who is a student regularly 
attending school as described in Sec. 416.1861:
    (i) For earned income beginning January 1, 2002, monthly and yearly 
maximum amounts that are the larger of:

[[Page 914]]

    (A) The monthly and yearly amounts for the previous year, or
    (B) Monthly and yearly maximum amounts increased for changes in the 
cost-of-living, calculated in the same manner as the Federal benefit 
rates described in Sec. 416.405, except that we will use the calendar 
year 2001 amounts as the base amounts and will round the resulting 
amount to the next higher multiple of $10 where such amount is a 
multiple of $5 but not of $10 and to the nearest multiple of $10 in any 
other case.
    (ii) For earned income before January 1, 2002, the amounts indicated 
in Table 1 of this section.

                                 Table 1
------------------------------------------------------------------------
                                                               But not
                                                              more than
                  For months                     Up to per       in a
                                                   month       calendar
                                                                 year
------------------------------------------------------------------------
In calendar years before 2001.................         $400       $1,620
In calendar year 2001.........................        1,290        5,200
------------------------------------------------------------------------

    (4) Any portion of the $20 monthly exclusion in Sec. 
416.1124(c)(10) which has not been excluded from your unearned income in 
that same month;
    (5) $65 of earned income in a month;
    (6) Earned income you use to pay impairment-related work expenses 
described in Sec. 416.976, if you are disabled (but not blind) and 
under age 65 or you are disabled (but not blind) and received SSI as a 
disabled individual (or received disability payments under a former 
State plan) for the month before you reached age 65.
    (i) For periods prior to December 1, 1990, you must be able, 
however, to establish your initial eligibility for Federal benefits 
without the use of the impairment-related work expense exclusion. Once 
you establish your initial eligibility without the use of the 
impairment-related work expense exclusion, the exclusion applies for 
determining your eligibility for all subsequent consecutive months for 
which you are eligible for regular SSI benefits, federally administered 
optional State supplementary payments, special SSI cash benefits or 
special SSI eligibility status. If, in a subsequent month, you are not 
eligible for any of these benefits, you cannot reestablish your 
eligibility for Federal SSI benefits or federally administered optional 
State supplementary payments before December 1, 1990, using the 
impairment-related work expense exclusion.
    (ii) For periods after November 30, 1990, you may also use the 
impairment-related work expense exclusion to establish initial 
eligibility and reeligibility following a month in which you were not 
eligible for regular SSI benefits, a federally administered optional 
State supplementary payment, special SSI cash benefits or special SSI 
eligibility status.
    (7) One-half of remaining earned income in a month;
    (8) Earned income used to meet any expenses reasonably attributable 
to the earning of the income if you are blind and under age 65 or if you 
receive SSI as a blind person for the month before you reach age 65. (We 
consider that you ``reach'' a certain age on the day before that 
particular birthday.); and
    (9) Any earned income you receive and use to fulfill an approved 
plan to achieve self-support if you are blind or disabled and under age 
65 or blind or disabled and received SSI as a blind or disabled person 
for the month before you reached age 65. See Sec. Sec. 416.1180 through 
416.1182 for an explanation of plans to achieve self-support and for the 
rules on when this exclusion applies.

[45 FR 65547, Oct. 3, 1980, as amended at 48 FR 21943, May 16, 1983; 50 
FR 48574, Nov. 26, 1985; 58 FR 63889, Dec. 3, 1993; 59 FR 41405, Aug. 
12, 1994; 65 FR 82912, Dec. 29, 2000]

                             Unearned Income



Sec. 416.1120  What is unearned income.

    Unearned income is all income that is not earned income. We describe 
some of the types of unearned income in Sec. 416.1121. We consider all 
of these items as unearned income, whether you receive them in cash or 
in kind.



Sec. 416.1121  Types of unearned income.

    Some types of unearned income are--
    (a) Annuities, pensions, and other periodic payments. This unearned 
income is usually related to prior work or service. It includes, for 
example, private pensions, social security benefits, disability 
benefits, veterans benefits,

[[Page 915]]

worker's compensation, railroad retirement annuities and unemployment 
insurance benefits.
    (b) Alimony and support payments. For SSI purposes, alimony and 
support payments are cash or in-kind contributions to meet some or all 
of a person's needs for food, clothing, or shelter. Support payments may 
be made voluntarily or because of a court order. Alimony (sometimes 
called maintenance) is an allowance made by a court from the funds of 
one spouse to the other spouse in connection with a suit for separation 
or divorce.
    (c) Dividends, interest, and certain royalties. Dividends and 
interest are returns on capital investments, such as stocks, bonds, or 
savings accounts. Royalties are compensation paid to the owner for the 
use of property, usually copyrighted material or natural resources such 
as mines, oil wells, or timber tracts. Royalty compensation may be 
expressed as a percentage of receipts from using the property or as an 
amount per unit produced. (See Sec. 416.1110(b) if you receive 
royalties as part of your trade or business and Sec. 416.1110(e) if you 
receive royalties in connection with the publication of your work.)
    (d) Rents. Rents are payments you receive for the use of real or 
personal property such as land, housing, or machinery. We deduct from 
rental payments your ordinary and necessary expenses in the same taxable 
year. These include only those expenses necessary for the production or 
collection of the rental income and they must be deducted when paid, not 
when they are incurred. Some examples of deductible expenses are 
interest on debts, State and local taxes on real and personal property 
and on motor fuels, general sales taxes, and expenses of managing or 
maintaining the property. (Sections 163, 164, and 212 of the Internal 
Revenue Code of 1954 and related regulations explain this in more 
detail.) We do not consider depreciation or depletion of property a 
deductible expense. (See Sec. 416.1110(b) for rules on rental income 
that is earned from self-employment. For example, you may be in the 
business of renting properties.)
    (e) Death benefits. We count payments you get which were occasioned 
by the death of another person except for the amount of such payments 
that you spend on the deceased person's last illness and burial 
expenses. Last illness and burial expenses include related hospital and 
medical expenses, funeral, burial plot and interment expenses, and other 
related costs.

    Example: If you receive $2,000 from your uncle's life insurance 
policy and you spend $900 on his last illness and burial expenses, the 
balance, $1,100, is unearned income. If you spend the entire $2,000 for 
the last illness and burial, there is no unearned income.

    (f) Prizes and awards. A prize is generally something you win in a 
contest, lottery or game of chance. An award is usually something you 
receive as the result of a decision by a court, board of arbitration, or 
the like.
    (g) Gifts and inheritances. A gift is something you receive which is 
not repayment to you for goods or services you provided and which is not 
given to you because of a legal obligation on the giver's part. An 
inheritance is something that comes to you as a result of someone's 
death. It can be in cash or in kind, including any right in real or 
personal property. Gifts and inheritances occasioned by the death of 
another person, to the extent that they are used to pay the expenses of 
the deceased's last illness and burial, as defined in paragraph (e) of 
this section, are not considered income.
    (h) Support and maintenance in kind. This is food, clothing, or 
shelter furnished to you. Our rules for valuing this income depend on 
your living arrangement. We use one rule if you are living in the 
household of a person who provides you with both food and shelter. We 
use different rules for other situations where you receive food, 
clothing, or shelter. We discuss all of the rules in Sec. Sec. 416.1130 
through 416.1147.

[45 FR 65547, Oct. 3, 1980, as amended at 56 FR 36000, July 30, 1991; 59 
FR 43471, Aug. 24, 1994]



Sec. 416.1123  How we count unearned income.

    (a) When we count unearned income. We count unearned income at the 
earliest of the following points: When you receive it or when it is 
credited to your account or set aside for your use. We determine your 
unearned income for each month. We describe an exception

[[Page 916]]

to the rule on how we count unearned income in paragraph (d) of this 
section.
    (b) Amount considered as income. We may include more or less of your 
unearned income than you actually receive.
    (1) We include more than you actually receive where another benefit 
payment (such as a social security insurance benefit) (see Sec. 
416.1121) has been reduced to recover a previous overpayment. You are 
repaying a legal obligation through the withholding of portions of your 
benefit amount, and the amount of the debt reduction is also part of 
your unearned income. Exception: We do not include more than you 
actually receive if you received both SSI benefits and the other benefit 
at the time the overpayment of the other benefit occurred and the 
overpaid amount was included in figuring your SSI benefit at that time.

    Example: Joe, an SSI beneficiary, is also entitled to social 
security insurance benefits in the amount of $200 per month. However, 
because of a prior overpayment of his social security insurance 
benefits, $20 per month is being withheld to recover the overpayment. In 
figuring the amount of his SSI benefits, the full monthly social 
security insurance benefit of $200 is included in Joe's unearned income. 
However, if Joe was receiving both benefits when the overpayment of the 
social security insurance benefit occurred and we then included the 
overpaid amount as income, we will compute his SSI benefit on the basis 
of receiving $180 as a social security insurance benefit. This is 
because we recognize that we computed his SSI benefit on the basis of 
the higher amount when he was overpaid.

    (2) We also include more than you actually receive if amounts are 
withheld from unearned income because of a garnishment, or to pay a debt 
or other legal obligaton, or to make any other payment such as payment 
of your Medicare premiums.
    (3) We include less than you actually receive if part of the payment 
is for an expense you had in getting the payment. For example, if you 
are paid for damages you receive in an accident, we subtract from the 
amount of the payment your medical, legal, or other expenses connected 
with the accident. If you receive a retroactive check from a benefit 
program other than SSI, legal fees connected with the claim are 
subtracted. We do not subtract from any taxable unearned income the part 
you have to use to pay personal income taxes. The payment of taxes is 
not an expense you have in getting income.
    (4) In certain situations, we may consider someone else's income to 
be available to you, whether or not it actually is. (For the rules on 
this process, called deeming, see Sec. Sec. 416.1160 through 416.1169.)
    (c) In-kind income. We use the current market value (defined in 
Sec. 416.1101) of in-kind unearned income to determine its value for 
SSI purposes. We describe some exceptions to this rule in Sec. Sec. 
416.1131 through 416.1147. If you receive an item that is not fully paid 
for and are responsible for the balance, only the paid-up value is 
income to you.

    Example: You are given a $1500 automobile but must pay the $1000 due 
on it. You are receiving income of $500.

    (d) Retroactive monthly social security benefits. We count 
retroactive monthly social security benefits according to the rule in 
paragraph (d)(1) of this section, unless the exception in paragraph 
(d)(2) of this section applies:
    (1) Periods for which SSI payments have been made. When you file an 
application for social security benefits and retroactive monthly social 
security benefits are payable on that application for a period for which 
you also received SSI payments (including federally-administered State 
supplementary payments), we count your retroactive monthly social 
security benefits as unearned income received in that period. Rather 
than reducing your SSI payments in months prior to your receipt of a 
retroactive monthly social security benefit, we will reduce the 
retroactive social security benefits by an amount equal to the amount of 
SSI payments (including federally-administered State supplementary 
payments) that we would not have paid to you if your social security 
benefits had been paid when regularly due rather than retroactively (see 
Sec. 404.408b(b)). If a balance is due you from your retroactive social 
security benefits after this reduction, for SSI purposes we will not 
count the balance as unearned income

[[Page 917]]

in a subsequent month in which you receive it. This is because your 
social security benefits were used to determine the amount of the 
reduction. This exception to the unearned income counting rule does not 
apply to any monthly social security benefits for a period for which you 
did not receive SSI.
    (2) Social security disability benefits where drug addiction or 
alcoholism is a contributing factor material to the determination of 
disability. If your retroactive social security benefits must be paid in 
installments because of the limitations on paying lump sum retroactive 
benefits to disabled recipients whose drug addiction or alcoholism is a 
contributing factor material to the determination of disability as 
described in Sec. 404.480, we will count the total of such retroactive 
social security benefits as unearned income in the first month such 
installments are paid, except to the extent the rule in paragraph (d)(1) 
of this section would provide that such benefits not be counted.
    (e) Certain veterans benefits. (1) If you receive a veterans benefit 
that includes an amount paid to you because of a dependent, we do not 
count as your unearned income the amount paid to you because of the 
dependent.
    (2) If you are a dependent of an individual who receives a veterans 
benefit and a portion of the benefit is attributable to you as a 
dependent, we count the amount attributable to you as your unearned cash 
income if--
    (i) You reside with the individual who receives the veterans 
benefit, or
    (ii) You receive your own separate payment from the Department of 
Veterans Affairs.

(Reporting and recordkeeping requirements in paragraph (b) have been 
approved by the Office of Management and Budget under control number 
0960-0128)

[45 FR 65547, Oct. 3, 1980, as amended at 47 FR 4988, Feb. 3, 1982; 47 
FR 13794, Apr. 1, 1982; 50 FR 48574, Nov. 26, 1985; 55 FR 20599, May 18, 
1990; 56 FR 3212, Jan. 29, 1991; 59 FR 59364, Nov. 17, 1994; 60 FR 8152, 
Feb. 10, 1995]



Sec. 416.1124  Unearned income we do not count.

    (a) General. While we must know the source and amount of all of your 
unearned income for SSI, we do not count all of it to determine your 
eligibility and benefit amount. We first exclude income as authorized by 
other Federal laws (see paragraph (b) of this section). Then we apply 
the other exclusions in the order listed in paragraph (c) of this 
section to the rest of your unearned income in the month. We never 
reduce your unearned income below zero or apply any unused unearned 
income exclusion to earned income except for the $20 general exclusion 
described in paragraph (c)(12) of this section.
    (b) Other Federal laws. Some Federal laws other than the Social 
Security Act provide that we cannot count some of your unearned income 
for SSI purposes. We list the laws and the exclusions in the appendix to 
this subpart which we update periodically.
    (c) Other unearned income we do not count. We do not count as 
unearned income--
    (1) Any public agency's refund of taxes on real property or food;
    (2) Assistance based on need which is wholly funded by a State or 
one of its political subdivisions. (For purposes of this rule, an Indian 
tribe is considered a political subdivision of a State.) Assistance is 
based on need when it is provided under a program which uses the amount 
of your income as one factor to determine your eligibility. Assistance 
based on need includes State supplementation of Federal SSI benefits as 
defined in subpart T of this part but does not include payments under a 
Federal/State grant program such as Aid to Families with Dependent 
Children under title IV-A of the Social Security Act;
    (3) Any portion of a grant, scholarship, or fellowship used for 
paying tuition, fees, or other necessary educational expenses. However, 
we do count any portion set aside or actually used for food, clothing, 
or shelter;
    (4) Food which you or your spouse raise if it is consumed by you or 
your household;
    (5) Assistance received under the Disaster Relief and Emergency 
Assistance Act and assistance provided under any Federal statute because 
of a catastrophe which the President of the United States declares to be 
a major disaster. See Sec. 416.1150 for a more detailed discussion of 
this assistance, particularly the treatment of in-kind

[[Page 918]]

support and maintenance received as the result of a major disaster;
    (6) Up to $20 of unearned income in a month if it is infrequent or 
irregular; that is, if you receive a type of income listed in Sec. 
416.1121 only once during a calendar quarter from a single source or if 
you cannot reasonably expect it. If the total amount of infrequent or 
irregular unearned income in a month exceeds $20, we cannot use this 
exclusion;
    (7) Alaska Longevity Bonus payments made to an individual who is a 
resident of Alaska and who, prior to October 1, 1985: met the 25-year 
residency requirement for receipt of such payments in effect prior to 
January 1, 1983; and was eligible for SSI;
    (8) Payments for providing foster care to an ineligible child who 
was placed in your home by a public or private nonprofit child placement 
or child care agency;
    (9) Any interest earned on excluded burial funds and any 
appreciation in the value of an excluded burial arrangement which are 
left to accumulate and become a part of the separate burial fund. (See 
Sec. 416.1231 for an explanation of the exclusion of burial assets.) 
This exclusion from income applies to interest earned on burial funds or 
appreciation in the value of excluded burial arrangements which occur 
beginning November 1, 1982, or the date you first become eligible for 
SSI benefits, if later;
    (10) Certain support and maintenance assistance as described in 
Sec. 416.1157;
    (11) One-third of support payments made to or for you by an absent 
parent if you are a child;
    (12) The first $20 of any unearned income in a month other than 
income in the form of in-kind support and maintenance received in the 
household of another (see Sec. 416.1131) and income based on need. 
Income based on need is a benefit that uses financial need as measured 
by your income as a factor to determine your eligibility. The $20 
exclusion does not apply to a benefit based on need that is totally or 
partially funded by the Federal government or by a nongovernmental 
agency. However, assistance which is based on need and funded wholly by 
a State or one of its political subdivisions is excluded totally from 
income as described in Sec. 416.1124(c)(2). If you have less than $20 
of unearned income in a month and you have earned income in that month, 
we will use the rest of the $20 exclusion to reduce the amount of your 
countable earned income;
    (13) Any unearned income you receive and use to fulfill an approved 
plan to achieve self-support if you are blind or disabled and under age 
65 or blind or disabled and received SSI as a blind or disabled person 
for the month before you reached age 65. See Sec. Sec. 416.1180 through 
416.1182 for an explanation of plans to achieve self-support and for the 
rules on when this exclusion applies;
    (14) The value of any assistance paid with respect to a dwelling 
unit under--
    (i) The United States Housing Act of 1937;
    (ii) The National Housing Act;
    (iii) Section 101 of the Housing and Urban Development Act of 1965;
    (iv) Title V of the Housing Act of 1949; or
    (v) Section 202(h) of the Housing Act of 1959;
    (15) Any interest accrued on and left to accumulate as part of the 
value of an excluded burial space purchase agreement. This exclusion 
from income applies to interest accrued on or after April 1, 1990;
    (16) The value of any commercial transportation ticket, for travel 
by you or your spouse among the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, 
and the Northern Mariana Islands, which is received as a gift by you or 
your spouse and is not converted to cash. If such a ticket is converted 
to cash, the cash you receive is income in the month you receive the 
cash;
    (17) Payments received by you from a fund established by a State to 
aid victims of crime;
    (18) Relocation assistance provided you by a State or local 
government that is comparable to assistance provided under title II of 
the Uniform Relocation Assistance and Real Property Acquisition Policies 
Act of 1970 that is subject to the treatment required by section 216 of 
that Act;

[[Page 919]]

    (19) Hostile fire pay received from one of the uniformed services 
pursuant to 37 U.S.C. 310; and
    (20) Interest or other earnings on a dedicated account which is 
excluded from resources. (See Sec. 416.1247).

[45 FR 65547, Oct. 3, 1980, as amended at 47 FR 55213, Dec. 8, 1982; 48 
FR 21943, May 16, 1983; 48 FR 33258, July 21, 1983; 48 FR 57127, Dec. 
28, 1983; 50 FR 48574, Nov. 26, 1985; 51 FR 39523, Oct. 29, 1986; 54 FR 
19164, May 4, 1989; 55 FR 28378, July 11, 1990; 57 FR 1384, Jan. 14, 
1992; 57 FR 53850, Nov. 13, 1992; 58 FR 63888, Dec. 3, 1993; 61 FR 1712, 
Jan. 23, 1996; 61 FR 49964, Sept. 24, 1996; 61 FR 67207, Dec. 20, 1996]

                     In-Kind Support and Maintenance



Sec. 416.1130  Introduction.

    (a) General. Both earned income and unearned income include items 
received in kind (Sec. 416.1102). Generally, we value in-kind items at 
their current market value and we apply the various exclusions for both 
earned and unearned income. However, we have special rules for valuing 
food, clothing, or shelter that is received as unearned income (in-kind 
support and maintenance). This section and the ones that follow discuss 
these rules. In these sections (Sec. Sec. 416.1130 through 416.1148) we 
use the in-kind support and maintenance you receive in the month as 
described in Sec. 416.420 to determine your SSI benefit. We value the 
in-kind support and maintenance using the Federal benefit rate for the 
month in which you receive it. Exception: For the first 2 months for 
which a cost-of-living adjustment applies, we value in-kind support and 
maintenance you receive using the VTR or PMV based on the Federal 
benefit rate as increased by the cost-of-living adjustment.

    Example: Mr. Jones receives an SSI benefit which is computed by 
subtracting one-third from the Federal benefit rate. This one-third 
represents the value of the income he receives because he lives in the 
household of a son who provides both food and shelter (in-kind support 
and maintenance). In January, we increase his SSI benefit because of a 
cost-of-living adjustment. We base his SSI payment for that month on the 
food and shelter he received from his son two months earlier in 
November. In determining the value of that food and shelter he received 
in November, we use the Federal benefit rate for January.

    (b) How we define in-kind support and maintenance. In-kind support 
and maintenance means any food, clothing, or shelter that is given to 
you or that you receive because someone else pays for it. Shelter 
includes room, rent, mortgage payments, real property taxes, heating 
fuel, gas, electricity, water, sewerage, and garbage collection 
services. You are not receiving in-kind support and maintenance in the 
form of room or rent if you are paying the amount charged under a 
business arrangement. A business arrangement exists when the amount of 
monthly rent required to be paid equals the current market rental value 
(see Sec. 416.1101). Exception: In the States in the Seventh Circuit 
(Illinois, Indiana, and Wisconsin), a business arrangement exists when 
the amount of monthly rent required to be paid equals or exceeds the 
presumed maximum value described in Sec. 416.1140(a)(1). In those 
States, if the required amount of rent is less than the presumed maximum 
value, we will impute as in-kind support and maintenance, the difference 
between the required amount of rent and either the presumed maximum 
value or the current market value, whichever is less.
    (c) How we value in-kind support and maintenance. Essentially, we 
have two rules for valuing the in-kind support and maintenance which we 
must count. The one-third reduction rule applies if you are living in 
the household of a person who provides you with both food and shelter 
(Sec. Sec. 416.1131 through 416.1133). The presumed value rule applies 
in all other situations where you are receiving countable in-kind 
support and maintenance (Sec. Sec. 416.1140 through 416.1145). If 
certain conditions exist, we do not count in-kind support and 
maintenance. These are discussed in Sec. Sec. 416.1141 through 
416.1145.

[45 FR 65547, Oct. 3, 1980, as amended at 50 FR 48574, Nov. 26, 1985; 51 
FR 13488, Apr. 21, 1986; 60 FR 16375, Mar. 30, 1995; 63 FR 33546, June 
19, 1998]



Sec. 416.1131  The one-third reduction rule.

    (a) What the rule is. Instead of determining the actual dollar value 
of in-kind support and maintenance, we count one-third of the Federal 
benefit

[[Page 920]]

rate as additional income if you (or you and your eligible spouse)--
    (1) Live in another person's household (see Sec. 416.1132) for a 
full calendar month except for temporary absences (see Sec. 416.1149), 
and
    (2) Receive both food and shelter from the person in whose household 
you are living. (If you do not receive both food and shelter from this 
person, see Sec. 416.1140.)
    (b) How we apply the one-third reduction rule. The one-third 
reduction applies in full or not at all. When you are living in another 
person's household, and the one-third reduction rule applies, we do not 
apply any income exclusions to the reduction amount. However, we do 
apply appropriate exclusions to any other earned or unearned income you 
receive. If you have an eligible spouse we apply the rules described in 
Sec. 416.1147.
    (c) If you receive other support and maintenance. If the one-third 
reduction rule applies to you, we do not count any other in-kind support 
and maintenance you receive.

[45 FR 65547, Oct. 3, 1980, as amended at 50 FR 48574, Nov. 26, 1985]



Sec. 416.1132  What we mean by ``living in another person's household''.

    (a) Household. For purposes of this subpart, we consider a household 
to be a personal place of residence. A commercial establishment such as 
a hotel or boarding house is not a household but a household can exist 
within a commercial establishment. If you live in a commercial 
establishment, we do not automatically consider you to be a member of 
the household of the proprietor. You may, however, live in the household 
of a roomer or boarder within the hotel or boarding house. An 
institution is not a household and a household cannot exist within an 
institution. (Institution is defined in Sec. 416.1101.)
    (b) Another person's household. You live in another person's 
household if paragraph (c) of this section does not apply and if the 
person who supplies the support and maintenance lives in the same 
household and is not--
    (1) Your spouse (as defined in Sec. 416.1806);
    (2) A minor child; or
    (3) An ineligible person (your spouse, parent, or essential person) 
whose income may be deemed to you as described in Sec. Sec. 416.1160 
through 416.1169.
    (c) Your own household--not another person's household. You are not 
living in another person's household (you live in your own household) 
if--
    (1) You (or your spouse who lives with you or any person whose 
income is deemed to you) have an ownership interest or a life estate 
interest in the home;
    (2) You (or your spouse who lives with you or any person whose 
income is deemed to you) are liable to the landlord for payment of any 
part of the rental charges;
    (3) You live in a noninstitutional care situation as described in 
Sec. 416.1143;
    (4) You pay at least a pro rata share of household and operating 
expenses (see Sec. 416.1133); or
    (5) All members of the household receive public income--maintenance 
payments (Sec. 416.1142).

[45 FR 65547, Oct. 3, 1980, as amended at 50 FR 48574, Nov. 26, 1985]



Sec. 416.1133  What is a pro rata share of household operating expenses.

    (a) General. If you pay your pro rata share toward monthly household 
operating expenses, you are living in your own household and are not 
receiving in-kind support and maintenance from anyone else in the 
household. The one-third reduction, therefore, does not apply to you. 
(If you are receiving food, clothing, or shelter from someone outside 
the household, we value it under the rule in Sec. 416.1140.)
    (b) How we determine a pro rata share. Your pro rata share of 
household operating expenses is the average monthly household operating 
expenses (based on a reasonable estimate if exact figures are not 
available) divided by the number of people in the household, regardless 
of age.
    (c) Average household operating expenses. Household operating 
expenses are the household's total monthly expenditures for food, rent, 
mortgage, property taxes, heating fuel, gas, electricity, water, 
sewerage, and garbage collection service. (The term does not include the 
cost of these items if someone outside the household pays for

[[Page 921]]

them.) Generally, we average household operating expenses over the past 
12 months to determine a pro rata share.



Sec. 416.1140  The presumed value rule.

    (a) How we apply the presumed value rule. (1) When you receive in-
kind support and maintenance and the one-third reduction rule does not 
apply, we use the presumed value rule. Instead of determining the actual 
dollar value of any food, clothing, or shelter you receive, we presume 
that it is worth a maximum value. This maximum value is one-third of 
your Federal benefit rate plus the amount of the general income 
exclusion described in Sec. 416.1124(c)(12).
    (2) The presumed value rule allows you to show that your in-kind 
support and maintenance is not equal to the presumed value. We will not 
use the presumed value if you show us that--
    (i) The current market value of any food, clothing, or shelter you 
receive, minus any payment you make for them, is lower than the presumed 
value; or
    (ii) The actual amount someone else pays for your food, clothing, or 
shelter is lower than the presumed value.
    (b) How we determine the amount of your unearned income under the 
presumed value rule. (1) If you choose not to question the use of the 
presumed value, or if the presumed value is less than the actual value 
of the food, clothing, or shelter you receive, we use the presumed value 
to figure your unearned income.
    (2) If you show us, as provided in paragraph (a)(2) of this section, 
that the presumed value is higher than the actual value of the food, 
clothing, or shelter you receive, we use the actual amount to figure 
your unearned income.

[45 FR 65547, Oct. 3, 1980, as amended at 50 FR 48575, Nov. 26, 1985; 58 
FR 63888, Dec. 3, 1993]



Sec. 416.1141  When the presumed value rule applies.

    The presumed value rule applies whenever we must count in-kind 
support and maintenance as unearned income and the one-third reduction 
rule does not apply. This means that the presumed value rule applies if 
you are living--
    (a) In another person's household (as described in Sec. 
416.1132(b)) but not receiving both food and shelter from that person;
    (b) In your own household (as described in Sec. 416.1132(c)). For 
exceptions, see Sec. 416.1142 if you are in a public assistance 
household and Sec. 416.1143 if you are in a noninstitutional care 
situation;
    (c) In a nonmedical institution including any--
    (1) Public nonmedical institution if you are there for less than a 
full calendar month;
    (2) Public or private nonprofit educational or vocational training 
insitution;
    (3) Private nonprofit retirement home or similar institution where 
there is an express obligation to provide your full support and 
maintenance or where someone else pays for your support and maintenance. 
For exceptions, see Sec. 416.1144; and
    (4) For-profit institution where someone else pays for your support 
and maintenance. If you or the institution pay for it, see Sec. 
416.1145.



Sec. 416.1142  If you live in a public assistance household.

    (a) Definition. A public assistance household is one in which every 
member receives some kind of public income-maintenance payments. These 
are payments made under--
    (1) Title IV-A of the Social Security Act (Aid to Families with 
Dependent Children);
    (2) Title XVI of the Social Security Act (SSI, including federally 
administered State supplements and State administered mandatory 
supplements);
    (3) The Refugee Act of 1980 (Those payments based on need);
    (4) The Disaster Relief and Emergency Assistance Act;
    (5) General assistance programs of the Bureau of Indian Affairs;
    (6) State or local government assistance programs based on need (tax 
credits or refunds are not assistance based on need); and
    (7) U.S. Department of Veterans Affairs programs (those payments 
based on need).

[[Page 922]]

    (b) How the presumed value rule applies. If you live in a public 
assistance household, we consider that you are not receiving in-kind 
support and maintenance from members of the household. In this 
situation, we use the presumed value rule only if you receive food, 
clothing, or shelter from someone outside the household.

[45 FR 65547, Oct. 3, 1980, as amended at 57 FR 53850, Nov. 13, 1992]



Sec. 416.1143  If you live in a noninstitutional care situation.

    (a) Definitions. For purposes of this subpart you live in a 
noninstitutional care situation if all the following conditions exist:
    (1) You are placed by a public or private agency under a specific 
program such as foster or family care;
    (2) The placing agency is responsible for your care;
    (3) You are in a private household (not an institution) which is 
licensed or approved by the placing agency to provide care; and
    (4) You, a public agency, or someone else pays for your care.
    (b) How the presumed value rule applies. You are not receiving in-
kind support and maintenance and the presumed value rule does not apply 
if you pay the rate the placing agency establishes. We consider this 
established rate to be the current market value for the in-kind support 
and maintenance you are receiving. The presumed value rule applies if 
you pay less than the established rate and the difference is paid by 
someone else other than a public or private agency providing social 
services described in Sec. 416.1103(b) or assistance based on need 
described in Sec. 416.1124(c)(2).



Sec. 416.1144  If you live in a nonprofit retirement home or similar institution.

    (a) Definitions. For purposes of this section the following 
definitions apply:
    (1) Nonprofit retirement home or similar institution means a 
nongovernmental institution as defined under Sec. 416.1101, which is, 
or is controlled by, a private nonprofit organization and which does not 
provide you with--
    (i) Services which are (or could be) covered under Medicaid, or
    (ii) Education or vocational training.
    (2) Nonprofit organization means a private organization which is tax 
exempt under section 501(a) of the Internal Revenue Code of 1954 and is 
of the kind described in section 501 (c) or (d) of that code.
    (3) An express obligation to provide your full support and 
maintenance means there is either a legally enforceable written contract 
or set of membership rules providing that the home, institution, or 
organization--
    (i) Will provide at least all of your food and shelter needs; and
    (ii) Does not require any current or future payment for that food 
and shelter. (For purposes of this paragraph, a lump sum prepayment for 
lifetime care is not a current payment.)
    (b) How the presumed value rule applies. The presumed value rule 
applies if you are living in a nonprofit retirement home or similar 
institution where there is an express obligation to provide your full 
support and maintenance or where someone else pays for your support and 
maintenance. The rule does not apply to the extent that--
    (1) The home, institution, or nonprofit organization does not have 
an express obligation to provide your full support and maintenance; and
    (2) The home, institution, or nonprofit organization receives no 
payment for your food, clothing, or shelter, or receives payment from 
another nonprofit organization.

[45 FR 65547, Oct. 3, 1980, as amended at 51 FR 34464, Sept. 29, 1986]



Sec. 416.1145  How the presumed value rule applies in a nonmedical for-profit 
institution.

    If you live in a nonmedical for-profit institution, we consider the 
amount accepted by that institution as payment in full to be the current 
market value of whatever food, clothing, or shelter the institution 
provides. If you are paying or are legally indebted for that amount, you 
are not receiving in-kind support and maintenance. We do not use the 
presumed value rule unless someone else pays for you.

[[Page 923]]

        In-Kind Support and Maintenance in Special Circumstances



Sec. 416.1147  How we value in-kind support and maintenance for a couple.

    (a) Both members of a couple live in another person's household and 
receive food and shelter from that person. When both of you live in 
another person's household throughout a month and receive food and 
shelter from that person, we apply the one-third reduction to the 
Federal benefit rate for a couple (Sec. 416.1131).
    (b) One member of a couple lives in another person's household and 
receives food and shelter from that person and the other member of the 
couple is in a medical institution. (1) If one of you is living in the 
household of another person who provides you with both food and shelter, 
and the other is temporarily absent from the household as provided in 
Sec. 416.1149(c)(1) (in a medical institution that receives substantial 
Medicaid payments for his or her care (Sec. 416.211(b))), and is 
ineligible in the month for either benefit payable under Sec. 416.212, 
we compute your benefits as if you were separately eligible individuals 
(see Sec. 416.414(b)(3)). This begins with the first full calendar 
month that one of you is in the medical institution. The one living in 
another person's household is eligible at an eligible individual's 
Federal benefit rate and one-third of that rate is counted as income not 
subject to any income exclusions. The one in the medical institution 
cannot receive more than the reduced benefit described in Sec. 
416.414(b)(3)(i).
    (2) If the one member of the couple in the institution is eligible 
for one of the benefits payable under the Sec. 416.212 provisions, we 
compute benefits as a couple at the rate specified under Sec. 416.412. 
However, if that one member remains in the institution for a full month 
after expiration of the period benefits based on Sec. 416.212 can be 
paid, benefits will be computed as if each person were separately 
eligible as described under paragraph (c)(1) of this section. This 
begins with the first calendar month after expiration of the period 
benefits based on Sec. 416.212 can be paid.
    (c) Both members of a couple are subject to the presumed value rule. 
If the presumed value rule applies to both of you, we value any food, 
clothing, or shelter you and your spouse receive at one-third of the 
Federal benefit rate for a couple plus the amount of the general income 
exclusion (Sec. 416.1124(c)(12)), unless you can show that their value 
is less as described in Sec. 416.1140(a)(2).
    (d) One member of a couple is subject to the presumed value rule and 
the other member is in a medical institution. (1) If one of you is 
subject to the presumed value rule and the other is temporarily absent 
from the household as provided in Sec. 416.1149(c)(1) (in a medical 
institution that receives substantial Medicaid payments for his or her 
care (Sec. 416.211(b))), and is ineligible in that month for either 
benefit payable under Sec. 416.212, we compute your benefits as if both 
members of the couple are separately eligible individuals (see Sec. 
416.414(b)(3)). This begins with the first full calendar month that one 
of you is in the medical institution (see Sec. 416.211(b)). We value 
any food, clothing, or shelter received by the one outside of the 
medical institution at one-third of an eligible individual's Federal 
benefit rate, plus the amount of the general income exclusion (Sec. 
416.1124(c)(12)), unless you can show that their value is less as 
described in Sec. 416.1140(a)(2). The member of the couple in the 
medical institution cannot receive more than the reduced benefit 
described in Sec. 416.414(b)(3)(i).
    (2) If one of you is subject to the presumed value rule and the 
other in the institution is eligible for one of the benefits payable 
under Sec. 416.212, we compute the benefits as a couple at the rate 
specified under Sec. 416.412. However, if the one in the institution 
remains in the institution after the period benefits based on Sec. 
416.212 can be paid, we will compute benefits as if each member of the 
couple were separately eligible as described in paragraph (d)(1) of this 
section.

[60 FR 16375, Mar. 30, 1995, as amended at 61 FR 10279, Mar. 13, 1996]



Sec. 416.1147a  Income rules in change-of-status situations involving in-kind 
support and maintenance.

    (a) General. This section explains the rules for determining 
countable income, including in-kind support and

[[Page 924]]

maintenance, when eligible individuals become an eligible couple or when 
an eligible couple becomes eligible individuals. Generally, under 
retrospective monthly accounting, income in a prior month, including in-
kind support and maintenance, affects benefit amounts for a current 
month. The prior month may be the first or second month prior to the 
current month (as explained in Sec. 416.420(a)) and the rules in this 
section apply when a change-of-status becomes effective between the 
prior month and the current month.
    (b) Eligible individuals become an eligible couple. If you and your 
spouse have been eligible individuals and become an eligible couple, we 
combine the earned and unearned income each of you had as an eligible 
individual in the prior month. If either or both of you received in-kind 
support and maintenance, we include its value as income. This may be 
one-third of the Federal benefit rate that applied in the prior month 
for one or both of you who lived in the household of another. It may be 
the presumed maximum value (one-third of the Federal benefit rate plus 
$20 as explained in Sec. 416.1140) for one or both of you as 
appropriate. It may also be a combination of the two if each of you 
received income in one of these forms. We also include income deemed to 
either or both of you in the prior month.
    (c) Eligible couple becomes one or two eligible individuals. If you 
are an eligible individual in the current month but were a member of an 
eligible couple in the prior month, we determine your countable income 
in the prior month separately from that of your spouse. We determine the 
value of any in-kind support and maintenance you and your spouse 
received in the prior month using the rules contained in Sec. 416.1147. 
For example, if both of you lived in the household of another and the 
one-third reduction applied, each of you would have income equal to one-
sixth of the Federal benefit rate fov a couple. Also, for example, if 
you received in-kind support and maintenance and the presumed maximum 
value applied, you would have income equal to one-sixth of the Federal 
benefit rate for a couple, plus $10. We divide any other income you had 
as an eligible couple according to who owned the income. If ownership of 
jointly owned income cannot be determined, we allocate one-half of it to 
you.

[50 FR 48575, Nov. 26, 1985]



Sec. 416.1148  If you have both in-kind support and maintenance and income 
that is deemed to you.

    (a) The one-third reduction and deeming of income. If you live in 
the household of your spouse, parent, essential person, or sponsor whose 
income can be deemed to you, or the household of a parent whose income 
is not deemed to you because of the provisions of Sec. 416.1165(i), the 
one-third reduction does not apply to you. The rules on deeming income 
are in Sec. Sec. 416.1160 through 416.1169. However, if you live in 
another person's household as described in Sec. 416.1131, and someone 
whose income can be deemed to you lives in the same household, we must 
apply both the one-third reduction and the deeming rules to you.
    (b) The presumed value rule and deeming of income. (1) If you live 
in the same household with someone whose income can be deemed to you 
(Sec. Sec. 416.1160 through 416.1169), or with a parent whose income is 
not deemed to you because of the provisions of Sec. 416.1165(i), any 
food, clothing, or shelter that person provides is not income to you. 
However, if you receive any food, clothing, or shelter from another 
source, it is income and we value it under the presumed value rule 
(Sec. 416.1140). We also apply the deeming rules.
    (2) If you are a child under age 18 who lives in the same household 
with an ineligible parent whose income may be deemed to you, and you are 
temporarily absent from the household to attend school (Sec. 
416.1167(b)), any food, clothing, or shelter you receive at school is 
income to you unless your parent purchases it. Unless otherwise 
excluded, we value this income under the presumed value rule (Sec. 
416.1140). We also apply the deeming rules to you (Sec. 416.1165).

[60 FR 361, Jan. 4, 1995]

[[Page 925]]

                            Temporary Absence



Sec. 416.1149  What is a temporary absence from your living arrangement.

    (a) General. A temporary absence may be due to employment, 
hospitalization, vacations, or visits. The length of time an absence can 
be temporary varies depending on the reason for your absence. For 
purposes of valuing in-kind support and maintenance under Sec. Sec. 
416.1130 through 416.1148, we apply the rules in this section. In 
general, we will find a temporary absence from your permanent living 
arrangement if you (or you and your eligible spouse)-
    (1) Become a resident of a public institution, or a public or 
private medical care facility where you otherwise would be subject to 
the reduced benefit rate described in Sec. 416.414, and you are 
eligible for the benefits payable under Sec. 416.212; or
    (2) Were in your permanent living arrangement for at least 1 full 
calendar month prior to the absence and intend to, and do, return to 
your permanent living arrangement in the same calendar month in which 
you (or you and your spouse) leave, or in the next month.
    (b) Rules we apply during a temporary absence. During a temporary 
absence, we continue to value your support and maintenance the same way 
that we did in your permanent living arrangement. For example, if the 
one-third reduction applies in your permanent living arrangement, we 
continue to apply the same rule during a temporary absence. However, if 
you receive in-kind support and maintenance only during a temporary 
absence we do not count it since you are still responsible for 
maintaining your permanent quarters during the absence.
    (c) Rules for temporary absence in certain circumstances. (1)(i) If 
you enter a medical care facility where you are eligible for the reduced 
benefits payable under Sec. 416.414 for full months in the facility, 
and you are not eligible for either benefit payable under Sec. 416.212 
(and you have not received such benefits during your current period of 
confinement) and you intend to return to your prior living arrangement, 
we consider this a temporary absence regardless of the length of your 
stay in the facility. We use the rules that apply to your permanent 
living arrangement to value any food, clothing, or shelter you receive 
during the month (for which reduced benefits under Sec. 416.414 are not 
payable) you enter or leave the facility. During any full calendar month 
you are in the medical care facility, you cannot receive more than the 
Federal benefit rate described in Sec. 416.414(b)(1). We do not 
consider food or shelter provided during a medical confinement to be 
income.
    (ii) If you enter a medical care facility and you are eligible for 
either benefit payable under Sec. 416.212, we also consider this a 
temporary absence from your permanent living arrangement. We use the 
rules that apply to your permanent living arrangement to value any food, 
clothing, or shelter you receive during the month you enter the facility 
and throughout the period you are eligible for these benefits. We 
consider your absence to be temporary through the last month benefits 
under Sec. 416.212 are paid unless you are discharged from the facility 
in the following month. In that case, we consider your absence to be 
temporary through the date of discharge.
    (2)(i) Generally, if you are a child under age 22, you are 
temporarily absent while you are away at school, regardless of how long 
you are away, if you come home on some weekends, lengthy holidays, and 
vacations (or for extended visits as provided in school regulations).
    (ii) However, if you are a child under age 18, and your permanent 
living arrangement is with an ineligible parent or essential person 
(Sec. 416.222), we follow the rules in Sec. 416.1148(b)(2). When you 
reach age 18, or if you are under age 18 and deeming does not apply, we 
consider the circumstances of your permanent living arrangement to value 
any in-kind support and maintenance you receive.

[45 FR 65547, Oct. 3, 1980, as amended at 50 FR 48575, Nov. 26, 1985; 52 
FR 8882, Mar. 20, 1987; 61 FR 10279, Mar. 13, 1996; 62 FR 1056, Jan. 8, 
1997]

[[Page 926]]

                                Disasters



Sec. 416.1150  How we treat income received because of a major disaster.

    (a) General. The Disaster Relief and Emergency Assistance Act and 
other Federal statutes provide assistance to victims of major disasters. 
In this section we describe when we do not count certain kinds of 
assistance you receive under these statutes.
    (b) Support and maintenance. (1) We do not count the value of 
support and maintenance (in cash or in kind) received from a Federal, 
State, or local government source, or from a disaster assistance 
organization, and the one-third reduction rule does not apply if--
    (i) You live in a household which you or you and another person 
maintain as your home when a catastrophe occurs in the area;
    (ii) The President of the United States declares the catastrophe to 
be a major disaster for purposes of the Disaster Relief and Emergency 
Assistance Act;
    (iii) You stop living in the home because of the catastrophe and 
within 30 days after the catastrophe you begin to receive support and 
maintenance; and
    (iv) You receive the support and maintenance while living in a 
residential facility maintained by another person.
    (2) We do not count the value of support and maintenance (in cash or 
in kind) received from any other source, such as from a private 
household, and the one-third reduction rule does not apply for up to 18 
months after you begin to receive it if--
    (i) You live in a household which you or you and another person 
maintain as your home when a catastrophe occurs in the area;
    (ii) The President of the United States declares the catastrophe to 
be a major disaster for purposes of the Disaster Relief and Emergency 
Assistance Act;
    (iii) You stop living in the home because of the catastrophe and 
within 30 days after the catastrophe you begin to receive support and 
maintenance; and
    (iv) You receive the support and maintenance while living in a 
residential facility (including a private household) maintained by 
another person.
    (c) Other assistance you receive. We do not consider other 
assistance to be income if you receive it under the Disaster Relief and 
Emergency Assistance Act or under another Federal statute because of a 
catastrophe which the President declares to be a major disaster or if 
you receive it from a State or local government or from a disaster 
assistance organization. For example, you may receive payments to repair 
or replace your home or other property.
    (d) Interest payments. We do not count any interest earned on the 
assistance payments described in paragraph (c) of this section.

[57 FR 53850, Nov. 13, 1992]



Sec. 416.1151  How we treat the repair or replacement of lost, damaged, 
or stolen resources.

    (a) General rule. If a resource is lost, damaged, or stolen, you may 
receive cash to repair or replace it or the resource may be repaired or 
replaced for you. We do not count the cash or the repair or replacement 
of the resource as your income.
    (b) Interest on cash for repair or replacement of a noncash 
resource. We do not count any interest earned on the cash you receive 
for repair or replacement of a noncash resource if the interest is 
earned within 9 months of the date you receive the cash. We can extend 
the 9-month period for up to an additional 9 months if we find you have 
good cause for not repairing or replacing the resource within the 
initial period. Good cause exists, for example, if you show that 
circumstances beyond your control prevent the repair or replacement, or 
contracting for the repair or replacement, of the resource within the 
first 9-month period.
    (c) Temporary replacement of a damaged or destroyed home. In 
determining the amount of in-kind support and maintenance you receive 
(Sec. Sec. 416.1130 through 416.1140), we do not count temporary 
housing if--
    (1) Your excluded home is damaged or destroyed, and
    (2) You receive the temporary housing only until your home is 
repaired or replaced.

[[Page 927]]

                         Home Energy Assistance



Sec. 416.1157  Support and maintenance assistance.

    (a) General. Section 2639 of Pub. L. 98-369, effective October 1, 
1984, amended section 1612(b)(13) to provide that certain support and 
maintenance assistance, which includes home energy assistance, be 
excluded from countable income for SSI purposes. This section discusses 
how we apply section 1612(b)(13).
    (b) Definitions. For support and maintenance assistance purposes--
    Appropriate State agency means the agency designated by the chief 
executive officer of the State to handle the State's responsibilities as 
set out in paragraph (c) of this section.
    Based on need means that the provider of the assistance:
    (1) Does not have an express obligation to provide the assistance;
    (2) States that the aid is given for the purpose of support or 
maintenance assistance or for home energy assistance (e.g., vouchers for 
heating or cooling bills, storm doors); and
    (3) Provides the aid for an SSI claimant, a member of the household 
in which an SSI claimant lives or an SSI claimant's ineligible spouse, 
parent, sponsor (or the sponsor's spouse) of an alien, or essential 
person.
    Private nonprofit agency means a religious, charitable, educational, 
or other organization such as described in section 501(c) of the 
Internal Revenue Code of 1954. (Actual tax exempt certification by IRS 
is not necessary.)
    Rate-of-return entity means an entity whose revenues are primarily 
received from the entity's charges to the public for goods or services 
and such charges are based on rates regulated by a State or Federal 
governmental body.
    Support and maintenance assistance means cash provided for the 
purpose of meeting food, clothing, or shelter needs or in-kind support 
and maintenance as defined in Sec. 416.1121(h). Support and maintenance 
assistance includes home energy assistance. Home energy assistance means 
any assistance related to meeting the costs of heating or cooling a 
home. Home energy assistance includes such items as payments for utility 
service or bulk fuels; assistance in kind such as portable heaters, 
fans, blankets, storm doors, or other items which help reduce the costs 
of heating and cooling such as conservation or weatherization materials 
and services; etc.
    c) What assistance we do not count as income. We do not count as 
income certain support and maintenance assistance received on or after 
October 1, 1984, by you or your ineligible spouse, parent, sponsor (or 
your sponsor's spouse) if you are an alien, or an essential person. We 
also do not consider certain support and maintenance assistance in 
determining a pro rata share of household operating expenses under Sec. 
416.1133. We do not count that assistance which is certified in writing 
by the appropriate State agency to be both based on need and--
    (1) Provided in kind by a private nonprofit agency; or
    (2) Provided in cash or in kind by--
    (i) A supplier of home heating oil or gas;
    (ii) A rate-of-return entity providing home energy; or
    (iii) A municipal utility providing home energy.

[51 FR 39523, Oct. 29, 1986; 51 FR 43709, Dec. 3, 1986, as amended at 53 
FR 35808, Sept. 15, 1988]

                            Deeming of Income



Sec. 416.1160  What is deeming of income.

    (a) General. We use the term deeming to identify the process of 
considering another person's income to be your own. When the deeming 
rules apply, it does not matter whether the income of the other person 
is actually available to you. We must apply these rules anyway. There 
are four categories of individuals whose income may be deemed to you.
    (1) Ineligible spouse. If you live in the same household with your 
ineligible spouse, we look at your spouse's income to decide whether we 
must deem some of it to you. We do this because we expect your spouse to 
use some of his or her income to take care of some of your needs.
    (2) Ineligible parent. If you are a child to whom deeming rules 
apply (See Sec. 416.1165), we look at your parent's income (and that of 
your parent's spouse)

[[Page 928]]

to decide whether we must deem some of it to be yours. We do this 
because we expect your parent to use some of his or her income to take 
care of your needs.
    (3) Sponsor of an alien. If you are an alien who has a sponsor and 
you first apply for SSI benefits after September 30, 1980, we look at 
your sponsor's income to decide whether we must deem some of it to be 
yours. This rule applies for 3 years after you are admitted to the 
United States for permanent residence and regardless of whether you live 
in the same household as your sponsor. We deem your sponsor's income to 
you because your sponsor agreed to support you (signed an affidavit of 
support) as a condition of your admission to the United States. If two 
deeming rules could apply to you because your sponsor is also your 
ineligible spouse or parent who lives with you, we use the appropriate 
spouse-to-spouse or parent-to-child deeming rules instead of the 
sponsor-to-alien rules. If you have a sponsor and also have an 
ineligible spouse or parent who is not your sponsor and whose income can 
be deemed to you, both rules apply. If your sponsor is not your parent 
or spouse but is the ineligible spouse or parent of another SSI 
beneficiary, we use the sponsor-to-alien deeming rules for you and the 
appropriate spouse-to-spouse or parent-to-child deeming rules for the 
other SSI beneficiary.
    (4) Essential person. If you live in the same household with your 
essential person (as defined in Sec. 416.222), we must look at that 
person's income to decide whether we must deem some of it to you. We do 
this because we have increased your benefit to help meet the needs of 
your essential person.
    (b) When we deem. We deem income to determine whether you are 
eligible for a benefit and to determine the amount of your benefit. 
However, we may consider this income in different months for each 
purpose.
    (1) Eligibility. We consider the income of your ineligible spouse, 
ineligible parent, sponsor or essential person in the current month to 
determine whether you are eligible for SSI benefits for that month.
    (2) Amount of benefit. We consider the income of your ineligible 
spouse, ineligible parent, sponsor, or essential person in the second 
month prior to the current month to determine your benefit amount for 
the current month. Exceptions:
    (i) We use the income from the first month you are initially 
eligible for payment of SSI benefits (see Sec. 416.501) to determine 
your benefit amount for that month. In the following month (the second 
month you are eligible for payment), we use the same countable income 
that we used in the preceding month to determine your benefit amount.
    (ii) To determine your benefit amount for the first month you again 
become eligible after you have been ineligible for at least a month, we 
use the same countable income that we use to determine your eligibility 
for that month. In the following month (the second month of 
reeligibility), we use the same countable income that we used in the 
preceding month to determine your benefit amount.
    (iii) To determine the amount of your benefit in the current month, 
if there are certain changes in your situation which we list below, we 
use only your own countable income in a prior month, excluding any 
income deemed to you in that month from an ineligible spouse or parent. 
These changes are the death of your spouse or parent, your attainment of 
age 18, or your becoming subject to the $30 Federal benefit rate (Sec. 
416.211(b)).
    (iv) To determine the amount of your benefit for the current month, 
we do not use income deemed from your essential person beginning with 
the month you can no longer qualify for the essential person increment 
(Sec. 416.413). We use only your own countable income in a prior month 
to determine the amount of your benefit for the current month.
    (c) Steps in deeming. Although the way we deem income varies 
depending upon whether you are an eligible individual, an eligible 
child, an alien with a sponsor, or an individual with an essential 
person, we follow several general steps to determine how much income to 
deem.
    (1) We determine how much earned and unearned income your ineligible 
spouse, ineligible parent, sponsor, or

[[Page 929]]

essential person has, and we apply the appropriate exclusions. (See 
Sec. 416.1161(a) for exclusions that apply to an ineligible parent or 
spouse, and Sec. 416.1161(b) for those that apply to an essential 
person or to a sponsor.)
    (2) Before we deem income to you from either your ineligible spouse 
or ineligible parent, we allocate an amount for each ineligible child in 
the household. (Allocations for ineligible children are explained in 
Sec. 416.1163(b) and Sec. 416.1165(b).) We also allocate an amount for 
each eligible alien who is subject to deeming from your ineligible 
spouse or parent as a sponsor. (Allocations for eligible aliens are 
explained in Sec. 416.1163(c).)
    (3) We then follow the deeming rules which apply to you.
    (i) For deeming income from your ineligible spouse, see Sec. 
416.1163.
    (ii) For deeming income from your ineligible parent, see Sec. 
416.1165.
    (iii) For deeming income from your ineligible spouse when you also 
have an eligible child, see Sec. 416.1166.
    (iv) For deeming income from your sponsor if you are an alien, see 
Sec. 416.1166a.
    (v) For deeming income from your essential person, see Sec. 
416.1168. The rules on when we stop deeming income from your essential 
person are in Sec. 416.1169.
    (vi) For provisions on change in status involving couples see Sec. 
416.1163(f) and for those involving parents see Sec. 416.1165(g).
    (d) Definitions for deeming purposes. For deeming purposes--
    Date of admission to or date of entry into the United States means 
the date established by the Immigration and Naturalization Service as 
the date the alien is admitted for permanent residence.
    Dependent means the same thing as it does for Federal income tax 
purposes--we mean someone for whom you are entitled to take a deduction 
on your personal income tax return. Exception: An alien and an alien's 
spouse are not considered to be dependents of the alien's sponsor for 
the purposes of these rules.
    Essential person means someone who was identified as essential to 
your welfare under a State program that preceded the SSI program. (See 
Sec. Sec. 416.220 through 416.223 for the rules on essential persons.)
    Ineligible child means your natural child or adopted child, or the 
natural or adopted child of your spouse, or the natural or adopted child 
of your parent or of your parent's spouse (as the terms child and spouse 
are defined in Sec. 416.1101), who is under age 21, lives in the same 
household with you, and is not eligible for SSI benefits.
    Ineligible parent means a natural or adoptive parent, or the spouse 
(as defined in Sec. 416.1101) of a natural or adoptive parent, who 
lives with you and is not eligible for SSI benefits. The income of 
ineligible parents affects your benefit only if you are a child under 
age 18.
    Ineligible spouse means someone who lives with you as your husband 
or wife and is not eligible for SSI benefits.
    Sponsor means an individual (but not an organization such as the 
congregation of a church or a service club, or an employer who only 
guarantees employment for an alien upon entry but does not sign an 
affadavit of support) who signs an affidavit of support agreeing to 
support you as a condition of your admission as an alien for permanent 
residence in the United States.

[52 FR 8882, Mar. 20, 1987, as amended at 54 FR 19164, May 4, 1989; 64 
FR 31974, June 15, 1999]



Sec. 416.1161  Income of an ineligible spouse, ineligible parent, and 
essential person for deeming purposes.

    The first step in deeming is determining how much income your 
ineligible spouse, ineligible parent (if you are a child), your sponsor 
(if you are an alien), or your essential person, has. We do not always 
include all of their income when we determine how much income to deem. 
In this section we explain the rules for determining how much of their 
income is subject to deeming. As part of the process of deeming income 
from your ineligible spouse or parent, we must determine the amount of 
income of any ineligible children in the household.
    (a) For an ineligible spouse or parent. We do not include any of the 
following types of income (see Sec. 416.1102) of an ineligible spouse 
or parent:

[[Page 930]]

    (1) Income excluded by Federal laws other than the Social Security 
Act (See the appendix to this subpart.)
    (2) Any public income-maintenance payments (Sec. 416.1142(a)) your 
ineligible spouse or parent receives, and any income which was counted 
or excluded in figuring the amount of that payment;
    (3) Any of the income of your ineligible spouse or parent that is 
used by a public income-maintenance program (Sec. 416.1142(a)) to 
determine the amount of that program's benefit to someone else;
    (4) Any portion of a grant, scholarship, or fellowship used to pay 
tuition or fees;
    (5) Money received for providing foster care to an ineligible child;
    (6) The value of food stamps and the value of Department of 
Agriculture donated foods;
    (7) Food raised by your parent or spouse and consumed by members of 
the household in which you live;
    (8) Tax refunds on income, real property, or food purchased by the 
family;
    (9) Income used to fulfill an approved plan for achieving self-
support (see Sec. Sec. 416.1180 through 416.1182);
    (10) Income used to comply with the terms of court-ordered support, 
or support payments enforced under title IV-D of the Act;
    (11) The value of in-kind support and maintenance;
    (12) Alaska Longevity Bonus payments made to an individual who is a 
resident of Alaska and who, prior to October 1, 1985: met the 25-year 
residency requirement for receipt of such payments in effect prior to 
January 1, 1983; and was eligible for SSI;
    (13) Disaster assistance as described in Sec. Sec. 416.1150 and 
416.1151;
    (14) Income received infrequently or irregularly (see Sec. Sec. 
416.1112(c)(1) and 416.1124(c)(6));
    (15) Work expenses if the ineligible spouse or parent is blind;
    (16) Income of your ineligible spouse or ineligible parent which was 
paid under a Federal, State, or local government program (For example, 
payments under title XX of the Social Security Act) to provide you with 
chore, attendant or homemaker services;
    (17) Certain support and maintenance assistance as described in 
Sec. 416.1157(c);
    (18) Housing assistance as provided in Sec. 416.1124(c)(14);
    (19) The value of a commercial transportation ticket as described in 
Sec. 416.1124(c)(16). However, if such a ticket is converted to cash, 
the cash is income in the month your spouse or parent receives the cash;
    (20) Refunds of Federal income taxes and advances made by an 
employer relating to an earned income tax credit, as provided in Sec. 
416.1112(c);
    (21) Payments from a fund established by a State to aid victims of 
crime (see Sec. 416.1124(c)(17));
    (22) Relocation assistance, as described in Sec. 416.1124(c)(18); 
and
    (23) Hostile fire pay received from one of the uniformed services 
pursuant to 37 U.S.C. 310;
    (24) Impairment-related work expenses, as described in 20 CFR 
404.1576, incurred and paid by an ineligible spouse or parent, if the 
ineligible spouse or parent receives disability benefits under title II 
of the Act; and
    (25) Interest earned on excluded burial funds and appreciation in 
the value of excluded burial arrangements which are left to accumulate 
and become part of separate burial funds, and interest accrued on and 
left to accumulate as part of the value of agreements representing the 
purchase of excluded burial spaces (see Sec. 416.1124(c) (9) and (15)).
    (b) For an essential person or for a sponsor of an alien. We include 
all the income (as defined in Sec. 416.1102) of an essential person or 
of a sponsor of an alien and of the spouse of the sponsor (if the 
sponsor and spouse live in the same household) except for support and 
maintenance assistance described in Sec. 416.1157(c), and income 
excluded under Federal laws other than the Social Security Act. For 
information on these laws see the appendix to this subpart.
    (c) For an ineligible child. Although we do not deem any income to 
you from an ineligible child, we reduce his or her allocation if the 
ineligible child has income (see Sec. 416.1163(b)(2)). For this 
purpose, we do not include any of the child's income listed in paragraph 
(a) of this section. In addition, if the ineligible child is a student 
(see Sec. 416.1861), we exclude his/her earned income subject to the 
amounts set in Sec. 416.1112(c)(3).

[[Page 931]]

    (d) For an eligible alien. Although we do not deem any income to you 
from an eligible alien, if your ineligible spouse or ineligible parent 
is also a sponsor of an eligible alien, we reduce the alien's allocation 
if he or she has income (see Sec. 416.1163(c)(2)). For this purpose 
exclude any of the alien's income listed in paragraph (a) of this 
section.

[45 FR 65547, Oct. 3, 1980, as amended at 46 FR 57276, Nov. 23, 1981; 48 
FR 33259, July 21, 1983; 50 FR 48576, Nov. 26, 1985; 51 FR 39523, Oct. 
29, 1986; 52 FR 8883, Mar. 20, 1987; 52 FR 44971, Nov. 24, 1987; 55 FR 
28378, July 11, 1990; 58 FR 63888, 63890, Dec. 3, 1993; 61 FR 1712, Jan. 
23, 1996; 61 FR 49964, Sept. 24, 1996; 67 FR 11034, Mar. 12, 2002]



Sec. 416.1161a  Income for deeming purposes where Medicaid eligibility 
is affected.

    (a) General. In many States, an individual who is eligible for SSI 
or a Federally administered State optional supplementary payment is in 
turn eligible for Medicaid. Also, several other States use SSI deeming 
rules in determining eligibility for Medicaid. In all of these States, 
in extraordinary cases, the Department will not apply the usual rules on 
deeming of income where those rules would result in an individual's 
being ineligible for SSI (or a Federally administered State optional 
supplementary payment) and Medicaid. Any determination made under this 
section may at any time be revised based on new information or changed 
circumstances.
    (b) When special deeming rules apply:
    (1) The Department will consider not applying the usual deeming 
rules only upon application by a State Medicaid agency (requirement 
approved under OMB No. 0960-0304) and on condition that the agency must 
show:
    (i) Deeming would result in lack of Medicaid eligibility for the 
individual.
    (ii) Medicaid eligibility would, prospectively, result in savings to 
the Medicaid program; and
    (iii) The quality of medical care necessary for the individual would 
be maintained under the arrangements contemplated.
    (2) The Department may also in particular cases require that 
additional facts be demonstrated, or that other criteria or standards be 
met, before it determines not to apply the usual deeming rules.
    (c) Amount of income to be deemed. If the usual rules of deeming do 
not apply, the Department will determine an amount, if any, to be 
deemed.
    (d) Temporary effect of special deeming rules. This provision is 
temporary and will be continued only through December 31, 1984. 
Determinations made under this section will nevertheless remain in 
effect unless they are revised based on changed circumstances (including 
establishment in the State of a Medicaid program of home and community-
based services or eligibility under a State plan provision) or new 
information.

[49 FR 5747, Feb. 15, 1984]



Sec. 416.1163  How we deem income to you from your ineligible spouse.

    If you have an ineligible spouse who lives in the same household, we 
apply the deeming rules to your ineligible spouse's income in the 
following order.
    (a) Determining your ineligible spouse's income. We first determine 
how much earned and unearned income your ineligible spouse has, using 
the appropriate exclusions in Sec. 416.1161(a).
    (b) Allocations for ineligible children. We then deduct an 
allocation for ineligible children in the household to help meet their 
needs. Exception: We do not allocate for ineligible children who are 
receiving public income-maintenance payments (see Sec. 416.1142(a)).
    (1) The allocation for each ineligible child is the difference 
between the Federal benefit rate for an eligible couple and the Federal 
benefit rate for an eligible individual. The amount of the allocation 
automatically increases whenever the Federal benefit rate increases. The 
amount of the allocation that we use to determine the amount of a 
benefit for a current month is based on the Federal benefit rate that 
applied in the second prior month unless one of the exceptions in Sec. 
416.1160(b)(2) applies.
    (2) Each ineligible child's allocation is reduced by the amount of 
his or her own income as described in Sec. 416.1161(c).
    (3) We first deduct the allocations from your ineligible spouse's 
unearned income. If your ineligible spouse does not have enough unearned 
income to cover the allocations we deduct the

[[Page 932]]

balance from your ineligible spouse's earned income.
    (c) Allocations for aliens sponsored by your ineligible spouse. We 
also deduct an allocation for eligible aliens who have been sponsored by 
and who have income deemed from your ineligible spouse.
    (1) The allocation for each alien who is sponsored by and who has 
income deemed from your ineligible spouse is the difference between the 
Federal benefit rate for an eligible couple and the Federal benefit rate 
for an eligible individual. The amount of the allocation automatically 
increases whenever the Federal benefit rate increases. The amount of the 
allocation that we use to compute your benefit for a current month is 
based on the Federal benefit rate that applied in the second prior month 
(unless the current month is the first or second month of eligibility or 
re-eligibility as explained in Sec. 416.420(a) and (b) (2) and (3)).
    (2) Each alien's allocation is reduced by the amount of his or her 
own income as described in Sec. 416.1161(d).
    (3) We first deduct the allocations from your ineligible spouse's 
unearned income. If your ineligible spouse does not have enough unearned 
income to cover the allocations, we deduct the balance from your 
ineligible spouse's earned income.
    (d) Determining your eligibility for SSI. (1) If the amount of your 
ineligible spouse's income that remains after appropriate allocations is 
not more than the difference between the Federal benefit rate for an 
eligible couple and the Federal benefit rate for an eligible individual, 
there is no income to deem to you from your spouse. In this situation, 
we subtract only your own countable income from the Federal benefit rate 
for an individual to determine whether you are eligible for SSI 
benefits.
    (2) If the amount of your ineligible spouse's income that remains 
after appropriate allocations is more than the difference between the 
Federal benefit rate for an eligible couple and the Federal benefit rate 
for an eligible individual, we treat you and your ineligible spouse as 
an eligible couple. We do this by:
    (i) Combining the remainder of your spouse's unearned income with 
your own unearned income and the remainder of your spouse's earned 
income with your earned income;
    (ii) Applying all appropriate income exclusions in Sec. Sec. 
416.1112 and 416.1124; and
    (iii) Subtracting the couple's countable income from the Federal 
benefit rate for an eligible couple. (See Sec. 416.2025(b) for 
determination of the State supplementary payment amount.)
    (e) Determining your SSI benefit. (1) In determining your SSI 
benefit amount, we follow the procedure in paragraphs (a) through (d) of 
this section. However, we use your ineligible spouse's income in the 
second month prior to the current month. We vary this rule if any of the 
exceptions in Sec. 416.1160(b)(2) applies (for example, if this is the 
first month you are eligible for payment of an SSI benefit or if you are 
again eligible after at least a month of being ineligible). In the first 
month of your eligibility for payment (or re-eligibility), we deem your 
ineligible spouse's income in the current month to determine both 
whether you are eligible for a benefit and the amount of your benefit. 
In the second month, we deem your ineligible spouse's income in that 
month to determine whether you are eligible for a benefit but we deem 
your ineligible spouse's income in the first month to determine the 
amount of your benefit.
    (2) Your SSI benefit under the deeming rules cannot be higher than 
it would be if deeming did not apply. Therefore, your benefit is the 
lesser of the amount computed under the rules in paragraph (d)(2) of 
this section or the amount remaining after we subtract only your own 
countable income from an individual's Federal benefit rate.
    (f) Special rules for couples when a change in status occurs. We 
have special rules to determine how to deem your spouse's income to you 
when there is a change in your situation.
    (1) Ineligible spouse becomes eligible. If your ineligible spouse 
becomes eligible for SSI benefits, we treat both of you as newly 
eligible. Therefore, your eligibility and benefit amount for the first

[[Page 933]]

month you are an eligible couple will be based on your income in that 
month. In the second month, your benefit amount will also be based on 
your income in the first month.
    (2) Spouses separate or divorce. If you separate from your 
ineligible spouse or your marriage to an ineligible spouse ends by 
divorce, we do not deem your ineligible spouse's income to you to 
determine your eligibility for benefits beginning with the first month 
following the event. If you remain eligible, we determine your benefit 
amount by following the rule in paragraph (e) of this section provided 
deeming from your spouse applied in the prior month.
    (3) Eligible individual begins living with an ineligible spouse. If 
you begin to live with your ineligible spouse, we deem your ineligible 
spouse's income to you in the first month thereafter to determine 
whether you continue to be eligible for SSI benefits. If you continue to 
be eligible, we follow the rule in Sec. 416.420(a) to determine your 
benefit amount.
    (4) Ineligible spouse dies. If your ineligible spouse dies, we do 
not deem your spouse's income to you to determine your eligibility for 
SSI benefits beginning with the month following the month of death. In 
determining your benefit amount beginning with the month following the 
month of death, we use only your own countable income in a prior month, 
excluding any income deemed to you in that month from your ineligible 
spouse.
    (5) You become subject to the $30 Federal benefit rate. If you 
become a resident of a medical care facility and the $30 Federal benefit 
rate applies, we do not deem your ineligible spouse's income to you to 
determine your eligibility for SSI benefits beginning with the first 
month for which the $30 Federal benefit rate applies. In determining 
your benefit amount beginning with the first month for which the $30 
Federal benefit rate applies, we use only your own countable income in a 
prior month, excluding any income deemed to you in that month from your 
ineligible spouse.
    (g) Examples. These examples show how we deem income from an 
ineligible spouse to an eligible individual in cases which do not 
involve any of the exceptions in Sec. 416.1160(b)(2). The income, the 
income exclusions, and the allocations are monthly amounts. The Federal 
benefit rates used are those effective January 1, 1986.

    Example 1. In September 1986, Mr. Todd, an aged individual, lives 
with his ineligible spouse, Mrs. Todd, and their ineligible child, Mike. 
Mr. Todd has a Federal benefit rate of $336 per month. Mrs. Todd 
receives $252 unearned income per month. She has no earned income and 
Mike has no income at all. Before we deem any income, we allocate to 
Mike $168 (the difference between the September Federal benefit rate for 
an eligible couple and the September Federal benefit rate for an 
eligible individual). We subtract the $168 allocation from Mrs. Todd's 
$252 unearned income, leaving $84. Since Mrs. Todd's $84 remaining 
income is not more than $168, which is the difference between the 
September Federal benefit rate for an eligible couple and the September 
Federal benefit rate for an eligible individual, we do not deem any 
income to Mr. Todd. Instead, we compare only Mr. Todd's own countable 
income with the Federal benefit rate for an eligible individual to 
determine whether he is eligible. If Mr. Todd's own countable income is 
less than his Federal benefit rate, he is eligible. To determine the 
amount of his benefit, we determine his countable income, including any 
income deemed from Mrs. Todd, in July and subtract this income from the 
appropriate Federal benefit rate for September.
    Example 2. In September 1986, Mr. Jones, a disabled individual, 
lives with his ineligible spouse, Mrs. Jones, and ineligible child, 
Christine. Mr. Jones and Christine have no income. Mrs. Jones has earned 
income of $401 a month and unearned income of $252 a month. Before we 
deem any income, we allocate $168 to Christine. We take the $168 
allocation from Mrs. Jones' $252 unearned income, leaving $84 in 
unearned income. Since Mrs. Jones' total remaining income ($84 unearned 
plus $401 earned) is more than $168, which is the difference between the 
September Federal benefit rate for an eligible couple and the September 
Federal benefit rate for an eligible individual, we compute the combined 
countable income as we do for a couple. We apply the $20 general income 
exclusion to the unearned income, reducing it further to $64. We then 
apply the earned income exclusion ($65 plus one-half the remainder) to 
Mrs. Jones' earned income of $401, leaving $168. We combine the $64 
countable unearned income and $168 countable earned income, and compare 
it ($232) with the $504 September Federal benefit rate for a couple, and 
determine that Mr. Jones is eligible. Since Mr. Jones is eligible, we 
determine the amount of his benefit by subtracting his

[[Page 934]]

countable income in July (including any deemed from Mrs. Jones) from 
September's Federal benefit rate for a couple.
    Example 3. In September 1986, Mr. Smith, a disabled individual, 
lives with his ineligible spouse, Mrs. Smith, who earns $201 per month. 
Mr. Smith receives a pension (unearned income) of $100 a month. Since 
Mrs. Smith's income is greater than $168, which is the difference 
between the September Federal benefit rate for an eligible couple and 
the September Federal benefit rate for an eligible individual, we deem 
all of her income to be available to both Mr. and Mrs. Smith and compute 
the combined countable income for the couple. We apply the $20 general 
income exclusion to Mr. Smith's $100 unearned income, leaving $80. Then 
we apply the earned income exclusion ($65 plus one-half of the 
remainder) to Mrs. Smith's $201, leaving $68. This gives the couple 
total countable income of $148. This is less than the $504 September 
Federal benefit rate for a couple, so Mr. Smith is eligible based on 
deeming. Since he is eligible, we determine the amount of his benefit 
based on his income (including any deemed from Mrs. Smith) in July.
    Example 4. In September 1986, Mr. Simon has a disabled spouse, Mrs. 
Simon, and has sponsored an eligible alien, Mr. Ollie. Mrs. Simon has 
monthly unearned income of $100 and Mr. Simon has earned income of $405. 
From Mr. Simon's earned income we allocate to Mr. Ollie $168, which is 
the difference between the Federal benefit rate for an eligible couple 
and the rate for an eligible individual. Mr. Ollie has no other income. 
This reduces Mr. Simon's earned income from $405 to $237. Since $237 is 
more than $168 (the difference between the Federal benefit rate for an 
eligible couple and the rate for an eligible individual), we deem all of 
Mr. Simon's remaining income to be available to Mr. and Mrs. Simon and 
compute the combined countable income for the couple. We apply the $20 
general income exclusion to Mrs. Simon's unearned income, leaving $80. 
Then we apply the general earned income exclusion ($65 plus one-half the 
remainder) to Mr. Simon's $237 earned income, leaving $86. This gives 
the couple total income of $166 ($80+$86.). The $166 is less than the 
$504 Federal benefit rate for a couple so Mrs. Simon would be eligible 
based on deeming. Since she is eligible, we determine the amount of her 
benefit based on her income (including any deemed from Mr. Simon) in 
July. For the way we deem Mr. Simon's income to Mr. Ollie, see the rules 
in Sec. 416.1166a.

[45 FR 65547, Oct. 3, 1980, as amended at 50 FR 48576, Nov. 26, 1985; 52 
FR 8883, Mar. 20, 1987; 53 FR 25151, July 5, 1988; 54 FR 19164, May 4, 
1989; 64 FR 31974, June 15, 1999]



Sec. 416.1165  How we deem income to you from your ineligible parent(s).

    If you are a child living with your parents, we apply the deeming 
rules to you through the month in which you reach age 18. We follow the 
rules in paragraphs (a) through (e) of this section to determine your 
eligibility. To determine your benefit amount, we follow the rules in 
paragraph (f) of this section. The rules in paragraph (g) of this 
section apply to changes in your family situation. Paragraph (i) of this 
section discusses the conditions under which we will not deem your 
ineligible parents' income to you if you are a disabled child living 
with your parents.
    (a) Determining your ineligible parent's income. We first determine 
how much current monthly earned and unearned income your ineligible 
parents have, using the appropriate exclusions in Sec. 416.1161(a).
    (b) Allocations for ineligible children. We next deduct an 
allocation for each ineligible child in the household as described in 
Sec. 416.1163(b).
    (c) Allocations for aliens who are sponsored by and have income 
deemed from your ineligible parent. We also deduct an allocation for 
eligible aliens who have been sponsored by and have income deemed from 
your ineligible parent as described in Sec. 416.1163(c).
    (d) Allocations for your ineligible parent(s). We next deduct 
allocations for your parent(s). We do not deduct an allocation for a 
parent who is receiving public income-maintenance payments (see Sec. 
416.1142(a)). The allocations are calculated as follows:
    (1) We first deduct $20 from the parents' combined unearned income, 
if any. If they have less than $20 in unearned income, we subtract the 
balance of the $20 from their combined earned income.
    (2) Next, we subtract $65 plus one-half the remainder of their 
earned income.
    (3) We total the remaining earned and unearned income and subtract--
    (i) The Federal benefit rate for the month for a couple if both 
parents live with you; or
    (ii) The Federal benefit rate for the month for an individual if 
only one parent lives with you.
    (e)(1) When you are the only eligible child. If you are the only 
eligible child

[[Page 935]]

in the household, we deem any of your parents' current monthly income 
that remains to be your unearned income. We combine it with your own 
unearned income and apply the exclusions in Sec. 416.1124 to determine 
your countable unearned income in the month. We add this to any 
countable earned income you may have and subtract the total from the 
Federal benefit rate for an individual to determine whether you are 
eligible for benefits.
    (2) When you are not the only eligible child. If your parents have 
more than one eligible child under age 18 in the household, we divide 
the parental income to be deemed equally among those eligible children.
    (3) When one child's income makes that child ineligible. We do not 
deem more income to an eligible child than the amount which, when 
combined with the child's own income, reduces his or her SSI benefit to 
zero. (For purposes of this paragraph, an SSI benefit includes any 
federally administered State supplement). If the share of parental 
income that would be deemed to a child makes that child ineligible 
(reduces the amount to zero) because that child has other countable 
income, we deem any remaining parental income to other eligible children 
under age 18 in the household in the manner described in paragraph 
(e)(2) of this section.
    (f) Determining your SSI benefit. In determining your SSI benefit 
amount, we follow the procedure in paragraphs (a) through (d) of this 
section. However, we use your ineligible parents' income in the second 
month prior to the current month. We vary this rule if any of the 
exceptions in Sec. 416.1160(b)(2) applies (for example, if this is the 
first month you are eligible for payment of an SSI benefit or if you are 
again eligible after at least a month of being ineligible). In the first 
month of your eligibility for payment (or re-eligibility) we deem your 
ineligible parents' income in the current month to determine both 
whether you are eligible for a benefit and the amount of your benefit. 
In the second month we deem your ineligible parents' income in that 
month to determine whether you are eligible for a benefit but we again 
use your countable income (including any that was deemed to you) in the 
first month to determine the amount of your benefit.
    (g) Special rules for a change in status. We have special rules to 
begin or stop deeming your ineligible parents' income to you when a 
change in your family situation occurs.
    (1) Ineligible parent becomes eligible. If your ineligible parent 
becomes eligible for SSI benefits, there will be no income to deem from 
that parent to you to determine your eligibility for SSI benefits 
beginning with the month your parent becomes eligible. However, to 
determine your benefit amount, we follow the rule in Sec. 416.420.
    (2) Eligible parent becomes ineligible. If your eligible parent 
becomes ineligible, we deem your parents' income to you in the first 
month of the parents' ineligibility to determine whether you continue to 
be eligible for SSI benefits. However, if you continue to be eligible, 
in order to determine your benefit amount, we follow the regular rule of 
counting your income in the second month prior to the current month.
    (3) Ineligible parent dies. If your ineligible parent dies, we do 
not deem that parent's income to you to determine your eligibility for 
SSI benefits beginning with the month following the month of death. In 
determining your benefit amount beginning with the month following the 
month of death, we use only your own countable income in a prior month, 
excluding any income deemed to you in that month from your ineligible 
parent (see Sec. 416.1160(b)(2)(B)). However, if you live with two 
ineligible parents, and one dies, we continue to deem income from the 
surviving parent.
    (4) Ineligible parent and you no longer live in the same household. 
If your ineligible parent and you no longer live in the same household, 
we do not deem that parent's income to you to determine your eligibility 
for SSI benefits beginning with the first month following the month in 
which one of you leaves. However (if you continue to be eligible), to 
determine your benefit amount we follow the rule in Sec. 416.420 of 
counting your income including income deemed from your parent in the 
second month prior to the current month.

[[Page 936]]

    (5) Ineligible parent and you begin living in the same household. If 
your ineligible parent and you begin living in the same household, we 
consider that parent's income to determine whether you continue to be 
eligible for SSI benefits beginning with the month following the month 
of change. However (if you continue to be eligible), to determine your 
benefit amount, we follow the rule in Sec. 416.420 of counting your 
income in the second month prior to the current month.
    (6) You become subject to the $30 Federal benefit rate. If you 
become a resident of a medical care facility and the $30 Federal benefit 
rate applies, we do not deem your ineligible parent's income to you to 
determine your eligibility for SSI benefits beginning with the first 
month for which the $30 Federal benefit rate applies. In determining 
your benefit amount beginning with the first month for which the $30 
Federal benefit rate applies, we only use your own countable income in a 
prior month, excluding any income deemed to you in that month from your 
ineligible parent.
    (7) You attain age 18. In the month following the month in which you 
attain age 18 and thereafter, we do not deem your ineligible parent's 
income to you to determine your eligibility for SSI benefits. In 
determining your benefit amount beginning with the month following your 
attainment of age 18, we only use your own countable income in a prior 
month, excluding any income deemed to you in that month from your 
ineligible parent (see Sec. 416.1160(b)(2)(B)). Your income for the 
current and subsequent months must include any income in the form of 
cash or in-kind support and maintenance provided by your parents. If you 
attain age 18 and stop living in the same household with your ineligible 
parent, these rules take precedence over paragraph (g)(4) of this 
section which requires continued use of deemed income in the benefit 
computation for 2 months following the month you no longer live in the 
same household.
    (h) Examples. These examples show how we deem an ineligible parent's 
income to an eligible child when none of the exceptions in Sec. 
416.1160(b)(2) applies. The Federal benefit rates are those effective 
January 1, 1992.

    Example 1. Henry, a disabled child, lives with his mother and father 
and a 12-year-old ineligible brother. His mother receives a pension 
(unearned income) of $365 per month and his father earns $1,165 per 
month. Henry and his brother have no income. First we deduct an 
allocation of $211 for Henry's brother from the unearned income. This 
leaves $154 in unearned income. We reduce the remaining unearned income 
further by the $20 general income exclusion, leaving $134. We then 
reduce the earned income of $1,165 by $65 leaving $1,100. Then we 
subtract one-half of the remainder, leaving $550. To this we add the 
remaining unearned income of $134 resulting in $684. From this, we 
subtract the parent allocation of $633 (the Federal benefit rate for a 
couple) leaving $51 to be deemed as Henry's unearned income. Henry has 
no other income. We apply Henry's $20 general income exclusion which 
reduces his countable income to $31. Since that amount is less than the 
$422 Federal benefit rate for an individual, Henry is eligible. We 
determine his benefit amount by subtracting his countable income 
(including deemed income) in a prior month from the Federal benefit rate 
for an individual for the current month. See Sec. 416.420.
    Example 2. James and Tony are disabled children who live with their 
mother. The children have no income but their mother receives $542 a 
month in unearned income. We reduce the unearned income by the $20 
general income exclusion, leaving $522. We then subtract the amount we 
allocate for the mother's needs, $422 (the Federal benefit rate for an 
individual). The amount remaining to be deemed to James and Tony is 
$100, which we divide equally between them resulting in $50 deemed 
unearned income to each child. We then apply the $20 general income 
exclusion, leaving each child with $30 countable income. The $30 of 
unearned income is less than the $422 Federal benefit rate for an 
individual, so the children are eligible. We then determine each child's 
benefit by subtracting his countable income (including deemed income) in 
a prior month from the Federal benefit rate for an individual for the 
current month. See Sec. 416.420.
    Example 3. Mrs. Jones is the ineligible mother of two disabled 
children, Beth and Linda, and has sponsored an eligible alien, Mr. Sean. 
Beth, Linda, and Mr. Sean have no income; Mrs. Jones has unearned income 
of $924 per month. We reduce the mother's unearned income by the $211 
allocation for Mr. Sean, leaving $713. We further reduce her income by 
the $20 general income exclusion, which leaves a balance of $693. Next, 
we subtract the amount we allocate for the mother's needs, $422 (the 
amount of the Federal benefit rate for an individual). The balance

[[Page 937]]

of $271 to be deemed is divided equally between Beth and Linda. Each now 
has unearned income of $135.50 from which we deduct the $20 general 
income exclusion, leaving each child with $115.50 countable income. 
Since this is less than the $422 Federal benefit rate for an individual, 
the girls are eligible. We then determine each child's benefit by 
subtracting her countable income (including deemed income) in a prior 
month from the Federal benefit rate for an individual for the current 
month. See Sec. 416.420. (For the way we deem the mother's income to 
Mr. Sean, see examples No. 3 and No. 4 in Sec. 416.1166a.)
    Example 4. Jack, a disabled child, lives with his mother, father, 
and two brothers, none of whom are eligible for SSI. Jack's mother 
receives a private pension of $350 per month and his father works and 
earns $1,525 per month. We allocate a total of $422 for Jack's 
ineligible brothers and subtract this from the parents' total unearned 
income of $350; the parents' unearned income is completely offset by the 
allocations for the ineligible children with an excess allocation of $72 
remaining. We subtract the excess of $72 from the parents' total earned 
income leaving $1,453. We next subtract the combined general income and 
earned income exclusions of $85 leaving a remainder of $1,368. We 
subtract one-half the remainder, leaving $684 from which we subtract the 
parents' allocation of $633. This results in $51 deemed to Jack. Jack 
has no other income, so we subtract the general income exclusion of $20 
from the deemed income leaving $31 as Jack's countable income. Since 
this is below the $422 Federal benefit rate for an individual, Jack is 
eligible. We determine his payment amount by subtracting his countable 
income (including deemed income) in a prior month from the Federal 
benefit rate for an individual for the current month. See Sec. 416.420.

    (i) Disabled child under age 18. If you are a disabled child under 
the age of 18 living with your parents, we will not deem your parents' 
income to you if--
    (1) You previously received a reduced SSI benefit while a resident 
of a medical facility, as described in Sec. 416.414;
    (2) You are eligible for medical assistance under a Medicaid State 
home care plan approved by the Secretary under the provisions of section 
1915(c) or authorized under section 1902(e)(3) of the Act; and
    (3) You would otherwise be ineligible for a Federal SSI benefit 
because of the deeming of your parents' income or resources.

[52 FR 8885, Mar. 20, 1987, as amended at 54 FR 19164, May 4, 1989; 57 
FR 48562, Oct. 27, 1992; 60 FR 361, Jan. 4, 1995; 62 FR 1056, Jan. 8, 
1997; 64 FR 31974, June 15, 1999]



Sec. 416.1166  How we deem income to you and your eligible child from 
your ineligible spouse.

    If you and your eligible child live in the same household with your 
ineligible spouse, we deem your ineligible spouse's income first to you, 
and then we deem any remainder to your eligible child. For the purpose 
of this section, SSI benefits include any federally administered State 
supplement. We then follow the rules in Sec. 416.1165(e) to determine 
the child's eligibility for SSI benefits and in Sec. 416.1165(f) to 
determine the benefit amount.
    (a) Determining your ineligible spouse's income. We first determine 
how much earned and unearned income your ineligible spouse has, using 
the appropriate exclusions in Sec. 416.1161(a).
    (b) Allocations for ineligible children. We next deduct an 
allocation for each ineligible child in the household as described in 
Sec. 416.1163(b).
    (c) Allocations for aliens who are sponsored by and have income 
deemed from your ineligible spouse. We also deduct an allocation for 
eligible aliens who have been sponsored by and have income deemed from 
your ineligible spouse as described in Sec. 416.1163(c).
    (d) Determining your eligibility for SSI benefits and benefit 
amount. We then follow the rules in Sec. 416.1163(c) to find out if any 
of your ineligible spouse's current monthly income is deemed to you and, 
if so, to determine countable income for a couple. Next, we follow 
paragraph (e) of this section to determine your child's eligibility. 
However, if none of your spouse's income is deemed to you, none is 
deemed to your child. Whether or not your spouse's income is deemed to 
you in determining your eligibility, we determine your benefit amount as 
explained in Sec. 416.1163(e).
    (e) Determining your child's eligibility and amount of benefits. (1) 
If you are eligible for SSI benefits after your spouse's income has been 
deemed to

[[Page 938]]

you, we do not deem any income to your child. To determine the child's 
eligibility, we subtract the child's own countable income without 
deeming from the benefit rate for an individual.
    (2) If you are not eligible for SSI benefits after your ineligible 
spouse's income has been deemed to you, we deem to your eligible child 
any of your spouse's income which was not used to reduce your SSI 
benefits to zero.
    (f) Examples. These examples show how we deem income to an eligible 
individual and an eligible child in the same household. The Federal 
benefit rates used are those effective January 1, 1984.

    Example 1. Mary, a blind individual, lives with her husband, John, 
and their disabled child, Peter. Mary and Peter have no income, but John 
is employed and earns $605 per month. We determine Mary's eligibility 
first. Since John's income is more than $157, which is one-half of the 
Federal benefit rate for an eligible individual, we treat the entire 
$605 as earned income available to John and Mary as a couple. Because 
they have no unearned income, we reduce the $605 by the $20 general 
income exclusion, and then by the earned income exclusion of $65 plus 
one-half the remainder. This leaves John and Mary with $260 in countable 
income. The $260 countable income is less than the $472 Federal benefit 
rate for a couple, so Mary is eligible; therefore, there is no income to 
be deemed to Peter.
    Example 2. Al, a disabled individual, resides with his ineligible 
spouse, Dora, and their disabled son, Jeff. Al and Jeff have no income, 
but Dora is employed and earns $1,065 a month. Since Dora's income is 
more than $157, which is one-half of the Federal benefit rate for an 
eligible individual, we treat the entire $1,065 as earned income 
available to Al and Dora as a couple. We reduce this income by the $20 
general income exclusion and then by $65 plus one-half the remainder 
(earned income exclusion), leaving $490 in countable income. Al is 
ineligible because the couple's $490 countable income exceeds the $472 
Federal benefit rate for a couple. Since Al is ineligible, we deem to 
Jeff $18, the amount of income over and above the amount which causes Al 
to be ineligible (the difference between the countable income and the 
Federal benefit rate for a couple). We treat the $18 deemed to Jeff as 
unearned income, and we apply the $20 general income exclusion, reducing 
Jeff's countable income to zero. Jeff is eligible.

[45 FR 65547, Oct. 3, 1980, as amended at 50 FR 48578, Nov. 26, 1985; 52 
FR 8887, Mar. 20, 1987; 64 FR 31975, June 15, 1999]



Sec. 416.1166a  How we deem income to you from your sponsor if you are 
an alien.

    Before we deem your sponsor's income to you if you are an alien, we 
determine how much earned and unearned income your sponsor has under 
Sec. 416.1161(b). We then deduct allocations for the sponsor and the 
sponsor's dependents. This is an amount equal to the Federal benefit 
rate for an individual for the sponsor (or for each sponsor even if two 
sponsors are married to each other and living together) plus an amount 
equal to one-half the Federal benefit rate for an eligible individual 
for each dependent of the sponsor. An ineligible dependent's income is 
not subtracted from the sponsor's dependent's allocation. We deem the 
balance of the income to be your unearned income.
    (a) If you are the only alien applying for or already eligible for 
SSI benefits who has income deemed to you from your sponsor. If you are 
the only alien who is applying for or already eligible for SSI benefits 
and who is sponsored by your sponsor, all the deemed income is your 
unearned income.
    (b) If you are not the only alien who is applying for or already 
eligible for SSI benefits and who has income deemed from your sponsor. 
If you and other aliens applying for or already eligible for SSI 
benefits are sponsored by the same sponsor, we deem the income to each 
of you as though you were the only alien sponsored by that person. The 
income deemed to you becomes your unearned income.
    (c) When you are an alien and income is no longer deemed from your 
sponsor. If you are an alien and have had your sponsor's income deemed 
to you, we stop deeming the income with the month in which the third 
anniversary of your admission into the United States occurs.
    (d) When sponsor deeming rules do not apply to you if you are an 
alien. If you are an alien, we do not apply the sponsor deeming rules to 
you if--
    (1) You are a refugee. You are a refugee admitted to the United 
States as the result of application of one of three sections of the 
Immigration and Nationality Act: (1) Section 203(a)(7), effective before 
April 1, 1980; (2) Section

[[Page 939]]

207(c)(1), effective after March 31, 1980; or (3) Section 212(d)(5);
    (2) You have been granted asylum. You have been granted political 
asylum by the Attorney General of the United States; or
    (3) You become blind or disabled. If you become blind or disabled as 
defined in Sec. 416.901 (at any age) after your admission to the United 
States, we do not deem your sponsor's income to you to determine your 
eligibility for SSI benefits beginning with the month in which your 
disability or blindness begins. However, to determine your benefit 
payment, we follow the rule in Sec. 416.420 of counting your income in 
the second month prior to the current month.
    (e) Examples. These examples show how we deem a sponsor's income to 
an eligible individual who is an alien when none of the exceptions in 
Sec. 416.1160(b)(2) applies. The income, income exclusions, and the 
benefit rates are in monthly amounts. The Federal benefit rates are 
those effective January 1, 1986.

    Example 1. Mr. John, an alien who has no income, has been sponsored 
by Mr. Herbert who has monthly earned income of $1,300 and unearned 
income of $70. Mr. Herbert's wife and three children have no income. We 
add Mr. Herbert's earned and unearned income for a total of $1,370 and 
apply the allocations for the sponsor and his dependents. Allocations 
total $1,008. These are made up of $336 (the Federal benefit rate for an 
eligible individual) for the sponsor, plus $672 (one-half the Federal 
benefit rate for an eligible individual, $168 each) for Mr. Herbert's 
wife and three children. The $1,008 is subtracted from Mr. Herbert's 
total income of $1,370 which leaves $362 to be deemed to Mr. John as his 
unearned income. Mr. John's only exclusion is the $20 general income 
exclusion. Since the $342 balance exceeds the $336 Federal benefit rate, 
Mr. John is ineligible.
    Example 2. Mr. and Mrs. Smith are an alien couple who have no income 
and who have been sponsored by Mr. Hart. Mr. Hart has earned income of 
$1,350 and his wife, Mrs. Hart, who lives with him, has earned income of 
$150. Their two children have no income. We combine Mr. and Mrs. Hart's 
income ($1,350+$150=$1,500). We deduct the allocations of $336 for Mr. 
Hart (the Federal benefit rate for an individual) and $504 for Mrs. Hart 
and the two children ($168 or one-half the Federal benefit rate for an 
eligible individual for each), a total of $840. The allocations ($840) 
are deducted from the total $1,500 income which leaves $660. This amount 
must be deemed independently to Mr. and Mrs. Smith. Mr. and Mrs. Smith 
would qualify for SSI benefits as a couple in the amount of $504 if no 
income had been deemed to them. The $1,320 ($660 each to Mr. and Mrs. 
Smith) deemed income is unearned income to Mr. and Mrs. Smith and is 
subject to the $20 general income exclusion, leaving $1,300. This 
exceeds the couple's rate of $504 so Mr. and Mrs. Smith are ineligible 
for SSI benefits.
    Example 3. Mr. Bert and Mr. Davis are aliens sponsored by their 
sister Mrs. Jean, who has earned income of $800. She also receives $250 
as survivors' benefits for her two minor children. We do not consider 
the $250 survivors' benefits to be Mrs. Jean's income because it is the 
children's income. We exclude $336 for Mrs. Jean (the Federal benefit 
rate for an individual) plus $336 ($168, one-half the Federal benefit 
rate for an eligible individual for each child), a total of $672. We 
subtract the $672 from Mrs. Jean's income of $800, which leaves $128 to 
be deemed to Mr. Bert and Mr. Davis. Each of the brothers is liable for 
rent in the boarding house (a commercial establishment) where they live. 
Each lives in his own household, receives no in-kind support and 
maintenance, and is eligible for the Federal benefit rate of $336. The 
$128 deemed income is deemed both to Mr. Bert and to Mr. Davis. As a 
result, each has countable income of $108 ($128 minus the $20 general 
income exclusion). This is less than $336, the Federal benefit rate for 
an individual, so that both are eligible for SSI. We use their income in 
a prior month to determine their benefit payments.
    Example 4. The same situation applies as in example 3 except that 
one of Mrs. Jean's children is disabled and eligible for SSI benefits. 
The eligibility of the disabled child does not affect the amount of 
income deemed to Mr. Bert and Mr. Davis since the sponsor-to-alien and 
parent-to-child rules are applied independently. The child's countable 
income is computed under the rules in Sec. 416.1165.

[52 FR 8887, Mar. 20, 1987]



Sec. 416.1167  Temporary absences and deeming rules.

    (a) General. During a temporary absence, we continue to consider the 
absent person a member of the household. A temporary absence occurs 
when--
    (1) You, your ineligible spouse, parent, or an ineligible child 
leaves the household but intends to and does return in the same month or 
the month immediately following; or
    (2) You enter a medical care facility and are eligible for either 
benefit payable under Sec. 416.212. We consider your absence to be 
temporary through the last month benefits under Sec. 416.212 were

[[Page 940]]

paid unless you were discharged from the facility in the following 
month. In that case, we consider your absence to be temporary through 
the date of discharge.
    (b) Child away at school. If you are an eligible child who is away 
at school but comes home on some weekends or lengthy holidays and if you 
are subject to the control of your parents, we consider you temporarily 
absent from your parents' household. However, if you are not subject to 
parental control, we do not consider your absence temporary and we do 
not deem parental income (or resources) to you. Being subject to 
parental control affects deeming to you only if you are away at school.
    (c) Active duty military service. If your ineligible spouse or 
parent is absent from the household due solely to a duty assignment as a 
member of the Armed Forces on active duty, we continue to consider that 
person to be living in the same household as you, absent evidence to the 
contrary. If we determine that during such an absence, evidence 
indicates that your spouse or parent should no longer be considered to 
be living in the same household as you, then deeming will cease. When 
such evidence exists, we determine the month in which your spouse or 
parent should no longer be considered to be living in the same household 
as you and stop deeming his or her income and resources beginning with 
the month following that month.

    Example: Tom is a child who receives SSI. In January 1996, Tom's 
father leaves the household due solely to an active duty assignment as a 
member of the Armed Forces. Five months later in June 1996, while Tom's 
father is still on an active duty assignment, Tom's parents file for 
divorce. As a result, Tom's father will not be returning to live in 
Tom's household. Therefore, Tom's father should no longer be considered 
to be living in the same household with Tom. Beginning July 1, 1996, 
deeming from Tom's father will cease.

[50 FR 48579, Nov. 26, 1985, as amended at 61 FR 10280, Mar. 13, 1996; 
62 FR 42411, Aug. 7, 1997]



Sec. 416.1168  How we deem income to you from your essential person.

    (a) Essential person's income. If you have an essential person, we 
deem all of that person's income (except any not counted because of 
other Federal statutes as described in Sec. 416.1161(b)) to be your own 
unearned income. If your essential person is also your ineligible 
spouse, or if you are a child whose essential person is your ineligible 
parent, we apply the essential person deeming rules in this section. See 
Sec. 416.1169 for the rules that apply when an ineligible spouse or 
parent ceases to be your essential person.
    (b) Determining your eligibility for an SSI benefit. We apply the 
exclusions to which you are entitled under Sec. Sec. 416.1112 and 
416.1124 to your earned income and to your unearned income which 
includes any income deemed from your essential person. After combining 
the remaining amounts of countable income, we compare the total with the 
Federal benefit rate for a qualified individual (see Sec. 416.413) to 
determine whether you are eligible for an SSI benefit.
    (c) Determining your SSI benefit amount. We determine your SSI 
benefit amount in the same way that we determine your eligibility. 
However, in following the procedure in paragraphs (a) and (b) of this 
section we use your essential person's income that we deemed to you in 
the second month prior to the current month. Exception: Beginning with 
the month in which you no longer have your essential person, we do not 
use any of the income deemed to you from that essential person in a 
prior month to determine the amount of your benefit (see Sec. 
416.1160(a)(3)(ii)(C)). We use only your own countable income in a prior 
month.

[45 FR 65547, Oct. 3, 1980, as amended at 50 FR 48579, Nov. 26, 1985]



Sec. 416.1169  When we stop deeming income from an essential person.

    If including the income deemed to you from your essential person 
causes you to be ineligible for an SSI benefit, you are no longer 
considered to have that essential person whose income makes you 
ineligible. To determine your eligibility for that month we deduct only 
your own countable income from your Federal benefit rate. However, other 
deeming rules may then apply as follows:

[[Page 941]]

    (a) Essential person is your spouse. If the person who was your 
essential person is your ineligible spouse, we apply the deeming rules 
in Sec. 416.1163 beginning with the month that the income of your 
essential person is no longer deemed to you.
    (b) Essential person is your parent. If you are a child under age 
18, and the person who was your essential person is your ineligible 
parent, we apply the deeming rules in Sec. 416.1165 beginning with the 
month that the income of your essential person is no longer deemed to 
you.

[50 FR 48579, Nov. 26, 1985]

     Alternative Income Counting Rules for Certain Blind Individuals



Sec. 416.1170  General.

    (a) What the alternative is. If you are blind and meet the 
requirements in Sec. 416.1171, we use one of two rules to see how much 
countable income you have. We use whichever of the following rules 
results in the lower amount of countable income:
    (1) The SSI income exclusions in Sec. Sec. 416.1112 and 416.1124; 
or
    (2) The disregards that would have applied under the State plan for 
October 1972.
    (b) State plan. As used in this subpart, State plan for October 1972 
means a State plan for providing assistance to the blind under title X 
or XVI (AABD) of the Social Security Act. That plan must have been 
approved under the provisions of 45 CFR chapter II as in effect for 
October 1972.



Sec. 416.1171  When the alternative rules apply.

    (a) Eligibility for the alternative. We use the alternative income 
counting rules for you if you meet all the following conditions:
    (1) You were eligible for, and received, assistance for December 
1973 under a State plan for October 1972;
    (2) You have continued to live in that same State since December 
1973;
    (3) You were transferred to the SSI rolls and received a benefit for 
January 1974; and
    (4) You have not been ineligible for an SSI benefit for any period 
of more than 6 consecutive months. (For purposes of this section, an SSI 
benefit means a Federal benefit; it does not include any State 
supplementation.)
    (b) Living in the same State. For purposes of this section, you have 
continued to live in the same State since December 1973 unless you have 
left it at any time with the intention of moving to another State. If 
there is no evidence to the contrary, we assume that--
    (1) If you leave the State for 90 calendar days or less, the absence 
is temporary and you still live in that State; and
    (2) If you leave the State for more than 90 calendar days, you are 
no longer living there.

  Rules for Helping Blind and Disabled Individuals Achieve Self-Support



Sec. 416.1180  General.

    One of the objectives of the SSI program is to help blind or 
disabled persons become self-supporting. If you are blind or disabled, 
we will pay you SSI benefits and will not count the part of your income 
that you use or set aside to use under a plan to become self-supporting. 
(See Sec. Sec. 416.1112(c)(8) and 1124(c)(13).) You may develop a plan 
for achieving self-support on your own or with our help. As appropriate, 
we will refer you to a State rehabilitation agency or agency for the 
blind for additional assistance in developing a plan.

[45 FR 65547, Oct. 3, 1980, as amended at 51 FR 10616, Mar. 28, 1986; 62 
FR 59813, Nov. 5, 1997]



Sec. 416.1181  What a plan to achieve self-support is.

    A plan to achieve self-support must--
    (a) Be designed especially for you;
    (b) Be in writing;
    (c) Be approved by us (a change of plan must also be approved);
    (d) Be designed for an initial period of not more than 18 months. We 
may extend the period for up to another 18 months if you cannot complete 
the plan in the first period. We may allow a total of up to 48 months to 
fulfill a plan for a lengthy education or training program;
    (e) Show your specific occupational goal;

[[Page 942]]

    (f) Show what money you have and will receive, how you will spend 
it, and how you will use it to attain your occupational goal; and
    (g) Show how the money you set aside under the plan will be 
separated from your other funds.



Sec. 416.1182  When we begin to count the income excluded under the plan.

    We will begin to count the earned and unearned income that would 
have been excluded under your plan in the month in which any of the 
following circumstances first exist:
    (a) You fail to follow the conditions of your plan;
    (b) You abandon your plan;
    (c) You complete the time schedule outlined in the plan; or
    (d) You reach your goal as outlined in the plan.

[45 FR 65547, Oct. 3, 1980, as amended at 50 FR 48579, Nov. 26, 1985]

  Appendix to Subpart K of Part 416--List of Types of Income Excluded 
Under the SSI Program as Provided by Federal Laws Other Than the Social 
                              Security Act

    Many Federal statutes in addition to the Social Security Act provide 
assistance or benefits for individuals and specify that the assistance 
or benefit will not be considered in deciding eligibility for SSI. We 
have listed these statutes in this appendix and have placed them in 
categories according to the kind of income or assistance they provide. 
The list gives the name of the Federal statute (where possible), the 
public law number, and the citation. Each item briefly describes what 
the statute provides that will not reduce or eliminate an SSI payment. 
More detailed information is available from a social security office or 
by reference to the statutes.
    We update this list periodically. However, when new Federal statutes 
of this kind are enacted, or existing statutes are changed, we apply the 
law currently in effect, even before this appendix is updated.

                                 I. Food

    (a) Value of food coupons under the Food Stamp Act of 1977, section 
1301 of Pub. L. 95-113 (91 Stat. 968, 7 U.S.C. 2017(b)).
    (b) Value of federally donated foods distributed under section 32 of 
Pub. L. 74-320 (49 Stat. 774) or section 416 of the Agriculture Act of 
1949 (63 Stat. 1058, 7 CFR 250.6(e)(9)).
    (c) Value of free or reduced price food for women and children under 
the--
    (1) Child Nutrition Act of 1966, section 11(b) of Pub. L. 89-642 (80 
Stat. 889, 42 U.S.C. 1780(b)) and section 17 of that Act as added by 
Pub. L. 92-433 (86 Stat. 729, 42 U.S.C. 1786); and
    (2) National School Lunch Act, section 13(h)(3), as amended by 
section 3 of Pub. L. 90-302 (82 Stat. 119, 42 U.S.C. 1761(h)(3)).
    (d) Services, except for wages paid to residents who assist in 
providing congregate services such as meals and personal care, provided 
a resident of an eligible housing project under a congregate services 
program under section 802 of the Cranston-Gonzales National Affordable 
Housing Act, Public Law 101-625 (104 Stat. 4313, 42 U.S.C. 8011).

                        II. Housing and Utilities

    (a) Assistance to prevent fuel cut-offs and to promote energy 
efficiency under the Emergency Energy Conservation Services Program or 
the Energy Crisis Assistance Program as authorized by section 222(a)(5) 
of the Economic Opportunity Act of 1964, as amended by section 5(d)(1) 
of Pub. L. No. 93-644 and section 5(a)(2) of Pub. L. 95-568 (88 Stat. 
2294 as amended, 42 U.S.C. 2809(a)(5)).
    (b) Home energy assistance payments or allowances under title XXVI 
of the Omnibus Budget Reconciliation Act of 1981, Public Law 97-35, as 
amended (42 U.S.C. 8624(f)).

    Note: This exclusion applies to a sponsor's income only if the alien 
is living in the housing unit for which the sponsor receives the home 
energy assistance payments or allowances.

    (c) Value of any assistance paid with respect to a dwelling unit 
under--
    (1) The United States Housing Act of 1937;
    (2) The National Housing Act;
    (3) Section 101 of the Housing and Urban Development Act of 1965; or
    (4) Title V of the Housing Act of 1949.

    Note: This exclusion applies to a sponsor's income only if the alien 
is living in the housing unit for which the sponsor receives the housing 
assistance.

    (d) Payments for relocating, made to persons displaced by Federal or 
federally assisted programs which acquire real property, under section 
216 of Pub. L. 91-646, the Uniform Relocation Assistance and Real 
Property Acquisition Policies Act of 1970 (84 Stat. 1902, 42 U.S.C. 
4636).

                      III. Education and Employment

    (a) Grants or loans to undergraduate students made or insured under 
programs administered by the Secretary of Education under section 507 of 
the Higher Education Amendments of 1968, Pub. L. 90-575 (82 Stat. 1063).
    (b) Any wages, allowances, or reimbursement for transportation and 
attendant care

[[Page 943]]

costs, unless excepted on a case-by-case basis, when received by an 
eligible handicapped individual employed in a project under title VI of 
the Rehabilitation Act of 1973 as added by title II of Pub. L. 95-602 
(92 Stat. 2992, 29 U.S.C. 795(b)(c)).
    (c) Student financial assistance for attendance costs received from 
a program funded in whole or in part under title IV of the Higher 
Education Act of 1965, as amended, or under Bureau of Indian Affairs 
student assistance programs if it is made available for tuition and fees 
normally assessed a student carrying the same academic workload, as 
determined by the institution, including costs for rental or purchase of 
any equipment, materials, or supplies required of all students in the 
same course of study and an allowance for books, supplies, 
transportation, and miscellaneous personal expenses for a student 
attending the institution on at least a half-time basis, as determined 
by the institution, under section 14(27) of Public Law 100-50, the 
Higher Education Technical Amendments Act of 1987 (20 U.S.C. 1087uu).

                          IV. Native Americans

    (a) Types of Payments Excluded Without Regard to Specific Tribes or 
Groups--
    (1) Indian judgment funds that are held in trust by the Secretary of 
the Interior or distributed per capita pursuant to a plan prepared by 
the Secretary of the Interior and not disapproved by a joint resolution 
of the Congress under Public Law 93-134 as amended by section 4 of 
Public Law 97-458 (96 Stat. 2513, 25 U.S.C. 1408). Indian judgment funds 
include interest and investment income accrued while such funds are so 
held in trust. This exclusion extends to initial purchases made with 
Indian judgment funds. This exclusion does not apply to sales or 
conversions of initial purchases or to subsequent purchases.

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (2) All funds held in trust by the Secretary of the Interior for an 
Indian tribe and distributed per capita to a member of that tribe are 
excluded from income under Public Law 98-64 (97 Stat. 365, 25 U.S.C. 
117b). Funds held by Alaska Native Regional and Village Corporations 
(ANRVC) are not held in trust by the Secretary of the Interior and 
therefore ANRVC dividend distributions are not excluded from countable 
income under this exclusion. For ANRVC dividend distributions, see 
paragraph IV.(a)(3) of this appendix.

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (3) Distributions received by an individual Alaska Native or 
descendant of an Alaska Native from an Alaska Native Regional and 
Village Corporation pursuant to the Alaska Native Claims Settlement Act, 
as follows: cash, including cash dividends on stock received from a 
Native Corporation, to the extent that it does not, in the aggregate, 
exceed $2,000 per individual each year; stock, including stock issued or 
distributed by a Native Corporation as a dividend or distribution on 
stock; a partnership interest; land or an interest in land, including 
land or an interest in land received from a Native Corporation as a 
dividend or distribution on stock; and an interest in a settlement 
trust. This exclusion is pursuant to section 15 of the Alaska Native 
Claims Settlement Act Amendments of 1987, Public Law 100-241 (101 Stat. 
1812, 43 U.S.C. 1626(c)), effective February 3, 1988.

    Note: This exclusion does not apply in deeming income from sponsors 
to aliens.

    (4) Up to $2,000 per year received by Indians that is derived from 
individual interests in trust or restricted lands under section 13736 of 
Public Law 103-66 (107 Stat. 663, 25 U.S.C. 1408, as amended).
    (b) Payments to Members of Specific Indian Tribes and Groups--
    (1) Per capita payments to members of the Red Lake Band of Chippewa 
Indians from the proceeds of the sale of timber and lumber on the Red 
Lake Reservation under section 3 of Public Law 85-794 (72 Stat. 958).
    (2) Per capita distribution payments by the Blackfeet and Gros 
Ventre tribal governments to members which resulted from judgment funds 
to the tribes under section 4 of Public Law 92-254 (86 Stat. 65) and 
under section 6 of Public Law 97-408 (96 Stat. 2036).
    (3) Settlement fund payments and the availability of such funds to 
members of the Hopi and Navajo Tribes under section 22 of Public Law 93-
531 (88 Stat. 1722) as amended by Public Law 96-305 (94 Stat. 929).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (4) Judgment funds distributed per capita to, or held in trust for, 
members of the Sac and Fox Indian Nation, and the availability of such 
funds under section 6 of Public Law 94-189 (89 Stat. 1094).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (5) Judgment funds distributed per capita to, or held in trust for, 
members of the Grand River Band of Ottawa Indians, and the availability 
of such funds under section 6 of Public Law 94-540 (90 Stat. 2504).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.


[[Page 944]]


    (6) Any judgment funds distributed per capita to members of the 
Confederated Tribes and Bands of the Yakima Indian Nation or the Apache 
Tribe of the Mescalero Reservation under section 2 of Public Law 95-433 
(92 Stat. 1047, 25 U.S.C. 609c-1).
    (7) Any judgment funds distributed per capita or made available for 
programs for members of the Delaware Tribe of Indians and the absentee 
Delaware Tribe of Western Oklahoma under section 8 of Public Law 96-318 
(94 Stat. 971).
    (8) All funds and distributions to members of the Passamaquoddy 
Tribe, the Penobscot Nation, and the Houlton Band of Maliseet Indians 
under the Maine Indian Claims Settlement Act, and the availability of 
such funds under section 9 of Public Law 96-420 (94 Stat. 1795, 25 
U.S.C. 1728(c)).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (9) Any distributions of judgment funds to members of the San Carlos 
Apache Indian Tribe of Arizona under section 7 of Public Law 93-134 (87 
Stat. 468) and Public Law 97-95 (95 Stat. 1206).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (10) Any distribution of judgment funds to members of the Wyandot 
Tribe of Indians of Oklahoma under section 6 of Public Law 97-371 (96 
Stat. 1814).
    (11) Distributions of judgment funds to members of the Shawnee Tribe 
of Indians (Absentee Shawnee Tribe of Oklahoma, the Eastern Shawnee 
Tribe of Oklahoma and the Cherokee Band of Shawnee descendants) under 
section 7 of Public Law 97-372 (96 Stat. 1816).
    (12) Judgment funds distributed per capita or made available for 
programs for members of the Miami Tribe of Oklahoma and the Miami 
Indians of Indiana under section 7 of Public Law 97-376 (96 Stat. 1829).
    (13) Distributions of judgment funds to members of the Clallam Tribe 
of Indians of the State of Washington (Port Gamble Indian Community, 
Lower Elwha Tribal Community and the Jamestown Band of Clallam Indians) 
under section 6 of Public Law 97-402 (96 Stat. 2021).
    (14) Judgment funds distributed per capita or made available for 
programs for members of the Pembina Chippewa Indians (Turtle Mountain 
Band of Chippewa Indians, Chippewa Cree Tribe of Rocky Boy's 
Reservation, Minnesota Chippewa Tribe, Little Shell Band of the Chippewa 
Indians of Montana, and the nonmember Pembina descendants) under section 
9 of Public Law 97-403 (96 Stat. 2025).
    (15) Per capita distributions of judgment funds to members of the 
Assiniboine Tribe of Fort Belknap Indian Community and the Papago Tribe 
of Arizona under sections 6 and 8(d) of Public Law 97-408 (96 Stat. 
2036, 2038).
    (16) Up to $2,000 of per capita distributions of judgment funds to 
members of the Confederated Tribes of the Warm Springs Reservation under 
section 4 of Public Law 97-436 (96 Stat. 2284).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (17) Judgment funds distributed to the Red Lake Band of Chippewa 
Indians under section 3 of Public Law 98-123 (97 Stat. 816).
    (18) Funds distributed per capita or family interest payments for 
members of the Assiniboine Tribe of Fort Belknap Indian Community of 
Montana and the Assiniboine Tribe of the Fort Peck Indian Reservation of 
Montana under section 5 of Public Law 98-124 (97 Stat. 818).
    (19) Distributions of judgment funds and income derived therefrom to 
members of the Shoalwater Bay Indian Tribe under section 5 of Public Law 
98-432 (98 Stat. 1672).
    (20) All distributions to heirs of certain deceased Indians under 
section 8 of the Old Age Assistance Claims Settlement Act, Public Law 
98-500 (98 Stat. 2319).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (21) Judgment funds distributed per capita or made available for any 
tribal program for members of the Wyandotte Tribe of Oklahoma and the 
Absentee Wyandottes under section 106 of Public Law 98-602 (98 Stat. 
3151).
    (22) Per capita and dividend payment distributions of judgment funds 
to members of the Santee Sioux Tribe of Nebraska, the Flandreau Santee 
Sioux Tribe, the Prairie Island Sioux, Lower Sioux, and Shakopee 
Mdewakanton Sioux Communities of Minnesota under section 8 of Public Law 
99-130 (99 Stat. 552) and section 7 of Public Law 93-134 (87 Stat. 468), 
as amended by Public Law 97-458 (96 Stat. 2513; 25 U.S.C. 1407).
    (23) Funds distributed per capita or held in trust for members of 
the Chippewas of Lake Superior and the Chippewas of the Mississippi 
under section 6 of Public Law 99-146 (99 Stat. 782).
    (24) Distributions of claims settlement funds to members of the 
White Earth Band of Chippewa Indians as allottees, or their heirs, under 
section 16 of Public Law 99-264 (100 Stat. 70).
    (25) Payments or distributions of judgment funds, and the 
availability of any amount for such payments or distributions, to 
members of the Saginaw Chippewa Indian Tribe of Michigan under section 6 
of Public Law 99-346 (100 Stat. 677).


[[Page 945]]


    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (26) Judgment funds distributed per capita or held in trust for 
members of the Chippewas of Lake Superior and the Chippewas of the 
Mississippi under section 4 of Public Law 99-377 (100 Stat. 805).
    (27) Judgment funds distributed to members of the Cow Creek Band of 
Umpqua Tribe of Indians under section 4 of Public Law 100-139 (101 Stat. 
822).
    (28) Per capita payments of claims settlement funds to members of 
the Coushatta Tribe of Louisiana under section 2 of Public Law 100-411 
(102 Stat. 1097) and section 7 of Public Law 93-134 (87 Stat. 468), as 
amended by Public Law 97-458 (96 Stat. 2513; 25 U.S.C. 1407).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (29) Funds distributed per capita for members of the Hoopa Valley 
Indian Tribe and the Yurok Indian Tribe under sections 4, 6 and 7 of 
Public Law 100-580 (102 Stat. 2929, 2930, 2931) and section 3 of Public 
Law 98-64 (97 Stat. 365; 25 U.S.C. 117b).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (30) Judgment funds held in trust by the United States, including 
interest and investment income accruing on such funds, and judgment 
funds made available for programs or distributed to members of the 
Wisconsin Band of Potawatomi (Hannahville Indian Community and Forest 
County Potawatomi) under section 503 of Public Law 100-581 (102 Stat. 
2945).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (31) All funds, assets, and income from the trust fund transferred 
to the members of the Puyallup Tribe under section 10 of the Puyallup 
Tribe of Indians Settlement Act of 1989, Public Law 101-41 (103 Stat. 
88, 25 U.S.C. 1773h(c)).

    Note: This exclusion does not apply in deeming income from sponsors 
to aliens.

    (32) Judgment funds distributed per capita, or held in trust, or 
made available for programs, for members of the Seminole Nation of 
Oklahoma, the Seminole Tribe of Florida, the Miccosukee Tribe of Indians 
of Florida and the independent Seminole Indians of Florida under section 
8 of Public Law 101-277 (104 Stat. 145).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (33) Payments, funds, distributions, or income derived from them to 
members of the Seneca Nation of New York under section 8(b) of the 
Seneca Nation Settlement Act of 1990, Public Law 101-503 (104 Stat. 
1297, 25 U.S.C. 1774f).

    Note: This exclusion does not apply in deeming income from sponsors 
to aliens.

    (34) Per capita distributions of settlement funds under section 102 
of the Fallon Paiute Shoshone Indian Tribes Water Rights Settlement Act 
of 1990, Public Law 101-618 (104 Stat. 3289) and section 7 of Public Law 
93-134 (87 Stat. 468), as amended by Public Law 97-458 (96 Stat. 2513; 
25 U.S.C. 1407).
    (35) Settlement funds, assets, income, payments, or distributions 
from Trust Funds to members of the Catawba Indian Tribe of South 
Carolina under section 11(m) of Public Law 103-116 (107 Stat. 1133).
    (36) Settlement funds held in trust (including interest and 
investment income accruing on such funds) for, and payments made to, 
members of the Confederated Tribes of the Colville Reservation under 
section 7(b) of Public Law 103-436 (108 Stat. 4579).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (c) Receipts from Lands Held in Trust for Certain Tribes or Groups--
    (1) Receipts from land held in trust by the Federal government and 
distributed to members of certain Indian tribes under section 6 of 
Public Law 94-114 (89 Stat. 579, 25 U.S.C. 459e).

    Note: This exclusion applies to the income of sponsors of aliens 
only if the alien lives in the sponsor's household.

    (2) Receipts derived from trust lands awarded to the Pueblo of Santa 
Ana and distributed to members of that tribe under section 6 of Public 
Law 95-498 (92 Stat. 1677).
    (3) Receipts derived from trust lands awarded to the Pueblo of Zia 
of New Mexico and distributed to members of that tribe under section 6 
of Public Law 95-499 (92 Stat. 1680).

                                V. Other

    (a) Compensation provided volunteers in the foster grandparents 
program and other similar programs, unless determined by the Director of 
the Action Agency to constitute the minimum wage, under sections 404(g) 
and 418 of the Domestic Volunteer Service Act of 1973 (87 Stat. 409, 
413), as amended by Pub. L. No. 96-143; (93 Stat. 1077); 42 U.S.C. 
5044(g) and 5058).

    Note: This exclusion does not apply to the income of sponsors of 
aliens.

    (b) Any assistance to an individual (other than wages or salaries) 
under the Older

[[Page 946]]

Americans Act of 1965, as amended by section 102(h)(1) of Pub. L. 95-478 
(92 Stat. 1515, 42 U.S.C. 3020a).
    (c) Amounts paid as restitution to certain individuals of Japanese 
ancestry and Aleuts for losses suffered as a result of evacuation, 
relocation, and internment during World War II, under the Civil 
Liberties Act of 1988 and the Aleutian and Pribilof Islands Restitution 
Act, sections 105(f) and 206(d) of Public Law 100-383 (50 U.S.C. App. 
1989 b and c).
    (d) Payments made on or after January 1, 1989, from the Agent Orange 
Settlement Fund or any other fund established pursuant to the settlement 
in the In Re Agent Orange product liability litigation, M.D.L. No. 381 
(E.D.N.Y.) under Public Law 101-201 (103 Stat. 1795) and section 10405 
of Public Law 101-239 (103 Stat. 2489).
    (e) Payments made under section 6 of the Radiation Exposure 
Compensation Act, Public Law 101-426 (104 Stat. 925, 42 U.S.C. 2210).
    (f) The value of any child care provided or arranged (or any payment 
for such care or reimbursement for costs incurred for such care) under 
the Child Care and Development Block Grant Act, as amended by section 
8(b) of Public Law 102-586 (106 Stat. 5035).
    (g) Payments made to individuals because of their status as victims 
of Nazi persecution excluded pursuant to section 1(a) of the Victims of 
Nazi Persecution Act of 1994, Public Law 103-286 (108 Stat. 1450).

[45 FR 65547, Oct. 3, 1980, as amended at 52 FR 8888, Mar. 20, 1987; 57 
FR 53851, Nov. 13, 1992; 57 FR 55088, Nov. 24, 1992; 59 FR 8538, Feb. 
23, 1994; 62 FR 30982, June 6, 1997]



                   Subpart L_Resources and Exclusions

    Authority: Secs. 702(a)(5), 1602, 1611, 1612, 1613, 1614(f), 1621, 
and 1631 of the Social Security Act (42 U.S.C. 902(a)(5), 1381a, 1382, 
1382a, 1382b, 1382c(f), 1382j, and 1383); sec. 211, Pub. L. 93-66, 87 
Stat. 154 (42 U.S.C. 1382 note).

    Source: 40 FR 48915, Oct. 20, 1975, unless otherwise noted.



Sec. 416.1201  Resources; general.

    (a) Resources; defined. For purposes of this subpart L, resources 
means cash or other liquid assets or any real or personal property that 
an individual (or spouse, if any) owns and could convert to cash to be 
used for his or her support and maintenance.
    (1) If the individual has the right, authority or power to liquidate 
the property or his or her share of the property, it is considered a 
resource. If a property right cannot be liquidated, the property will 
not be considered a resource of the individual (or spouse).
    (2) Support and maintenance assistance not counted as income under 
Sec. 416.1157(c) will not be considered a resource.
    (3) Except for cash reimbursement of medical or social services 
expenses already paid for by the individual, cash received for medical 
or social services that is not income under Sec. 416.1103 (a) or (b), 
or a retroactive cash payment which is income that is excluded from 
deeming under Sec. 416.1161(a)(16), is not a resource for the calendar 
month following the month of its receipt. However, cash retained until 
the first moment of the second calendar month following its receipt is a 
resource at that time.
    (i) For purposes of this provision, a retroactive cash payment is 
one that is paid after the month in which it was due.
    (ii) This provision applies only to the unspent portion of those 
cash payments identified in this paragraph (a)(3). Once the cash from 
such payments is spent, this provision does not apply to items purchased 
with the money, even if the period described above has not expired.
    (iii) Unspent money from those cash payments identified in this 
paragraph (a)(3) must be identifiable from other resources for this 
provision to apply. The money may be commingled with other funds, but if 
this is done in such a fashion that an amount from such payments can no 
longer be separately identified, that amount will count toward the 
resource limit described in Sec. 416.1205.
    (4) Death benefits, including gifts and inheritances, received by an 
individual, to the extent that they are not income in accordance with 
paragraphs (e) and (g) of Sec. 416.1121 because they are to be spent on 
costs resulting from the last illness and burial of the deceased, are 
not resources for the calendar month following the month of receipt. 
However, such death benefits retained until the first moment of the 
second calendar month following their receipt are resources at that 
time.
    (b) Liquid resources. Liquid resources are cash or other property 
which can

[[Page 947]]

be converted to cash within 20 days, excluding certain nonwork days as 
explained in Sec. 416.120(d). Examples of resources that are ordinarily 
liquid are stocks, bonds, mutual fund shares, promissory notes, 
mortgages, life insurance policies, financial institution accounts 
(including savings, checking, and time deposits, also known as 
certificates of deposit) and similar items. Liquid resources, other than 
cash, are evaluated according to the individual's equity in the 
resources. (See Sec. 416.1208 for the treatment of funds held in 
individual and joint financial institution accounts.)
    (c) Nonliquid resources. (1) Nonliquid resources are property which 
is not cash and which cannot be converted to cash within 20 days 
excluding certain nonwork days as explained in Sec. 416.120(d). 
Examples of resources that are ordinarily nonliquid are loan agreements, 
household goods, automobiles, trucks, tractors, boats, machinery, 
livestock, buildings and land. Nonliquid resources are evaluated 
according to their equity value except as otherwise provided. (See Sec. 
416.1218 for treatment of automobiles.)
    (2) For purposes of this subpart L, the equity value of an item is 
defined as:
    (i) The price that item can reasonably be expected to sell for on 
the open market in the particular geographic area involved; minus
    (ii) Any encumbrances.

[40 FR 48915, Oct. 20, 1975, as amended at 44 FR 43266, July 24, 1979; 
48 FR 33259, July 21, 1983; 52 FR 4283, Feb. 11, 1987; 52 FR 16845, May 
6, 1987; 53 FR 23231, June 21, 1988; 56 FR 36001, July 30, 1991; 57 FR 
35461, Aug. 10, 1992; 57 FR 55089, Nov. 24, 1992; 59 FR 27988, May 31, 
1994]



Sec. 416.1202  Deeming of resources.

    (a) Married individual. In the case of an individual who is living 
with a person not eligible under this part and who is considered to be 
the husband or wife of such individual under the criteria in Sec. Sec. 
416.1802 through 416.1835 of this part, such individual's resources 
shall be deemed to include any resources, not otherwise excluded under 
this subpart, of such spouse whether or not such resources are available 
to such individual. In addition to the exclusions listed in Sec. 
416.1210, pension funds which the ineligible spouse may have are also 
excluded. Pension funds are defined as funds held in individual 
retirement accounts (IRA), as described by the Internal Revenue Code, or 
in work-related pension plans (including such plans for self-employed 
individuals, sometimes referred to as Keogh plans).
    (b) Child--(1) General. In the case of a child (as defined in Sec. 
416.1856) who is under age 18, such child's resources shall be deemed to 
include any resources, not otherwise excluded under this subpart, of an 
ineligible parent of such child (or the ineligible spouse of a parent) 
who is living in the same household (as defined in Sec. 416.1851) as 
such child, whether or not available to such child, to the extent that 
the resources of such parent (or such spouse of a parent) exceed the 
resource limits described in Sec. 416.1205 except as provided in 
paragraph (b)(2) of this section. (If the child is living with only one 
parent, the resource limit for an individual applies. If the child is 
living with both parents (or one parent and his or her spouse), the 
resource limit for an individual and spouse applies.) In addition to the 
exclusions listed in Sec. 416.1210, pension funds which the ineligible 
parent or spouse of a parent may have are also excluded. ``Pension 
funds'' are defined in paragraph (a) of this section. As used in this 
section, the term ``parent'' means the natural or adoptive parent of a 
child and ``spouse of a parent'' means the spouse (as defined in Sec. 
416.1806) of such natural or adoptive parent.
    (2) Disabled child under age 18. In the case of a disabled child 
under age 18 who is living in the same household with his or her 
parents, the deeming provisions of paragraph (b)(1) of this section 
shall not apply if such child--
    (i) Previously received a reduced SSI benefit while a resident of a 
medical facility, as described in Sec. 416.414;
    (ii) Is eligible for medical assistance under a Medicaid State home 
care plan approved by the Secretary under the provisions of section 
1915(c) or authorized under section 1902(e)(3) of the Act; and
    (iii) Would otherwise be ineligible because of the deeming of his or 
her parents' resources or income.

[[Page 948]]

    (c) Applicability. When used in this subpart L, the term individual 
refers to an eligible aged, blind, or disabled person, and also includes 
a person whose resources are deemed to be the resources of such 
individual (as provided in paragraphs (a) and (b) of this section).

[40 FR 48915, Oct. 20, 1975, as amended at 50 FR 38982, Sept. 26, 1985; 
52 FR 8888, Mar. 20, 1987; 52 FR 29841, Aug. 12, 1987; 52 FR 32240, Aug. 
26, 1987; 60 FR 361, Jan. 4, 1995; 62 FR 1056, Jan. 8, 1997; 65 FR 
16815, Mar. 30, 2000]



Sec. 416.1203  Deeming of resources of an essential person.

    In the case of a qualified individual (as defined in Sec. 416.221) 
whose payment standard has been increased because of the presence of an 
essential person (as defined in Sec. 416.222), the resources of such 
qualified individual shall be deemed to include all the resources of 
such essential person. If such qualified individual would not meet the 
resource criteria for eligibility (as defined in Sec. Sec. 416.1205 and 
416.1260) because of the deemed resources, then the payment standard 
increase because of the essential person will be nullified and the 
provision of this section will not apply; essential person status is 
lost permanently. However, if such essential person is an ineligible 
spouse of a qualified individual or a parent (or spouse of a parent) of 
a qualified individual who is a child under age 21, then the resources 
of such person will be deemed to such qualified individual in accordance 
with the provision in Sec. 416.1202.

[39 FR 33797, Sept. 20, 1974, as amended at 51 FR 10616, Mar. 28, 1986]



Sec. 416.1204  Deeming of resources of the sponsor of an alien.

    The resources of an alien who first applies for SSI benefits after 
September 30, 1980, are deemed to include the resources of the alien's 
sponsor for 3 years after the alien's date of admission into the United 
States. The date of admission is the date established by the Immigration 
and Naturalization Service as the date of admission for permanent 
residence. The resources of the sponsor's spouse are included if the 
sponsor and spouse live in the same household. Deeming of these 
resources applies regardless of whether the alien and sponsor live in 
the same household and regardless of whether the resources are actually 
available to the alien. For rules that apply in specific situations, see 
Sec. 416.1166a(d).
    (a) Exclusions from the sponsor's resources. Before we deem a 
sponsor's resources to an alien, we exclude the same kinds of resources 
that are excluded from the resources of an individual eligible for SSI 
benefits. The applicable exclusions from resources are explained in 
Sec. 416.1210 (paragraphs (a) through (i), (k), and (m) through (q)) 
through Sec. 416.1239. For resources excluded by Federal statutes other 
than the Social Security Act, as applicable to the resources of sponsors 
deemed to aliens, see the appendix to subpart K of part 416. We next 
allocate for the sponsor or for the sponsor and spouse (if living 
together). (The amount of the allocation is the applicable resource 
limit described in Sec. 416.1205 for an eligible individual and an 
individual and spouse.)
    (b) An alien sponsored by more than one sponsor. The resources of an 
alien who has been sponsored by more than one person are deemed to 
include the resources of each sponsor.
    (c) More than one alien sponsored by one individual. If more than 
one alien is sponsored by one individual the deemed resources are deemed 
to each alien as if he or she were the only one sponsored by the 
individual.
    (d) Alien has a sponsor and a parent or a spouse with deemable 
resources. Resources may be deemed to an alien from both a sponsor and a 
spouse or parent (if the alien is a child) provided that the sponsor and 
the spouse or parent are not the same person and the conditions for each 
rule are met.
    (e) Alien's sponsor is also the alien's ineligible spouse or parent. 
If the sponsor is also the alien's ineligible spouse or parent who lives 
in the same household, the spouse-to-spouse or parent-to-child deeming 
rules apply instead of the sponsor-to-alien deeming rules. If the spouse 
or parent deeming rules cease to apply, the sponsor deeming rules will 
begin to apply. The spouse or parent rules may cease to apply if an 
alien child reaches age 18 or if either the sponsor who is the 
ineligible spouse or parent, or the alien moves to a separate household.

[[Page 949]]

    (f) Alien's sponsor also is the ineligible spouse or parent of 
another SSI beneficiary. If the sponsor is also the ineligible spouse or 
ineligible parent of an SSI beneficiary other than the alien, the 
sponsor's resources are deemed to the alien under the rules in paragraph 
(a), and to the eligible spouse or child under the rules in Sec. Sec. 
416.1202, 1205, 1234, 1236, and 1237.

[52 FR 8888, Mar. 20, 1987, as amended at 61 FR 1712, Jan. 23, 1996]



Sec. 416.1204a  Deeming of resources where Medicaid eligibility is affected.

    Section 416.1161a of this part describes certain circumstances 
affecting Medicaid eligibility in which the Department will not deem 
family income to an individual. The Department will follow the same 
standards, procedures, and limitations set forth in that section with 
respect to deeming of resources.

[49 FR 5747, Feb. 15, 1984]



Sec. 416.1205  Limitation on resources.

    (a) Individual with no eligible spouse. An aged, blind, or disabled 
individual with no spouse is eligible for benefits under title XVI of 
the Act if his or her nonexcludable resources do not exceed $1,500 prior 
to January 1, 1985, and all other eligibility requirements are met. An 
individual who is living with an ineligible spouse is eligible for 
benefits under title XVI of the Act if his or her nonexcludable 
resources, including the resources of the spouse, do not exceed $2,250 
prior to January 1, 1985, and all other eligibility requirements are 
met.
    (b) Individual with an eligible spouse. An aged, blind, or disabled 
individual who has an eligible spouse is eligible for benefits under 
title XVI of the Act if their nonexcludable resources do not exceed 
$2,250 prior to January 1, 1985, and all other eligibility requirements 
are met.
    (c) Effective January 1, 1985 and later. The resources limits and 
effective dates for January 1, 1985 and later are as follows:

------------------------------------------------------------------------
                                                              Individual
                Effective date                   Individual   and spouse
------------------------------------------------------------------------
Jan. 1, 1985..................................       $1,600       $2,400
Jan. 1, 1986..................................        1,700       $2,550
Jan. 1, 1987..................................        1,800       $2,700
Jan. 1, 1988..................................        1,900       $2,850
Jan. 1, 1989..................................        2,000       $3,000
------------------------------------------------------------------------


[50 FR 38982, Sept. 26, 1985]



Sec. 416.1207  Resources determinations.

    (a) General. Resources determinations are made as of the first 
moment of the month. A resource determination is based on what assets an 
individual has, what their values are, and whether or not they are 
excluded as of the first moment of the month.
    (b) Increase in value of resources. If, during a month, a resource 
increases in value or an individual acquires an additional resource or 
replaces an excluded resource with one that is not excluded, the 
increase in the value of the resources is counted as of the first moment 
of the next month
    (c) Decrease in value of resources. If, during a month, a resource 
decreases in value or an individual spends a resource or replaces a 
resource that is not excluded with one that is excluded, the decrease in 
the value of the resources is counted as of the first moment of the next 
month.
    (d) Treatment of items under income and resource counting rules. 
Items received in cash or in kind during a month are evaluated first 
under the income counting rules and, if retained until the first moment 
of the following month, are subject to the rules for counting resources 
at that time.
    (e) Receipts from the sale, exchange, or replacement of a resource. 
If an individual sells, exchanges or replaces a resource, the receipts 
are not income. They are still considered to be a resource. This rule 
includes resources that have never been counted as such because they 
were sold, exchanged or replaced in the month in which they were 
received. See Sec. 416.1246 for the rule on resources disposed of for 
less than fair market value (including those disposed of during the 
month of receipt).

    Example: Miss L., a disabled individual, receives a $350 
unemployment insurance benefit on January 10, 1986. The benefit is 
unearned income to Miss L. when she receives it. On January 14, Miss L. 
uses the $350 payment to purchase shares of stock. Miss L.

[[Page 950]]

has exchanged one item (cash) for another item (stock). The $350 payment 
is never counted as a resource to Miss L. because she exchanged it in 
the same month she received it. The stock is not income; it is a 
different form of a resource exchanged for the cash. Since a resource is 
not countable until the first moment of the month following its receipt, 
the stock is not a countable resource to Miss L. until February 1.

[52 FR 4283, Feb. 11, 1987]



Sec. 416.1208  How funds held in financial institution accounts are counted.

    (a) General. Funds held in a financial institution account 
(including savings, checking, and time deposits, also known as 
certificates of deposit) are an individual's resource if the individual 
owns the account and can use the funds for his or her support and 
maintenance. We determine whether an individual owns the account and can 
use the funds for his or her support and maintenance by looking at how 
the individual holds the account. This is reflected in the way the 
account is titled.
    (b) Individually-held account. If an individual is designated as 
sole owner by the account title and can withdraw funds and use them for 
his or her support and maintenance, all of the funds, regardless of 
their source, are that individual's resource. For as long as these 
conditions are met, we presume that the individual owns 100 percent of 
the funds in the account. This presumption is non-rebuttable.
    (c) Jointly-held account--(1) Account holders include one or more 
SSI claimants or recipients. If there is only one SSI claimant or 
recipient account holder on a jointly held account, we presume that all 
of the funds in the account belong to that individual. If there is more 
than one claimant or recipient account holder, we presume that all the 
funds in the account belong to those individuals in equal shares.
    (2) Account holders include one or more deemors. If none of the 
account holders is a claimant or recipient, we presume that all of the 
funds in a jointly-held account belong to the deemor(s), in equal shares 
if there is more than one deemor. A deemor is a person whose income and 
resources are required to be considered when determining eligibility and 
computing the SSI benefit for an eligible individual (see Sec. Sec. 
416.1160 and 416.1202).
    (3) Right to rebut presumption of ownership. If the claimant, 
recipient, or deemor objects or disagrees with an ownership presumption 
as described in paragraph (c)(1) or (c)(2) of this section, we give the 
individual the opportunity to rebut the presumption. Rebuttal is a 
procedure as described in paragraph (c)(4) of this section, which 
permits an individual to furnish evidence and establish that some or all 
of the funds in a jointly-held account do not belong to him or her. 
Successful rebuttal establishes that the individual does not own some or 
all of the funds. The effect of successful rebuttal may be retroactive 
as well as prospective.

    Example: The recipient's first month of eligibility is January 1993. 
In May 1993 the recipient successfully establishes that none of the 
funds in a 5-year-old jointly-held account belong to her. We do not 
count any of the funds as resources for the months of January 1993 and 
continuing.

    (4) Procedure for rebuttal. To rebut an ownership presumption as 
described in paragraph (c)(1) or (c)(2) of this section, the individual 
must:
    (i) Submit his/her statement, along with corroborating statements 
from other account holders, regarding who owns the funds in the joint 
account, why there is a joint account, who has made deposits to and 
withdrawals from the account, and how withdrawals have been spent;
    (ii) Submit account records showing deposits, withdrawals, and 
interest (if any) in the months for which ownership of funds is at 
issue; and
    (iii) Correct the account title to show that the individual is no 
longer a co-owner if the individual owns none of the funds; or, if the 
individual owns only a portion of the funds, separate the funds owned by 
the other account holder(s) from his/her own funds and correct the 
account title on the individual's own funds to show they are solely-
owned by the individual.

[59 FR 27989, May 31, 1994]



Sec. 416.1210  Exclusions from resources; general.

    In determining the resources of an individual (and spouse, if any) 
the following items shall be excluded:

[[Page 951]]

    (a) The home (including the land appertaining thereto) to the extent 
its value does not exceed the amount set forth in Sec. 416.1212;
    (b) Household goods and personal effects to the extent that their 
total value does not exceed the amount provided in Sec. 416.1216;
    (c) An automobile to the extent that its value does not exceed the 
amount provided in Sec. 416.1218;
    (d) Property of a trade or business which is essential to the means 
of self-support as provided in Sec. 416.1222;
    (e) Nonbusiness property which is essential to the means of self-
support as provided in Sec. 416.1224;
    (f) Resources of a blind or disabled individual which are necessary 
to fulfill an approved plan for achieving self-support as provided in 
Sec. 416.1226;
    (g) Stock in regional or village corporations held by natives of 
Alaska during the twenty-year period in which the stock is inalienable 
pursuant to the Alaska Native Claims Settlement Act (see Sec. 
416.1228);
    (h) Life insurance owned by an individual (and spouse, if any) to 
the extent provided in Sec. 416.1230;
    (i) Restricted allotted Indian lands as provided in Sec. 416.1234;
    (j) Payments or benefits provided under a Federal statute other than 
title XVI of the Social Security Act where exclusion is required by such 
statute;
    (k) Disaster relief assistance as provided in Sec. 416.1237;
    (l) Burial spaces and certain funds up to $1,500 for burial expenses 
as provided in Sec. 416.1231;
    (m) Title XVI or title II retroactive payments as provided in Sec. 
416.1233;
    (n) Housing assistance as provided in Sec. 416.1238;
    (o) Refunds of Federal income taxes and advances made by an employer 
relating to an earned income tax credit, as provided in Sec. 416.1235;
    (p) Payments received as compensation for expenses incurred or 
losses suffered as a result of a crime as provided in Sec. 416.1229;
    (q) Relocation assistance from a State or local government as 
provided in Sec. 416.1239; and
    (r) Dedicated financial institution accounts as provided in Sec. 
416.1247.

[40 FR 48915, Oct. 20, 1975, as amended at 41 FR 13338, Mar. 30, 1976; 
44 FR 15664, Mar. 15, 1979; 48 FR 57127, Dec. 28, 1983; 51 FR 34464, 
Sept. 29, 1986; 55 FR 28378, July 11, 1990; 58 FR 63890, Dec. 3, 1993; 
59 FR 8538, Feb. 23, 1994; 61 FR 1712, Jan. 23, 1996; 61 FR 67207, Dec. 
20, 1996]



Sec. 416.1212  Exclusion of the home.

    (a) Defined. A home is any property in which an individual (and 
spouse, if any) has an ownership interest and which serves as the 
individual's principal place of residence. This property includes the 
shelter in which an individual resides, the land on which the shelter is 
located and related outbuildings.
    (b) Home not counted. We do not count a home regardless of its 
value. However, see Sec. Sec. 416.1220 through 416.1224 when there is 
an income-producing property located on the home property that does not 
qualify under the home exclusion.
    (c) If an individual changes principal place of residence. If an 
individual (and spouse, if any) moves out of his or her home without the 
intent to return, the home becomes a countable resource because it is no 
longer the individual's principal place of residence. If an individual 
leaves his or her home to live in an institution, we still consider the 
home to be the individual's principal place of residence, irrespective 
of the individual's intent to return, as long as a spouse or dependent 
relative of the eligible individual continues to live there. The 
individual's equity in the former home becomes a countable resource 
effective with the first day of the month following the month it is no 
longer his or her principal place of residence.
    (d) Proceeds from the sale of an excluded home. (1) The proceeds 
from the sale of a home which is excluded from the individual's 
resources will also be excluded from resources to the extent they are 
intended to be used and are, in fact, used to purchase another home, 
which is similarly excluded, within 3 months of the date of receipt of 
the proceeds.

[[Page 952]]

    (2) The value of a promissory note or similar installment sales 
contract constitutes a ``proceed'' which can be excluded from resources 
if--
    (i) The note results from the sale of an individual's home as 
described in Sec. 416.1212(a);
    (ii) Within 3 months of receipt (execution) of the note, the 
individual purchases a replacement home as described in Sec. 
416.1212(a) (see paragraph (e) of this section for an exception); and
    (iii) All note-generated proceeds are reinvested in the replacement 
home within 3 months of receipt (see paragraph (f) of this section for 
an exception).
    (3) In addition to excluding the value of the note itself, other 
proceeds from the sale of the former home are excluded resources if they 
are used within 3 months of receipt to make payment on the replacement 
home. Such proceeds, which consist of the downpayment and that portion 
of any installment amount constituting payment against the principal, 
represent a conversion of a resource.
    (e) Failure to purchase another excluded home timely. If the 
individual does not purchase a replacement home within the 3-month 
period specified in paragraph (d)(2)(ii) of this section, the value of a 
promissory note or similar installment sales contract received from the 
sale of an excluded home is a countable resource effective with the 
first moment of the month following the month the note is executed. If 
the individual purchases a replacement home after the expiration of the 
3-month period, the note becomes an excluded resource the month 
following the month of purchase of the replacement home provided that 
all other proceeds are fully and timely reinvested as explained in 
paragraph (f) of this section.
    (f) Failure to reinvest proceeds timely. (1) If the proceeds (e.g., 
installment amounts constituting payment against the principal) from the 
sale of an excluded home under a promissory note or similar installment 
sales contract are not reinvested fully and timely (within 3 months of 
receipt) in a replacement home, as of the first moment of the month 
following receipt of the payment, the individual's countable resources 
will include:
    (i) The value of the note; and
    (ii) That portion of the proceeds, retained by the individual, which 
was not timely reinvested
    (2) The note remains a countable resource until the first moment of 
the month following the receipt of proceeds that are fully and timely 
reinvested in the replacement home. Failure to reinvest proceeds for a 
period of time does not permanently preclude exclusion of the promissory 
note or installment sales contract. However, previously received 
proceeds that were not timely reinvested remain countable resources to 
the extent they are retained.

    Example 1. On July 10, an SSI recipient received his quarterly 
payment of $200 from the buyer of his former home under an installment 
sales contract. As of October 31, the recipient has used only $150 of 
the July payment in connection with the purchase of a new home. The 
exclusion of the unused $50 (and of the installment contract itself) is 
revoked back to July 10. As a result, the $50 and the value of the 
contract as of August 1, are included in a revised determination of 
resources for August and subsequent months.
    Example 2. On April 10, an SSI recipient received a payment of $250 
from the buyer of his former home under an installment sales contract. 
On May 3, he reinvested $200 of the payment in the purchase of a new 
home. On May 10, the recipient received another $250 payment, and 
reinvested the full amount on June 3. As of July 31, since the recipient 
has used only $200 of the April payment in connection with the purchase 
of the new home, the exclusion of the unused $50 (and of the installment 
contract itself) is revoked back to April 10. As a result, the $50 and 
the value of the contract as of May 1 are includable resources. Since 
the recipient fully and timely reinvested the May payment, the 
installment contract and the payment are again excludable resources as 
of June 1. However, the $50 left over from the previous payment remains 
a countable resource.

    (g) Interest payments. If interest is received as part of an 
installment payment resulting from the sale of an excluded home under a 
promissory note or similar installment sales contract, the interest 
payments do not represent conversion of a resource. The interest is 
income under the provisions of Sec. Sec. 416.1102, 416.1120, and 
416.1121(c).

[50 FR 42686, Oct. 22, 1985, as amended at 51 FR 7437, Mar. 4, 1986; 59 
FR 43285, Aug. 23, 1994]

[[Page 953]]



Sec. 416.1216  Exclusion of household goods and personal effects.

    (a) Household goods and personal effects; defined. Household goods 
are defined as including household furniture, furnishings and equipment 
which are commonly found in or about a house and are used in connection 
with the operation, maintenance and occupancy of the home. Household 
goods would also include the furniture, furnishings and equipment which 
are used in the functions and activities of home and family life as well 
as those items which are for comfort and accommodation. Personal effects 
are defined as including clothing, jewelry, items of personal care, 
individual education and recreational items such as books, musical 
instruments, and hobbies.
    (b) Limitation on household goods and personal effects. In 
determining the resources of an individual (and spouse, if any), 
household goods and personal effects are excluded if their total equity 
value is $2,000 or less. If the total equity value of household goods 
and personal effects is in excess of $2,000, the excess is counted 
against the resource limitation.
    (c) Additional exclusions of household goods and personal effects. 
In determining the resources of an individual (and spouse, if any) and 
in determining the value of the household goods and personal effects of 
such individual (and spouse), there shall be excluded a wedding ring and 
an engagement ring and household goods and personal effects such as 
prosthetic devices, dialysis machines, hospital beds, wheel chairs and 
similar equipment required because of a person's physical condition. The 
exclusion of items required because of a person's physical condition is 
not applicable to items which are used extensively and primarily by 
members of the household in addition to the person whose physical 
condition requires the item.

[40 FR 48915, Oct. 20,1975, as amended at 44 FR 43266, July 24, 1979]



Sec. 416.1218  Exclusion of the automobile.

    (a) Automobile; defined. As used in this section, the term 
automobile includes, in addition to passenger cars, other vehicles used 
to provide necessary transportation.
    (b) Limitation on automobiles. In determining the resources of an 
individual (and spouse, if any), automobiles are excluded or counted as 
follows:
    (1) Total exclusion. One automobile is totally excluded regardless 
of its value if, for the individual or a member of the individual's 
household--
    (i) It is necessary for employment;
    (ii) It is necessary for the medical treatment of a specific or 
regular medical problem;
    (iii) It is modified for operation by or transportation of a 
handicapped person; or
    (iv) It (or other type of vehicle) is necessary because of climate, 
terrain, distance, or similar factors to provide necessary 
transportation to perform essential daily activities.
    (2) Exclusion to $4,500 of the market value. If no automobile is 
excluded under paragraph (b)(1) of this section, one automobile is 
excluded from counting as a resource to the extent its current market 
value does not exceed $4,500. If the market value of the automobile 
exceeds $4,500, the excess is counted against the resource limit.
    (3) Other automobiles. Any other automobiles are treated as 
nonliquid resources and counted against the resource limit to the extent 
of the individual's equity (see Sec. 416.1201(c)).
    (c) Current market value. The current market value of an automobile 
is the average price an automobile of that particular year, make, model, 
and condition will sell for on the open market (to a private individual) 
in the particular geographic area involved.

[40 FR 48915, Oct. 20, 1975, as amended at 44 FR 43266, July 24, 1979; 
50 FR 42687, Oct. 22, 1985]



Sec. 416.1220  Property essential to self-support; general.

    When counting the value of resources an individual (and spouse, if 
any) has, the value of property essential to self-support is not 
counted, within certain limits. There are different rules for 
considering this property depending on whether it is income-producing or 
not. Property essential to self-support can include real and personal 
property (for example, land, buildings, equipment

[[Page 954]]

and supplies, motor vehicles, and tools, etc.) used in a trade or 
business (as defined in Sec. 404.1066 of part 404), nonbusiness income-
producing property (houses or apartments for rent, land other than home 
property, etc.) and property used to produce goods or services essential 
to an individual's daily activities. Liquid resources other than those 
used as part of a trade or business are not property essential to self-
support. If the individual's principal place of residence qualifies 
under the home exclusion, it is not considered in evaluating property 
essential to self-support.

[50 FR 42687, Oct. 22, 1985]



Sec. 416.1222  How income-producing property essential to self-support 
is counted.

    (a) General. When deciding the value of property used in a trade or 
business or nonbusiness income-producing activity, only the individual's 
equity in the property is counted. We will exclude as essential to self-
support up to $6,000 of an individual's equity in income-producing 
property if it produces a net annual income to the individual of at 
least 6 percent of the excluded equity. If the individual's equity is 
greater than $6,000, we count only the amount that exceeds $6,000 toward 
the allowable resource limit specified in Sec. 416.1205 if the net 
annual income requirement of 6 percent is met on the excluded equity. If 
the activity produces less than a 6-percent return due to circumstances 
beyond the individual's control (for example, crop failure, illness, 
etc.), and there is a reasonable expectation that the individual's 
activity will again produce a 6-percent return, the property is also 
excluded. If the individual owns more than one piece of property and 
each produces income, each is looked at to see if the 6-percent rule is 
met and then the amounts of the individual's equity in all of those 
properties producing 6 percent are totaled to see if the total equity is 
$6,000 or less. The equity in those properties that do not meet the 6-
percent rule is counted toward the allowable resource limit specified in 
Sec. 416.1205. If the individual's total equity in the properties 
producing 6-percent income is over the $6,000 equity limit, the amount 
of equity exceeding $6,000 is counted as a resource toward the allowable 
resource limit.

    Example 1. Sharon has a small business in her home making hand-woven 
rugs. The looms and other equipment used in the business have a current 
market value of $7,000. The value of her equity is $5,500 since she owes 
$1,500 on the looms. Sharon's net earnings from self-employment is $400. 
Since Sharon's equity in the looms and other equipment ($5,500) is under 
the $6,000 limit for property essential to self-support and her net 
income after expenses ($400) is greater than 6 percent of her equity, 
her income-producing property is excluded from countable resources. The 
home is not considered in any way in valuing property essential to self-
support.
    Example 2. Charlotte operates a farm. She owns 3 acres of land on 
which her home is located. She also owns 10 acres of farm land not 
connected to her home. There are 2 tool sheds and 2 animal shelters 
located on the 10 acres. She has various pieces of farm equipment that 
are necessary for her farming activities. We exclude the house and the 3 
acres under the home exclusion (see Sec. 416.1212). However, we look at 
the other 10 acres of land, the buildings and equipment separately to 
see if her total equity in them is no more than $6,000 and if the annual 
rate of return is 6 percent of her equity. In this case, the 10 acres 
and buildings are valued at $4,000 and the few items of farm equipment 
and other inventory are valued at $1,500. Charlotte sells produce which 
nets her more than 6 percent for this year. The 10 acres and other items 
are excluded as essential to her self-support and they continue to be 
excluded as long as she meets the 6-percent annual return requirement 
and the equity value of the 10 acres and other items remains less than 
$6,000.
    Example 3. Henry has an automobile repair business valued at $5,000. 
There are no debts on the property and bills are paid monthly. For the 
past 4 years the business has just broken even. Since Henry's income 
from the business is less then 6 percent of his equity, the entire 
$5,000 is counted as his resources. Since this exceeds the resources 
limit as described in Sec. 416.1205, he is not eligible for SSI 
benefits.

    (b) Exception. Property that represents the authority granted by a 
governmental agency to engage in an income-producing activity is 
excluded as property essential to self-support if it is:
    (1) Used in a trade or business or nonbusiness income-producing 
activity; or

[[Page 955]]

    (2) Not used due to circumstances beyond the individual's control, 
e.g., illness, and there is a reasonable expectation that the use will 
resume.

    Example: John owns a commercial fishing permit granted by the State 
Commerce Commission, a boat, and fishing tackle. The boat and tackle 
have an equity value of $6,500. Last year, John earned $2,000 from his 
fishing business. The value of the fishing permit is not detemined 
because the permit is excluded under the exception. The boat and tackle 
are producing in excess of a 6 percent return on the excluded equity 
value, so they are excluded under the general rule (see paragraph (a) of 
this section) up to $6,000. The $500 excess value is counted toward the 
resource limit as described in Sec. 416.1205.

[50 FR 42687, Oct. 22, 1985]



Sec. 416.1224  How nonbusiness property used to produce goods or services 
essential to self-support is counted.

    Nonbusiness property is considered to be essential for an 
individual's (and spouse, if any) self-support if it is used to produce 
goods or services necessary for his or her daily activities. This type 
of property includes real property such as land which is used to produce 
vegetables or livestock only for personal consumption in the 
individual's household (for example, corn, tomatoes, chicken, cattle). 
This type of property also includes personal property necessary to 
perform daily functions exclusive of passenger cars, trucks, boats, or 
other special vehicles. (See Sec. 416.1218 for a discussion on how 
automobiles are counted.) Property used to produce goods or services or 
property necessary to perform daily functions is excluded if the 
individual's equity in the property does not exceed $6,000. Personal 
property which is required by the individual's employer for work is not 
counted, regardless of value, while the individual is employed. Examples 
of this type of personal property include tools, safety equipment, 
uniforms and similar items.

    Example: Bill owns a small unimproved lot several blocks from his 
home. He uses the lot, which is valued at $4,800, to grow vegetables and 
fruit only for his own consumption. Since his equity in the property is 
less than $6,000, the property is excluded as necessary to self-support.

[50 FR 42687, Oct. 22, 1985]



Sec. 416.1225  An approved plan for self-support; general.

    If the individual is blind or disabled, resources will not be 
counted that are identified as necessary to fulfill a plan for achieving 
self-support which is in writing, has been approved by the Social 
Security Administration and is being pursued by the individual.

[50 FR 42688, Oct. 22, 1985]



Sec. 416.1226  What a plan to achieve self-support is.

    A plan to achieve self-support must--
    (a) Be designed especially for the individual;
    (b) Be in writing;
    (c) Be approved by the Social Security Administration (a change of 
plan must also be approved);
    (d) Be designed for an initial period of not more than 18 months. 
The period may be extended for up to another 18 months if the individual 
cannot complete the plan in the first 18-month period. A total of up to 
48 months may be allowed to fulfill a plan for a lengthy education or 
training program designed to make the individual self-supporting;
    (e) Show the individual's specific occupational goal;
    (f) Show what resources the individual has or will receive for 
purposes of the plan and how he or she will use them to attain his or 
her occupational goal; and
    (g) Show how the resources the individual set aside under the plan 
will be kept identifiable from his or her other funds.

[50 FR 42688, Oct. 22, 1985]



Sec. 416.1227  When the resources excluded under a plan to achieve 
self-support begin to count.

    The resources that were excluded under the individual's plan will 
begin to be counted as of the first day of the month following the month 
in which any of these circumstances occur:
    (a) Failing to follow the conditions of the plan:
    (b) Abandoning the plan;
    (c) Completing the time schedule outlined in the plan; or
    (d) Reaching the goal as outlined in the plan.

[50 FR 42688, Oct. 22, 1985]

[[Page 956]]



Sec. 416.1228  Exclusion of Alaskan natives' stock in regional or village 
corporations.

    (a) In determining the resources of a native of Alaska (and spouse, 
if any) there will be excluded from resources, shares of stock held in a 
regional or village corporation during the period of 20 years in which 
such stock is inalienable, as provided by sections 7(h) and 8(c) of the 
Alaska Native Claims Settlement Act (43 U.S.C. 1606, 1607). The 20-year 
period of inalienability terminates on January 1, 1992.
    (b) As used in this section, native of Alaska has the same meaning 
as that contained in section 3(b) of the Alaska Native Claims Settlement 
Act (43 U.S.C. 1602(b)).



Sec. 416.1229  Exclusion of payments received as compensation for expenses 
incurred or losses suffered as a result of a crime.

    (a) In determining the resources of an individual (and spouse, if 
any), any amount received from a fund established by a State to aid 
victims of crime is excluded from resources for a period of 9 months 
beginning with the month following the month of receipt.
    (b) To be excluded from resources under this section, the individual 
(or spouse) must demonstrate that any amount received was compensation 
for expenses incurred or losses suffered as the result of a crime.

[61 FR 1712, Jan. 23, 1996]



Sec. 416.1230  Exclusion of life insurance.

    (a) General. In determining the resources of an individual (and 
spouse, if any), life insurance owned by the individual (and spouse, if 
any) will be considered to the extent of its cash surrender value. If, 
however, the total face value of all life insurance policies on any 
person does not exceed $1,500, no part of the cash surrender value of 
such life insurance will be taken into account in determining the 
resources of the individual (and spouse, if any). In determining the 
face value of life insurance on the individual (and spouse, if any), 
term insurance and burial insurance will not be taken into account.
    (b) Definitions--(1) Life insurance. Life insurance is a contract 
under which the insurer agrees to pay a specified amount upon the death 
of the insured.
    (2) Insurer. The insurer is the company or association which 
contracts with the owner of the insurance.
    (3) Insured. The insured is the person upon whose life insurance is 
effected.
    (4) Owner. The owner is the person who has the right to change the 
policy. This is normally the person who pays the premiums.
    (5) Term insurance. Term insurance is a form of life insurance 
having no cash surrender value and generally furnishing insurance 
protection for only a specified or limited period of time.
    (6) Face value. Face value is the basic death benefit of the policy 
exclusive of dividend additions or additional amounts payable because of 
accidental death or under other special provisions.
    (7) Cash surrender value. Cash surrender value is the amount which 
the insurer will pay (usually to the owner) upon cancellation of the 
policy before death of the insured or before maturity of the policy.
    (8) Burial insurance. Burial insurance is insurance whose terms 
specifically provide that the proceeds can be used only to pay the 
burial expenses of the insured.



Sec. 416.1231  Burial spaces and certain funds set aside for burial expenses.

    (a) Burial spaces--(1) General. In determining the resources of an 
individual, the value of burial spaces for the individual, the 
individual's spouse or any member of the individual's immediate family 
will be excluded from resources.
    (2) Burial spaces defined. For purposes of this section ``burial 
spaces'' include burial plots, gravesites, crypts, mausoleums, urns, 
niches and other customary and traditional repositories for the 
deceased's bodily remains provided such spaces are owned by the 
individual or are held for his or her use. Additionally, the term 
includes necessary and reasonable improvements or additions to or upon 
such burial spaces including, but not limited to, vaults, headstones, 
markers, plaques, or burial containers and arrangements for opening and 
closing the gravesite for burial of the deceased.

[[Page 957]]

    (3) An agreement representing the purchase of a burial space. The 
value of an agreement representing the purchase of a burial space, 
including any accumulated interest, will be excluded from resources. We 
do not consider a burial space ``held for'' an individual under an 
agreement unless the individual currently owns and is currently entitled 
to the use of the space under that agreement. For example, we will not 
consider a burial space ``held for'' an individual under an installment 
sales agreement or other similar device under which the individual does 
not currently own nor currently have the right to use the space, nor is 
the seller currently obligated to provide the space, until the purchase 
amount is paid in full.
    (4) Immediate family defined. For purposes of this section immediate 
family means an individual's minor and adult children, including adopted 
children and step-children; an individual's brothers, sisters, parents, 
adoptive parents, and the spouses of those individuals. Neither 
dependency nor living-in-the-same-household will be a factor in 
determining whether a person is an immediate family member.
    (b) Funds set aside for burial expenses--(1) Exclusion. In 
determining the resources of an individual (and spouse, if any) there 
shall be excluded an amount not in excess of $1,500 each of funds 
specifically set aside for the burial expenses of the individual or the 
individual's spouse. This exclusion applies only if the funds set aside 
for burial expenses are kept separate from all other resources not 
intended for burial of the individual (or spouse) and are clearly 
designated as set aside for the individual's (or spouse's) burial 
expenses. If excluded burial funds are mixed with resources not intended 
for burial, the exclusion will not apply to any portion of the funds. 
This exclusion is in addition to the burial space exclusion.
    (2) Exception for parental deeming situations. If an individual is 
an eligible child, the burial funds (up to $1,500) that are set aside 
for the burial arrangements of the eligible child's ineligible parent or 
parent's spouse will not be counted in determining the resources of such 
eligible child.
    (3) Burial funds defined. For purposes of this section ``burial 
funds'' are revocable burial contracts, burial trusts, other burial 
arrangements (including amounts paid on installment sales contracts for 
burial spaces), cash, accounts, or other financial instruments with a 
definite cash value clearly designated for the individual's (or 
spouse's, if any) burial expenses and kept separate from nonburial-
related assets. Property other than listed in this definition will not 
be considered ``burial funds.''
    (4) Recipients currently receiving SSI benefits. Recipients 
currently eligible as of July 11, 1990, who have had burial funds 
excluded which do not meet all of the requirements of paragraphs (b) (1) 
and (3) of this section must convert or separate such funds to meet 
these requirements unless there is an impediment to such conversion or 
separation; i.e., a circumstance beyond an individual's control which 
makes conversion/separation impossible or impracticable. For so long as 
such an impediment or circumstance exists, the burial funds will be 
excluded if the individual remains otherwise continuously eligible for 
the exclusion.
    (5) Reductions. Each person's (as described in Sec. Sec. 
416.1231(b)(1) and 416.1231(b)(2)) $1,500 exclusion must be reduced by:
    (i) The face value of insurance policies on the life of an 
individual owned by the individual or spouse (if any) if the cash 
surrender value of those policies has been excluded from resources as 
provided in Sec. 416.1230; and
    (ii) Amounts in an irrevocable trust (or other irrevocable 
arrangement) available to meet the burial expenses.
    (6) Irrevocable trust or other irrevocable arrangement. Funds in an 
irrevocable trust or other irrevocable arrangement which are available 
for burial are funds which are held in an irrevocable burial contract, 
an irrevocable burial trust, or an amount in an irrevocable trust which 
is specifically identified as available for burial expenses.
    (7) Increase in value of burial funds. Interest earned on excluded 
burial funds and appreciation in the value of excluded burial 
arrangements which occur beginning November 1, 1982, or

[[Page 958]]

the date of first SSI eligibility, whichever is later, are excluded from 
resources if left to accumulate and become part of the separate burial 
fund.
    (8) Burial funds used for some other purpose. (i) Excluded burial 
funds must be used solely for that purpose.
    (ii) If any excluded funds are used for a purpose other than the 
burial arrangements of the individual or the individual's spouse for 
whom the funds were set aside, future SSI benefits of the individual (or 
the individual and eligible spouse) will be reduced by an amount equal 
to the amount of excluded burial funds used for another purpose. This 
penalty for use of excluded burial funds for a purpose other than the 
burial arrangements of the individual (or spouse) will apply only if, as 
of the first moment of the month of use, the individual would have had 
resources in excess of the limit specified in Sec. 416.1205 without 
application of the exclusion.
    (9) Extension of burial fund exclusion during suspension. The 
exclusion of burial funds and accumulated interest and appreciation will 
continue to apply throughout a period of suspension as described in 
Sec. 416.1320, so long as the individual's eligibility has not been 
terminated as described in Sec. Sec. 416.1331 through 416.1335.

[48 FR 57127, Dec. 28, 1983, as amended at 55 FR 28377, July 11, 1990; 
57 FR 1384, Jan. 14, 1992]



Sec. 416.1232  Replacement of lost, damaged, or stolen excluded resources.

    (a) Cash (including any interest earned on the cash) or in-kind 
replacement received from any source for purposes of repairing or 
replacing an excluded resource (as defined in Sec. 416.1210) that is 
lost, damaged, or stolen is excluded as a resource. This exclusion 
applies if the cash (and the interest) is used to repair or replace the 
excluded resource within 9 months of the date the individual received 
the cash. Any of the cash (and interest) that is not used to repair or 
replace the excluded resource will be counted as a resource beginning 
with the month after the 9-month period expires.
    (b) The initial 9-month time period will be extended for a 
reasonable period up to an additional 9 months where we find the 
individual had good cause for not replacing or repairing the resource. 
An individual will be found to have good cause when circumstances beyond 
his or her control prevented the repair or replacement or the 
contracting for the repair or replacement of the resource. The 9-month 
extension can only be granted if the individual intends to use the cash 
or in-kind replacement items to repair or replace the lost, stolen, or 
damaged excluded resource in addition to having good cause for not 
having done so. If good cause is found for an individual, any unused 
cash (and interest) is counted as a resource beginning with the month 
after the good cause extension period expires. Exception: For victims of 
Hurricane Andrew only, the extension period for good cause may be 
extended for up to an additional 12 months beyond the 9-month extension 
when we find that the individual had good cause for not replacing or 
repairing an excluded resource within the 9-month extension.
    (c) The time period described in paragraph (b) of this section 
(except the time period for individuals granted an additional extension 
under the Hurricane Andrew provision) may be extended for a reasonable 
period up to an additional 12 months in the case of a catastrophe which 
is declared to be a major disaster by the President of the United States 
if the excluded resource is geographically located within the disaster 
area as defined by the Presidential order; the individual intends to 
repair or replace the excluded resource; and, the individual 
demonstrates good cause why he or she has not been able to repair or 
replace the excluded resource within the 18-month period.
    (d) Where an extension of the time period is made for good cause and 
the individual changes his or her intent to repair or replace the 
excluded resource, funds previously held for replacement or repair will 
be counted as a resource effective with the month that the individual 
reports this change of intent.

[44 FR 15662, Mar. 15, 1979, as amended at 50 FR 48579, Nov. 26, 1985; 
61 FR 5944, Feb. 15, 1996]

[[Page 959]]



Sec. 416.1233  Exclusion of certain underpayments from resources.

    (a) General. In determining the resources of an eligible individual 
(and spouse, if any), we will exclude, for 6 months following the month 
of receipt, the unspent portion of any title II or title XVI retroactive 
payment received on or after October 1, 1984. Exception: We will exclude 
for 9 months following the month of receipt the unspent portion of any 
title II of title XVI retroactive payment received during the period 
beginning October 1, 1987, and ending September 30, 1989. This exclusion 
also applies to such payments received by any other person whose 
resources are subject to deeming under this subpart.
    (b) Retroactive payments. For purposes of this exclusion, a 
retroactive payment is one that is paid after the month in which it was 
due. A title XVI retroactive payment includes any retroactive amount of 
federally administered State supplementation.
    (c) Limitation on exclusion. This exclusion applies only to any 
unspent portion of retroactive payments made under title II or XVI. Once 
the money from the retroactive payment is spent, this exclusion does not 
apply to items purchased with the money, even if the 6-month or 9-month 
period, whichever is applicable (see paragraph (a) of this section), has 
not expired. However, other exclusions may be applicable. As long as the 
funds from the retroactive payment are not spent, they are excluded for 
the full 6-month or 9-month period, whichever is applicable.
    (d) Funds must be identifiable. Unspent money from a retroactive 
payment must be identifiable from other resources for this exclusion to 
apply. The money may be commingled with other funds but, if this is done 
in such a fashion that the retroactive amount can no longer be 
separately identified, that amount will count toward the resource limit 
described in Sec. 416.1205.
    (e) Written notice. We will give each recipient a written notice of 
the exclusion limitation when we make the retroactive payment.

[51 FR 34464, Sept. 29, 1986, as amended at 54 FR 19164, May 4, 1989]



Sec. 416.1234  Exclusion of Indian lands.

    In determining the resources of an individual (and spouse, if any) 
who is of Indian descent from a federally recognized Indian tribe, we 
will exclude any interest of the individual (or spouse, if any) in land 
which is held in trust by the United States for an individual Indian or 
tribe, or which is held by an individual Indian or tribe and which can 
only be sold, transferred, or otherwise disposed of with the approval of 
other individuals, his or her tribe, or an agency of the Federal 
Government.

[59 FR 8538, Feb. 23, 1994]



Sec. 416.1235  Exclusion of earned income tax credit.

    In determining the resources of an individual (and spouse, if any), 
we exclude in the month following the month of receipt the unspent 
portion of any refund of Federal income taxes under section 32 of the 
Internal Revenue Code (relating to earned income tax credit) and the 
unspent portion of any payment from an employer under section 3507 of 
the Internal Revenue Code (relating to advance payment of earned income 
tax credit). Any unspent funds retained until the first moment of the 
second month following their receipt are subject to resource counting 
rules at that time.

[58 FR 63890, Dec. 3, 1993]



Sec. 416.1236  Exclusions from resources; provided by other statutes.

    (a) For the purpose of Sec. 416.1210(j), payments or benefits 
provided under a Federal statute other than title XVI of the Social 
Security Act where exclusion from resources is required by such statute 
include:
    (1) Payments made under title II of the Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970 (84 Stat. 
1902, 42 U.S.C. 4636).
    (2) Payments made to Native Americans as listed in paragraphs (b) 
and (c) of section IV of the appendix to subpart K of part 416, as 
provided by Federal statutes other than the Social Security Act.
    (3) Indian judgment funds held in trust by the Secretary of the 
Interior or distributed per capita pursuant to a plan prepared by the 
Secretary of the

[[Page 960]]

Interior and not disapproved by a joint resolution of the Congress under 
Public Law 93-134, as amended by Public Law 97-458 (25 U.S.C. 1407). 
Indian judgment funds include interest and investment income accrued 
while the funds are so held in trust. This exclusion extends to initial 
purchases made with Indian judgment funds. This exclusion will not apply 
to proceeds from sales or conversions of initial purchases or to 
subsequent purchases.
    (4) The value of the coupon allotment in excess of the amount paid 
for the coupons under the Food Stamp Act of 1964 (78 Stat. 705, as 
amended, 7 U.S.C. 2016(c)).
    (5) The value of assistance to children under the National School 
Lunch Act (60 Stat. 230, 42 U.S.C. 1751 et seq.) as amended by Pub. L. 
90-302 (82 Stat. 117, 42 U.S.C. 1761(h)(3)).
    (6) The value of assistance to children under the Child Nutrition 
Act of 1966 (80 Stat. 889, 42 U.S.C. 1780(b)).
    (7) Any grant or loan to any undergraduate student for educational 
purposes made or insured under any program administered by the 
Commissioner of Education as provided by section 507 of the Higher 
Education Amendments of 1968, Pub. L. 90-575 (82 Stat. 1063).
    (8) Incentive allowances received under title I of the Comprehensive 
Employment and Training Act of 1973 (87 Stat. 849, 29 U.S.C. 821(a)).
    (9) Payments to volunteers under the Domestic Volunteer Service Act 
of 1973 as provided by section 404(g) of that act (87 Stat. 409, 42 
U.S.C. 5044).
    (10) Distributions received by an individual Alaska Native or 
descendant of an Alaska Native from an Alaska Native Regional and 
Village Corporation pursuant to the Alaska Native Claims Settlement Act, 
as follows: cash, including cash dividends on stock received from a 
Native Corporation, is disregarded to the extent that it does not, in 
the aggregate, exceed $2,000 per individual each year (the $2,000 limit 
is applied separately each year, and cash distributions up to $2,000 
which an individual received in a prior year and retained into 
subsequent years will not be counted as resources in those years); 
stock, including stock issued or distributed by a Native Corporation as 
a dividend or distribution on stock; a partnership interest; land or an 
interest in land, including land or an interest in land received from a 
Native Corporation as a dividend or distribution on stock; and an 
interest in a settlement trust. This exclusion is pursuant to the 
exclusion under section 15 of the Alaska Native Claims Settlement Act 
Amendments of 1987, Public Law 100-241 (43 U.S.C. 1626(c)), effective 
February 3, 1988.
    (11) Value of Federally donated foods distributed pursuant to 
section 32 of Pub. L. 74-320 or section 416 of the Agriculture Act of 
1949 (7 CFR 250.6(e)(9) as authorized by 5 U.S.C. 301).
    (12) All funds held in trust by the Secretary of the Interior for an 
Indian tribe and distributed per capita to a member of that tribe under 
Public Law 98-64. Funds held by Alaska Native Regional and Village 
Corporations (ANRVC) are not held in trust by the Secretary of the 
Interior and therefore ANRVC dividend distributions are not excluded 
from resources under this exclusion. For the treatment of ANRVC dividend 
distributions, see paragraph (a)(10) of this section.
    (13) Home energy assistance payments or allowances under the Low-
Income Home Energy Assistance Act of 1981, as added by title XXVI of the 
Omnibus Budget Reconciliation Act of 1981, Public Law 97-35 (42 U.S.C. 
8624(f)).
    (14) Student financial assistance for attendance costs received from 
a program funded in whole or in part under title IV of the Higher 
Education Act of 1965, as amended, or under Bureau of Indian Affairs 
student assistance programs if it is made available for tuition and fees 
normally assessed a student carrying the same academic workload, as 
determined by the institution, including costs for rental or purchase of 
any equipment, materials, or supplies required of all students in the 
same course of study; and an allowance for books, supplies, 
transportation, and miscellaneous personal expenses for a student 
attending the institution on at least a half-time basis, as determined 
by the institution, under section 14(27) of Public Law 100-50, the 
Higher Education Technical Amendments Act of 1987 (20 U.S.C. 1087uu), or 
under Bureau

[[Page 961]]

of Indian Affairs student assistance programs.
    (15) Amounts paid as restitution to certain individuals of Japanese 
ancestry and Aleuts under the Civil Liberties Act of 1988 and the 
Aleutian and Pribilof Islands Restitution Act, sections 105(f) and 
206(d) of Public Law 100-383 (50 U.S.C. app. 1989 b and c).
    (16) Payments made on or after January 1, 1989, from the Agent 
Orange Settlement Fund or any other fund established pursuant to the 
settlement in the In Re Agent Orange product liability litigation, 
M.D.L. No. 381 (E.D.N.Y.) under Public Law 101-201 (103 Stat. 1795) and 
section 10405 of Public Law 101-239 (103 Stat. 2489).
    (17) Payments made under section 6 of the Radiation Exposure 
Compensation Act, Public Law 101-426 (104 Stat. 925, 42 U.S.C. 2210).
    (18) Payments made to individuals because of their status as victims 
of Nazi persecution excluded pursuant to section 1(a) of the Victims of 
Nazi Persecution Act of 1994, Public Law 103-286 (108 Stat. 1450).
    (b) In order for payments and benefits listed in paragraph (a) to be 
excluded from resources, such funds must be segregated and not 
commingled with other countable resources so that the excludable funds 
are identifiable.

[41 FR 13338, Mar. 30, 1976, as amended at 42 FR 44221, Sept. 2, 1977; 
42 FR 54945, Oct. 12, 1977; 43 FR 45555, Oct. 3, 1978; 57 FR 53851, Nov. 
13, 1992; 57 FR 55089, Nov. 24, 1992; 59 FR 8538, Feb. 23, 1994; 62 FR 
30983, June 6, 1997]



Sec. 416.1237  Assistance received on account of major disaster.

    (a) Assistance received under the Disaster Relief and Emergency 
Assistance Act or other assistance provided under a Federal statute 
because of a catastrophe which is declared to be a major disaster by the 
President of the United States or comparable assistance received from a 
State or local government, or from a disaster assistance organization, 
is excluded in determining countable resources under Sec. 416.1210.
    (b) Interest earned on the assistance is excluded from resources.

[57 FR 53852, Nov. 13, 1992]



Sec. 416.1238  Exclusion of certain housing assistance.

    The value of any assistance paid with respect to a dwelling under 
the statutes listed in Sec. 416.1124(c)(14) is excluded from resources.

[55 FR 28378, July 11, 1990]



Sec. 416.1239  Exclusion of State or local relocation assistance payments.

    In determining the resources of an individual (or spouse, if any), 
relocation assistance provided by a State or local government (as 
described in Sec. 416.1124(c)(18)) is excluded from resources for a 
period of 9 months beginning with the month following the month of 
receipt.

[61 FR 1712, Jan. 23, 1996]



Sec. 416.1240  Disposition of resources.

    (a) Where the resources of an individual (and spouse, if any) are 
determined to exceed the limitations prescribed in Sec. 416.1205, such 
individual (and spouse, if any) shall not be eligible for payment except 
under the conditions provided in this section. Payment will be made to 
an individual (and spouse, if any) if:
    (1) Total includable liquid resources (as defined in Sec. 
416.1201(b)) do not exceed one-fourth of the applicable dollar amount 
referenced in section 1611(b)(1) of the Act in the case of an individual 
and in section 1611(b)(2) in the case of an individual and spouse (as 
increased pursuant to section 1617 of the Act and published in the 
Federal Register pursuant to section 215(i)(2)(D)); and
    (2) The individual agrees in writing to:
    (i) Dispose, at current market value, of the nonliquid resources (as 
defined in Sec. 416.1201(c)) in excess of the limitations prescribed in 
Sec. 416.1205 within the time period specified in Sec. 416.1242; and
    (ii) Repay any overpayments (as defined in Sec. 416.1244) with the 
proceeds of such disposition.
    (b) Payment made for the period during which the resources are being 
disposed of will be conditioned upon the disposition of those resources 
as prescribed in paragraph (a)(2) of this section. Any payments so made 
are (at the time of disposition) considered overpayments to the extent 
they would not

[[Page 962]]

have been paid had the disposition occurred at the beginning of the 
period for which such payments were made.
    (c) If an individual fails to dispose of the resources prescribed in 
paragraph (a)(2) of this section, regardless of the efforts he or she 
makes to dispose of them, the resources will be counted at their current 
market value and the individual will be ineligible due to excess 
resources. The original estimate of current market value will be used 
unless the individual submits evidence establishing a lower value (e.g., 
an estimate from a disinterested knowledgeable source.)

[52 FR 31762, Aug. 24, 1987]



Sec. 416.1242  Time limits for disposing of resources.

    (a) In order for payment conditioned on the disposition of nonliquid 
resources to be made, the individual must agree in writing to dispose of 
real property within 9 months and personal property within 3 months. The 
time period for disposal of property begins on the date we accept the 
individual's signed written agreement to dispose of the property. If we 
receive a signed agreement on or after the date we have determined that 
the individual meets the eligibility requirements described in Sec. 
416.202 of this part, with the exception of the resource requirements 
described in this subpart, our acceptance of the written agreement will 
occur on the date the individual receives our written notice that the 
agreement is in effect. If we receive a signed agreement prior to the 
date we determine that all nonresource requirements are met, our 
acceptance of the written agreement will not occur until the date the 
individual receives our written notice that all nonresource requirements 
are met and that the agreement is in effect. When the written notice is 
mailed to the individual, we assume that the notice was received 5 days 
after the date shown on the notice unless the individual shows us that 
he or she did not receive it within the 5-day period.
    (b) The 3-month time period for disposition of personal property 
will be extended an additional 3 months where it is found that the 
individual had ``good cause'' for failing to dispose of the resources 
within the original time period. The rules on the valuation of real 
property not disposed of within 9 months are described in Sec. 
416.1245(b).
    (c) An individual will be found to have ``good cause'' for failing 
to dispose of a resource if, despite reasonable and diligent effort on 
his part, he was prevented by circumstances beyond his control from 
disposing of the resource.
    (d) In determining whether the appropriate time limits discussed in 
paragraphs (a) and (b) of this section have elapsed, no month will be 
counted for which an individual's benefits have been suspended as 
described in Sec. 416.1320, provided that the reason for the suspension 
is unrelated to the requirements in Sec. 416.1245(b) and that the 
individual's eligibility has not been terminated as defined in 
Sec. Sec. 416.1331 through 416.1335.

[40 FR 48915, Oct. 20, 1975, as amended at 53 FR 13257, Apr. 22, 1988; 
55 FR 10419, Mar. 21, 1990; 58 FR 60105, Nov. 15, 1993]



Sec. 416.1244  Treatment of proceeds from disposition of resources.

    (a) Upon disposition of the resources, the net proceeds to the 
individual from the sale are considered available to repay that portion 
of the payments that would not have been made had the disposition 
occurred at the beginning of the period for which payment was made.
    (b) The net proceeds from disposition will normally be the sales 
price less any encumbrance on the resource and the expenses of sale such 
as transfer taxes, fees, advertising costs, etc. where, however, a 
resource has been sold (or otherwise transferred) by an individual to a 
friend or relative for less than its current market value, the net 
proceeds will be the current market value less costs of sale and 
encumbrance.
    (c) After deducting any amount necessary to raise the individual's 
(and spouse's, if any) resources to the applicable limits described in 
Sec. 416.1205, as of the beginning of the disposition period, the 
balance of the net proceeds will be used to recover the payments made to 
the individual (and spouse, if any). Any remaining proceeds are 
considered liquid resources.

[[Page 963]]

    (d) The overpayment to be recovered is equal to the balance of the 
net proceeds (as described in paragraph (c) of this section) or the 
total payments made to the individual (and spouse, if any) for the 
period of disposition, whichever is less.

[40 FR 48915, Oct. 20, 1975, as amended at 50 FR 38982, Sept. 28, 1985]



Sec. 416.1245  Exceptions to required disposition of real property.

    (a) Loss of housing for joint owner. Excess real property which 
would be a resource under Sec. 416.1201 is not a countable resource for 
conditional benefit purposes when: it is jointly owned; and sale of the 
property by an individual would cause the other owner undue hardship due 
to loss of housing. Undue hardship would result when the property serves 
as the principal place of residence for one (or more) of the other 
owners, sale of the property would result in loss of that residence, and 
no other housing would be readily available for the displaced other 
owner (e.g., the other owner does not own another house that is legally 
available for occupancy). However, if undue hardship ceases to exist, 
its value will be included in countable resources as described in Sec. 
416.1207.
    (b) Reasonable efforts to sell. (1) Excess real property is not 
included in countable resources for so long as the individual's 
reasonable efforts to sell it have been unsuccessful. The basis for 
determining whether efforts to sell are reasonable, as well as 
unsuccessful, will be a 9-month disposal period described in Sec. 
416.1242. If it is determined that reasonable efforts to sell have been 
unsuccessful, further SSI payments will not be conditioned on the 
disposition of the property and only the benefits paid during the 9-
month disposal period will be subject to recovery. In order to be 
eligible for payments after the conditional benefits period, the 
individual must continue to make reasonable efforts to sell.
    (2) A conditional benefits period involving excess real property 
begins as described at Sec. 416.1242(a). The conditional benefits 
period ends at the earliest of the following times:
    (i) Sale of the property;
    (ii) Lack of continued reasonable efforts to sell;
    (iii) The individual's written request for cancellation of the 
agreement;
    (iv) Countable resources, even without the conditional exclusion, 
fall below the applicable limit (e.g., liquid resources have been 
depleted); or
    (v) The 9-month disposal period has expired.
    (3) Reasonable efforts to sell property consist of taking all 
necessary steps to sell it in the geographic area covered by the media 
serving the area in which the property is located, unless the individual 
has good cause for not taking these steps. More specifically, making a 
reasonable effort to sell means that:
    (i) Except for gaps of no more than 1 week, an individual must 
attempt to sell the property by listing it with a real estate agent or 
by undertaking to sell it himself;
    (ii) Within 30 days of receiving notice that we have accepted the 
individual's signed written agreement to dispose of the property, and 
absent good cause for not doing so, the individual must:
    (A) List the property with an agent; or
    (B) Begin to advertise it in at least one of the appropriate local 
media, place a ``For Sale'' sign on the property (if permitted), begin 
to conduct ``open houses'' or otherwise show the property to interested 
parties on a continuous basis, and attempt any other appropriate methods 
of sale; and
    (iii) The individual accepts any reasonable offer to buy and has the 
burden of demonstrating that an offer was rejected because it was not 
reasonable. If the individual receives an offer that is at least two-
thirds of the latest estimate of current market value, the individual 
must present evidence to establish that the offer was unreasonable and 
was rejected.
    (4) An individual will be found to have ``good cause'' for failing 
to make reasonable efforts to sell under paragraph (b)(3) of this 
section if he or she was prevented by circumstances beyond his or her 
control from taking the steps specified in paragraph (b)(3) (i) through 
(ii) of this section.
    (5) An individual who has received conditional benefits through the 
expiration of the 9 month disposal period

[[Page 964]]

and whose benefits have been suspended as described at Sec. 416.1320 
for reasons unrelated to the property excluded under the conditional 
benefits agreement, but whose eligibility has not been terminated as 
defined at Sec. Sec. 416.1331 through 416.1335, can continue to have 
the excess real property not included in countable resources upon 
reinstatement of SSI payments if reasonable efforts to sell the property 
resume within 1 week of reinstatement. Such an individual will not have 
to go through a subsequent conditional benefits period. However, the 
individual whose eligibility has been terminated as defined at 
Sec. Sec. 416.1331 through 416.1335 and who subsequently reapplies 
would be subject to a new conditional benefits period if there is still 
excess real property.

[55 FR 10419, Mar. 21, 1990, as amended at 62 FR 30983, June 6, 1997; 64 
FR 31975, June 15, 1999]



Sec. 416.1246  Disposal of resources at less than fair market value.

    (a) General. (1) An individual (or eligible spouse) who gives away 
or sells a nonexcluded resource for less than fair market value for the 
purpose of establishing SSI or Medicaid eligibility will be charged with 
the difference between the fair market value of the resource and the 
amount of compensation received. The difference is referred to as 
uncompensated value and is counted toward the resource limit (see Sec. 
416.1205) for a period of 24 months from the date of transfer.
    (2) If the transferred resource (asset) is returned to the 
individual, the uncompensated value is no longer counted as of the date 
of return. If the transferred asset is cash, the uncompensated value is 
reduced as of the date of return by the amount of cash that is returned. 
No income will be charged as a result of such returns. The returned 
asset will be evaluated as a resource according to the rules described 
in Sec. Sec. 416.1201 through 416.1230 as of the first day of the 
following month.
    (3) If the individual receives additional compensation in the form 
of cash for the transferred asset the uncompensated value is reduced, as 
of the date the additional cash compensation is received, by the amount 
of that additional compensation.
    (b) Fair market value. Fair market value is equal to the current 
market value of a resource at the time of transfer or contract of sale, 
if earlier. See Sec. 416.1101 for definition of current market value.
    (c) Compensation. The compensation for a resource includes all 
money, real or personal property, food, shelter, or services received by 
the individual (or eligible spouse) at or after the time of transfer in 
exchange for the resource if the compensation was provided pursuant to a 
binding (legally enforceable) agreement in effect at the time of 
transfer. Compensation also includes all money, real or personal 
property, food, shelter, or services received prior to the actual 
transfer if they were provided pursuant to a binding (legally 
enforceable) agreement whereby the eligible individual would transfer 
the resource or otherwise pay for such items. In addition, payment or 
assumption of a legal debt owed by the eligible individual in exchange 
for the asset is considered compensation.
    (d)(1) Uncompensated value--General. The uncompensated value is the 
fair market value of a resource at the time of transfer minus the amount 
of compensation received by the individual (or eligible spouse) in 
exchange for the resource. However, if the transferred resource was 
partially excluded, we will not count uncompensated value in an amount 
greater than the countable value of the resources at the time of 
transfer.
    (2) Suspension of counting as a resource the uncompensated value 
where necessary to avoid undue hardship. We will suspend counting as a 
resource the uncompensated value of the transferred asset for any month 
in the 24-month period if such counting will result in undue hardship. 
We will resume counting the uncompensated value as a resource for any 
month of the 24-month period in which counting will not result in undue 
hardship. We will treat as part of the 24-month period any months during 
which we suspend the counting of uncompensated value.
    (3) When undue hardship exists. Undue hardship exists when:

[[Page 965]]

    (i) An individual alleges that failure to receive SSI benefits would 
deprive the individual of food or shelter; and
    (ii) The applicable Federal benefit rate (plus the federally-
administered State supplementary payment level) exceeds the sum of: The 
individual's monthly countable and excludable income and monthly 
countable and excludable liquid resources.
    (e) Presumption that resource was transferred to establish SSI or 
Medicaid eligibility. Transfer of a resource for less than fair market 
value is presumed to have been made for the purpose of establishing SSI 
or Medicaid eligibility unless the individual (or eligible spouse) 
furnishes convincing evidence that the resource was transferred 
exclusively for some other reason. Convincing evidence may be pertinent 
documentary or non-documentary evidence which shows, for example, that 
the transfer was ordered by a court, or that at the time of transfer the 
individual could not have anticipated becoming eligible due to the 
existence of other circumstances which would have precluded eligibility. 
The burden of rebutting the presumption that a resource was transferrred 
to establish SSI or Medicaid eligibility rests with the individual (or 
eligible spouse).
    (f) Applicability. This section applies only to transfers of 
resources that occurred before July 1, 1988. Paragraphs (d)(2) and 
(d)(3) of this section, regarding undue hardship, are effective for such 
transfers on or after April 1, 1988.

[48 FR 40885, Sept. 12, 1983, as amended at 50 FR 38982, Sept. 26, 1985; 
53 FR 13257, Apr. 22, 1988; 55 FR 10419, Mar. 21, 1990]



Sec. 416.1247  Exclusion of a dedicated account in a financial institution.

    (a) General. In determining the resources of an individual (or 
spouse, if any), the funds in a dedicated account in a financial 
institution established and maintained in accordance with Sec. 
416.640(e) will be excluded from resources. This exclusion applies only 
to benefits which must or may be deposited in such an account, as 
specified in Sec. 416.546, and accrued interest or other earnings on 
these benefits. If these funds are commingled with any other funds 
(other than accumulated earnings or interest) this exclusion will not 
apply to any portion of the funds in the dedicated account.
    (b) Exclusion during a period of suspension or termination--(1) 
Suspension. The exclusion of funds in a dedicated account and interest 
and other earnings thereon continues to apply during a period of 
suspension due to ineligibility as described in Sec. 416.1320, 
administrative suspension, or a period of eligibility for which no 
payment is due, so long as the individual's eligibility has not been 
terminated as described in Sec. Sec. 416.1331 through 416.1335.
    (2) Termination. Once an individual's eligibility has been 
terminated, any funds previously excluded under paragraph (a) of this 
section may not be excluded if the individual establishes a subsequent 
period of eligibility by filing a new application.

[61 FR 67207, Dec. 20, 1996]



Sec. 416.1260  Special resource provision for recipients under a State plan.

    (a) General. In the case of any individual (or individual and 
spouse, as the case may be) who for the month of December 1973 was a 
recipient of aid or assistance under a State plan approved under title 
I, X, XIV, or XVI, of the Act (see Sec. 416.121), the resources of such 
individual (or individual and spouse, as the case may be) shall be 
deemed not to exceed the amount specified in Sec. 416.1205 during any 
period that the resources of such individual (or individual and spouse, 
as the case may be) do not exceed the maximum amount of resources 
specified in such State plan as in effect in October 1972, provided that 
such individual:
    (1) Has, since December 1973, resided continuously in the State 
under whose plan he was eligible for the month of December 1973; and
    (2) Has not, since December 1973, been ineligible for an SSI benefit 
for a period exceeding 6 consecutive months. An SSI benefit means a 
Federal benefit only; it does not include any State supplementation.
    (b) For purposes of this section, an individual will cease to reside 
continuously in a State if he leaves the State with the present 
intention to abandon his home there. In the absence of evidence to the 
contrary,

[[Page 966]]

    (1) If an individual leaves the State for a period of 90 calendar 
days or less, his absence from the State will be considered temporary 
and he will be considered to continue to reside in such State; and
    (2) If an individual leaves the State for a period in excess of 90 
calendar days, he will no longer be considered to reside continuously in 
such State.
    (c) State plan; defined. As used in this subpart, an approved State 
plan as in effect in October 1972 and State plan for October 1972 means 
a State plan as approved under the provisions of 45 CFR Ch. II as in 
effect in October 1972.

[41 FR 47424, Oct. 29, 1976, as amended at 52 FR 29841, Aug. 12, 1987]



Sec. 416.1261  Application of special resource provision.

    In determining the resources of an individual (and spouse, if any) 
who meets the conditions specified in Sec. 416.1260(a), either the 
State plan resource limit and exclusions (as specified in Sec. 
416.1260) or the resource limit (as specified in Sec. 416.1205) and 
exclusions (as specified in Sec. 416.1210), whichever is most 
advantageous to the individual (and spouse, if any) will be used.



Sec. 416.1262  Special resource provision applicable in cases involving 
essential persons.

    (a) Essential persons continuously meet criteria of eligibility. In 
determining the resources of an individual (and spouse, if any) who meet 
the conditions specified in Sec. 416.1260 and whose payment standard is 
increased because such individual has in his home an essential person 
(as defined in Sec. 416.222), either the State plan resource limit and 
exclusions (as specified in Sec. 416.1260) applicable to cases in which 
the needs of an essential person are taken into account in determining 
the individual's needs, or the resource limit as specified in Sec. 
416.1205 and exclusions as specified in Sec. 416.1210, whichever is 
most advantageous to the individual (and spouse), will be used.
    (b) Essential person fails to meet criteria of eligibility. If for 
any month after December 1973 a person fails to meet the criteria for an 
essential person as specified in Sec. 416.222, in determining the 
resources of an individual (and spouse, if any) either the State plan 
resource limit and criteria as specified in Sec. 416.1260 applicable to 
the individual or individual and spouse, as the case may be, or the 
resource limit as specified in Sec. 416.1205 and exclusions as 
specified in Sec. 416.1210, whichever is most advantageous to the 
individual (and spouse), will be used.

[39 FR 33797, Sept. 20, 1974, as amended at 51 FR 10616, Mar. 28, 1986]



Sec. 416.1264  Spouse ineligible under a State plan in December 1973.

    In the case of an individual who meets the conditions specified in 
Sec. 416.1260 but whose spouse does not meet such conditions, whichever 
of the following is most advantageous for the individual (and spouse, if 
any) will be applied:
    (a) The resource limitation and exclusions for an individual as in 
effect under the approved State plan for October 1972, or
    (b) The resource limitation (as specified in Sec. 416.1205) and 
exclusions (as specified in Sec. 416.1210) for an individual and 
eligible spouse or an individual living with an ineligible spouse.



Sec. 416.1266  Individual under special resource provision dies after 
December 1973.

    Where only one person, either the eligible individual or the 
eligible spouse, meets the conditions specified in Sec. 416.1260 and 
that person dies after December 1973, the State plan resource limitation 
and exclusions will not be applied to determine the amount of resources 
of the surviving individual. The resource limitation (as specified in 
Sec. 416.1205) and exclusions (as specified in Sec. 416.1210) will be 
applied for the now eligible individual beginning with the month such 
person is considered the eligible individual as defined in subpart A of 
this part.



                 Subpart M_Suspensions and Terminations

    Authority: Secs. 702(a)(5), 1129A, 1611-1614, 1619, and 1631 of the 
Social Security Act (42 U.S.C. 902(a)(5), 1320a-8a, 1382-1382c, 1382h, 
and 1383).

    Source: 40 FR 1510, Jan. 8, 1975, unless otherwise noted.

[[Page 967]]



Sec. 416.1320  Suspensions; general.

    (a) When suspension is proper. Suspension of benefit payments is 
required when a recipient is alive but no longer meets the requirements 
of eligibility under title XVI of the Act (see subpart B of this part) 
and termination in accordance with Sec. Sec. 416.1331 through 416.1335 
does not apply. (This subpart does not cover suspension of payments for 
administrative reasons, as, for example, when mail is returned as 
undeliverable by the Postal Service and the Administration does not have 
a valid mailing address for a recipient or when the representative payee 
dies and a search is underway for a substitute representative payee.)
    (b) Effect of suspension. (1) When payments are correctly suspended 
due to the ineligibility of a recipient, payments shall not be resumed 
until the individual again meets all requirements for eligibility except 
the filing of a new application. Such recipient, upon requesting 
reinstatement, shall be required to submit such evidence as may be 
necessary (except evidence of age, disability, or blindness) to 
establish that he or she again meets all requirements for eligibility 
under this part. Payments to such recipient shall be reinstated 
effective with the first day such recipient meets all requirements for 
eligibility except the filing of a new application.
    (2) A month of ineligibility for purposes of determining when to 
prorate the SSI benefit payment for a subsequent month, is a month for 
which the individual is ineligible for any Federal SSI benefit and any 
federally administered State supplementation.
    (c) Actions which are not suspensions. Payments are not 
``suspended,'' but the claim is disallowed, when it is found that:
    (1) The claimant was notified in accordance with Sec. 416.210(c) at 
or about the time he filed application and before he received payment of 
a benefit that he should file a claim for a payment of the type 
discussed in Sec. 416.1330 and such claimant has failed, without good 
cause (see Sec. 416.210(e)(2)), to take all appropriate steps within 30 
days after receipt of such notice to file and prosecute an application 
for such payment;
    (2) Upon initial application, payment of benefits was conditioned 
upon disposal of specified resources which exceeded the permitted amount 
and the claimant did not comply with the agreed-upon conditions;
    (3) Payment was made to an individual faced with a financial 
emergency who was later found to have been not eligible for payment; or
    (4) Payment was made to an individual presumed to be disabled and 
such disability is not established.
    (d) Exception. Even though conditions described in paragraph (a) of 
this section apply because your impairment is no longer disabling, we 
will not suspend your benefits if after November 1980:
    (1) You are participating in an appropriate vocational 
rehabilitation program (that is, one that has been approved under a 
State plan approved under Title I of the Rehabilitation Act of 1973 and 
which meets the requirements outlined in 34 CFR part 361) which you 
began during your disability;
    (2) Your disability did not end before December 1, 1980; and
    (3) We have determined that your completion of the program, or your 
continuation in the program for a specific period of time, will 
significantly increase the likelihood that you will not have to return 
to the disability benefit rolls.

[40 FR 1510, Jan. 8, 1975, and 47 FR 31544, July 21, 1982; 47 FR 52693, 
Nov. 23, 1982, as amended at 51 FR 13494, Apr. 21, 1986; 51 FR 17618, 
May 14, 1986; 56 FR 55453, Oct. 28, 1991. Redesignated at 68 FR 53509, 
Sept. 11, 2003]



Sec. 416.1321  Suspension for not giving us permission to contact 
financial institutions.

    (a) If you don't give us permission to contact any financial 
institution and request any financial records about you when we think it 
is necessary to determine your SSI eligibility or payment amount, or if 
you cancel the permission, you cannot be eligible for SSI payments (see 
Sec. 416.207) and we will stop your payments. Also, if anyone whose 
income and resources we consider as being available to you (see 
Sec. Sec. 416.1160, 416.1202, 416.1203 and 416.1204) doesn't

[[Page 968]]

give us permission to contact any financial institution and request any 
financial records about that person when we think it is necessary to 
determine your SSI eligibility or payment amount, or that person cancels 
the permission, you cannot be eligible for SSI payments and we will stop 
your payments. We will not find you ineligible and/or stop your payments 
if the person whose income and resources we consider as being available 
to you fails to give or continue permission and good cause, as discussed 
in Sec. 416.207(h), exists.
    (b) We will suspend your payments starting with the month after the 
month in which we notify you in writing that:
    (1) You failed to give us permission to contact any financial 
institution and request any financial records about you, or
    (2) The person(s) whose income and resources we consider as being 
available to you failed to give us such permission.
    (c) If you are otherwise eligible, we will start your benefits in 
the month following the month in which:
    (1) You give us permission to contact any financial institution and 
request any financial records about you, or
    (2) The person(s) whose income and resources we consider as being 
available to you gives us such permission.

[68 FR 53509, Sept. 11, 2003]



Sec. 416.1322  Suspension due to failure to comply with request for 
information.

    (a) Suspension of benefit payments is required effective with the 
month following the month in which it is determined in accordance with 
Sec. 416.714(b) that the individual is ineligible for payment due to 
his or her failure to comply with our request for necessary information. 
When we have information to establish that benefit payments are again 
payable, the benefit payments will be reinstated for any previous month 
for which the individual continued to meet the eligibility requirements 
of Sec. 416.202. If the reason that an individual's benefits were 
suspended was failure to comply with our request for information, the 
payments for the months that benefits are reinstated will not be 
prorated under Sec. 416.421.
    (b) A suspension of payment for failure to comply with our request 
for information will not apply with respect to any month for which a 
determination as to eligibility for or amount of payment can be made 
based on information on record, whether or not furnished by an 
individual specified in Sec. 416.704(a). Where it is determined that 
the information of record does not permit a determination with respect 
to eligibility for or amount of payment, notice of a suspension of 
payment due to a recipient's failure to comply with a request for 
information will be sent in accordance with Sec. Sec. 416.1336 and 
416.1404.

[51 FR 13494, Apr. 21, 1986]



Sec. 416.1323  Suspension due to excess income.

    (a) Effective date. Suspension of payments due to ineligibility for 
benefits because of excess income is effective with the first month in 
which ``countable income'' (see Sec. Sec. 416.1100 through 416.1124 of 
this part) equals or exceeds the amount of benefits otherwise payable 
for such month (see subpart D of this part). This rule applies 
regardless of the month in which the income is received.
    (b) Resumption of payments. If benefits are otherwise payable, they 
will be resumed effective with the first month in which a recipient's 
monthly countable income becomes less than the applicable Federal 
benefit rate (or the sum of that rate and the level for any federally 
administered State supplementary payment) for that month. If the reason 
that a recipient's benefits were suspended was excess income, the 
payment for the first month that benefits are reinstated will not be 
prorated under Sec. 416.421.

[40 FR 1510, Jan. 8, 1975, as amended at 51 FR 13494, Apr. 21, 1986; 65 
FR 16815, Mar. 30, 2000]



Sec. 416.1324  Suspension due to excess resources.

    (a) Effective date. Except as specified in Sec. Sec. 416.1240 
through 416.1242, suspension of benefit payments because of excess 
resources is required effective with the month in which:

[[Page 969]]

    (1) Ineligibility exists because countable resources are in excess 
of:
    (i) The resource limits prescribed in Sec. 416.1205 for an 
individual and an individual and spouse, or
    (ii) In the case of an eligible individual (and eligible spouse, if 
any) who for the month of December 1973 was a recipient of aid or 
assistance under a State plan approved under title I, X, XIV, or XVI of 
the Act, the maximum amount of resources specified in such State plan as 
in effect for October 1972, if greater than the amounts specified in 
Sec. 416.1205, as applicable; or
    (2) After eligibility has been established, payment of benefits was 
conditioned upon disposal of specified resources, which exceeded the 
permitted amount and the claimant did not comply with the agreed upon 
conditions.
    (3) The amount of an individual's or couple's countable resources is 
determined as of the first moment of each calendar quarter.
    (b) Resumption of payments. If benefits are otherwise payable, they 
will be resumed effective with the start of the month after the month in 
which a recipient's countable resources no longer exceed the limit that 
applies. If the reason that a recipient's benefits were suspended was 
excess resources, the payment for the first month that benefits are 
reinstated will not be prorated under Sec. 416.421.

[40 FR 1510, Jan. 8, 1975, as amended at 50 FR 38982, Sept. 26, 1985; 51 
FR 13494, Apr. 21, 1986]



Sec. 416.1325  Suspension due to status as a resident of a public 
institution.

    (a) Except as provided in Sec. 416.211 (b) and (c), a recipient is 
ineligible for benefits for the first full calendar month in which he or 
she is a resident of a public institution (as defined in Sec. 416.201) 
throughout the calendar month (as defined in Sec. 416.211(a)), and 
payments are suspended effective with such first full month. Such 
ineligibility continues for so long as such individual remains a 
resident of a public institution.
    (b) Resumption of payments. If benefits are otherwise payable, they 
will be resumed effective with the earliest day of the month in which a 
recipient is no longer a resident of a public institution. See Sec. 
416.421. A transfer from one public institution to another or a 
temporary absence from the institution lasting 14 days or less, however, 
will not change his or her status as a resident, and the suspension will 
continue.

[51 FR 13494, Apr. 21, 1986]



416.1326  Suspension for failure to comply with treatment for drug 
addiction or alcoholism.

    (a) Basis for suspension. If you are disabled and drug addiction or 
alcoholism is a contributing factor material to the determination of 
disability as described in Sec. 416.935, we will refer you to 
appropriate treatment as defined in Sec. 416.937. You will not be an 
eligible individual and we will suspend your benefits if you do not 
comply with the terms, conditions and requirements of treatment 
prescribed by the institution or facility. (See Sec. 416.940 which 
explains how we evaluate compliance with treatment.)
    (b) Date of suspension. We will suspend your benefits for a period 
starting with the first month after we notify you in writing that you 
failed to comply with prescribed treatment.
    (c) Resumption of benefits. If you are complying with prescribed 
treatment and are otherwise eligible for benefits, we will resume 
benefits effective with the first day of the month after you demonstrate 
and maintain compliance with appropriate treatment for these periods--
    (1) 2 consecutive months for the first determination of 
noncompliance;
    (2) 3 consecutive months for the second determination of 
noncompliance; and
    (3) 6 consecutive months for the third and all subsequent 
determinations of noncompliance.

[60 FR 8152, Feb. 10, 1995]



Sec. 416.1327  Suspension due to absence from the United States.

    (a) Suspension effective date. A recipient is not eligible for SSI 
benefits if he is outside the United States for a full calendar month. 
For purposes of this paragraph--
    (1) United States means the 50 States, the District of Columbia, and 
the Northern Mariana Islands:
    (2) Day means a full 24-hour day; and

[[Page 970]]

    (3) In determining whether a recipient has been outside the United 
States for a full calendar month, it must be established whether the 
recipient is outside the United States for 30 consecutive days or more. 
If yes, he or she will be treated as remaining outside the United States 
until he or she has returned to and remained in the United States for a 
period of 30 consecutive days. When a recipient has been outside the 
United States, the first period of 30 consecutive days of absence is 
counted beginning with the day after the day the recipient departs from 
the United States and ending with the day before the day on which he or 
she returns to the United States. When a recipient has returned to the 
United States, the second period of 30 consecutive days starts on the 
day the individual returned and ends on the 30th day of continuous 
presence in the United States. Benefits will be suspended effective with 
the first full calendar month in which a recipient is outside the United 
States.
    (b) Resumption of payments after absence from the United States. If 
benefits are otherwise payable they will be resumed--
    (1) Effective with the day following the 30th day of continuous 
presence in the United States after the recipient's return if the 
absence was for 30 consecutive days or more.
    (2) Effective with the day the recipient returned to the United 
States, if the absence from the United States was for a full calendar 
month, but for less than 30 consecutive days (this can occur only for 
the calendar month of February).

    Example 1: Mike left the United States on March 1 and returned on 
April 1. Counting March 2 through March 31, he was outside the United 
States for 30 consecutive days; thus he is also deemed to be outside the 
United States for 30 additional consecutive days. Therefore, for April 1 
through April 30, he is deemed to be outside the United States and not 
eligible for the calendar month of April. Payments start effective May 
1.
    Example 2: Mary left the United States on April 15 and returned on 
July 1. Counting April 16 through June 30, she was actually outside the 
United States and not eligible for the calendar months of May and June. 
Since she was absent for more than 30 consecutive days, she is deemed to 
be outside the United States for 30 additional consecutive days. 
Therefore, for July 1 through July 30, she is deemed to be outside the 
United States and not eligible for payment until July 31.

[51 FR 13494, Apr. 21, 1986; 51 FR 17332, May 12, 1986]



Sec. 416.1329  Suspension due to loss of United States residency, United 

States citizenship, or status as an alien lawfully admitted for permanent 
residence or otherwise permanently residing in the United States under 
          color of law.

    (a) A recipient ceases to be an eligible individual or eligible 
spouse, under section 1614(a)(1)(B) of the Act, when he or she ceases to 
meet the requirement of Sec. 416.202(b) with respect to United States 
residency, United States citizenship, or status as an alien lawfully 
admitted for permanent residence or otherwise permanently residing in 
the United States under color of law. Payments are suspended effective 
with the first month after the last month in which a recipient meets the 
requirements of Sec. 416.202(b).
    (b) Resumption of payments. If benefits are otherwise payable, they 
will be resumed effective with the earliest day of the month on which 
the recipient again meets both the residence and citizenship or lawfully 
admitted alien or color of law requirements. See Sec. 416.421.

[51 FR 13495, Apr. 21, 1986]



Sec. 416.1330  Suspension due to failure to apply for and obtain other 
benefits.

    (a) Suspension effective date. A recipient ceases to be an eligible 
individual or eligible spouse when, in the absence of a showing of 
incapacity to do so, or other good cause, he or she fails within 30 days 
after notice from the Social Security Administration of probable 
eligibility, to take all appropriate steps to apply for and, if 
eligible, to obtain payments such as an annuity, pension, retirement, or 
disability benefit, including veterans' compensation, old-age, 
survivors, and disability insurance benefit, railroad retirement annuity 
or pension, or unemployment insurance benefit. Benefit payments are 
suspended due to such ineligibility effective with the month in which 
the recipient was notified in writing of the requirement that he or she 
file and

[[Page 971]]

take all appropriate steps to receive the other benefits. See Sec. 
416.210(e).
    (b) Resumption of payment. If benefits are otherwise payable, they 
will be resumed effective with the earliest day of the month on which 
the recipient takes the necessary steps to obtain the other benefits. 
See Sec. 416.421.

[51 FR 13495, Apr. 21, 1986]



Sec. 416.1331  Termination of your disability or blindness payments.

    (a) General. The last month for which we can pay you benefits based 
on disability is the second month after the first month in which you are 
determined to no longer have a disabling impairment (described in Sec. 
416.911). (See Sec. 416.1338 for an exception to this rule if you are 
participating in an appropriate vocational rehabilitation program, and 
Sec. 416.261 for an explanation of special benefits for which you may 
be eligible.) The last month for which we can pay you benefits based on 
blindness is the second month after the month in which your blindness 
ends (see Sec. 416.986 for when blindness ends). You must meet the 
income, resources, and other eligibility requirements to receive any of 
the benefits described in this paragraph. We will also stop payment of 
your benefits if you have not cooperated with us in getting information 
about your disability or blindness.
    (b) After we make a determination that you are not now disabled. If 
we determine that you do not meet the disability requirements of the 
law, we will send you an advance written notice telling you why we 
believe you are not disabled and when your benefits should stop. The 
notice will explain your right to appeal if you disagree with our 
determination. You may still appeal our determination that you are not 
now disabled even though your payments are continuing because of your 
participation in an appropriate vocational rehabilitation program. You 
may also appeal a determination that your completion of or continuation 
for a specified period of time in an appropriate vocational 
rehabilitation program will not significantly increase the likelihood 
that you will not have to return to the disability benefit rolls and, 
therefore, you are not entitled to continue to receive benefits.
    (c) When benefits terminate due to 12 consecutive suspension months 
for failure to comply with treatment for drug addiction or alcoholism. 
If you are disabled and drug addiction or alcoholism is a contributing 
factor material to the determination of disability as described in Sec. 
416.935, your benefits will terminate after 12 consecutive months of 
suspension for noncompliance with treatment requirements as described in 
Sec. 416.1326.
    (d) When benefits terminate due to payment of 36 months of benefits 
based on disability when drug addiction or alcoholism is a contributing 
factor material to the determination of disability. If you are disabled 
and drug addiction or alcoholism is a contributing factor material to 
the determination of disability as described in Sec. 416.935, your 
benefits will terminate after you receive a total of 36 months of SSI 
benefits. The 36-month limit is no longer effective for benefits for 
months beginning after September 2004.
    (e) Months we count in determining the 36 months of benefits when 
drug addiction or alcoholism is a contributing factor material to the 
determination of disability. Beginning March 1995, we will count all 
months for which you were paid an SSI benefit, a federally-administered 
State supplement, a special SSI cash benefit, or you were in special SSI 
eligibility status, toward the 36 months described in paragraph (d) of 
this section. Months for which you were not eligible for benefits will 
not count toward the 36 months.

[49 FR 22274, May 29, 1984, as amended at 60 FR 8152, Feb. 10, 1995; 65 
FR 42792, July 11, 2000]



Sec. 416.1332  Termination of benefit for disabled individual: Exception.

    Special SSI cash benefits (see Sec. 416.261) will be payable for 
the period beginning January 1, 1981, and ending June 30, 1987 if you 
meet eligibility requirements in Sec. 416.262. These requirements apply 
if you, as a disabled recipient, are no longer eligible for regular SSI 
benefits because you demonstrate that you are able to engage in SGA.

[47 FR 15325, Apr. 9, 1982, as amended at 50 FR 46763, Nov. 13, 1985]

[[Page 972]]



Sec. 416.1333  Termination at the request of the recipient.

    A recipient, his legal guardian, or his representative payee, may 
terminate his eligibility for benefits under this part by filing a 
written request for termination which shows an understanding that such 
termination may extend to other benefits resulting from eligibility 
under this part. In the case of a representative payee there must also 
be a showing which establishes that no hardship would result if an 
eligible recipient were not covered by the supplemental security income 
program. When such a request is filed, the recipient ceases to be an 
eligible individual, or eligible spouse, effective with the month 
following the month the request is filed with the Social Security 
Administration unless the recipient specifies some other month. However, 
the Social Security Administration will not effectuate the request for 
any month for which payment has been or will be made unless there is 
repayment, or assurance of repayment, of any amounts paid for those 
months (e.g., from special payments which would be payable for such 
months under section 228 of the Act). When the Social Security 
Administration effectuates a termination of eligibility at the request 
of the recipient, his legal guardian, or his representative payee, 
notice of the determination will be sent in accordance with Sec. 
416.1404, and eligibility, once terminated, can be reestablished, except 
as provided by Sec. 416.1408, only upon the filing of a new 
application.

[42 FR 39100, Aug. 2, 1977]



Sec. 416.1334  Termination due to death of recipient.

    Eligibility for benefits ends with the month in which the recipient 
dies. Payments are terminated effective with the month after the month 
of death.



Sec. 416.1335  Termination due to continuous suspension.

    We will terminate your eligibility for benefits following 12 
consecutive months of benefit suspension for any reason beginning with 
the first month you were no longer eligible for regular SSI cash 
benefits, federally-administered State supplementation, special SSI cash 
benefits described in Sec. 416.262, or special SSI eligibility status 
described in Sec. 416.265. We will count the 12-month suspension period 
from the start of the first month that you are no longer eligible for 
SSI benefits (see Sec. 416.1320(a)) or the start of the month after the 
month your special SSI eligibility status described in Sec. 416.265 
ended. This termination is effective with the start of the 13th month 
after the suspension began.

[60 FR 8153, Feb. 10, 1995, as amended at 64 FR 31975, June 15, 1999]



Sec. 416.1336  Notice of intended action affecting recipient's payment status.

    (a) Advance written notice requirement. Advance written notice of 
intent to discontinue payment because of an event requiring suspension, 
reduction (see subpart D of this part), or termination of payments shall 
be given in all cases, prior to effectuation of the action, except where 
the Social Security Administration has factual information confirming 
the death of the recipient, e.g., as enumerated in Sec. 404.704(b) of 
this chapter, or a report by a surviving spouse, a legal guardian, a 
parent or other close relative, or a landlord.
    (b) Continuation of payment pending an appeal. The written notice of 
intent to suspend, reduce, or terminate payments shall allow 60 days 
after the date of receipt of the notice for the recipient to request the 
appropriate appellate review (see subpart N of this part). If appeal is 
filed within 10 days after the individual's receipt of the notice, the 
payment shall be continued or reinstated at the previously established 
payment level (subject to the effects of intervening events on the 
payment which are not appealed within 10 days of receipt of a required 
advance notice or which do not require advance notice, e.g., an increase 
in the benefit amount) until a decision on such initial appeal is 
issued, unless the individual specifically waives in writing his right 
to continuation of payment at the previously established level in 
accordance with paragraph (c) of this section. (See

[[Page 973]]

Sec. 416.1337 for exceptions to the continuation of payment level.) 
Where the request for the appropriate appellate review is filed more 
than 10 days after the notice is received but within the 60-day period 
specified in Sec. 416.1413 or Sec. 416.1425 of this part, there shall 
be no right to continuation or reinstatement of payment at the 
previously established level unless good cause is established under the 
criteria specified in Sec. 416.1411 of this part for failure to appeal 
within 10 days after receipt of the notice. For purposes of this 
paragraph, the date of receipt of the notice of intent to suspend, 
reduce, or terminate payments shall be presumed to be 5 days after the 
date on the face of such notice, unless there is a reasonable showing to 
the contrary.
    (c) Waiver of right to continued payment. Notwithstanding any other 
provisions of this section, the recipient, in order to avoid the 
possibility of an overpayment of benefits, may waive continuation of 
payment at the previously established level (subject to intervening 
events which would have increased the benefit for the month in which the 
incorrect payment was made, in which case the higher amount shall be 
paid), after having received a full explanation of his rights. The 
request for waiver of continuation of payment shall be in writing, state 
that waiver action is being initiated solely at the recipient's request, 
and state that the recipient understands his right to receive continued 
payment at the previously established level.

[43 FR 18170, Apr. 28, 1978, as amended at 65 FR 16815, Mar. 30, 2000]



Sec. 416.1337  Exceptions to the continuation of previously established 
payment level.

    (a) Multiple payments exception. (1) Where it is determined that a 
recipient is receiving two or more regular monthly payments in one 
month, the Social Security Administration shall determine the correct 
payment amount and, as soon as practicable thereafter, send the 
recipient an advance written notice of intent to make subsequent payment 
in that amount. Payment for the following month shall be made in the 
correct amount, except as provided in paragraph (a)(3) of this section.
    (2) The advance notice shall explain:
    (i) That multiple payments were made in the one or more months 
identified in the notice;
    (ii) The correct amount of monthly benefits that the recipient is 
eligible to receive; and
    (iii) The recipient's appeal rights.
    (3) If an appeal is filed within 10 days after receipt of the 
written notice of intent, the highest of the two or more check amounts, 
or the correct amount if higher (subject to the dollar limitation 
provisions), shall be continued until a decision on such initial level 
of appeal is issued. See Sec. 416.1474 for criteria as to good cause 
for failure to file a timely appeal. For purposes of this paragraph, the 
date of receipt of the notice of intent shall be presumed to be 5 days 
after the date on the face of such notice, unless there is a reasonable 
showing to the contrary.
    (4) The fact that a recipient is receiving multiple payments is 
established if the records of the Social Security Administration show 
that:
    (i) Two or more checks are being sent to an individual under the 
same name or a common logical spelling variation of the name;
    (ii) The social security number is the same or a pseudo number 
appears;
    (iii) The checks are being sent to the same address;
    (iv) The sex code for such individual is the same; and
    (v) The date of birth for such individual is the same.
    (b) Dollar limitation exception. (1) Where it is determined that a 
recipient is receiving an erroneous monthly payment which exceeds the 
dollar limitation applicable to the recipient's payment category, as set 
forth in paragraph (b)(4) of this section, the Social Security 
Administration shall determine the correct payment amount and, as soon 
as practicable thereafter, send the recipient an advance written notice 
of intent to make subsequent payment in that amount. Payment for the 
following month shall be made in the correct amount, except as provided 
in paragraph (b)(3) of this section.
    (2) The advance notice shall explain:

[[Page 974]]

    (i) That an erroneous monthly payment which exceeds the dollar 
limitation applicable to the recipient's payment category was made in 
the one or more months identified in the notice;
    (ii) The correct amount of monthly benefits that the recipient is 
eligible to receive; and
    (iii) The recipient's appeal rights.
    (3) If an appeal is filed within 10 days after receipt of the 
written notice of the intent (see Sec. 416.1474 for criteria as to good 
cause for failure to file a timely appeal), the amount of payment to be 
continued, pending decision on appeal, shall be determined as follows:
    (i) Recipient in payment status. Where the recipient is in payment 
status, the payment shall be in the amount the recipient received in the 
month immediately preceding the month the dollar limitation was first 
exceeded (subject to intervening events which would have increased the 
benefit for the month in which the incorrect payment was made, in which 
case the higher amount shall be paid).
    (ii) Recipient in nonpayment status. If the recipient's benefits 
were suspended in the month immediately preceding the month the dollar 
limitation was first exceeded, the payment shall be based on that amount 
which should have been paid in the month in which the incorrect payment 
was made. However, if the individual's benefits had been correctly 
suspended as provided in Sec. Sec. 416.1320 through 416.1330 or Sec. 
416.1339 and they should have remained suspended but a benefit that 
exceeded the dollar limitation was paid, no further payment shall be 
made to him or her at this time and notice of the planned action shall 
not contain any provision regarding continuation of payment pending 
appeal.


For purposes of this paragraph, the date of receipt of the notice of 
planned action shall be presumed to be 5 days after the date on the face 
of such notice, unless there is a reasonable showing to the contrary.
    (4) The payment categories and dollar limitations are as follows:

                 Payment Category and Dollar Limitation

    (i) Federal supplemental security income benefit only.--$200.
    Recipients whose records indicate eligibility for Federal 
supplemental security income benefits for the month before the month the 
dollar limitation was first exceeded.
    (ii) Federal supplemental security income benefit and optional 
supplementation, or optional supplementation only.--$700
    Recipients whose records indicate they were eligible for Federal 
supplemental security income benefits plus federally-administered 
optional supplementation, or eligible for federally-administered 
optional supplementation only, for the month before the month the dollar 
limitation was first exceeded.
    (iii) Federal supplemental security income benefit and mandatory or 
other supplementation, or mandatory supplementation only.--$2,000
    Recipients whose records show eligibility for Federal supplemental 
security income benefits and federally-administered mandatory 
supplementation or essential person increment for the month before the 
month the dollar limitation was first exceeded. This category also 
includes those eligible for federally-administered mandatory 
supplementation only and those eligible for Federal supplemental 
security income benefits plus an essential person increment and 
federally-administered optional sup ple men tation.

[43 FR 18170, Apr. 28, 1978, as amended at 65 FR 40495, June 30, 2000]



Sec. 416.1338  If you are participating in a vocational rehabilitation 
program.

    (a) When your benefits based on disability may be continued. Your 
benefits may be continued after your impairment is no longer disabling 
if--
    (1) Your disability did not end before December 1980, the effective 
date of this provision of the law;
    (2) You are participating in a program of vocational rehabilitation 
that has been approved under a State plan approved under Title I of the 
Rehabilitation Act of 1973 and which meets the requirements of 34 CFR 
part 361 for a rehabilitation program;
    (3) You began the program before your disability ended; and
    (4) We have determined that your completion of the program, or your 
continuation in the program for a specified period of time, will 
significantly increase the likelihood that you will not have to return 
to the disability benefit rolls.


[[Page 975]]


    Example: While under a disability from a severe back impairment, 
``A'' begins a vocational rehabilitation program under the direction of 
a State vocational rehabilitation agency with a vocational goal of 
jewelry repairman. ``A'' is 50 years old, has a high school education, 
and worked as a route salesman for a bread company for 6 years before 
becoming disabled. Before ``A'' completes his training, his disability 
status is reviewed and a determination is made that he is able to do 
light work. Considering his age, education and work experience, ``A'' is 
no longer disabled. However, if ``A'' is able to work as a jewelry 
repairman, he will be considered able to engage in substantial gainful 
activity even if he can do only sedentary work. Therefore, it is 
determined that ``A's'' completion of the vocational rehabilitation 
program will significantly increase the likelihood that he will be 
permanently removed from the disability rolls. ``A'' will continue to 
receive payments until he completes or stops his program, or until it is 
determined that continued participation will no longer significantly 
increase the likelihood of permanent removal from the disability rolls.

    (b) When your benefits will be stopped. Your benefits generally will 
be stopped with the month--
    (1) You complete the program;
    (2) You stop participating in the program for any reason; or
    (3) We determine that your continuing participation in the program 
will not significantly increase the likelihood that you may be 
permanently removed from the disability benefit rolls.


Exception: In no case will your benefits be stopped with a month earlier 
than the second month after the month your disability ends, provided 
that you are otherwise eligible for benefits through such month.

[47 FR 31544, July 21, 1982, as amended at 47 FR 52693, Nov. 23, 1982; 
51 FR 17618, May 14, 1986]



Sec. 416.1339  Suspension due to flight to avoid criminal prosecution or 

custody or confinement after conviction, or due to violation of probation 
or parole.

    (a) Basis for suspension. An individual is ineligible for SSI 
benefits for any month during which he or she is--
    (1) Fleeing to avoid prosecution for a crime, or an attempt to 
commit a crime, which is a felony under the laws of the place from which 
the individual flees (or which, in the case of the State of New Jersey, 
is a high misdemeanor under the laws of that State); or
    (2) Fleeing to avoid custody or confinement after conviction for a 
crime, or an attempt to commit a crime, which is a felony under the laws 
of the place from which the individual flees (or which, in the case of 
the State of New Jersey, is a high misdemeanor under the laws of that 
State); or
    (3) Violating a condition of probation or parole imposed under 
Federal or State law.
    (b) Suspension effective date. (1) Suspension of benefit payments 
because an individual is a fugitive as described in paragraph (a)(1) or 
(a)(2) of this section or a probation or parole violator as described in 
paragraph (a)(3) of this section is effective with the first day of 
whichever of the following months is earlier--
    (i) The month in which a warrant or order for the individual's 
arrest or apprehension, an order requiring the individual's appearance 
before a court or other appropriate tribunal (e.g., a parole board), or 
similar order is issued by a court or other duly authorized tribunal on 
the basis of an appropriate finding that the individual--
    (A) Is fleeing, or has fled, to avoid prosecution as described in 
paragraph (a)(1) of this section;
    (B) Is fleeing, or has fled, to avoid custody or confinement after 
conviction as described in paragraph (a)(2) of this section;
    (C) Is violating, or has violated, a condition of his or her 
probation or parole as described in paragraph (a)(3) of this section; or
    (ii) The first month during which the individual fled to avoid such 
prosecution, fled to avoid such custody or confinement after conviction, 
or violated a condition of his or her probation or parole, if indicated 
in such warrant or order, or in a decision by a court or other 
appropriate tribunal.
    (2) An individual will not be considered to be ineligible for SSI 
benefits and benefit payments will not be suspended under this section 
for any month prior to August 1996.
    (c) Resumption of payments. If benefits are otherwise payable, they 
will be resumed effective with the first month

[[Page 976]]

throughout which the individual is determined to be no longer fleeing to 
avoid such prosecution, fleeing to avoid such custody or confinement 
after conviction, or violating a condition of his or her probation or 
parole.

[65 FR 40495, June 30, 2000]



Sec. 416.1340  Penalty for false or misleading statements.

    (a) Why would SSA penalize me? You will be subject to a penalty if 
you make, or cause to be made, a statement or representation of a 
material fact for use in determining any initial or continuing right to, 
or the amount of, monthly insurance benefits under title II or benefits 
or payments under title XVI and:
    (1) You know or should know that the statement or representation
    (i) Is false or misleading; or
    (ii) Omits a material fact; or
    (2) You make the statement with a knowing disregard for the truth.
    (b) What is the penalty? The penalty is ineligibility for cash 
benefits under title XVI (including State supplementary payments made by 
SSA according to Sec. 416.2005) and nonpayment of any benefits under 
title II that we would otherwise pay you.
    (c) How long will the penalty last? The penalty will last--
    (1) Six consecutive months the first time we penalize you;
    (2) Twelve consecutive months the second time we penalize you; and
    (3) Twenty-four consecutive months the third or subsequent time we 
penalize you.
    (d) Will this penalty affect any of my other government benefits? If 
we penalize you, the penalty will apply only to your eligibility for 
benefits under titles II and XVI (including State supplementary payments 
made by us according to Sec. 416.2005). The penalty will not affect--
    (1) Your eligibility for benefits that you would otherwise be 
eligible for under titles XVIII and XIX but for the imposition of the 
penalty; and
    (2) The eligibility or amount of benefits payable under titles II or 
XVI to another person. For example, if you and your spouse are receiving 
title XVI benefits, those benefit payments to your spouse based on the 
benefit rate for a couple will not be affected because of the penalty. 
Your spouse will receive one half of the couple rate.
    (e) How will SSA make its decision to penalize me? In order to 
impose a penalty on you, we must find that you knowingly (knew or should 
have known or acted with knowing disregard for the truth) made a false 
or misleading statement or omitted a material fact. We will base our 
decision to penalize you on the evidence and the reasonable inferences 
that can be drawn from that evidence, not on speculation or suspicion. 
Our decision to penalize you will be documented with the basis and 
rationale for that decision. In determining whether you knowingly made a 
false or misleading statement or omitted a material fact so as to 
justify imposition of the penalty, we will consider all evidence in the 
record, including any physical, mental, educational, or linguistic 
limitations (including any lack of facility with the English language) 
which you may have had at the time. In determining whether you acted 
knowingly, we will also consider the significance of the false or 
misleading statement or omission in terms of its likely impact on your 
benefits.
    (f) What should I do if I disagree with SSA's initial determination 
to penalize me? If you disagree with our initial determination to impose 
a penalty, you have the right to request reconsideration of the penalty 
decision as explained in Sec. 416.1407. We will give you a chance to 
present your case, including the opportunity for a face-to-face 
conference. If you request reconsideration of our initial determination 
to penalize you, you have the choice of a case review, informal 
conference, or formal conference, as described in Sec. 416.1413(a) 
through (c). If you disagree with our reconsidered determination you 
have the right to follow the normal administrative and judicial review 
process by requesting a hearing before an administrative law judge, 
Appeals Council review and Federal court, review as explained in Sec. 
416.1400.
    (g) When will the penalty period begin and end? Subject to the 
additional limitations noted in paragraphs (g)(1) and (g)(2) of this 
section, the penalty period will begin the first day of the month for 
which you would otherwise receive

[[Page 977]]

payment of benefits under title II or title XVI were it not for 
imposition of the penalty. Once a sanction begins, it will run 
continuously even if payments are intermittent. If more than one penalty 
has been imposed, but they have not yet run, the penalties will not run 
concurrently.
    (1) If you do not request reconsideration of our initial 
determination to penalize you, the penalty period will begin no earlier 
than the first day of the second month following the month in which the 
time limit for requesting reconsideration ends. The penalty period will 
end on the last day of the final month of the penalty period. For 
example, if the time period for requesting reconsideration ends on 
January 10, a 6-month period of nonpayment begins on March 1 if you 
would otherwise be eligible to receive benefits for that month, and ends 
on August 31.
    (2) If you request reconsideration of our initial determination to 
penalize you and the reconsidered determination does not change our 
original decision to penalize you, the penalty period will begin no 
earlier than the first day of the second month following the month we 
notify you of our reconsidered determination. The penalty period will 
end on the last day of the final month of the penalty period. For 
example, if we notify you of our reconsidered determination on August 
31, 2001, and you are not otherwise eligible for payment of benefits at 
that time, but would again be eligible to receive payment of benefits on 
October 1, 2003, a 6-month period of nonpayment would begin on October 
1, 2003 and end on March 31, 2004.

[65 FR 42286, July 10, 2000]



 Subpart N_Determinations, Administrative Review Process, and Reopening 
                     of Determinations and Decisions

    Authority: Secs. 702(a)(5), 1631, and 1633 of the Social Security 
Act (42 U.S.C. 902(a)(5), 1383, and 1383b).

    Source: 45 FR 52096, Aug. 5, 1980, unless otherwise noted.

          Introduction, Definitions, and Initial Determinations



Sec. 416.1400  Introduction.

    (a) Explanation of the administrative review process. This subpart 
explains the procedures we follow in determining your rights under title 
XVI of the Social Security Act. The regulations describe the process of 
administrative review and explain your right to judicial review after 
you have taken all the necessary administrative steps. The 
administrative review process consists of several steps, which usually 
must be requested within certain time periods and in the following 
order:
    (1) Initial determination. This is a determination we make about 
your eligibility or your continuing eligibility for benefits or about 
any other matter, as discussed in Sec. 416.1402, that gives you a right 
to further review.
    (2) Reconsideration. If you are dissatisfied with an initial 
determination, you may ask us to reconsider it.
    (3) Hearing before an administrative law judge. If you are 
dissatisfied with the reconsideration determination, you may request a 
hearing before an administrative law judge.
    (4) Appeals Council review. If you are dissatisfied with the 
decision of the administrative law judge, you may request that the 
Appeals Council review the decision.
    (5) Federal court review. When you have completed the steps of the 
administrative review process listed in paragraphs (a)(1) through (a)(4) 
of this section, we will have made our final decision. If you are 
dissatisfied with our final decision, you may request judicial review by 
filing an action in a Federal district court.
    (6) Expedited appeals process. At some time after your initial 
determination has been reviewed, if you have no dispute with our 
findings of fact and our application and interpretation of the 
controlling laws, but you believe that a part of the law is 
unconstitutional, you may use the expedited appeals process. This 
process permits you to go directly to a Federal district court so that 
the constitutional issue may be resolved.
    (b) Nature of the administrative review process. In making a 
determination or decision in your case, we conduct the

[[Page 978]]

administrative review process in an informal, nonadversary manner. In 
each step of the review process, you may present any information you 
feel is helpful to your case. Subject to the limitations on Appeals 
Council consideration of additional evidence (see Sec. Sec. 416.1470(b) 
and 416.1476(b)), we will consider at each step of the review process 
any information you present as well as all the information in our 
records. You may present the information yourself or have someone 
represent you, including an attorney. If you are dissatisfied with our 
decision in the review process, but do not take the next step within the 
stated time period, you will lose your right to further administrative 
review and your right to judicial review, unless you can show us that 
there was good cause for your failure to make a timely request for 
review.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 305, Jan. 3, 1986; 52 FR 
4004, Feb. 9, 1987]



Sec. 416.1401  Definitions.

    As used in this subpart:
    Date you receive notice means 5 days after the date on the notice, 
unless you show us that you did not receive it within the 5-day period.
    Decision means the decision made by an administrative law judge or 
the Appeals Council.
    Determination means the initial determination or the reconsidered 
determination.
    Mass change means a State-initiated change in the level(s) of 
federally administered State supplementary payments applicable to all 
recipients of such payments, or to categories of such recipients, due, 
for example, to State legislative or executive action.
    Remand means to return a case for further review.
    Vacate means to set aside a previous action.
    Waive means to give up a right knowingly and voluntarily.
    We, us, or our refers to the Social Security Administration.
    You or your refers to any person or the eligible spouse of any 
person claiming or receiving supplemental security income benefits.

[45 FR 52096, Aug. 5, 1980, as amended at 59 FR 43038, Aug. 22, 1994]



Sec. 416.1402  Administrative actions that are initial determinations.

    Initial determinations are the determinations we make that are 
subject to administrative and judicial review. The initial determination 
will state the important facts and give the reasons for our conclusions. 
Initial determinations regarding supplemental security income benefits 
include, but are not limited to, determinations about--
    (a) Your eligibility for, or the amount of, your supplemental 
security income benefits or your special SSI cash benefits under Sec. 
416.262, except actions solely involving transitions to eligibility 
between these types of benefits (see Sec. Sec. 416.1403 (a)(13) and 
(a)(14)).
    (b) Suspension, reduction, or termination of your SSI benefits or 
special SSI cash benefits (see Sec. Sec. 416.261 and 416.262) or 
suspension or termination of your special SSI eligibility status (see 
Sec. Sec. 416.264 through 416.269);
    (c) Whether an overpayment of benefits must be repaid to us;
    (d) Whether payments will be made, on your behalf, to a 
representative payee, unless you are under age 18, legally incompetent, 
or you are disabled and drug addiction or alcoholism is a contributing 
factor material to the determination of disability;
    (e) Who will act as your payee if we determine that representative 
payment will be made;
    (f) Imposing penalties for failing to report important information;
    (g) Your drug addiction or alcoholism;
    (h) Whether you are eligible for special SSI eligibility status 
under Sec. 416.265;
    (i) Your disability;
    (j) Whether your completion of or continuation for a specified 
period of time in an appropriate vocational rehabilitation program will 
significantly increase the likelihood that you will not have to return 
to the disability benefit rolls and thus, whether your benefits may be 
continued even though you are not disabled;
    (k) Whether or not you have a disabling impairment as defined in 
Sec. 416.911;
    (l) How much and to whom benefits due a deceased individual will be 
paid;

[[Page 979]]

    (m) A claim for benefits under Sec. 416.351 based on alleged 
misinformation; and
    (n) Our calculation of the amount of change in your federally 
administered State supplementary payment amount (i.e., a reduction, 
suspension, or termination) which results from a mass change, as defined 
in Sec. 416.1401.

[45 FR 52096, Aug. 5, 1980, as amended at 47 FR 15325, Apr. 9, 1982; 49 
FR 22275, May 29, 1984; 58 FR 52913, Oct. 13, 1993; 59 FR 41405, Aug. 
12, 1994; 59 FR 43039, Aug. 22, 1994; 59 FR 44928, Aug. 31, 1994; 60 FR 
8153, Feb. 10, 1995; 60 FR 14215, Mar. 15, 1995]



Sec. 416.1403  Administrative actions that are not initial determinations.

    (a) Administrative actions that are not initial determinations may 
be reviewed by us, but they are not subject to the administrative review 
process provided by this subpart and they are not subject to judicial 
review. These actions include, but are not limited to, an action about--
    (1) Presumptive disability or presumptive blindness;
    (2) An emergency advance payment (as defined in Sec. 416.520(b));
    (3) Denial of a request to be made a representative payee;
    (4) Denial of a request to use the expedited appeals process;
    (5) Denial of a request to reopen a determination or a decision;
    (6) The fee that may be charged or received by a person who has 
represented you in connection with a proceeding before us;
    (7) Disqualifying or suspending a person from acting as your 
representative in a proceeding before us (see Sec. 416.1545);
    (8) Denying your request to extend the time period for requesting 
review of a determination or a decision;
    (9) Determining whether (and the amount of) travel expenses incurred 
are reimbursable in connection with proceedings before us;
    (10) Denying your request to readjudicate your claim and apply an 
Acquiescence Ruling;
    (11) Determining whether an organization may collect a fee from you 
for expenses it incurs in serving as your representative payee (see 
Sec. 416.640a);
    (12) Declining under Sec. 416.351(f) to make a determination on a 
claim for benefits based on alleged misinformation because one or more 
of the conditions specified in Sec. 416.351(f) are not met;
    (13) Transition to eligibility for special SSI cash benefits (Sec. 
416.262) in a month immediately following a month for which you were 
eligible for regular SSI benefits;
    (14) Transition to eligibility for regular SSI benefits in a month 
immediately following a month for which you were eligible for special 
SSI cash benefits (Sec. 416.262);
    (15) The determination to reduce, suspend, or terminate your 
federally administered State supplementary payments due to a State-
initiated mass change, as defined in Sec. 416.1401, in the levels of 
such payments, except as provided in Sec. 416.1402(n);
    (16) Termination of Federal administration of State supplementary 
payments;
    (17) Findings on whether we can collect an overpayment by using the 
Federal income tax refund offset procedure. (see Sec. 416.583);
    (18) Determining whether we will refer information about your 
overpayment to a consumer reporting agency (see Sec. Sec. 416.590 and 
422.305 of this chapter);
    (19) Determining whether we will refer your overpayment to the 
Department of the Treasury for collection by offset against Federal 
payments due you (see Sec. Sec. 416.590 and 422.310 of this chapter); 
and
    (20) Determining whether we will order your employer to withhold 
from your disposable pay to collect an overpayment you received under 
title XVI of the Social Security Act (see part 422, subpart E, of this 
chapter).
    (b) We send some notices of actions that are not initial 
determinations:
    (1) If you receive an emergency advance payment or presumptive 
disability or presumptive blindness payments, we will provide a notice 
explaining the nature and conditions of the payments.
    (2) If you receive presumptive disability or presumptive blindness 
payments, we shall send you a notice when these payments are exhausted.

[[Page 980]]

    (3) If there is a termination of Federal administration of State 
supplementary payments.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 8809, Mar. 14, 1986; 55 
FR 1020, Jan. 11, 1990; 55 FR 4423, Feb. 8, 1990; 57 FR 23058, June 1, 
1992; 59 FR 41405, Aug. 12, 1994; 59 FR 43039, Aug. 22, 1994; 59 FR 
44928, Aug. 31, 1994; 62 FR 49440, Sept. 22, 1997; 66 FR 67081, Dec. 28, 
2001; 68 FR 74184, Dec. 23, 2003]



Sec. 416.1404  Notice of the initial determination.

    (a) We shall mail a written notice of the initial determination to 
you at your last known address. Generally, we will not send a notice if 
your benefits are stopped because of your death, or if the initial 
determination is a redetermination that your eligibility for benefits 
and the amount of your benefits have not changed.
    (b) The written notice that we send will tell you--
    (1) What our initial determination is;
    (2) The reasons for our determination; and
    (3) What rights you have to a reconsideration of the determination.
    (c) If our initial determination is that we must suspend, reduce or 
terminate your benefits, the notice will also tell you that you have a 
right to a reconsideration before the determination takes effect (see 
Sec. 416.1336).

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 305, Jan. 3, 1986]



Sec. 416.1405  Effect of an initial determination.

    An initial determination is binding unless you request a 
reconsideration within the stated time period, or we revise the initial 
determination.

[51 FR 305, Jan. 3, 1986]



Sec. 416.1406  Testing modifications to the disability determination procedures.

    (a) Applicability and scope. Notwithstanding any other provision in 
this part or part 422 of this chapter, we are establishing the 
procedures set out in this section to test modifications to our 
disability determination process. These modifications will enable us to 
test, either individually or in one or more combinations, the effect of: 
having disability claim managers assume primary responsibility for 
processing an application for SSI payments based on disability; 
providing persons who have applied for benefits based on disability with 
the opportunity for an interview with a decision maker when the decision 
maker finds that the evidence in the file is insufficient to make a 
fully favorable determination or requires an initial determination 
denying the claim; having a single decision maker make the initial 
determination with assistance from medical consultants, where 
appropriate; and eliminating the reconsideration step in the 
administrative review process and having a claimant who is dissatisfied 
with the initial determination request a hearing before an 
administrative law judge. The model procedures we test will be designed 
to provide us with information regarding the effect of these procedural 
modifications and enable us to decide whether and to what degree the 
disability determination process would be improved if they were 
implemented on a national level.
    (b) Procedures for cases included in the tests. Prior to commencing 
each test or group of tests in selected site(s), we will publish a 
notice in the Federal Register. The notice will describe which model or 
combinations of models we intend to test, where the specific test 
site(s) will be, and the duration of the test(s). The individuals who 
participate in the test(s) will be randomly assigned to a test group in 
each site where the tests are conducted. Paragraph (b) (1) through (4) 
of this section lists descriptions of each model.
    (1) In the disability claim manager model, when you file an 
application for SSI payments based on disability, a disability claim 
manager will assume primary responsibility for the processing of your 
claim. The disability claim manager will be the focal point for your 
contacts with us during the claims intake process and until an initial 
determination on your claim is made. The disability claim manager will 
explain the SSI disability program to you, including the definition of 
disability and how we determine whether you meet all the requirements 
for SSI payments based on disability. The disability claim manager will 
explain

[[Page 981]]

what you will be asked to do throughout the claims process and how you 
can obtain information or assistance through him or her. The disability 
claim manager will also provide you with information regarding your 
right to representation, and he or she will provide you with appropriate 
referral sources for representation. The disability claim manager may be 
either a State agency employee or a Federal employee. In some instances, 
the disability claim manager may be assisted by other individuals.
    (2) In the single decision maker model, the decision maker will make 
the disability determination and may also determine whether the other 
conditions of eligibility for SSI payments based on disability are met. 
The decision maker will make the disability determination after any 
appropriate consultation with a medical or psychological consultant. The 
medical or psychological consultant will not be required to sign the 
disability determination forms we use to have the State agency certify 
the determination of disability to us (see Sec. 416.1015). However, 
before an initial determination is made that a claimant is not disabled 
in any case where there is evidence which indicates the existence of a 
mental impairment, the decision maker will make every reasonable effort 
to ensure that a qualified psychiatrist or psychologist has completed 
the medical portion of the case review and any applicable residual 
functional capacity assessment pursuant to our existing procedures (see 
Sec. 416.1017). Similarly, in making an initial determination with 
respect to the disability of a child under age 18 claiming SSI payments 
based on disability, the decision maker will make reasonable efforts to 
ensure that a qualified pediatrician, or other individual who 
specializes in a field of medicine appropriate to the child's 
impairment(s), evaluates the claim of such child (see Sec. 416.903(f)). 
In some instances the decision maker may be the disability claim manager 
described in paragraph (b)(1) of this section. When the decision maker 
is a State agency employee, a team of individuals that includes a 
Federal employee will determine whether the other conditions of 
eligibility for SSI payments are met.
    (3) In the predecision interview model, if the decision maker(s) 
finds that the evidence in your file is insufficient to make a fully 
favorable determination or requires an initial determination denying 
your claim, a predecision notice will be mailed to you. The notice will 
tell you that, before the decision maker(s) makes an initial 
determination about whether you are disabled, you may request a 
predecision interview with the decision maker(s). The notice will also 
tell you that you may also submit additional evidence. You must request 
a predecision interview within 10 days after the date you receive the 
predecision notice. You must also submit any additional evidence within 
10 days after the date you receive the predecision notice. If you 
request a predecision interview, the decision maker(s) will conduct the 
predecision interview in person, by videoconference, or by telephone as 
the decision maker(s) determines is appropriate under the circumstances. 
If you make a late request for a predecision interview, or submit 
additional evidence late, but show in writing that you had good cause 
under the standards in Sec. 416.1411 for missing the deadline, the 
decision maker(s) will extend the deadline. If you do not request the 
predecision interview or if you do not appear for a scheduled 
predecision interview and do not submit additional evidence, or if you 
do not respond to our attempts to communicate with you, the decision 
maker(s) will make an initial determination based upon the evidence in 
your file. If you identify additional evidence during the predecision 
interview, which was previously not available, the decision maker(s) 
will advise you to submit the evidence. If you are unable to do so, the 
decision maker(s) may assist you in obtaining it. The decision maker(s) 
also will advise you of the specific timeframes you have for submitting 
any additional evidence identified during the predecision interview. If 
you have no treating source(s) (see Sec. 416.902), or your treating 
source(s) is unable or unwilling to provide the necessary evidence, or 
there is a conflict in the evidence that cannot be resolved through 
evidence from your treating source(s), the

[[Page 982]]

decision maker(s) may arrange a consultative examination or resolve 
conflicts according to existing procedures (see Sec. 416.919a). If you 
attend the predecision interview, or do not attend the predecision 
interview but you submit additional evidence, the decision maker(s) will 
make an initial determination based on the evidence in your file, 
including the additional evidence you submit or the evidence obtained as 
a result of the predecision notice or interview, or both.
    (4) In the reconsideration elimination model, we will modify the 
disability determination process by eliminating the reconsideration step 
of the administrative review process. If you receive an initial 
determination on your claim for SSI payments based on disability, and 
you are dissatisfied with the determination, we will notify you that you 
may request a hearing before an administrative law judge. If you request 
a hearing before an administrative law judge, we will apply our usual 
procedures contained in subpart N of this part.

[60 FR 20028, Apr. 24, 1995]

                             Reconsideration



Sec. 416.1407  Reconsideration--general.

    Reconsideration is the first step in the administrative review 
process that we provide if you are dissatisfied with the initial 
determination. If you are dissatisfied with our reconsideration 
determination, you may request a hearing before an administrative law 
judge.

[51 FR 305, Jan. 3, 1986]



Sec. 416.1408  Parties to a reconsideration.

    (a) Who may request a reconsideration. If you are dissatisfied with 
the initial determination, you may request that we reconsider it. In 
addition, a person who shows in writing that his or her rights may be 
adversely affected by the initial determination may request a 
reconsideration.
    (b) Who are parties to a reconsideration. After a request for the 
reconsideration, you and any person who shows in writing that his or her 
rights are adversely affected by the initial determination will be 
parties to the reconsideration.



Sec. 416.1409  How to request reconsideration.

    (a) We shall reconsider an initial determination if you or any other 
party to the reconsideration files a written request at one of our 
offices within 60 days after the date you receive notice of the initial 
determination (or within the extended time period if we extend the time 
as provided in paragraph (b) of this section).
    (b) Extension of time to request a reconsideration. If you want a 
reconsideration of the initial determination but do not request one in 
time, you may ask us for more time to request a reconsideration. Your 
request for an extension of time must be in writing and it must give the 
reasons why the request for reconsideration was not filed within the 
stated time period. If you show us that you had good cause for missing 
the deadline, we will extend the time period. To determine whether good 
cause exists, we use the standards explained in Sec. 416.1411.



Sec. 416.1411  Good cause for missing the deadline to request review.

    (a) In determining whether you have shown that you have good cause 
for missing a deadline to request review we consider--
    (1) What circumstances kept you from making the request on time;
    (2) Whether our action misled you;
    (3) Whether you did not understand the requirements of the Act 
resulting from amendments to the Act, other legislation, or court 
decisions; and
    (4) Whether you had any physical, mental, educational, or linguistic 
limitations (including any lack of facility with the English language) 
which prevented you from filing a timely request or from understanding 
or knowing about the need to file a timely request for review.
    (b) Examples of circumstances where good cause may exist include, 
but are not limited to, the following situations:
    (1) You were seriously ill and were prevented from contacting us in 
person, in writing, or through a friend, relative, or other person.

[[Page 983]]

    (2) There was a death or serious illness in your immediate family.
    (3) Important records were destroyed or damaged by fire or other 
accidental cause.
    (4) You were trying very hard to find necessary information to 
support your claim but did not find the information within the stated 
time periods.
    (5) You asked us for additional information explaining our action 
within the time limit, and within 60 days of receiving the explanation 
you requested reconsideration or a hearing, or within 30 days of 
receiving the explanation you requested Appeals Council review or filed 
a civil suit.
    (6) We gave you incorrect or incomplete information about when and 
how to request administrative review or to file a civil suit.
    (7) You did not receive notice of the initial determination or 
decision.
    (8) You sent the request to another Government agency in good faith 
within the time limit and the request did not reach us until after the 
time period had expired.
    (9) Unusual or unavoidable circumstances exist, including the 
circumstances described in paragraph (a)(4) of this section, which show 
that you could not have known of the need to file timely, or which 
prevented you from filing timely.

[45 FR 52096, Aug. 5, 1980, as amended at 59 FR 1637, Jan. 12, 1994]



Sec. 416.1413  Reconsideration procedures.

    If you request reconsideration, we will give you a chance to present 
your case. How you can present your case depends upon the issue involved 
and whether you are asking us to reconsider an initial determination on 
an application or an initial determination on a suspension, reduction or 
termination of benefits. The methods of reconsideration include the 
following:
    (a) Case review. We will give you and the other parties to the 
reconsideration an opportunity to review the evidence in our files and 
then to present oral and written evidence to us. We will then make a 
decision based on all of this evidence. The official who reviews the 
case will make the reconsidered determination.
    (b) Informal conference. In addition to following the procedures of 
a case review, an informal conference allows you and the other parties 
to the reconsideration an opportunity to present witnesses. A summary 
record of this proceeding will become part of the case record. The 
official who conducts the informal conference will make the reconsidered 
determination.
    (c) Formal conference. In addition to following the procedures of an 
informal conference, a formal conference allows you and the other 
parties to a reconsideration an opportunity to request us to subpoena 
adverse witnesses and relevant documents and to cross-examine adverse 
witnesses. A summary record of this proceeding will become a part of the 
case record. The official who conducts the formal conference will make 
the reconsidered determination.
    (d) Disability hearing. If you have been receiving supplemental 
security income benefits because you are blind or disabled and you 
request reconsideration of an initial or revised determination that, 
based on medical factors, you are not now blind or disabled, we will 
give you and the other parties to the reconsideration an opportunity for 
a disability hearing. (See Sec. Sec. 416.1414 through 416.1418.)

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 305, Jan. 3, 1986]



Sec. 416.1413a  Reconsiderations of initial determinations on applications.

    The method of reconsideration we will use when you appeal an initial 
determination on your application for benefits depends on the issue 
involved in your case.
    (a) Nonmedical issues. If you challenge our finding on a nonmedical 
issue, we shall offer you a case review or an informal conference, and 
will reach our reconsidered determination on the basis of the review you 
select.
    (b) Medical issues. If you challenge our finding on a medical issue 
(even if you received payments because we presumed you were blind or 
disabled), we shall reach our reconsidered determination on the basis of 
a case review.

[45 FR 52096, Aug. 5, 1980. Redesignated at 51 FR 305, Jan. 3, 1986]

[[Page 984]]



Sec. 416.1413b  Reconsideration procedures for post-eligiblity claims.

    If you are eligible for supplemental security income benefits and we 
notify you that we are going to suspend, reduce or terminate your 
benefits, you can appeal our determination within 60 days of the date 
you receive our notice. The 60-day period may be extended if you have 
good cause for an extension of time under the conditions stated in Sec. 
416.1411(b). If you appeal a suspension, reduction, or termination of 
benefits, the method of reconsideration we will use depends on the issue 
in your case. If the issue in your case is that you are no longer blind 
or disabled for medical reasons, you will receive an opportunity for a 
disability hearing. If any other issue is involved, you have the choice 
of a case review, informal conference or formal conference.

[51 FR 305, Jan. 3, 1986]



Sec. 416.1413c  Arrangement for conferences.

    (a) As soon as we receive a request for a formal or informal 
conference, we shall set the time, date and place for the conference.
    (b) We shall send you and any other parties to the reconsideration a 
written notice about the conference (either by mailing it to your last 
known address or by personally serving you with it) at least 10 days 
before the conference. However, we may hold the conference sooner if we 
all agree. We will not send written notice of the time, date, and place 
of the conference if you waive your right to receive it.
    (c) We shall schedule the conference within 15 days after you 
request it, but, at our discretion or at your request, we will delay the 
conference if we think the delay will ensure that the conference is 
conducted efficiently and properly.
    (d) We shall hold the conference at one of our offices, by telephone 
or in person, whichever you prefer. We will hold the conference 
elsewhere in person if you show circumstances that make this arrangement 
reasonably necessary.

[45 FR 52096, Aug. 5, 1980. Redesignated at 51 FR 305, Jan. 3, 1986]



Sec. 416.1414  Disability hearing--general.

    (a) Availability. We will provide you with an opportunity for a 
disability hearing if:
    (1) You have been receiving supplemental security income benefits 
based on a medical impairment that renders you blind or disabled;
    (2) We have made an initial or revised determination based on 
medical factors that you are not blind or disabled because your 
impairment:
    (i) Has ceased;
    (ii) Did not exist; or
    (iii) Is no longer disabling; and
    (3) You make a timely request for reconsideration of the initial or 
revised determination.
    (b) Scope. The disability hearing will address only the initial or 
revised determination, based on medical factors, that you are not now 
blind or disabled. Any other issues you raise in connection with your 
request for reconsideration will be reviewed in accordance with the 
reconsideration procedures described in Sec. 416.1413 (a) through (c).
    (c) Time and place--(1) General. Either the State agency or the 
Director of the Office of Disability Hearings or his or her delegate, as 
appropriate, will set the time and place of your disability hearing. We 
will send you a notice of the time and place of your disability hearing 
at least 20 days before the date of the hearing. You may be expected to 
travel to your disability hearing. (See Sec. Sec. 416.1495-416.1499 
regarding reimbursement for travel expenses.)
    (2) Change of time or place. If you are unable to travel or have 
some other reason why you cannot attend your disability hearing at the 
scheduled time or place, you should request at the earliest possible 
date that the time or place of your hearing be changed. We will change 
the time or place if there is good cause for doing so under the 
standards in Sec. 416.1436 (c) and (d).
    (d) Combined issues. If a disability hearing is available to you 
under paragraph (a) of this section, and you file a new application for 
benefits while your request for reconsideration is still pending, we may 
combine the issues on both claims for the purpose of the disability 
hearing and issue a combined initial/reconsidered determination

[[Page 985]]

which is binding with respect to the common issues on both claims.
    (e) Definition. For purposes of the provisions regarding disability 
hearings (Sec. Sec. 416.1414 through 416.1418) we, us, or our means the 
Social Security Administration or the State agency.

[51 FR 305, Jan. 3, 1986, as amended at 51 FR 8809, Mar. 14, 1986]



Sec. 416.1415  Disability hearing--disability hearing officers.

    (a) General. Your disability hearing will be conducted by a 
disability hearing officer who was not involved in making the 
determination you are appealing. The disability hearing officer will be 
an experienced disability examiner, regardless of whether he or she is 
appointed by a State agency or by the Director of the Office of 
Disability Hearings or his or her delegate, as described in paragraphs 
(b) and (c) of this section.
    (b) State agency hearing officers--(1) Appointment of State agency 
hearing officers. If a State agency made the initial or revised 
determination that you are appealing, the disability hearing officer who 
conducts your disability hearing may be appointed by a State agency. If 
the disability hearing officer is appointed by a State agency, that 
individual will be employed by an adjudicatory unit of the State agency 
other than the adjudicatory unit which made the determination you are 
appealing.
    (2) State agency defined. For purposes of this subpart, State agency 
means the adjudicatory component in the State which issues disability 
determinations.
    (c) Federal hearing officers. The disability hearing officer who 
conducts your disability hearing will be appointed by the Director of 
the Office of Disability Hearings or his or her delegate if:
    (1) A component of our office other than a State agency made the 
determination you are appealing; or
    (2) The State agency does not appoint a disability hearing officer 
to conduct your disability hearing under paragraph (b) of this section.

[51 FR 305, Jan. 3, 1986]



Sec. 416.1416  Disability hearing--procedures.

    (a) General. The disability hearing will enable you to introduce 
evidence and present your views to a disability hearing officer if you 
are dissatisfied with an initial or revised determination, based on 
medical factors, that you are not now blind or disabled, as described in 
Sec. 416.1414(a)(2).
    (b) Your procedural rights. We will advise you that you have the 
following procedural rights in connection with the disability hearing 
process:
    (1) You may request that we assist you in obtaining pertinent 
evidence for your disability hearing and, if necessary, that we issue a 
subpoena to compel the production of certain evidence or testimony. We 
will follow subpoena procedures similar to those described in Sec. 
416.1450(d) for the administrative law judge hearing process;
    (2) You may have a representative at the hearing appointed under 
subpart O of this part, or you may represent yourself;
    (3) You or your representative may review the evidence in your case 
file, either on the date of your hearing or at an earlier time at your 
request, and present additional evidence;
    (4) You may present witnesses and question any witnesses at the 
hearing; and
    (5) You may waive your right to appear at the hearing. If you do not 
appear at the hearing, the disability hearing officer will prepare and 
issue a written reconsidered determination based on the information in 
your case file.
    (c) Case preparation. After you request reconsideration, your case 
file will be reviewed and prepared for the hearing. This review will be 
conducted in the component of our office (including a State agency) that 
made the initial or revised determination, by personnel who were not 
involved in making the initial or revised determination. Any new 
evidence you submit in connection with your request for reconsideration 
will be included in this review. If necessary, further development of 
evidence, including arrangements for medical examinations, will be 
undertaken by this component. After the case file is prepared for the

[[Page 986]]

hearing, it will be forwarded by this component to the disability 
hearing officer for a hearing. If necessary, the case file may be sent 
back to this component at any time prior to the issuance of the 
reconsidered determination for additional development. Under paragraph 
(d) of this section, this component has the authority to issue a 
favorable reconsidered determination at any time in its development 
process.
    (d) Favorable reconsidered determination without a hearing. If the 
evidence in your case file supports a finding that you are now blind or 
disabled, either the component that prepares your case for hearing under 
paragraph (c) or the disability hearing officer will issue a written 
favorable reconsidered determination, even if a disability hearing has 
not yet been held.
    (e) Opportunity to submit additional evidence after the hearing. At 
your request, the disability hearing officer may allow up to 15 days 
after your disability hearing for receipt of evidence which is not 
available at the hearing, if:
    (1) The disability hearing officer determines that the evidence has 
a direct bearing on the outcome of the hearing; and
    (2) The evidence could not have been obtained before the hearing.
    (f) Opportunity to review and comment on evidence obtained or 
developed by us after the hearing. If, for any reason, additional 
evidence is obtained or developed by us after your disability hearing, 
and all evidence taken together can be used to support a reconsidered 
determination that is unfavorable to you with regard to the medical 
factors of eligibility, we will notify you, in writing, and give you an 
opportunity to review and comment on the additional evidence. You will 
be given 10 days from the date you receive our notice to submit your 
comments (in writing or, in appropriate cases, by telephone), unless 
there is good cause for granting you additional time, as illustrated by 
the examples in Sec. 416.1411(b). Your comments will be considered 
before a reconsidered determination is issued. If you believe that it is 
necessary to have further opportunity for a hearing with respect to the 
additional evidence, a supplementary hearing may be scheduled at your 
request. Otherwise, we will ask for your written comments on the 
additional evidence, or, in appropriate cases, for your telephone 
comments.

[51 FR 306, Jan. 3, 1986]



Sec. 416.1417  Disability hearing--disability hearing officer's reconsidered 
determination.

    (a) General. The disability hearing officer who conducts your 
disability hearing will prepare and will issue a written reconsidered 
determination, unless:
    (1) The disability hearing officer sends the case back for 
additional development by the component that prepared the case for the 
hearing, and that component issues a favorable determination, as 
permitted by Sec. 416.1416(c);
    (2) It is determined that you are engaging in substantial gainful 
activity and that you are therefore not disabled; or
    (3) The reconsidered determination prepared by the disability 
hearing officer is reviewed under Sec. 416.1418.
    (b) Content. The disability hearing officer's reconsidered 
determination will give the findings of fact and the reasons for the 
reconsidered determination. The reconsidered determination must be based 
on evidence offered at the disability hearing or otherwise included in 
your case file.
    (c) Notice. We will mail you and the other parties a notice of 
reconsidered determination in accordance with Sec. 416.1422.
    (d) Effect. The disability hearing officer's reconsidered 
determination, or, if it is changed under Sec. 416.1418, the 
reconsidered determination that is issued by the Director of the Office 
of Disability Hearings or his or her delegate, is binding in accordance 
with Sec. 416.1421, subject to the exceptions specified in that 
section.

[51 FR 306, Jan. 3, 1986]



Sec. 416.1418  Disability hearing--review of the disability hearing 
officer's reconsidered determination before it is issued.

    (a) General. The Director of the Office of Disability Hearings or 
his or her delegate may select a sample of disability

[[Page 987]]

hearing officers' reconsidered determinations, before they are issued, 
and review any such case to determine its correctness on any grounds he 
or she deems appropriate. The Director or his or her delegate shall 
review any case within the sample if:
    (1) There appears to be an abuse of discretion by the hearing 
officer;
    (2) There is an error of law; or
    (3) The action, findings or conclusions of the disability hearing 
officer are not supported by substantial evidence.

If the review indicates that the reconsidered determination prepared by 
the disability hearing officer is correct, it will be dated and issued 
immediately upon completion of the review. If the reconsidered 
determination prepared by the disability hearing officer is found by the 
Director or his or her delegate to be deficient, it will be changed as 
described in paragraph (b) of this section.
    (b) Methods of correcting deficiencies in the disability hearing 
officer's reconsidered determination. If the reconsidered determination 
prepared by the disability hearing officer is found by the Director or 
his or her delegate to be deficient, the Director of the Office of 
Disability Hearings or his or her delegate will take appropriate action 
to assure that the deficiency is corrected before a reconsidered 
determination is issued. The --ction taken by the Director or his or her 
delegate will take one of two forms:
    (1) The Director or his or her delegate may return the case file 
either to the component responsible for preparing the case for hearing 
or to the disability hearing officer, for appropriate further action; or
    (2) The Director or his or her delegate may issue a written 
reconsidered determination which corrects the deficiency.
    (c) Further action on your case if it is sent back by the Director 
or his or her delegate either to the component that prepared your case 
for hearing or to the disability hearing officer. If the Director of the 
Office of Disability Hearings or his or her delegate sends your case 
back either to the component responsible for preparing the case for 
hearing or to the disability hearing officer for appropriate further 
action, as provided in paragraph (b)(1) of this section, any additional 
proceedings in your case will be governed by the disability hearing 
procedures described in Sec. 416.1416(f) or if your case is returned to 
the disability hearing officer and an unfavorable determination is 
indicated, a supplementary hearing may be scheduled for you before a 
reconsidered determination is reached in your case.
    (d) Opportunity to comment before the Director or his or her 
delegate issues a reconsidered determination that is unfavorable to you. 
If the Director of the Office of Disability Hearings or his or her 
delegate proposes to issue a reconsidered determination as described in 
paragraph (b)(2) of this section, and that reconsidered determination is 
unfavorable to you, her or she will send you a copy of the proposed 
reconsidered determination with an explanation of the reasons for it, 
and will give you an opportunity to submit written comments before it is 
issued. At your request, you will also be given an opportunity to 
inspect the pertinent materials in your case file, including the 
reconsidered determination prepared by the disability hearing officer, 
before submitting your comments. You will be given 10 days from the date 
you receive the Director's notice of proposed action to submit your 
written comments, unless additional time is necessary to provide access 
to the pertinent file materials or there is good cause for providing 
more time, as illustrated by the examples in Sec. 416.1411(b). The 
Director or his or her delegate will consider your comments before 
taking any further action on your case.

[51 FR 307, Jan. 3, 1986]



Sec. 416.1419  Notice of another person's request for reconsideration.

    If any other person files a request for reconsideration of the 
initial determination in your case, we shall notify you at your last 
known address before we reconsider the initial determination. We shall 
also give you an opportunity to present any evidence you think helpful 
to the reconsidered determination.

[45 FR 52096, Aug. 5, 1980. Redesignated at 51 FR 306, Jan. 3, 1986]

[[Page 988]]



Sec. 416.1420  Reconsidered determination.

    After you or another person requests a reconsideration, we shall 
review the evidence considered in making the initial determination and 
any other evidence we receive. We shall make our determination based on 
this evidence. The person who makes the reconsidered determination shall 
have had no prior involvement with the initial determination.

[45 FR 52096, Aug. 5, 1980. Redesignated at 51 FR 307, Jan. 3, 1986]



Sec. 416.1421  Effect of a reconsidered determination.

    The reconsidered determination is binding unless--
    (a) You or any other party to the reconsideration requests a hearing 
before an administrative law judge within the stated time period and a 
decision is made;
    (b) The expedited appeals process is used; or
    (c) The reconsidered determination is revised.

[51 FR 307, Jan. 3, 1986]



Sec. 416.1422  Notice of a reconsidered determination.

    We shall mail a written notice of the reconsidered determination to 
the parties at their last known address. We shall state the specific 
reasons for the determination and tell you and any other parties of the 
right to a hearing. If it is appropriate, we will also tell you and any 
other parties how to use the expedited appeals process.

[45 FR 52096, Aug. 5, 1980. Redesignated at 51 FR 306, Jan. 3, 1986]

                        Expedited Appeals Process



Sec. 416.1423  Expedited appeals process--general.

    By using the expedited appeals process you may go directly to a 
Federal district court without first completing the administrative 
review process that is generally required before the court will hear 
your case.



Sec. 416.1424  When the expedited appeals process may be used.

    You may use the expedited appeals process if all of the following 
requirements are met:
    (a) We have made an initial and a reconsidered determination; an 
administrative law judge has made a hearing decision; or Appeals Council 
review has been requested, but a final decision has not been issued.
    (b) You are a party to the reconsidered determination or the hearing 
decision.
    (c) You have submitted a written request for the expedited appeals 
process.
    (d) You have claimed, and we agree, that the only factor preventing 
a favorable determination or decision is a provision in the law that you 
believe is unconstitutional.
    (e) If you are not the only party, all parties to the determination 
or decision agree to request the expedited appeals process.



Sec. 416.1425  How to request expedited appeals process.

    (a) Time of filing request. You may request the expedited appeals 
process--
    (1) Within 60 days after the date you receive notice of the 
reconsidered determination (or within the extended time period if we 
extend the time as provided in paragraph (c) of this section);
    (2) At any time after you have filed a timely request for a hearing 
but before you receive notice of the administrative law judge's 
decision;
    (3) Within 60 days after the date you receive a notice of the 
administrative law judge's decision or dismissal (or within the extended 
time period if we extend the time as provided in paragraph (c) of this 
section); or
    (4) At any time after you have filed a timely request for Appeals 
Council review, but before you receive notice of the Appeals Council's 
action.
    (b) Place of filing request. You may file a written request for the 
expedited appeals process at one of our offices.
    (c) Extension of time to request expedited appeals process. If you 
want to use the expedited appeals process but do not request it within 
the stated time period, you may ask for more time to submit your 
request. Your request for

[[Page 989]]

an extension of time must be in writing and it must give the reasons why 
the request for the expedited appeals process was not filed within the 
stated time period. If you show that you had good cause for missing the 
deadline, the time period will be extended. To determine whether good 
cause exists, we use the standards explained in Sec. 416.1411.



Sec. 416.1426  Agreement in expedited appeals process.

    If you meet all the requirements necessary for the use of the 
expedited appeals process, our authorized representative shall prepare 
an agreement. The agreement must be signed by you, by every other party 
to the determination or decision, and by our authorized representative. 
The agreement must provide that--
    (a) The facts in your claim are not in dispute;
    (b) The sole issue in dispute is whether a provision of the Act that 
applies to your case is unconstitutional;
    (c) Except for your belief that a provision of the Act is 
unconstitutional, you agree with our interpretation of the law;
    (d) If the provision of the Act that you believe is unconstitutional 
were not applied to your case, your claim would be allowed; and
    (e) Our determination or the decision is final for the purpose of 
seeking judicial review.



Sec. 416.1427  Effect of expedited appeals process agreement.

    After an expedited appeals process agreement is signed, you will not 
need to complete the remaining steps of the administrative review 
process. Instead, you may file an action in a Federal district court 
within 60 days after the date you receive notice (a signed copy of the 
agreement will be mailed to you and will constitute notice) that the 
agreement has been signed by our authorized representative.

[45 FR 52096, Aug. 5, 1980, as amended at 49 FR 46370, Nov. 26, 1984]



Sec. 416.1428  Expedited appeals process request that does not result 
in agreement.

    If you do not meet all of the requirements necessary to use the 
expedited appeals process, we shall tell you that your request to use 
this process is denied and that your request will be considered as a 
request for a hearing, or Appeals Council review, whichever is 
appropriate.

               Hearing Before an Administrative Law Judge



Sec. 416.1429  Hearing before an administrative law judge--general.

    If you are dissatisfied with one of the determinations or decisions 
listed in Sec. 416.1430 you may request a hearing. The Associate 
Commissioner for Hearings and Appeals, or his or her delegate, shall 
appoint an administrative law judge to conduct the hearing. If 
circumstances warrant, the Associate Commissioner, or his or her 
delegate, may assign your case to another administrative law judge. At 
the hearing you may appear in person or by video teleconferencing, 
submit new evidence, examine the evidence used in making the 
determination or decision under review, and present and question 
witnesses. The administrative law judge who conducts the hearing may ask 
you questions. He or she shall issue a decision based on the hearing 
record. If you waive your right to appear at the hearing, either in 
person or by video teleconferencing, the administrative law judge will 
make a decision based on the evidence that is in the file and any new 
evidence that may have been submitted for consideration.

[68 FR 5219, Feb. 3, 2003]



Sec. 416.1430  Availability of a hearing before an administrative law judge.

    (a) You or another party may request a hearing before an 
administrative law judge if we have made--
    (1) A reconsidered determination;
    (2) A reconsideration of a revised determination of an initial or 
reconsidered determination that involves a suspension, reduction or 
termination of benefits;
    (3) A revised initial determination or revised reconsidered 
determination that does not involve a suspension, reduction or 
termination of benfits; or
    (4) A revised decision based on evidence not included in the record 
on which the prior decision was based.

[[Page 990]]

    (b) We will hold a hearing only if you or another party to the 
hearing file a written request for a hearing.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 307, Jan. 3, 1986]



Sec. 416.1432  Parties to a hearing before an administrative law judge.

    (a) Who may request a hearing. You may request a hearing if a 
hearing is available under Sec. 416.1430. In addition, a person who 
shows in writing that his or her rights may be adversely affected by the 
decision may request a hearing.
    (b) Who are parties to a hearing. After a request for a hearing is 
made, you, the other parties to the initial, reconsidered, or revised 
determination, and any other person who shows in writing that his or her 
rights may be adversely affected by the hearing, are parties to the 
hearing. In addition, any other person may be made a party to the 
hearing if his or her rights may be adversely affected by the decision, 
and the administrative law judge notifies the person to appear at the 
hearing or to present evidence supporting his or her interest.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 307, Jan. 3, 1986]



Sec. 416.1433  How to request a hearing before an administrative law judge.

    (a) Written request. You may request a hearing by filing a written 
request. You should include in your request--
    (1) Your name and social security number;
    (2) The name and social security number of your spouse, if any;
    (3) The reasons you disagree with the previous determination or 
decision;
    (4) A statement of additional evidence to be submitted and the date 
you will submit it; and
    (5) The name and address of any designated representative.
    (b) When and where to file. The request must be filed at one of our 
offices within 60 days after the date you receive notice of the previous 
determination or decision (or within the extended time period if we 
extend the time as provided in paragraph (c) of this section).
    (c) Extension of time to request a hearing. If you have a right to a 
hearing but do not request one in time, you may ask for more time to 
make your request. The request for an extension of time must be in 
writing and it must give the reasons why the request for a hearing was 
not filed within the stated time period. You may file your request for 
an extension of time at one of our offices. If you show that you had 
good cause for missing the deadline, the time period will be extended. 
To determine whether good cause exists, we use the standards explained 
in Sec. 416.1411.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 307, Jan. 3, 1986]



Sec. 416.1435  Submitting evidence prior to a hearing before an 
administrative law judge.

    If possible, the evidence or a summary of evidence you wish to have 
considered at the hearing should be submitted to the administrative law 
judge with the request for hearing or within 10 days after filing the 
request. Each party shall make every effort to be sure that all material 
evidence is received by the administrative law judge or is available at 
the time and place set for the hearing.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 307, Jan. 3, 1986]



Sec. 416.1436  Time and place for a hearing before an administrative 
law judge.

    (a) General. The administrative law judge sets the time and place 
for the hearing. He or she may change the time and place, if it is 
necessary. After sending you reasonable notice of the proposed action, 
the administrative law judge may adjourn or postpone the hearing or 
reopen it to receive additional evidence any time before he or she 
notifies you of a hearing decision.
    (b) Where we hold hearings. We hold hearings in the 50 States, the 
District of Columbia, and the Northern Mariana Islands. The ``place'' of 
the hearing is the hearing office or other site(s) at which you and any 
other parties to the hearing are located when you make your 
appearance(s) before the administrative law judge, whether in person or 
by video teleconferencing.
    (c) Determining how appearances will be made. In setting the time 
and place of the hearing, the administrative law

[[Page 991]]

judge determines whether your appearance or that of any other individual 
who is to appear at the hearing will be made in person or by video 
teleconferencing. The administrative law judge will direct that the 
appearance of an individual be conducted by video teleconferencing if 
video teleconferencing technology is available to conduct the 
appearance, use of video teleconferencing to conduct the appearance 
would be more efficient than conducting the appearance in person, and 
the administrative law judge does not determine that there is a 
circumstance in the particular case preventing use of video 
teleconferencing to conduct the appearance. Section 416.1450 sets forth 
procedures under which parties to the hearing and witnesses appear and 
present evidence at hearings.
    (d) Objecting to the time or place of the hearing. If you object to 
the time or place of your hearing, you must notify the administrative 
law judge at the earliest possible opportunity before the time set for 
the hearing. You must state the reason for your objection and state the 
time and place you want the hearing to be held. If at all possible, the 
request should be in writing. The administrative law judge will change 
the time or place of the hearing if you have good cause, as determined 
under paragraph (e) and (f) of this section. Section 416.1438 provides 
procedures we will follow when you do not respond to a notice of 
hearing.
    (e) Good cause for changing the time or place. If you have been 
scheduled to appear by video teleconferencing at the place of your 
hearing and you notify the ALJ as provided in paragraph (d) of this 
section that you object to appearing in that way, the administrative law 
judge will find your wish not to appear by video teleconferencing to be 
a good reason for changing the time or place of your scheduled hearing 
and will reschedule your hearing for a time and place at which you may 
make your appearance before the administrative law judge in person. The 
administrative law judge will also find good cause for changing the time 
or place of your scheduled hearing, and will reschedule your hearing, if 
your reason is one of the following circumstances and is supported by 
the evidence:
    (1) You or your representative are unable to attend or to travel to 
the scheduled hearing because of a serious physical or mental condition, 
incapacitating injury, or death in the family; or
    (2) Severe weather conditions make it impossible to travel to the 
hearing.
    (f) Good cause in other circumstances. In determining whether good 
cause exists in circumstances other than those set out in paragraph (e) 
of this section, the administrative law judge will consider your reason 
for requesting the change, the facts supporting it, and the impact of 
the proposed change on the efficient administration of the hearing 
process. Factors affecting the impact of the change include, but are not 
limited to, the effect on the processing of other scheduled hearings, 
delays which might occur in rescheduling your hearing, and whether any 
prior changes were granted to you. Examples of such other circumstances, 
which you might give for requesting a change in the time or place of the 
hearing, include, but are not limited to, the following:
    (1) You have attempted to obtain a representative but need 
additional time;
    (2) Your representative was appointed within 30 days of the 
scheduled hearing and needs additional time to prepare for the hearing;
    (3) Your representative has a prior commitment to be in court or at 
another administrative hearing on the date scheduled for the hearing;
    (4) A witness who will testify to facts material to your case would 
be unavailable to attend the scheduled hearing and the evidence cannot 
be otherwise obtained;
    (5) Transportation is not readily available for you to travel to the 
hearing;
    (6) You live closer to another hearing site; or
    (7) You are unrepresented, and you are unable to respond to the 
notice of hearing because of any physical, mental, educational, or 
linguistic limitations (including any lack of facility with the English 
language) which you may have.

[68 FR 5220, Feb. 3, 2003]

[[Page 992]]



Sec. 416.1438  Notice of a hearing before an administrative law judge.

    (a) Issuing the notice. After the administrative law judge sets the 
time and place of the hearing, we will mail notice of the hearing to you 
at your last known address, or give the notice to you by personal 
service, unless you have indicated in writing that you do not wish to 
receive this notice. The notice will be mailed or served at least 20 
days before the hearing.
    (b) Notice information. The notice of hearing will contain a 
statement of the specific issues to be decided and tell you that you may 
designate a person to represent you during the proceedings. The notice 
will also contain an explanation of the procedures for requesting a 
change in the time or place of your hearing, a reminder that if you fail 
to appear at your scheduled hearing without good cause the ALJ may 
dismiss your hearing request, and other information about the scheduling 
and conduct of your hearing. You will also be told if your appearance or 
that of any other party or witness is scheduled to be made by video 
teleconferencing rather than in person. If we have scheduled you to 
appear at the hearing by video teleconferencing, the notice of hearing 
will tell you that the scheduled place for the hearing is a 
teleconferencing site and explain what it means to appear at your 
hearing by video teleconferencing. The notice will also tell you how you 
may let us know if you do not want to appear in this way and want, 
instead, to have your hearing at a time and place where you may appear 
in person before the ALJ.
    (c) Acknowledging the notice of hearing. The notice of hearing will 
ask you to return a form to let us know that you received the notice. If 
you or your representative do not acknowledge receipt of the notice of 
hearing, we will attempt to contact you for an explanation. If you tell 
us that you did not receive the notice of hearing, an amended notice 
will be sent to you by certified mail. See Sec. 416.1436 for the 
procedures we will follow in deciding whether the time or place of your 
scheduled hearing will be changed if you do not respond to the notice of 
hearing.

[68 FR 5220, Feb. 3, 2003]



Sec. 416.1439  Objections to the issues.

    If you object to the issues to be decided upon at the hearing, you 
must notify the administrative law judge in writing at the earliest 
possible opportunity before the time set for the hearing. You must state 
the reasons for your objections. The administrative law judge shall make 
a decision on your objections either in writing or at the hearing.



Sec. 416.1440  Disqualification of the administrative law judge.

    An administrative law judge shall not conduct a hearing if he or she 
is prejudiced or partial with respect to any party or has any interest 
in the matter pending for decision. If you object to the administrative 
law judge who will conduct the hearing, you must notify the 
administrative law judge at your earliest opportunity. The 
administrative law judge shall consider your objections and shall decide 
whether to proceed with the hearing or withdraw. If he or she withdraws, 
the Associate Commissioner for Hearings and Appeals, or his or her 
delegate, will appoint another administrative law judge to conduct the 
hearing. If the administrative law judge does not withdraw, you may, 
after the hearing, present your objections to the Appeals Council as 
reasons why the hearing decision should be revised or a new hearing held 
before another administrative law judge.



Sec. 416.1441  Prehearing case review.

    (a) General. After a hearing is requested but before it is held, we 
may, for the purposes of a prehearing case review, forward the case to 
the component of our office (including a State agency) that issued the 
determination being reviewed. That component will decide whether the 
determination may be revised. A revised determination may be wholly or 
partially favorable to you. A prehearing case review will not delay the 
scheduling of a hearing unless you agree to continue the review and 
delay the hearing. If the prehearing case review is not completed

[[Page 993]]

before the date of the hearing, the case will be sent to the 
administrative law judge unless a favorable revised determination is in 
process or you and the other parties to the hearing agree in writing to 
delay the hearing until the review is completed.
    (b) When a prehearing case review may be conducted. We may conduct a 
prehearing case review if--
    (1) Additional evidence is submitted;
    (2) There is an indication that additional evidence is available;
    (3) There is a change in the law or regulation; or
    (4) There is an error in the file or some other indication that the 
prior determination may be revised.
    (c) Notice of a prehearing revised determination. If we revise the 
determination in a prehearing case review, we shall mail written notice 
of the revised determination to all parties at their last known address. 
We will state the basis for the revised determination and advise all 
parties of their right to request a hearing on the revised determination 
within 60 days after the date of receiving this notice.
    (d) Revised determination wholly favorable. If the revised 
determination is wholly favorable to you, we shall tell you in the 
notice that the administrative law judge will dismiss the hearing 
request unless a party requests that the hearing proceed. A request to 
continue must be made in writing within 30 days after the date the 
notice of the revised determination is mailed.
    (e) Revised determination partially favorable. If the revised 
determination is partially favorable to you, we shall tell you in the 
notice what was not favorable. We shall also tell you that the hearing 
you requested will be held unless you, the parties to the revised 
determination and the parties to the hearing tell us that all parties 
agree to dismiss the hearing request.



Sec. 416.1442  Prehearing proceedings and decisions by attorney advisors.

    (a) General. After a hearing is requested but before it is held, an 
attorney advisor in our Office of Hearings and Appeals may conduct 
prehearing proceedings as set out in paragraph (c) of this section. If 
upon the completion of these proceedings, a decision that is wholly 
favorable to you and all other parties may be made, an attorney advisor, 
instead of an administrative law judge, may issue such a decision. The 
conduct of the prehearing proceedings by the attorney advisor will not 
delay the scheduling of a hearing. If the prehearing proceedings are not 
completed before the date of the hearing, the case will be sent to the 
administrative law judge unless a wholly favorable decision is in 
process or you and all other parties to the hearing agree in writing to 
delay the hearing until the proceedings are completed.
    (b) When prehearing proceedings may be conducted by an attorney 
advisor. An attorney advisor may conduct prehearing proceedings if you 
have filed a claim for SSI benefits based on disability and--
    (1) New and material evidence is submitted;
    (2) There is an indication that additional evidence is available;
    (3) There is a change in the law or regulations; or
    (4) There is an error in the file or some other indication that a 
wholly favorable decision may be issued.
    (c) Nature of the prehearing proceedings that may be conducted by an 
attorney advisor. As part of the prehearing proceedings, the attorney 
advisor, in addition to reviewing the existing record, may--
    (1) Request additional evidence that may be relevant to the claim, 
including medical evidence; and
    (2) If necessary to clarify the record for the purpose of 
determining if a wholly favorable decision is warranted, schedule a 
conference with the parties.
    (d) Notice of a decision by an attorney advisor. If the attorney 
advisor issues a wholly favorable decision under this section, we shall 
mail a written notice of the decision to all parties at their last known 
address. We shall state the basis for the decision and advise all 
parties that an administrative law judge will dismiss the hearing 
request unless a party requests that the hearing proceed. A request to 
proceed with the hearing must be made in writing within 30 days after 
the date the notice of the decision of the attorney advisor is mailed.

[[Page 994]]

    (e) Effect of actions under this section. If under this section, an 
administrative law judge dismisses a request for a hearing, the 
dismissal is binding in accordance with Sec. 416.1459 unless it is 
vacated by an administrative law judge or the Appeals Council pursuant 
to Sec. 416.1460. A decision made by an attorney advisor under this 
section is binding unless--
    (1) A party files a request to proceed with the hearing pursuant to 
paragraph (d) of this section and an administrative law judge makes a 
decision;
    (2) The Appeals Council reviews the decision on its own motion 
pursuant to Sec. 416.1469 as explained in paragraph (f)(3) of this 
section; or
    (3) The decision of the attorney advisor is revised under the 
procedures explained in Sec. 416.1487.
    (f) Ancillary provisions. For the purposes of the procedures 
authorized by this section, the regulations of part 416 shall apply to--
    (1) Authorize an attorney advisor to exercise the functions 
performed by an administrative law judge under Sec. Sec. 416.920a, 
416.927, and 416.946;
    (2) Define the term ``decision'' to include a decision made by an 
attorney advisor, as well as the decisions identified in Sec. 416.1401; 
and
    (3) Make the decision of an attorney advisor subject to review by 
the Appeals Council under Sec. 416.1469 if an administrative law judge 
dismisses the request for a hearing following issuance of the decision, 
and the Appeals Council decides to review the decision of the attorney 
advisor anytime within 60 days after the date of the dismissal.
    (g) Sunset provision. The provisions of this section will no longer 
be effective on April 2, 2001.

[60 FR 34132, June 30, 1995, as amended at 63 FR 35516, June 30, 1998; 
64 FR 13678, Mar. 22, 1999; 64 FR 51894, Sept. 27, 1999; 65 FR 16815, 
Mar. 30, 2000]



Sec. 416.1443  Responsibilities of the adjudication officer.

    (a)(1) General. Under the procedures set out in this section we will 
test modifications to the procedures we follow when you file a request 
for a hearing before an administrative law judge in connection with a 
claim for benefits based on disability where the question of whether you 
are under a disability as defined in Sec. Sec. 416.905 and 416.906 is 
at issue. These modifications will enable us to test the effect of 
having an adjudication officer be your primary point of contact after 
you file a hearing request and before you have a hearing with an 
administrative law judge. The tests may be conducted alone, or in 
combination with the tests of the modifications to the disability 
determination procedures which we conduct under Sec. 416.1406. The 
adjudication officer, working with you and your representative, if any, 
will identify issues in dispute, develop evidence, conduct informal 
conferences, and conduct any other prehearing proceeding as may be 
necessary. The adjudication officer has the authority to make a decision 
wholly favorable to you if the evidence so warrants. If the adjudication 
officer does not make a decision on your claim, your hearing request 
will be assigned to an administrative law judge for further proceedings.
    (2) Procedures for cases included in the tests. Prior to commencing 
tests of the adjudication officer position in selected site(s), we will 
publish a notice in the Federal Register. The notice will describe where 
the specific test site(s) will be and the duration of the test(s). We 
will also state whether the tests of the adjudication officer position 
in each site will be conducted alone, or in combination with the tests 
of the modifications to the disability determination procedures which we 
conduct under Sec. 416.1406. The individuals who participate in the 
test(s) will be assigned randomly to a test group in each site where the 
tests are conducted.
    (b)(1) Prehearing procedures conducted by an Adjudication Officer. 
When you file a request for a hearing before an administrative law judge 
in connection with a claim for benefits based on disability where the 
question of whether you are under a disability as defined in Sec. Sec. 
416.905 and 416.906 is at issue, the adjudication officer will conduct 
an interview with you. The interview may take place in person, by 
telephone, or by videoconference, as the adjudication officer determines 
is appropriate under the circumstances of your case. If you

[[Page 995]]

file a request for an extension of time to request a hearing in 
accordance with Sec. 416.1433(c), the adjudication officer may develop 
information on, and may decide where the adjudication officer issues a 
wholly favorable decision to you that you had good cause for missing the 
deadline for requesting a hearing. To determine whether you had good 
cause for missing the deadline, the adjudication officer will use the 
standards contained in Sec. 416.1411.
    (2) Representation. The adjudication officer will provide you with 
information regarding the hearing process, including your right to 
representation. As may be appropriate, the adjudication officer will 
provide you with referral sources for representation, and give you 
copies of necessary documents to facilitate the appointment of a 
representative. If you have a representative, the adjudication officer 
will conduct an informal conference with the representative, in person 
or by telephone, to identify the issues in dispute and prepare proposed 
written agreements for the approval of the administrative law judge 
regarding those issues which are not in dispute and those issues 
proposed for the hearing. If you decide to proceed without 
representation, the adjudication officer may hold an informal conference 
with you. If you obtain representation after the adjudication officer 
has concluded that your case is ready for a hearing, the administrative 
law judge will return your case to the adjudication officer who will 
conduct an informal conference with you and your representative.
    (3) Evidence. You, or your representative, may submit, or may be 
asked to obtain and submit, additional evidence to the adjudication 
officer. As the adjudication officer determines is appropriate under the 
circumstances of your case, the adjudication officer may refer the claim 
for further medical or vocational evidence.
    (4) Referral for a hearing. The adjudication officer will refer the 
claim to the administrative law judge for further proceedings when the 
development of evidence is complete, and you or your representative 
agree that a hearing is ready to be held. If you or your representative 
are unable to agree with the adjudication officer that the development 
of evidence is complete, the adjudication officer will note your 
disagreement and refer the claim to the administrative law judge for 
further proceedings. At this point, the administrative law judge 
conducts all further hearing proceedings, including scheduling and 
holding a hearing, (Sec. 416.1436), considering any additional evidence 
or arguments submitted (Sec. Sec. 416.1435, 416.1444, 416.1449, 
416.1450), and issuing a decision or dismissal of your request for a 
hearing, as may be appropriate (Sec. Sec. 416.1448, 416.1453, 
416.1457). In addition, if the administrative law judge determines on or 
before the date of your hearing that the development of evidence is not 
complete, the administrative law judge may return the claim to the 
adjudication officer to complete the development of the evidence and for 
such other action as necessary.
    (c)(1) Wholly favorable decisions issued by an adjudication officer. 
If, after a hearing is requested but before it is held, the adjudication 
officer decides that the evidence in your case warrants a decision which 
is wholly favorable to you, the adjudication officer may issue such a 
decision. For purposes of the tests authorized under this section, the 
adjudication officer's decision shall be considered to be a decision as 
defined in Sec. 416.1401. If the adjudication officer issues a decision 
under this section, it will be in writing and will give the findings of 
fact and the reasons for the decision. The adjudication officer will 
evaluate the issues relevant to determining whether or not you are 
disabled in accordance with the provisions of the Social Security Act, 
the rules in this part and part 422 of this chapter and applicable 
Social Security Rulings. For cases in which the adjudication officer 
issues a decision, he or she may determine your residual functional 
capacity in the same manner that an administrative law judge is 
authorized to do so in Sec. 416.946. The adjudication officer may also 
evaluate the severity of your mental impairments in the same manner that 
an administrative law judge is authorized to do so under Sec. 416.920a. 
The adjudication officer's decision will be based on the evidence which 
is included in the record and, subject to paragraph (c)(2)

[[Page 996]]

of this section, will complete the actions that will be taken on your 
request for hearing. A copy of the decision will be mailed to all 
parties at their last known address. We will tell you in the notice that 
the administrative law judge will not hold a hearing unless a party to 
the hearing requests that the hearing proceed. A request to proceed with 
the hearing must be made in writing within 30 days after the date the 
notice of the decision of the adjudication officer is mailed.
    (2) Effect of a decision by an adjudication officer. A decision by 
an adjudication officer which is wholly favorable to you under this 
section, and notification thereof, completes the administrative action 
on your request for hearing and is binding on all parties to the hearing 
and not subject to further review, unless--
    (i) You or another party requests that the hearing continue, as 
provided in paragraph (c)(1) of this section;
    (ii) The Appeals Council decides to review the decision on its own 
motion under the authority provided in Sec. 416.1469;
    (iii) The decision is revised under the procedures explained in 
Sec. Sec. 416.1487 through 416.1489; or
    (iv) In a case remanded by a Federal court, the Appeals Council 
assumes jurisdiction under the procedures in Sec. 416.1484.
    (3) Fee for a representative's services. The adjudication officer 
may authorize a fee for your representative's services if the 
adjudication officer makes a decision on your claim that is wholly 
favorable to you, and you are represented. The actions of, and any fee 
authorization made by, the adjudication officer with respect to 
representation will be made in accordance with the provisions of subpart 
O of this part.
    (d) Who may be an adjudication officer. The adjudication officer 
described in this section may be an employee of the Social Security 
Administration or a State agency that makes disability determinations 
for us.

[60 FR 47476, Sept. 13, 1995]

               Administrative Law Judge Hearing Procedures



Sec. 416.1444  Administrative law judge hearing procedures--general.

    A hearing is open to the parties and to other persons the 
administrative law judge considers necessary and proper. At the hearing 
the administrative law judge looks fully into the issues, questions you 
and the other witnesses, and accepts as evidence any documents that are 
material to the issues. The administrative law judge may stop the 
hearing temporarily and continue it at a later date if he or she 
believes that there is material evidence missing at the hearing. The 
administrative law judge may also reopen the hearing at any time before 
he or she mails a notice of the decision in order to receive new and 
material evidence. The administrative law judge may decide when the 
evidence will be presented and when the issues will be discussed.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 307, Jan. 3, 1986]



Sec. 416.1446  Issues before an administrative law judge.

    (a) General. The issues before the administrative law judge include 
all the issues brought out in the initial, reconsidered or revised 
determination that were not decided entirely in your favor. However, if 
evidence presented before or during the hearing causes the 
administrative law judge to question a fully favorable determination, he 
or she will notify you and will consider it an issue at the hearing.
    (b) New issues--(1) General. The administrative law judge may 
consider a new issue at the hearing if he or she notifies you and all 
the parties about the new issue any time after receiving the hearing 
request and before mailing notice of the hearing decision. The 
administrative law judge or any party may raise a new issue; an issue 
may be raised even though it arose after the request for a hearing and 
even though it has not been considered in an initial or reconsidered 
determination. However, it may not be raised if it involves a claim that 
is within the jurisdiction

[[Page 997]]

of a State agency under a Federal-State agreement concerning the 
determination of disability.
    (2) Notice of a new issue. The administrative law judge shall notify 
you and any other party if he or she will consider any new issue. Notice 
of the time and place of the hearing on any new issues will be given in 
the manner described in Sec. 416.1438, unless you have indicated in 
writing that you do not wish to receive the notice.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 307, Jan. 3, 1986]



Sec. 416.1448  Deciding a case without an oral hearing before an 
administrative law judge.

    (a) Decision wholly favorable. If the evidence in the hearing record 
supports a finding in favor of you and all the parties on every issue, 
the administrative law judge may issue a hearing decision without 
holding an oral hearing. However, the notice of the decision will inform 
you that you have the right to an oral hearing and that you have a right 
to examine the evidence on which the decision is based.
    (b) Parties do not wish to appear. (1) The administrative law judge 
may decide a case on the record and not conduct an oral hearing if--
    (i) You and all the parties indicate in writing that you do not wish 
to appear before the administrative law judge at an oral hearing; or
    (ii) You live outside the United States and you do not inform us 
that you want to appear and there are no other parties who wish to 
appear.
    (2) When an oral hearing is not held, the administrative law judge 
shall make a record of the material evidence. The record will include 
the applications, written statements, certificates, reports, affidavits, 
and other documents which were used in making the determination under 
review and any additional evidence you or any other party to the hearing 
present in writing. The decision of the administrative law judge must be 
based on this record.
    (c) Case remanded for a revised determination. (1) The 
administrative law judge may remand a case to the appropriate component 
of our office for a revised determination if there is reason to believe 
that the revised determination would be fully favorable to you. This 
could happen if the administrative law judge receives new and material 
evidence or if there is a change in the law that permits the favorable 
determination.
    (2) Unless you request the remand the administrative law judge shall 
notify you that your case has been remanded and tell you that if you 
object, you must notify him or her of your objections within 10 days of 
the date the case is remanded or we will assume that you agree to the 
remand. If you object to the remand, the administrative law judge will 
consider the objection and rule on it in writing.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 307, Jan. 3, 1986]



Sec. 416.1449  Presenting written statements and oral arguments.

    You or a person you designate to act as your representative may 
appear before the administrative law judge to state your case, to 
present a written summary of your case, or to enter written statements 
about the facts and law material to your case into the record. A copy of 
your written statements should be filed for each party.



Sec. 416.1450  Presenting evidence at a hearing before an administrative 
law judge.

    (a) The right to appear and present evidence. Any party to a hearing 
has a right to appear before the administrative law judge, either in 
person or, when the conditions in Sec. 416.1436(c) exist, by video 
teleconferencing, to present evidence and to state his or her position. 
A party may also make his or her appearance by means of a designated 
representative, who may make the appearance in person or by video 
teleconferencing.
    (b) Waiver of the right to appear. You may send the administrative 
law judge a waiver or a written statement indicating that you do not 
wish to appear at the hearing. You may withdraw this waiver any time 
before a notice of the hearing decision is mailed to you. Even if all of 
the parties waive their right to appear at a hearing, the administrative 
law judge may notify them of a time and a place for an oral hearing, if 
he or

[[Page 998]]

she believes that a personal appearance and testimony by you or any 
other party is necessary to decide the case.
    (c) What evidence is admissible at a hearing. The administrative law 
judge may receive evidence at the hearing even though the evidence would 
not be admissible in court under the rules of evidence used by the 
court.
    (d) Subpoenas. (1) When it is reasonably necessary for the full 
presentation of a case, an administrative law judge or a member of the 
Appeals Council may, on his or her own initiative or at the request of a 
party, issue subpoenas for the appearance and testimony of witnesses and 
for the production of books, records, correspondence, papers, or other 
documents that are material to an issue at the hearing.
    (2) Parties to a hearing who wish to subpoena documents or witnesses 
must file a written request for the issuance of a subpoena with the 
administrative law judge or at one of our offices at least 5 days before 
the hearing date. The written request must give the names of the 
witnesses or documents to be produced; describe the address or location 
of the witnesses or documents with sufficient detail to find them; state 
the important facts that the witness or document is expected to prove; 
and indicate why these facts could not be proven without issuing a 
subpoena.
    (3) We will pay the cost of issuing the subpoena.
    (4) We will pay subpoenaed witnesses the same fees and mileage they 
would receive if they had been subpoenaed by a Federal district court.
    (e) Witnesses at a hearing. Witnesses may appear at a hearing in 
person or, when the conditions in Sec. 416.1436(c) exist, video 
teleconferencing. They shall testify under oath or affirmation, unless 
the administrative law judge finds an important reason to excuse them 
from taking an oath or affirmation. The administrative law judge may ask 
the witnesses any questions material to the issues and shall allow the 
parties or their designated representatives to do so.
    (f) Collateral estoppel--issues previously decided. An issue at your 
hearing may be a fact that has already been decided in one of our 
previous determinations or decisions in a claim involving the same 
parties, but arising under a different title of the Act or under the 
Federal Coal Mine Health and Safety Act. If this happens, the 
administrative law judge will not consider the issue again, but will 
accept the factual finding made in the previous determination or 
decision unless there are reasons to believe that it was wrong.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 307, Jan. 3, 1986; 68 FR 
5221, Feb. 3, 2003]



Sec. 416.1451  When a record of a hearing before an administrative law 
judge is made.

    The administrative law judge shall make a complete record of the 
hearing proceedings. The record will be prepared as a typed copy of the 
proceedings if--
    (a) The case is sent to the Appeals Council without a decision or 
with a recommended decision by the administrative law judge;
    (b) You seek judicial review of your case by filing an action in a 
Federal district court within the stated time period, unless we request 
the court to remand the case; or
    (c) An administrative law judge or the Appeals Council asks for a 
written record of the proceedings.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 308, Jan. 3, 1986]



Sec. 416.1452  Consolidated hearings before an administrative law judge.

    (a) General. (1) A consolidated hearing may be held if--
    (i) You have requested a hearing to decide your eligibility for 
supplemental security income benefits and you have also requested a 
hearing to decide your rights under another law we administer; and
    (ii) One or more of the issues to be considered at the hearing you 
requested are the same issues that are involved in another claim you 
have pending before us.
    (2) If the administrative law judge decides to hold the hearing on 
both claims, he or she decides both claims, even if we have not yet made 
an initial or reconsidered determination on the other claim.
    (b) Record, evidence, and decision. There will be a single record at 
a consolidated hearing. This means that the

[[Page 999]]

evidence introduced in one case becomes evidence in the other(s). The 
administrative law judge may make either a separate or consolidated 
decision.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 308, Jan. 3, 1986]



Sec. 416.1453  The decision of an administrative law judge.

    (a) General. The administrative law judge shall issue a written 
decision which gives the findings of fact and the reasons for the 
decision. The decision must be based on evidence offered at the hearing 
or otherwise included in the record. The administrative law judge shall 
mail a copy of the decision to all the parties at their last known 
address. The Appeals Council may also receive a copy of the decision.
    (b) Time for the administrative law judge's decision. (1) The 
administrative law judge must issue the hearing decision no later than 
90 days after the request for hearing is filed, unless--
    (i) The matter to be decided is whether you are disabled; or
    (ii) There is good cause for extending the time period because of 
unavoidable circumstances.
    (2) Good cause for extending the time period may be found under the 
following circumstances:
    (i) Delay caused by you or by your representative's action. The time 
period for decision in this instance may be extended by the total number 
of days of the delays. The delays include delays in submitting evidence, 
briefs, or other statements, postponements or adjournments made at your 
request, and any other delays caused by you or your representative.
    (ii) Other delays. The time period for decision may be extended 
where delays occur through no fault of the Commissioner. In this 
instance, the decision will be issued as soon as practicable.
    (c) Recommended decision. Although an administrative law judge will 
usually make a decision, he or she may send the case to the Appeals 
Council with a recommended decision where appropriate. The 
administrative law judge will mail a copy of the recommended decision to 
the parties at their last known addresses and send the recommended 
decision to the Appeals Council.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 308, Jan. 3, 1986; 54 FR 
37793, Sept. 13, 1989; 62 FR 38455, July 18, 1997]



Sec. 416.1455  The effect of an administrative law judge's decision.

    The decision of the administrative law judge is binding on all 
parties to the hearing unless--
    (a) You or another party request a review of the decision by the 
Appeals Council within the stated time period, and the Appeals Council 
reviews your case;
    (b) You or another party requests a review of the decision by the 
Appeals Council within the stated time period, the Appeals Council 
denies your request for review, and you seek judicial review of your 
case by filing an action in a Federal district court;
    (c) The decision is revised by an administrative law judge or the 
Appeals Council under the procedures explained in Sec. 416.1487;
    (d) The expedited appeals process is used;
    (e) The decision is a recommended decision directed to the Appeals 
Council; or
    (f) In a case remanded by a Federal court, the Appeals Council 
assumes jurisdiction under the procedures in Sec. 416.1484.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 308, Jan. 3, 1986; 54 FR 
37793, Sept. 13, 1989]



Sec. 416.1456  Removal of a hearing request from an administrative law 
judge to the Appeals Council.

    If you have requested a hearing and the request is pending before an 
administrative law judge, the Appeals Council may assume responsibility 
for holding a hearing by requesting that the administrative law judge 
send the hearing request to it. If the Appeals Council holds a hearing, 
it shall conduct the hearing according to the rules for hearings before 
an administrative law judge. Notice shall be mailed to all parties at 
their last known address telling them that the Appeals Council

[[Page 1000]]

has assumed responsibility for the case.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 308, Jan. 3, 1986]



Sec. 416.1457  Dismissal of a request for a hearing before an administrative 
law judge.

    An administrative law judge may dismiss a request for a hearing 
under any of the following conditions:
    (a) At any time before notice of the hearing decision is mailed, you 
or the party or parties that requested the hearing ask to withdraw the 
request. This request may be submitted in writing to the administrative 
law judge or made orally at the hearing.
    (b)(1)(i) Neither you nor the person you designate to act as your 
representative appears at the time and place set for the hearing and you 
have been notified before the time set for the hearing that your request 
for a hearing may be dismissed without further notice if you did not 
appear at the time and place of hearing, and good cause has not been 
found by the administrative law judge for your failure to appear; or
    (ii) Neither you nor the person you designate to act as your 
representative appears at the time and place set for the hearing and 
within 10 days after the administrative law judge mails you a notice 
asking why you did not appear, you do not give a good reason for the 
failure to appear.
    (2) In determining good cause or good reason under this paragraph, 
we will consider any physical, mental, educational, or linguistic 
limitations (including any lack of facility with the English language) 
which you may have.
    (c) The administrative law judge decides that there is cause to 
dismiss a hearing request entirely or to refuse to consider any one or 
more of the issues because--
    (1) The doctrine of res judicata applies in that we have made a 
previous determination or decision under this subpart about your rights 
on the same facts and on the same issue or issues, and this previous 
determination or decision has become final by either administrative or 
judicial action;
    (2) The person requesting a hearing has no right to it under Sec. 
416.1430;
    (3) You did not request a hearing within the stated time period and 
we have not extended the time for requesting a hearing under Sec. 
416.1433(c); or
    (4) You die, there are no other parties, and we have no information 
to show that you may have a survivor who may be paid benefits due to you 
under Sec. 416.542(b) and who wishes to pursue the request for hearing, 
or that you authorized interim assistance reimbursement to a State 
pursuant to section 1631(g) of the Act. The administrative law judge, 
however, will vacate a dismissal of the hearing request if, within 60 
days after the date of the dismissal:
    (i) A person claiming to be your survivor, who may be paid benefits 
due to you under Sec. 416.542(b), submits a written request for a 
hearing, and shows that a decision on the issues that were to be 
considered at the hearing may adversely affect him or her; or
    (ii) We receive information showing that you authorized interim 
assistance reimbursement to a State pursuant to section 1631(g) of the 
Act.

[45 FR 52096, Aug. 5, 1980, as amended at 50 FR 21439, May 24, 1985; 51 
FR 308, Jan. 3, 1986; 58 FR 52913, Oct. 13, 1993; 59 FR 1637, Jan. 12, 
1994]



Sec. 416.1458  Notice of dismissal of a request for a hearing before an 
administrative law judge.

    We shall mail a written notice of the dismissal of the hearing 
request to all parties at their last known address. The notice will 
state that there is a right to request that the Appeals Council vacate 
the dismissal action.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 308, Jan. 3, 1986]



Sec. 416.1459  Effect of dismissal of a request for a hearing before an 
administrative law judge.

    The dismissal of a request for a hearing is binding, unless it is 
vacated by an administrative law judge or the Appeals Council.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 308, Jan. 3, 1986]

[[Page 1001]]



Sec. 416.1460  Vacating a dismissal of a request for a hearing before an 
administrative law judge.

    An administrative law judge or the Appeals Council may vacate any 
dismissal of a hearing request if, within 60 days after the date you 
receive the dismissal notice, you request that the dismissal be vacated 
and show good cause why the hearing request should not have been 
dismissed. The Appeals Council itself may decide within 60 days after 
the notice of dismissal is mailed to vacate the dismissal. The Appeals 
Council shall advise you in writing of any action it takes.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 308, Jan. 3, 1986]



Sec. 416.1461  Prehearing and posthearing conferences.

    The administrative law judge may decide on his or her own, or at the 
request of any party to the hearing, to hold a prehearing or posthearing 
conference to facilitate the hearing or the hearing decision. The 
administrative law judge shall tell the parties of the time, place and 
purpose of the conference at least seven days before the conference 
date, unless the parties have indicated in writing that they do not wish 
to receive a written notice of the conference. At the conference, the 
administrative law judge may consider matters in addition to those 
stated in the notice, if the parties consent in writing. A record of the 
conference will be made. The administrative law judge shall issue an 
order stating all agreements and actions resulting from the conference. 
If the parties do not object, the agreements and actions become part of 
the hearing record and are binding on all parties.



Sec. 416.1465  [Reserved]

                         Appeals Council Review



Sec. 416.1466  Testing elimination of the request for Appeals Council review.

    (a) Applicability and scope. Notwithstanding any other provision in 
this part or part 422 of this chapter, we are establishing the 
procedures set out in this section to test elimination of the request 
for review by the Appeals Council. These procedures will apply in 
randomly selected cases in which we have tested a combination of model 
procedures for modifying the disability claim process as authorized 
under Sec. Sec. 416.1406 and 416.1443, and in which an administrative 
law judge has issued a decision (not including a recommended decision) 
that is less than wholly favorable to you.
    (b) Effect of an administrative law judge's decision. In a case to 
which the procedures of this section apply, the decision of an 
administrative law judge will be binding on all the parties to the 
hearing unless--
    (1) You or another party file an action concerning the decision in 
Federal district court;
    (2) The Appeals Council decides to review the decision on its own 
motion under the authority provided in Sec. 416.1469, and it issues a 
notice announcing its decision to review the case on its own motion no 
later than the day before the filing date of a civil action establishing 
the jurisdiction of a Federal district court; or
    (3) The decision is revised by the administrative law judge or the 
Appeals Council under the procedures explained in Sec. 416.1487.
    (c) Notice of the decision of an administrative law judge. The 
notice of decision the administrative law judge issues in a case 
processed under this section will advise you and any other parties to 
the decision that you may file an action in a Federal district court 
within 60 days after the date you receive notice of the decision.
    (d) Extension of time to file action in Federal district court. Any 
party having a right to file a civil action under this section may 
request that the time for filing an action in Federal district court be 
extended. The request must be in writing and it must give the reasons 
why the action was not filed within the stated time period. The request 
must be filed with the Appeals Council. If you show that you had good 
cause for missing the deadline, the time period will be extended. To 
determine whether good cause exists, we will use the standards in Sec. 
416.1411.

[62 FR 49603, Sept. 23, 1997]

[[Page 1002]]



Sec. 416.1467  Appeals Council review--general.

    If you or any other party is dissatisfied with the hearing decision 
or with the dismissal of a hearing request, you may request that the 
Appeals Council review that action. The Appeals Council may deny or 
dismiss the request for review, or it may grant the request and either 
issue a decision or remand the case to an administrative law judge. The 
Appeals Council shall notify the parties at their last known address of 
the action it takes.



Sec. 416.1468  How to request Appeals Council review.

    (a) Time and place to request Appeals Council review. You may 
request Appeals Council review by filing a written request. Any 
documents or other evidence you wish to have considered by the Appeals 
Council should be submitted with your request for review. You may file 
your request at one of our offices within 60 days after the date you 
receive notice of the hearing decision or dismissal (or within the 
extended time period if we extend the time as provided in paragraph (b) 
of this section).
    (b) Extension of time to request review. You or any party to a 
hearing decision may ask that the time for filing a request for the 
review be extended. The request for an extension of time must be in 
writing. It must be filed with the Appeals Council, and it must give the 
reasons why the request for review was not filed within the stated time 
period. If you show that you had good cause for missing the deadline, 
the time period will be extended. To determine whether good cause 
exists, we use the standards explained in Sec. 416.1411.



Sec. 416.1469  Appeals Council initiates review.

    (a) General. Anytime within 60 days after the date of a decision or 
dismissal that is subject to review under this section, the Appeals 
Council may decide on its own motion to review the action that was taken 
in your case. We may refer your case to the Appeals Council for it to 
consider reviewing under this authority.
    (b) Identification of cases. We will identify a case for referral to 
the Appeals Council for possible review under its own-motion authority 
before we effectuate a decision in the case. We will identify cases for 
referral to the Appeals Council through random and selective sampling 
techniques, which we may use in association with examination of the 
cases identified by sampling. We will also identify cases for referral 
to the Appeals Council through the evaluation of cases we conduct in 
order to effectuate decisions.
    (1) Random and selective sampling and case examinations. We may use 
random and selective sampling to identify cases involving any type of 
action (i.e., wholly or partially favorable decisions, unfavorable 
decisions, or dismissals) and any type of benefits (i.e., benefits based 
on disability and benefits not based on disability). We will use 
selective sampling to identify cases that exhibit problematic issues or 
fact patterns that increase the likelihood of error. Neither our random 
sampling procedures nor our selective sampling procedures will identify 
cases based on the identity of the decisionmaker or the identity of the 
office issuing the decision. We may examine cases that have been 
identified through random or selective sampling to refine the 
identification of cases that may meet the criteria for review by the 
Appeals Council.
    (2) Identification as a result of the effectuation process. We may 
refer a case requiring effectuation to the Appeals Council if, in the 
view of the effectuating component, the decision cannot be effectuated 
because it contains a clerical error affecting the outcome of the claim; 
the decision is clearly inconsistent with the Social Security Act, the 
regulations, or a published ruling; or the decision is unclear regarding 
a matter that affects the claim's outcome.
    (c) Referral of cases. We will make referrals that occur as the 
result of a case examination or the effectuation process in writing. The 
written referral based on the results of such a case examination or the 
effectuation process will state the referring component's reasons for 
believing that the Appeals Council should review the case on its own 
motion. Referrals that result from

[[Page 1003]]

selective sampling without a case examination may be accompanied by a 
written statement identifying the issue(s) or fact pattern that caused 
the referral. Referrals that result from random sampling without a case 
examination will only identify the case as a random sample case.
    (d) Appeals Council's action. If the Appeals Council decides to 
review a decision or dismissal on its own motion, it will mail a notice 
of review to all the parties as provided in Sec. 416.1473. The Appeals 
Council will include with that notice a copy of any written referral it 
has received under paragraph (c) of this section. The Appeals Council's 
decision to review a case is established by its issuance of the notice 
of review. If it is unable to decide within the applicable 60-day period 
whether to review a decision or dismissal, the Appeals Council may 
consider the case to determine if the decision or dismissal should be 
reopened pursuant to Sec. Sec. 416.1487 and 416.1488. If the Appeals 
Council decides to review a decision on its own motion or to reopen a 
decision as provided in Sec. Sec. 416.1487 and 416.1488, the notice of 
review or the notice of reopening issued by the Appeals Council will 
advise, where appropriate, that interim benefits will be payable if a 
final decision has not been issued within 110 days after the date of the 
decision that is reviewed or reopened, and that any interim benefits 
paid will not be considered overpayments unless the benefits are 
fraudulently obtained.

[63 FR 36571, July 7, 1998]



Sec. 416.1470  Cases the Appeals Council will review.

    (a) The Appeals Council will review a case if--
    (1) There appears to be an abuse of discretion by the administrative 
law judge;
    (2) There is an error of law;
    (3) The action, findings or conclusions of the administrative law 
judge are not supported by substantial evidence; or
    (4) There is a broad policy or procedural issue that may affect the 
general public interest.
    (b) In reviewing decisions based on an application for benefits, if 
new and material evidence is submitted, the Appeals Council shall 
consider the additional evidence only where it relates to the period on 
or before the date of the administrative law judge hearing decision. In 
reviewing decisions other than those based on an application for 
benefits, the Appeals Council shall evaluate the entire record including 
any new and material evidence submitted. It will then review the case if 
it finds that the administrative law judge's action, findings, or 
conclusion is contrary to the weight of the evidence currently of 
record.

[45 FR 52096, Aug. 5, 1980, as amended at 52 FR 4004, Feb. 9, 1987]



Sec. 416.1471  Dismissal by Appeals Council.

    The Appeals Council will dismiss your request for review if you did 
not file your request within the stated period of time and the time for 
filing has not been extended. The Appeals Council may also dismiss any 
proceedings before it if--
    (a) You and any other party to the proceedings files a written 
request for dismissal; or
    (b) You die, there are no other parties, and we have no information 
to show that you may have a survivor who may be paid benefits due to you 
under Sec. 416.542(b) and who wishes to pursue the request for review, 
or that you authorized interim assistance reimbursement to a State 
pursuant to section 1631(g) of the Act. The Appeals Council, however, 
will vacate a dismissal of the request for review if, within 60 days 
after the date of the dismissal:
    (1) A person claiming to be your survivor, who may be paid benefits 
due to you under Sec. 416.542(b), submits a written request for review, 
and shows that a decision on the issues that were to be considered on 
review may adversely affect him or her; or
    (2) We receive information showing that you authorized interim 
assistance reimbursement to a State pursuant to section 1631(g) of the 
Act.

[45 FR 52096, Aug. 5, 1980, as amended at 58 FR 52914, Oct. 13, 1993]

[[Page 1004]]



Sec. 416.1472  Effect of dismissal of request for Appeals Council review.

    The dismissal of a request for Appeals Council review is binding and 
not subject to further review.



Sec. 416.1473  Notice of Appeals Council review.

    When the Appeals Council decides to review a case, it shall mail a 
notice to all parties at their last known address stating the reasons 
for the review and the issues to be considered.



Sec. 416.1474  Obtaining evidence from Appeals Council.

    You may request and receive copies or a statement of the documents 
or other written evidence upon which the hearing decision or dismissal 
was based and a copy or summary of the transcript of oral evidence. 
However, you will be asked to pay the costs of providing these copies 
unless there is a good reason why you should not pay.



Sec. 416.1475  Filing briefs with the Appeals Council.

    Upon request, the Appeals Council shall give you and all other 
parties a reasonable opportunity to file briefs or other written 
statements about the facts and law relevant to the case. A copy of each 
brief or statement should be filed for each party.



Sec. 416.1476  Procedures before Appeals Council on review.

    (a) Limitation of issues. The Appeals Council may limit the issues 
it considers if it notifies you and the other parties of the issues it 
will review.
    (b) Evidence. (1) In reviewing decisions based on an application for 
benefits, the Appeals Council will consider the evidence in the 
administrative law judge hearing record and any new and material 
evidence only if it relates to the period on or before the date of the 
administrative law judge hearing decision. If you submit evidence which 
does not relate to the period on or before the date of the 
administrative law judge hearing decision, the Appeals Council will 
return the additional evidence to you with an explanation as to why it 
did not accept the additional evidence and will advise you of your right 
to file a new application. The notice returning the evidence to you will 
also advise you that if you file an application within 60 days after the 
date of the Appeals Council's notice, your request for review will 
constitute a written statement indicating an intent to claim benefits in 
accordance with Sec. 416.340. If a new application is filed within 60 
days of this notice, the date of the request for review will be used as 
the filing date for your application.
    (2) In reviewing decisions other than those based on an application 
for benefits, the Appeals Council will consider the evidence in the 
administrative law judge hearing record and any additional evidence it 
believes is material to an issue being considered.
    (3) If additional evidence is needed, the Appeals Council may remand 
the case to an administrative law judge to receive evidence and issue a 
new decision. However, if the Appeals Council decides that it can obtain 
the evidence more quickly, it may do so, unless it will adversely affect 
your rights.
    (c) Oral argument. You may request to appear before the Appeals 
Council to present oral argument. The Appeals Council will grant your 
request if it decides that your case raises an important question of law 
or policy or that oral argument would help to reach a proper decision. 
If your request to appear is granted, the Appeals Council will tell you 
the time and place of the oral argument at least 10 days before the 
scheduled date.

[45 FR 52096, Aug. 5, 1980, as amended at 52 FR 4004, Feb. 9, 1987]



Sec. 416.1477  Case remanded by Appeals Council.

    (a) When the Appeals Council may remand a case. The Appeals Council 
may remand a case to an administrative law judge so that he or she may 
hold a hearing and issue a decision or a recommended decision. The 
Appeals Council may also remand a case in which additional evidence is 
needed or additional action by the administrative law judge is required.
    (b) Action by administrative law judge on remand. The administrative 
law judge shall take any action that is ordered by the Appeals Council 
and may take any additional action that is not

[[Page 1005]]

inconsistent with the Appeals Council's remand order.
    (c) Notice when case is returned with a recommended decision. When 
the administrative law judge sends a case to the Appeals Council with a 
recommended decision, a notice is mailed to the parties at their last 
known address. The notice tells them that the case has been sent to the 
Appeals Council, explains the rules for filing briefs or other written 
statements with the Appeals Council, and includes a copy of the 
recommended decision.
    (d) Filing briefs with and obtaining evidence from the Appeals 
Council. (1) You may file briefs or other written statements about the 
facts and law relevant to your case with the Appeals Council within 20 
days of the date that the recommended decision is mailed to you. Any 
party may ask the Appeals Council for additional time to file briefs or 
statements. The Appeals Council will extend this period, as appropriate, 
if you show that you had good cause for missing the deadline.
    (2) All other rules for filing briefs with and obtaining evidence 
from the Appeals Council follow the procedures explained in this 
subpart.
    (e) Procedures before the Appeals Council. (1) The Appeals Council 
after receiving a recommended decision will conduct its proceedings and 
issue its decision according to the procedures explained in this 
subpart.
    (2) If the Appeals Council believes that more evidence is required, 
it may again remand the case to an administrative law judge for further 
inquiry into the issues, rehearing, receipt of evidence, and another 
decision or recommended decision. However, if the Appeals Council 
decides that it can get the additional evidence more quickly, it will 
take appropriate action.



Sec. 416.1479  Decision of Appeals Council.

    After it has reviewed all the evidence in the administrative law 
judge hearing record and any additional evidence received, subject to 
the limitations on Appeals Council consideration of additional evidence 
in Sec. Sec. 416.1470(b) and 416.1476(b), the Appeals Council will make 
a decision or remand the case to an administrative law judge. The 
Appeals Council may affirm, modify or reverse the administrative law 
judge hearing decision or it may adopt, modify or reject a recommended 
decision. A copy of the Appeals Council's decision will be mailed to the 
parties at their last known address.

[52 FR 4005, Feb. 9, 1987]



Sec. 416.1481  Effect of Appeals Council's decision or denial of review.

    The Appeals Council may deny a party's request for review or it may 
decide to review a case and make a decision. The Appeals Council's 
decision, or the decision of the administrative law judge if the request 
for review is denied, is binding unless you or another party file an 
action in Federal district court, or the decision is revised. You may 
file an action in a Federal district court within 60 days after the date 
you receive notice of the Appeals Council's action.



Sec. 416.1482  Extension of time to file action in Federal district court.

    Any party to the Appeals Council's decision or denial of review, or 
to an expedited appeals process agreement, may request that the time for 
filing an action in a Federal district court be extended. The request 
must be in writing and it must give the reasons why the action was not 
filed within the stated time period. The request must be filed with the 
Appeals Council, or if it concerns an expedited appeals process 
agreement, with one of our offices. If you show that you had good cause 
for missing the deadline, the time period will be extended. To determine 
whether good cause exists, we use the standards explained in Sec. 
416.1411.

                           Court Remand Cases



Sec. 416.1483  Case remanded by a Federal court.

    When a Federal court remands a case to the Commissioner for further 
consideration, the Appeals Council, acting on behalf of the 
Commissioner, may make a decision, or it may remand the case to an 
administrative law judge with instructions to take action and issue a 
decision or return the case to the Appeals Council with a recommended 
decision. If the case is remanded by the Appeals Council, the

[[Page 1006]]

procedures explained in Sec. 416.1477 will be followed. Any issues 
relating to your claim may be considered by the administrative law judge 
whether or not they were raised in the administrative proceedings 
leading to the final decision in your case.

[54 FR 37793, Sept. 13, 1989, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.1484  Appeals Council review of administrative law judge decision 
in a case remanded by a Federal court.

    (a) General. In accordance with Sec. 416.1483, when a case is 
remanded by a Federal court for further consideration, the decision of 
the administrative law judge will become the final decision of the 
Commissioner after remand on your case unless the Appeals Council 
assumes jurisdiction of the case. The Appeals Council may assume 
jurisdiction based on written exceptions to the decision of the 
administrative law judge which you file with the Appeals Council or 
based on its authority pursuant to paragraph (c) of this section. If the 
Appeals Council assumes jurisdiction of your case, any issues relating 
to your claim may be considered by the Appeals Council whether or not 
they were raised in the administrative proceedings leading to the final 
decision in your case or subsequently considered by the administrative 
law judge in the administrative proceedings following the court's remand 
order. The Appeals Council will either make a new, independent decision 
based on the entire record that will be the final decision of the 
Commissioner after remand or remand the case to an administrative law 
judge for further proceedings.
    (b) You file exceptions disagreeing with the decision of the 
administrative law judge. (1) If you disagree with the decision of the 
administrative law judge, in whole or in part, you may file exceptions 
to the decision with the Appeals Council. Exceptions may be filed by 
submitting a written statement to the Appeals Council setting forth your 
reasons for disagreeing with the decision of the administrative law 
judge. The exceptions must be filed within 30 days of the date you 
receive the decision of the administrative law judge or an extension of 
time in which to submit exceptions must be requested in writing within 
the 30-day period. A timely request for a 30-day extension will be 
granted by the Appeals Council. A request for an extension of more than 
30 days should include a statement of reasons as to why you need the 
additional time.
    (2) If written exceptions are timely filed, the Appeals Council will 
consider your reasons for disagreeing with the decision of the 
administrative law judge and all the issues presented by your case. If 
the Appeals Council concludes that there is no reason to change the 
decision of the administrative law judge, it will issue a notice to you 
addressing your exceptions and explaining why no change in the decision 
of the administrative law judge is warranted. In this instance, the 
decision of the administrative law judge is the final decision of the 
Commissioner after remand.
    (3) When you file written exceptions to the decision of the 
administrative law judge, the Appeals Council may assume jurisdiction at 
any time, even after the 60-day time period which applies when you do 
not file exceptions. If the Appeals Council assumes jurisdiction, it 
will make a new, independent decision based on its consideration of the 
entire record affirming, modifying, or reversing the decision of the 
administrative law judge or remand the case to an administrative law 
judge for further proceedings, including a new decision. The new 
decision of the Appeals Council is the final decision of the 
Commissioner after remand.
    (c) Appeals Council assumes jurisdiction without exceptions being 
filed. Any time within 60 days after the date of the decision of the 
administrative law judge, the Appeals Council may decide to assume 
jurisdiction of your case even though no written exceptions have been 
filed. Notice of this action will be mailed to all parties at their last 
known address. You will be provided with the opportunity to file briefs 
or other written statements with the Appeals Council about the facts and 
law relevant to your case. After the briefs or other written statements 
have been received or the time allowed (usually

[[Page 1007]]

30 days) for submitting them has expired, the Appeals Council will 
either issue a final decision of the Commissioner affirming, modifying, 
or reversing the decision of the administrative law judge, or remand the 
case to an administrative law judge for further proceedings, including a 
new decision.
    (d) Exceptions are not filed and the Appeals Council does not 
otherwise assume jurisdiction. If no exceptions are filed and the 
Appeals Council does not assume jurisdiction of your case, the decision 
of the administrative law judge becomes the final decision of the 
Commissioner after remand.

[54 FR 37793, Sept. 13, 1989, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.1485  Application of circuit court law.

    The procedures which follow apply to administrative determinations 
or decisions on claims involving the application of circuit court law.
    (a) General. We will apply a holding in a United States Court of 
Appeals decision that we determine conflicts with our interpretation of 
a provision of the Social Security Act or regulations unless the 
Government seeks further judicial review of that decision or we 
relitigate the issue presented in the decision in accordance with 
paragraphs (c) and (d) of this section. We will apply the holding to 
claims at all levels of the administrative review process within the 
applicable circuit unless the holding, by its nature, applies only at 
certain levels of adjudication.
    (b) Issuance of an Acquiescence Ruling. When we determine that a 
United States Court of Appeals holding conflicts with our interpretation 
of a provision of the Social Security Act or regulations and the 
Government does not seek further judicial review or is unsuccessful on 
further review, we will issue a Social Security Acquiescence Ruling. The 
Acquiescence Ruling will describe the administrative case and the court 
decision, identify the issue(s) involved, and explain how we will apply 
the holding, including, as necessary, how the holding relates to other 
decisions within the applicable circuit. These Acquiescence Rulings will 
generally be effective on the date of their publication in the Federal 
Register and will apply to all determinations, redeterminations, and 
decisions made on or after that date unless an Acquiescence Ruling is 
rescinded as stated in paragraph (e) of this section. The process we 
will use when issuing an Acquiescence Ruling follows:
    (1) We will release an Acquiescence Ruling for publication in the 
Federal Register for any precedential circuit court decision that we 
determine contains a holding that conflicts with our interpretation of a 
provision of the Social Security Act or regulations no later than 120 
days from the receipt of the court's decision. This timeframe will not 
apply when we decide to seek further judicial review of the circuit 
court decision or when coordination with the Department of Justice and/
or other Federal agencies makes this timeframe no longer feasible.
    (2) If we make a determination or decision on your claim between the 
date of a circuit court decision and the date we publish an Acquiescence 
Ruling, you may request application of the published Acquiescence Ruling 
to the prior determination or decision. You must demonstrate that 
application of the Acquiescence Ruling could change the prior 
determination or decision in your case. You may demonstrate this by 
submitting a statement that cites the Acquiescence Ruling or the holding 
or portion of a circuit court decision which could change the prior 
determination or decision in your case. If you can so demonstrate, we 
will readjudicate the claim in accordance with the Acquiescence Ruling 
at the level at which it was last adjudicated. Any readjudication will 
be limited to consideration of the issue(s) covered by the Acquiescence 
Ruling and any new determination or decision on readjudication will be 
subject to administrative and judicial review in accordance with this 
subpart. Our denial of a request for readjudication will not be subject 
to further administrative or judicial review. If you file a request for 
readjudication within the 60-day appeal period and we deny that request, 
we shall extend the time to file an appeal on the merits of the claim to 
60 days after the date that we deny the request for readjudication.

[[Page 1008]]

    (3) After we receive a precedential circuit court decision and 
determine that an Acquiescence Ruling may be required, we will begin to 
identify those claims that are pending before us within the circuit and 
that might be subject to readjudication if an Acquiescence Ruling is 
subsequently issued. When an Acquiescence Ruling is published, we will 
send a notice to those individuals whose cases we have identified which 
may be affected by the Acquiescence Ruling. The notice will provide 
information about the Acquiescence Ruling and the right to request 
readjudication under that Acquiescence Ruling, as described in paragraph 
(b)(2) of this section. It is not necessary for an individual to receive 
a notice in order to request application of an Acquiescence Ruling to 
his or her claim, as described in paragraph (b)(2) of this section.
    (c) Relitigation of court's holding after publication of an 
Acquiescence Ruling. After we have published an Acquiescence Ruling to 
reflect a holding of a United States Court of Appeals on an issue, we 
may decide under certain conditions to relitigate that issue within the 
same circuit. We may relitigate only when the conditions specified in 
paragraphs (c)(2) and (3) of this section are met, and, in general, one 
of the events specified in paragraph (c)(1) of this section occurs.
    (1) Activating events:
    (i) An action by both Houses of Congress indicates that a circuit 
court decision on which an Acquiescence Ruling was based was decided 
inconsistently with congressional intent, such as may be expressed in a 
joint resolution, an appropriations restriction, or enactment of 
legislation which affects a closely analogous body of law;
    (ii) A statement in a majority opinion of the same circuit indicates 
that the court might no longer follow its previous decision if a 
particular issue were presented again;
    (iii) Subsequent circuit court precedent in other circuits supports 
our interpretation of the Social Security Act or regulations on the 
issue(s) in question; or
    (iv) A subsequent Supreme Court decision presents a reasonable legal 
basis for questioning a circuit court holding upon which we base an 
Acquiescence Ruling.
    (2) The General Counsel of the Social Security Administration, after 
consulting with the Department of Justice, concurs that relitigation of 
an issue and application of our interpretation of the Social Security 
Act or regulations to selected claims in the administrative review 
process within the circuit would be appropriate.
    (3) We publish a notice in the Federal Register that we intend to 
relitigate an Acquiescence Ruling issue and that we will apply our 
interpretation of the Social Security Act or regulations within the 
circuit to claims in the administrative review process selected for 
relitigation. The notice will explain why we made this decision.
    (d) Notice of relitigation. When we decide to relitigate an issue, 
we will provide a notice explaining our action to all affected 
claimants. In adjudicating claims subject to relitigation, 
decisionmakers throughout the SSA administrative review process will 
apply our interpretation of the Social Security Act and regulations, but 
will also state in written determinations or decisions how the claims 
would have been decided under the circuit standard. Claims not subject 
to relitigation will continue to be decided under the Acquiescence 
Ruling in accordance with the circuit standard. So that affected 
claimants can be readily identified and any subsequent decision of the 
circuit court or the Supreme Court can be implemented quickly and 
efficiently, we will maintain a listing of all claimants who receive 
this notice and will provide them with the relief ordered by the court.
    (e) Rescission of an Acquiescence Ruling. We will rescind as 
obsolete an Acquiescence Ruling and apply our interpretation of the 
Social Security Act or regulations by publishing a notice in the Federal 
Register when any of the following events occurs:
    (1) The Supreme Court overrules or limits a circuit court holding 
that was the basis of an Acquiescence Ruling;
    (2) A circuit court overrules or limits itself on an issue that was 
the basis of an Acquiescence Ruling;

[[Page 1009]]

    (3) A Federal law is enacted that removes the basis for the holding 
in a decision of a circuit court that was the subject of an Acquiescence 
Ruling; or
    (4) We subsequently clarify, modify or revoke the regulation or 
ruling that was the subject of a circuit court holding that we 
determined conflicts with our interpretation of the Social Security Act 
or regulations, or we subsequently publish a new regulation(s) 
addressing an issue(s) not previously included in our regulations when 
that issue(s) was the subject of a circuit court holding that conflicted 
with our interpretation of the Social Security Act or regulations and 
that holding was not compelled by the statute or Constitution.

[63 FR 24933, May 6, 1998]

           Reopening and Revising Determinations and Decisions



Sec. 416.1487  Reopening and revising determinations and decisions.

    (a) General. Generally, if you are dissatisfied with a determination 
or decision made in the administrative review process, but do not 
request further review within the stated time period, you lose your 
right to further review and that determination or decision becomes 
final. However, a determination or a decision made in your case which is 
otherwise final and binding may be reopened and revised by us.
    (b) Procedure for reopening and revision. We may reopen a final 
determination or decision on our own initiative, or you may ask that a 
final determination or a decision to which you were a party be reopened. 
In either instance, if we reopen the determination or decision, we may 
revise that determination or decision. The conditions under which we may 
reopen a previous determination or decision, either on our own 
initiative or at your request, are explained in Sec. 416.1488.

[59 FR 8535, Feb. 23, 1994]



Sec. 416.1488  Conditions for reopening.

    A determination, revised determination, decision, or revised 
decision may be reopened--
    (a) Within 12 months of the date of the notice of the initial 
determination, for any reason;
    (b) Within two years of the date of the notice of the initial 
determination if we find good cause, as defined in Sec. 416.1489, to 
reopen the case; or
    (c) At any time if it was obtained by fraud or similar fault. In 
determining whether a determination or decision was obtained by fraud or 
similar fault, we will take into account any physical, mental, 
educational, or linguistic limitations (including any lack of facility 
with the English language) which you may have had at the time.

[45 FR 52096, Aug. 5, 1980, as amended at 59 FR 1637, Jan. 12, 1994]



Sec. 416.1489  Good cause for reopening.

    (a) We will find that there is good cause to reopen a determination 
or decision if--
    (1) New and material evidence is furnished;
    (2) A clerical error was made; or
    (3) The evidence that was considered in making the determination or 
decision clearly shows on its face that an error was made.
    (b) We will not find good cause to reopen your case if the only 
reason for reopening is a change of legal interpretation or 
administrative ruling upon which the determination or decision was made.



Sec. 416.1491  Late completion of timely investigation.

    We may revise a determination or decision after the applicable time 
period in Sec. 416.1488(a) or Sec. 416.1488(b) expires if we begin an 
investigation into whether to revise the determination or decision 
before the applicable time period expires. We may begin the 
investigation either based on a request by you or by an action on our 
part. The investigation is a process of gathering facts after a 
determination or decision has been reopened to determine if a revision 
of the determination or decision is applicable.
    (a) If we have diligently pursued the investigation to its 
conclusion, we may revise the determination or decision. The revision 
may be favorable or unfavorable to you. ``Diligently pursued''

[[Page 1010]]

means that in light of the facts and circumstances of a particular case, 
the necessary action was undertaken and carried out as promptly as the 
circumstances permitted. Diligent pursuit will be presumed to have been 
met if we conclude the investigation and if necessary, revise the 
determination or decision within 6 months from the date we began the 
investigation.
    (b) If we have not diligently pursued the investigation to its 
conclusion, we will revise the determination or decision if a revision 
is applicable and if it will be favorable to you. We will not revise the 
determination or decision if it will be unfavorable to you.

[49 FR 46370, Nov. 26, 1984; 49 FR 48036, Dec. 10, 1984]



Sec. 416.1492  Notice of revised determination or decision.

    (a) When a determination or decision is revised, notice of the 
revision will be mailed to the parties at their last known address. The 
notice will state the basis for the revised determination or decision 
and the effect of the revision. The notice will also inform the parties 
of the right to further review.
    (b) If a determination is revised and the revised determination 
requires that your benefits be suspended, reduced, or terminated, the 
notice will inform you of your right to continued payment (see Sec. 
416.1336 and the exceptions set out in Sec. 416.1337) and of your right 
of reconsideration.
    (c) If a determination is revised and the revised determination does 
not require that your benefits be suspended, reduced, or terminated, the 
notice will inform you of your right to a hearing before an 
administrative law judge.
    (d) If a reconsidered determination that you are blind or disabled, 
based on medical factors, is reopened for the purpose of being revised, 
you will be notified, in writing, of the proposed revision and of your 
right to request that a disability hearing be held before a revised 
reconsidered determination is issued. If a revised reconsidered 
determination is issued, you may request a hearing before an 
administrative law judge.
    (e) If an administrative law judge or the Appeals Council proposes 
to revise a decision, and the revision would be based on evidence not 
included in the record on which the prior decision was based, you and 
any other parties to the decision will be notified, in writing, of the 
proposed action and of your right to request that a hearing be held 
before any further action is taken. If a revised decision is issued by 
an administrative law judge, you and any other party may request that it 
be reviewed by the Appeals Council, or the Appeals Council may review 
the decision on its own initiative.
    (f) If an administrative law judge or the Appeals Council proposes 
to revise a decision, and the revision would be based only on evidence 
included in the record on which the prior decision was based, you and 
any other parties to the decision will be notified, in writing, of the 
proposed action. If a revised decision is issued by an administrative 
law judge, you and any other party may request that it be reviewed by 
the Appeals Council, or the Appeals Council may review the decision on 
its own initiative.
    (g) An administrative law judge may, in connection with a valid 
request for a hearing, propose to reopen an issue other than the issue 
on which the request for a hearing was based. The administrative law 
judge will follow the time limits for reopenings set out in Sec. 
416.1488. The administrative law judge shall mail to the parties at 
their last known address a notice of the reopening.

[45 FR 52096, Aug. 5, 1980, as amended at 51 FR 308, Jan. 3, 1986]



Sec. 416.1493  Effect of revised determination or decision.

    A revised determination or decision is binding unless--
    (a) You or a party to the revised determination file a written 
request for a reconsideration or a hearing;
    (b) You or another party to the revised decision file, as 
appropriate, a request for review by the Appeals Council or a hearing;
    (c) The Appeals Council reviews the revised decision; or
    (d) The revised determination or decision is further revised.

[[Page 1011]]



Sec. 416.1494  Time and place to request further review or a hearing on 
revised determination or decision.

    You or another party to the revised determination or decision may 
request, as appropriate, further review or a hearing on the revision by 
filing a request in writing at one of our offices within 60 days after 
the date you receive notice of the revision. Further review or a hearing 
will be held on the revision according to the rules of this subpart.

                   Payment of Certain Travel Expenses



Sec. 416.1495  Payment of certain travel expenses--general.

    When you file a claim for supplemental security income (SSI) 
benefits, you may incur certain travel expenses in pursuing your claim. 
Sections 416.1496 through 416.1499 explain who may be reimbursed for 
travel expenses, the types of travel expenses that are reimbursable, and 
when and how to claim reimbursement. Generally, the agency that requests 
you to travel will be the agency that reimburses you. No later than when 
it notifies you of the examination or hearing described in Sec. 
416.1496(a), that agency will give you information about the right to 
travel reimbursement, the right to advance payment and how to request 
it, the rules on means of travel and unusual travel costs, and the need 
to submit receipts.

[51 FR 8810, Mar. 14, 1986]



Sec. 416.1496  Who may be reimbursed.

    (a) The following individuals may be reimbursed for certain travel 
expenses--
    (1) You, when you attend medical examinations upon request in 
connection with disability determinations; these are medical 
examinations requested by the State agency or by us when additional 
medical evidence is necessary to make a disability determination (also 
referred to as consultative examinations, see Sec. 416.917);
    (2) You, your representative (see Sec. 416.1505 (a) and (b)), and 
all unsubpoenaed witnesses we or the State agency determines to be 
reasonably necessary who attend disability hearings; and
    (3) You, your representative, and all unsubpoenaed witnesses we 
determine to be reasonably necessary who attend hearings on any claim 
for SSI benefits before an administrative law judge.
    (b) Sections 416.1495 through 416.1499 do not apply to subpoenaed 
witnesses. They are reimbursed under Sec. Sec. 416.1450(d) and 
416.1416(b)(1).

[51 FR 8810, Mar. 14, 1986]



Sec. 416.1498  What travel expenses are reimbursable.

    Reimbursable travel expenses include the ordinary expenses of public 
or private transportation as well as unusual costs due to special 
circumstances.
    (a) Reimbursement for ordinary travel expenses is limited--
    (1) To the cost of travel by the most economical and expeditious 
means of transportation available and appropriate to the individual's 
condition of health as determined by the State agency or by us, 
considering the available means in the following order--
    (i) Common carrier (air, rail, or bus);
    (ii) Privately owned vehicles;
    (iii) Commercially rented vehicles and other special conveyances;
    (2) If air travel is necessary, to the coach fare for air travel 
between the specified travel points involved unless first-class air 
travel is authorized in advance by the State agency or by the Secretary 
in instances when--
    (i) Space is not available in less-than-first-class accommodations 
on any scheduled flights in time to accomplish the purpose of the 
travel;
    (ii) First-class accommodations are necessary because you, your 
representative, or reasonably necessary witness is so handicapped or 
otherwise impaired that other accommodations are not practical and the 
impairment is substantiated by competent medical authority;
    (iii) Less-than-first-class accommodations on foreign carriers do 
not provide adequate sanitation or health standards; or
    (iv) The use of first-class accommodations would result in an 
overall savings to the government based on economic considerations, such 
as the avoidance of additional subsistence costs that would be incurred 
while

[[Page 1012]]

awaiting availability of less-than-first-class accommodations.
    (b) Unusual travel costs may be reimbursed but must be authorized in 
advance and in writing by us or the appropriate State official, as 
applicable, unless they are unexpected or unavoidable; we or the State 
agency must determine their reasonableness and necessity and must 
approve them before payment can be made. Unusual expenses that may be 
covered in connection with travel include, but are not limited to--
    (1) Ambulance services;
    (2) Attendant services;
    (3) Meals;
    (4) Lodging; and
    (5) Taxicabs.
    (c) If we reimburse you for travel, we apply the rules in Sec. Sec. 
416.1496 through 416.1499 and the same rates and conditions of payment 
that govern travel expenses for Federal employees as authorized under 41 
CFR chapter 301. If a State agency reimburses you, the reimbursement 
rates shall be determined by the rules in Sec. Sec. 416.1496 through 
416.1499 and that agency's rules and regulations and may differ from one 
agency to another and also may differ from the Federal reimbursement 
rates.
    (1) When public transportation is used, reimbursement will be made 
for the actual costs incurred, subject to the restrictions in paragraph 
(a)(2) of this section on reimbursement for first-class air travel.
    (2) When travel is by a privately owned vehicle, reimbursement will 
be made at the current Federal or State mileage rate specified for that 
geographic location plus the actual costs of tolls and parking, if 
travel by a privately owned vehicle is determined appropriate under 
paragraph (a)(1) of this section. Otherwise, the amount of reimbursement 
for travel by privately owned vehicle cannot exceed the total cost of 
the most economical public transportation for travel between the same 
two points. ``Total cost'' includes the cost for all the authorized 
travelers who travel in the same privately owned vehicle. Advance 
approval of travel by privately owned vehicle is not required (but could 
give you assurance of its approval).
    (3) Sometimes your health condition dictates a mode of 
transportation different from most economical and expeditious. In order 
for your health to require a mode of transportation other than common 
carrier or passenger car, you must be so handicapped or otherwise 
impaired as to require special transportation arrangements and the 
condition must be substantiated by competent medical authority.
    (d) For travel to a hearing--
    (1) Reimbursement is limited to travel within the U.S. For this 
purpose, the U.S. includes the U.S. as defined in Sec. 416.120(c)(10).
    (2) When the travel is performed after September 30, 1981, we or the 
State agency will reimburse you, your representative, or an unsubpoenaed 
witness only if the distance from the person's residence or office 
(whichever he or she travels from) to the hearing site exceeds 75 miles.
    (3) For travel expenses incurred on or after April 1, 1991, the 
amount of reimbursement under this section for travel by your 
representative to attend a disability hearing or a hearing before an 
administrative law judge shall not exceed the maximum amount allowable 
under this section for travel to the hearing site from any point within 
the geographic area of the office having jurisdiction over the hearing.
    (i) The geographic area of the office having jurisdiction over the 
hearing means, as appropriate--
    (A) The designated geographic service area of the State agency 
adjudicatory unit having responsibility for providing the disability 
hearing;
    (B) If a Federal disability hearing officer holds the disability 
hearing, the geographic area of the State (as defined in Sec. 
416.120(c)(9)) in which the claimant resides or, if the claimant is not 
a resident of a State, in which the hearing officer holds the disability 
hearing; or
    (C) The designated geographic service area of the Office of Hearings 
and Appeals hearing office having responsibility for providing the 
hearing before an administrative law judge.
    (ii) We or the State agency determine the maximum amount allowable 
for travel by a representative based on the distance to the hearing site 
from the

[[Page 1013]]

farthest point within the appropriate geographic area. In determining 
the maximum amount allowable for travel between these two points, we or 
the State agency apply the rules in paragraphs (a) through (c) of this 
section and the limitations in paragraph (d) (1) and (4) of this 
section. If the distance between these two points does not exceed 75 
miles, we or the State agency will not reimburse any of your 
representative's travel expenses.
    (4) If a change in the location of the hearing is made at your 
request from the location we or the State agency selected to one farther 
from your residence or office, neither your additional travel expenses 
nor the additional travel expenses of your representative and witnesses 
will be reimbursed.

[51 FR 8810, Mar. 14, 1986, as amended at 59 FR 8532, Feb. 23, 1994]



Sec. 416.1499  When and how to claim reimbursement.

    (a)(1) Generally, you will be reimbursed for your expenses after 
your trip. However, travel advances may be authorized if you request 
prepayment and show that the requested advance is reasonable and 
necessary.
    (2) You must submit to us or the State agency, as appropriate, an 
itemized list of what you spent and supporting receipts to be 
reimbursed.
    (3) Arrangements for special means of transportation and related 
unusual costs may be made only if we or the State agency authorizes the 
costs in writing in advance of travel, unless the costs are unexpected 
or unavoidable. If they are unexpected or unavoidable we or the State 
agency must determine their reasonableness and necessity and must 
approve them before payment may be made.
    (4) If you receive prepayment, you must, within 20 days after your 
trip, provide to us or the State agency, as appropriate, an itemized 
list of your actual travel costs and submit supporting receipts. We or 
the State agency will require you to pay back any balance of the 
advanced amount that exceeds any approved travel expenses within 20 days 
after you are notified of the amount of that balance. (State agencies 
may have their own time limits in place of the 20-day periods in the 
preceding two sentences.)
    (b) You may claim reimbursable travel expenses incurred by your 
representative for which you have been billed by your representative, 
except that if your representative makes a claim for them to us or the 
State, he or she will be reimbursed directly.

(Approved by the Office of Management and Budget under control number 
0960-0434)

[51 FR 8810, Mar. 14, 1986, as amended at 51 FR 44983, Dec. 16, 1986]



                   Subpart O_Representation of Parties

    Authority: Secs. 702(a)(5) and 1631(d) of the Social Security Act 
(42 U.S.C. 902(a)(5) and 1383(d)).

    Source: 45 FR 52106, Aug. 5, 1980, unless otherwise noted.



Sec. 416.1500  Introduction.

    You may appoint someone to represent you in any of your dealings 
with us. This subpart explains, among other things--
    (a) Who may be your representative and what his or her 
qualifications must be;
    (b) How you appoint a representative;
    (c) The payment of fees to a representative;
    (d) Our rules that representatives must follow; and
    (e) What happens to a representative who breaks the rules.



Sec. 416.1503  Definitions.

    As used in this subpart:
    Representative means an attorney who meets all of the requirements 
of Sec. 416.1505(a), or a person other than an attorney who meets all 
of the requirements of Sec. 416.1505(b), and whom you appoint to 
represent you in dealings with us.
    We, our, or us refers to the Social Security Administration (SSA).
    You or your refers to any person or the eligible spouse of any 
person claiming or receiving supplemental security income benefits.

[45 FR 52106, Aug. 5, 1980, as amended at 62 FR 38455, July 18, 1997]

[[Page 1014]]



Sec. 416.1505  Who may be your representative.

    (a) Attorney. You may appoint as your representative in dealings 
with us any attorney in good standing who--
    (1) Has the right to practice law before a court of a State, 
Territory, District, or island possession of the United States, or 
before the Supreme Court or a lower Federal court of the United States;
    (2) Is not disqualified or suspended from acting as a representative 
in dealings with us; and
    (3) Is not prohibited by any law from acting as a representative.
    (b) Person other than attorney. You may appoint any person who is 
not an attorney to be your representative in dealings with us if he or 
she--
    (1) Is generally known to have a good character and reputation;
    (2) Is capable of giving valuable help to you in connection with 
your claim;
    (3) Is not disqualified or suspended from acting as a representative 
in dealing with us; and
    (4) Is not prohibited by any law from acting as a representative.



Sec. 416.1506  Notification of options for obtaining attorney representation.

    If you are not represented by an attorney and we make a 
determination or decision that is subject to the administrative review 
process provided under subpart N of this part and it does not grant all 
of the benefits or other relief you requested or it adversely affects 
any eligibility to benefits that we have established or may establish 
for you, we will include with the notice of that determination or 
decision information about your options for obtaining an attorney to 
represent you in dealing with us. We will also tell you that a legal 
services organization may provide you with legal representation free of 
charge if you satisfy the qualifying requirements applicable to that 
organization.

[58 FR 64886, Dec. 10, 1993]



Sec. 416.1507  Appointing a representative.

    We will recognize a person as your representative if the following 
things are done:
    (a) You sign a written notice stating that you want the person to be 
your representative in dealings with us.
    (b) That person signs the notice, agreeing to be your 
representative, if the person is not an attorney. An attorney does not 
have to sign a notice of appointment.
    (c) The notice is filed at one of our offices if you have initially 
filed a claim or requested reconsideration; with an administrative law 
judge if you have requested a hearing; or with the Appeals Council if 
you have requested a review of the administrative law judge's decision.



Sec. 416.1510  Authority of a representative.

    (a) What a representative may do. Your representative may, on your 
behalf--
    (1) Obtain information about your claim to the same extent that you 
are able to do;
    (2) Submit evidence;
    (3) Make statements about facts and law; and
    (4) Make any request or give any notice about the proceedings before 
us.
    (b) What a representative may not do. A representative may not sign 
an application on behalf of a claimant for rights or benefits under 
title XVI of the Act unless authorized to do so under Sec. 416.315.



Sec. 416.1515  Notice or request to a representative.

    (a) We shall send your representative--
    (1) Notice and a copy of any administrative action, determination, 
or decision; and
    (2) Requests for information or evidence.
    (b) A notice or request sent to your representative will have the 
same force and effect as if it had been sent to you.



Sec. 416.1520  Fee for a representative's services.

    (a) General. A representative may charge and receive a fee for his 
or her services as a representative only as provided in paragraph (b) of 
this section.
    (b) Charging and receiving a fee. (1) The representative must file a 
written request with us before he or she may

[[Page 1015]]

charge or receive a fee for his or her services.
    (2) We decide the amount of the fee, if any, a representative may 
charge or receive.
    (3) A representative shall not charge or receive any fee unless we 
have approved it, and he or she shall not charge or receive any fee that 
is more than the amount we approve. This rule applies whether the fee is 
charged to or received from you or from someone else.
    (c) Notice of fee determination. We shall mail to both you and your 
representative at your last known address a written notice of what we 
decide about the fee. We shall state in the notice--
    (1) The amount of the fee that is authorized;
    (2) How we made that decision;
    (3) That we are not responsible for paying the fee; and
    (4) That within 30 days of the date of the notice, either you or 
your representative may request us to review the fee determination.
    (d) Review of fee determination--(1) Request filed on time. We will 
review the decision we made about a fee if either you or your 
representative files a written request for the review at one of our 
offices within 30 days after the date of the notice of the fee 
determination. Either you or your representative, whoever requests the 
review, shall mail a copy of the request to the other person. An 
authorized official of the Social Security Administration who did not 
take part in the fee determination being questioned will review the 
determination. This determination is not subject to further review. The 
official shall mail a written notice of the decision made on review both 
to you and to your representative at your last known address.
    (2) Request not filed on time. (i) If you or your representative 
requests a review of the decision we made about a fee, but does so more 
than 30 days after the date of the notice of the fee determination, 
whoever makes the request shall state in writing why it was not filed 
within the 30-day period. We will review the determination if we decide 
that there was good cause for not filing the request on time.
    (ii) Some examples of good cause follow:
    (A) Either you or your representative was seriously ill and the 
illness prevented you or your representative from contacting us in 
person or in writing.
    (B) There was a death or serious illness in your family or in the 
family of your representative.
    (C) Material records were destroyed by fire or other accidental 
cause.
    (D) We gave you or your representative incorrect or incomplete 
information about the right to request review.
    (E) You or your representative did not timely receive notice of the 
fee determination.
    (F) You or your representative sent the request to another 
government agency in good faith within the 30-day period, and the 
request did not reach us until after the period had ended.
    (3) Payment of fees. We assume no responsibility for the payment of 
a fee based on a representative's services before the Social Security 
Administration under title XVI.



Sec. 416.1525  Request for approval of a fee.

    (a) Filing a request. In order for your representative to obtain 
approval of a fee for services he or she performed in dealings with us, 
he or she shall file a written request with one of our offices. This 
should be done after the proceedings in which he or she was a 
representative are completed. The request must contain--
    (1) The dates the representative's services began and ended;
    (2) A list of the services he or she gave and the amount of time he 
or she spent on each type of service;
    (3) The amount of the fee he or she wants to charge for the 
services;
    (4) The amount of fee the representative wants to request or charge 
for his or her services in the same matter before any State or Federal 
court;
    (5) The amount of and a list of any expenses the representative 
incurred for which he or she has been paid or expects to be paid;
    (6) A description of the special qualifications which enabled the 
representative, if he or she is not an attorney, to give valuable help 
to you in connection with your claim; and

[[Page 1016]]

    (7) A statement showing that the representative sent a copy of the 
request for approval of a fee to you.
    (b) Evaluating a request for approval of a fee. (1) When we evaluate 
a representative's request for approval of a fee, we consider the 
purpose of the supplemental security income program, which is to assure 
a minimum level of income for the beneficiaries of the program, together 
with--
    (i) The extent and type of services the representative performed;
    (ii) The complexity of the case;
    (iii) The level of skill and competence required of the 
representative in giving the services;
    (iv) The amount of time the representative spent on the case;
    (v) The results the representative achieved;
    (vi) The level of review to which the claim was taken and the level 
of the review at which the representative became your representative; 
and
    (vii) The amount of fee the representative requests for his or her 
services, including any amount authorized or requested before, but not 
including the amount of any expenses he or she incurred.
    (2) Although we consider the amount of benefits, if any, that are 
payable, we do not base the amount of fee we authorize on the amount of 
the benefit alone, but on a consideration of all the factors listed in 
this section. The benefits payable in any claim are determined by 
specific provisions of law and are unrelated to the efforts of the 
representative. We may authorize a fee even if no benefits are payable.



Sec. 416.1528  Proceedings before a State or Federal court.

    We shall not consider any service the representative gave you in any 
proceeding before a State or Federal court to be services as a 
representative in dealings with us. However, if the representative has 
also given service to you in the same connection in any dealings with 
us, he or she must specify what, if any, portion of the fee he or she 
wants to charge is for services performed in dealings with us. If the 
representative charges any fee for those services, he or she must file 
the request and furnish all of the information required by Sec. 
416.1525.



Sec. 416.1535  Services in a proceeding under title XVI of the Act.

    Services provided a claimant in any dealing with us under title XVI 
of the Act consist of services performed for that claimant in connection 
with any claim he or she may have before the SSA under title XVI of the 
Act. These services include any in connection with any asserted right a 
claimant may have calling for an initial or reconsidered determination 
by us, and a decision or action by an administrative law judge or by the 
Appeals Council.

[45 FR 52106, Aug. 5, 1980, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.1540  Rules of conduct and standards of responsibility for 
representatives.

    (a) Purpose and scope. (1) All attorneys or other persons acting on 
behalf of a party seeking a statutory right or benefit shall, in their 
dealings with us, faithfully execute their duties as agents and 
fiduciaries of a party. A representative shall provide competent 
assistance to the claimant and recognize the authority of the Agency to 
lawfully administer the process. The following provisions set forth 
certain affirmative duties and prohibited actions which shall govern the 
relationship between the representative and the Agency, including 
matters involving our administrative procedures and fee collections.
    (2) All representatives shall be forthright in their dealings with 
us and with the claimant and shall comport themselves with due regard 
for the nonadversarial nature of the proceedings by complying with our 
rules and standards, which are intended to ensure orderly and fair 
presentation of evidence and argument.
    (b) Affirmative duties. A representative shall, in conformity with 
the regulations setting forth our existing duties and responsibilities 
and those of claimants (see Sec. 416.912 in disability and blindness 
claims):
    (1) Act with reasonable promptness to obtain the information and 
evidence that the claimant wants to submit in

[[Page 1017]]

support of his or her claim, and forward the same to us for 
consideration as soon as practicable. In disability and blindness 
claims, this includes the obligations to assist the claimant in bringing 
to our attention everything that shows that the claimant is disabled or 
blind, and to assist the claimant in furnishing medical evidence that 
the claimant intends to personally provide and other evidence that we 
can use to reach conclusions about the claimant's medical impairment(s) 
and, if material to the determination of whether the claimant is blind 
or disabled, its effect upon the claimant's ability to work on a 
sustained basis, pursuant to Sec. 416.912(a);
    (2) Assist the claimant in complying, as soon as practicable, with 
our requests for information or evidence at any stage of the 
administrative decisionmaking process in his or her claim. In disability 
and blindness claims, this includes the obligation pursuant to Sec. 
416.912(c) to assist the claimant in providing, upon our request, 
evidence about:
    (i) The claimant's age;
    (ii) The claimant's education and training;
    (iii) The claimant's work experience;
    (iv) The claimant's daily activities both before and after the date 
the claimant alleges that he or she became disabled;
    (v) The claimant's efforts to work; and
    (vi) Any other factors showing how the claimant's impairment(s) 
affects his or her ability to work, or, if the claimant is a child, his 
or her functioning. In Sec. Sec. 416.960 through 416.969, we discuss in 
more detail the evidence we need when we consider vocational factors; 
and
    (3) Conduct his or her dealings in a manner that furthers the 
efficient, fair and orderly conduct of the administrative decisionmaking 
process, including duties to:
    (i) Provide competent representation to a claimant. Competent 
representation requires the knowledge, skill, thoroughness and 
preparation reasonably necessary for the representation. This includes 
knowing the significant issue(s) in a claim and having a working 
knowledge of the applicable provisions of the Social Security Act, as 
amended, the regulations and the Rulings; and
    (ii) Act with reasonable diligence and promptness in representing a 
claimant. This includes providing prompt and responsive answers to 
requests from the Agency for information pertinent to processing of the 
claim.
    (c) Prohibited actions. A representative shall not:
    (1) In any manner or by any means threaten, coerce, intimidate, 
deceive or knowingly mislead a claimant, or prospective claimant or 
beneficiary, regarding benefits or other rights under the Act;
    (2) Knowingly charge, collect or retain, or make any arrangement to 
charge, collect or retain, from any source, directly or indirectly, any 
fee for representational services in violation of applicable law or 
regulation;
    (3) Knowingly make or present, or participate in the making or 
presentation of, false or misleading oral or written statements, 
assertions or representations about a material fact or law concerning a 
matter within our jurisdiction;
    (4) Through his or her own actions or omissions, unreasonably delay 
or cause to be delayed, without good cause (see Sec. 416.1411(b)), the 
processing of a claim at any stage of the administrative decisionmaking 
process;
    (5) Divulge, without the claimant's consent, except as may be 
authorized by regulations prescribed by us or as otherwise provided by 
Federal law, any information we furnish or disclose about a claim or 
prospective claim;
    (6) Attempt to influence, directly or indirectly, the outcome of a 
decision, determination or other administrative action by offering or 
granting a loan, gift, entertainment or anything of value to a presiding 
official, Agency employee or witness who is or may reasonably be 
expected to be involved in the administrative decisionmaking process, 
except as reimbursement for legitimately incurred expenses or lawful 
compensation for the services of an expert witness retained on a non-
contingency basis to provide evidence; or

[[Page 1018]]

    (7) Engage in actions or behavior prejudicial to the fair and 
orderly conduct of administrative proceedings, including but not limited 
to:
    (i) Repeated absences from or persistent tardiness at scheduled 
proceedings without good cause (see Sec. 416.1411(b));
    (ii) Willful behavior which has the effect of improperly disrupting 
proceedings or obstructing the adjudicative process; and
    (iii) Threatening or intimidating language, gestures or actions 
directed at a presiding official, witness or Agency employee which 
results in a disruption of the orderly presentation and reception of 
evidence.

[63 FR 41417, Aug. 4, 1998]



Sec. 416.1545  Violations of our requirements, rules, or standards.

    When we have evidence that a representative fails to meet our 
qualification requirements or has violated the rules governing dealings 
with us, we may begin proceedings to suspend or disqualify that 
individual from acting in a representational capacity before us. We may 
file charges seeking such sanctions when we have evidence that a 
representative:
    (a) Does not meet the qualifying requirements described in Sec. 
416.1505;
    (b) Has violated the affirmative duties or engaged in the prohibited 
actions set forth in Sec. 416.1540; or
    (c) Has been convicted of a violation under section 1631(d) of the 
Act.

[63 FR 41418, Aug. 4, 1998]



Sec. 416.1550  Notice of charges against a representative.

    (a) The Deputy Commissioner for Disability and Income Security 
Programs (or other official the Commissioner may designate), or his or 
her designee, will prepare a notice containing a statement of charges 
that constitutes the basis for the proceeding against the 
representative.
    (b) We will send this notice to the representative either by 
certified or registered mail, to his or her last known address, or by 
personal delivery.
    (c) We will advise the representative to file an answer, within 30 
days from the date of the notice or from the date the notice was 
delivered personally, stating why he or she should not be suspended or 
disqualified from acting as a representative in dealings with us.
    (d) The Deputy Commissioner for Disability and Income Security 
Programs (or other official the Commissioner may designate), or his or 
her designee, may extend the 30-day period for good cause.
    (e) The representative must--
    (1) Answer the notice in writing under oath (or affirmation); and
    (2) File the answer with the Social Security Administration, Office 
of Hearings and Appeals, Attention: Special Counsel Staff, within the 
30-day time period.
    (f) If the representative does not file an answer within the 30-day 
time period, he or she does not have the right to present evidence, 
except as may be provided in Sec. 416.1565(g).

[45 FR 52106, Aug. 5, 1980, as amended at 56 FR 24132, May 29, 1991; 62 
FR 38455, July 18, 1997; 63 FR 41418, Aug. 4, 1998]



Sec. 416.1555  Withdrawing charges against a representative.

    We may withdraw charges against a representative. We will do this if 
the representative files an answer, or we obtain evidence, that 
satisfies us that there is reasonable doubt about whether he or she 
should be suspended or disqualified from acting as a representative in 
dealings with us. If we withdraw the charges, we shall notify the 
representative by mail at his or her last known address.



Sec. 416.1565  Hearing on charges.

    (a) Scheduling the hearing. If the Deputy Commissioner for 
Disability and Income Security Programs (or other official the 
Commissioner may designate), or his or her designee, does not take 
action to withdraw the charges within 15 days after the date on which 
the representative filed an answer, we will hold a hearing and make a 
decision on the charges.
    (b) Hearing officer. (1) The Associate Commissioner for Hearings and 
Appeals, or his or her designee, shall assign an administrative law 
judge, designated to act as a hearing officer, to hold a hearing on the 
charges.

[[Page 1019]]

    (2) No hearing officer shall hold a hearing in a case in which he or 
she is prejudiced or partial about any party, or has any interest in the 
matter.
    (3) If the representative or any party to the hearing objects to the 
hearing officer who has been named to hold the hearing, we must be 
notified at the earliest opportunity. The hearing officer shall consider 
the objection(s) and either proceed with the hearing or withdraw from 
it.
    (4) If the hearing officer withdraws from the hearing, another one 
will be named.
    (5) If the hearing officer does not withdraw, the representative or 
any other person objecting may, after the hearing, present his or her 
objections to the Appeals Council explaining why he or she believes the 
hearing officer's decision should be revised or a new hearing held by 
another administrative law judge designated to act as a hearing officer.
    (c) Time and place of hearing. The hearing officer shall mail the 
parties a written notice of the hearing at their last known addresses, 
at least 20 days before the date set for the hearing.
    (d) Change of time and place for hearing. (1) The hearing officer 
may change the time and place for the hearing. This may be done either 
on his or her own initiative, or at the request of the representative or 
the other party to the hearing,
    (2) The hearing officer may adjourn or postpone the hearing.
    (3) The hearing officer may reopen the hearing for the receipt of 
additional evidence at any time before mailing notice of the decision.
    (4) The hearing officer shall give the representative and the other 
party to the hearing reasonable notice of any change in the time or 
place for the hearing, or of an adjournment or reopening of the hearing.
    (e) Parties. The representative against whom charges have been made 
is a party to the hearing. The Deputy Commissioner for Disability and 
Income Security Programs (or other official the Commissioner may 
designate), or his or her designee, shall also be a party to the 
hearing.
    (f) Subpoenas. (1) The representative or the other party to the 
hearing may request the hearing officer to issue a subpoena for the 
attendance and testimony of witnesses and for the production of books, 
records, correspondence, papers, or other documents that are material to 
any matter being considered at the hearing. The hearing officer may, on 
his or her own, initiative, issue subpoenas for the same purposes when 
the action is reasonably necessary for the full presentation of the 
facts.
    (2) The representative or the other party who wants a subpoena 
issued shall file a written request with the hearing officer. This must 
be done at least 5 days before the date set for the hearing. The request 
must name the documents to be produced, and describe the address or 
location in enough detail to permit the witnesses or documents to be 
found.
    (3) The representative or the other party who wants a subpoena 
issued shall state in the request for a subpoena the material facts that 
he or she expects to establish by the witness or document, and why the 
facts could not be established by the use of other evidence which could 
be obtained without use of a subpoena.
    (4) We will pay the cost of the issuance and the fees and mileage of 
any witness subpoenaed, as provided in section 205(d) of the Act.
    (g) Conduct of the hearing. (1) The hearing officer shall make the 
hearing open to the representative, to the other party, and to any 
persons the hearing officer or the parties consider necessary or proper. 
The hearing officer shall inquire fully into the matters being 
considered, hear the testimony of witnesses, and accept any documents 
that are material.
    (2) If the representative did not file an answer to the charges, he 
or she has no right to present evidence at the hearing. The hearing 
officer may make or recommend a decision on the basis of the record, or 
permit the representative to present a statement about the sufficiency 
of the evidence or the validity of the proceedings upon which the 
suspension or disqualification, if it occurred, would be based.

[[Page 1020]]

    (3) If the representative did file an answer to the charges, and if 
the hearing officer believes that there is material evidence available 
that was not presented at the hearing, the hearing officer may at any 
time before mailing notice of the hearing decision reopen the hearing to 
accept the additional evidence.
    (4) The hearing officer has the right to decide the order in which 
the evidence and the allegations will be presented and the conduct of 
the hearing.
    (h) Evidence. The hearing officer may accept evidence at the 
hearing, even though it is not admissible under the rules of evidence 
that apply to Federal court procedure.
    (i) Witnesses. Witnesses who testify at the hearing shall do so 
under oath or affirmation. Either the representative or a person 
representing him or her may question the witnesses. The other party and 
that party's representative must also be allowed to question the 
witnesses. The hearing officer may also ask questions as considered 
necessary, and shall rule upon any objection made by either party about 
whether any question is proper.
    (j) Oral and written summation. (1) The hearing officer shall give 
the representative and the other party a reasonable time to present oral 
summation and to file briefs or other written statements about proposed 
findings of fact and conclusions of law if the parties request it.
    (2) The party that files briefs or other written statements shall 
provide enough copies so that they may be made available to any other 
party to the hearing who requests a copy.
    (k) Record of hearing. In all cases, the hearing officer shall have 
a complete record of the proceedings at the hearing made.
    (l) Representation. The representative, as the person charged, may 
appear in person and may be represented by an attorney or other 
representative.
    (m) Failure to appear. If the representative or the other party to 
the hearing fails to appear after being notified of the time and place, 
the hearing officer may hold the hearing anyway so that the party 
present may offer evidence to sustain or rebut the charges. The hearing 
officer shall give the party who failed to appear an opportunity to show 
good cause for failure to appear. If the party fails to show good cause, 
he or she is considered to have waived the right to be present at the 
hearing. If the party shows good cause, the hearing officer may hold a 
supplemental hearing.
    (n) Dismissal of charges. The hearing officer may dismiss the 
charges in the event of the death of the representative.
    (o) Cost of transcript. If the representative or the other party to 
a hearing requests a copy of the transcript of the hearing, the hearing 
officer will have it prepared and sent to the party upon payment of the 
cost, unless the payment is waived for good cause.

[45 FR 52106, Aug. 5, 1980, as amended at 56 FR 24132, May 29, 1991; 62 
FR 38455, July 18, 1997; 63 FR 41418, Aug. 4, 1998]



Sec. 416.1570  Decision by hearing officer.

    (a) General. (1) After the close of the hearing, the hearing officer 
shall issue a decision or certify the case to the Appeals Council. The 
decision must be in writing, will contain findings of fact and 
conclusions of law, and be based upon the evidence of record.
    (2) If the hearing officer finds that the charges against the 
representative have been sustained, he or she shall either--
    (i) Suspend the representative for a specified period of not less 
than 1 year, nor more than 5 years, from the date of the decision; or
    (ii) Disqualify the representative from acting as a representative 
in dealings with us until he or she may be reinstated under Sec. 
416.1599.
    (3) The hearing officer shall mail a copy of the decision to the 
parties at their last known addresses. The notice will inform the 
parties of the right to request the Appeals Council to review the 
decision.
    (b) Effect of hearing officer's decision. (1) The hearing officer's 
decision is final and binding unless reversed or modified by the Appeals 
Council upon review.
    (2) If the final decision is that a person is disqualified from 
being a representative in dealings with us, he or she will not be 
permitted to represent

[[Page 1021]]

anyone in dealings with us until authorized to do so under the 
provisions of Sec. 416.1599.
    (3) If the final decision is that a person is suspended for a 
specified period of time from being a representative in dealings with 
us, he or she will not be permitted to represent anyone in dealings with 
us during the period of suspension unless authorized to do so under the 
provisions of Sec. 416.1599.

[45 FR 52106, Aug. 5, 1980, as amended at 56 FR 24132, May 29, 1991]



Sec. 416.1575  Requesting review of the hearing officer's decision.

    (a) General. After the hearing officer issues a decision, either the 
representative or the other party to the hearing may ask the Appeals 
Council to review the decision.
    (b) Time and place of filing request for review. The party 
requesting review shall file the request for review in writing with the 
Appeals Council within 30 days from the date the hearing officer mailed 
the notice. The party requesting review shall certify that a copy of the 
request for review and of any documents that are submitted have been 
mailed to the opposing party.



Sec. 416.1576  Assignment of request for review of the hearing officer's 
decision.

    Upon receipt of a request for review of the hearing officer's 
decision, the matter will be assigned to a panel consisting of three 
members of the Appeals Council none of whom shall be the Chair of the 
Appeals Council. The panel shall jointly consider and rule by majority 
opinion on the request for review of the hearing officer's decision, 
including a determination to dismiss the request for review. Matters 
other than a final disposition of the request for review may be disposed 
of by the member designated chair of the panel.

[56 FR 24132, May 29, 1991]



Sec. 416.1580  Appeals Council's review of hearing officer's decision.

    (a) Upon request, the Appeals Council shall give the parties a 
reasonable time to file briefs or other written statements as to fact 
and law, and to appear before the Appeals Council to present oral 
argument.
    (b) If a party files a brief or other written statement with the 
Appeals Council, he or she shall send a copy to the opposing party and 
certify that the copy has been sent.



Sec. 416.1585  Evidence permitted on review.

    (a) General. Generally, the Appeals Council will not consider 
evidence in addition to that introduced at the hearing. However, if the 
Appeals Council believes that the evidence offered is material to an 
issue it is considering, the evidence will be considered.
    (b) Individual charged filed an answer. (1) When the Appeals Council 
believes that additional material evidence is available, and the 
representative has filed an answer to the charges, the Appeals Council 
shall require that the evidence be obtained. The Appeals Council may 
name an administrative law judge or a member of the Appeals Council to 
receive the evidence.
    (2) Before additional evidence is admitted into the record, the 
Appeals Council shall mail a notice to the parties telling them that 
evidence about certain issues will be obtained, unless the notice is 
waived. The Appeals Council shall give each party a reasonable 
opportunity to comment on the evidence and to present other evidence 
that is material to an issue it is considering.
    (c) Individual charged did not file an answer. If the representative 
did not file an answer to the charges, the Appeals Council will not 
permit the introduction of evidence that was not considered at the 
hearing.



Sec. 416.1590  Appeals Council's decision.

    (a) The Appeals Council shall base its decision upon the evidence in 
the hearing record and any other evidence it may permit on review. The 
Appeals Council shall either--
    (1) Affirm, reverse, or modify the hearing officer's decision;
    (2) Return a case to the hearing officer when the Appeals Council 
considers it appropriate.
    (b) The Appeals Council, in changing a hearing officer's decision to 
suspend a representative for a specified period, shall in no event 
reduce the period of

[[Page 1022]]

suspension to less than 1 year. In modifying a hearing officer's 
decision to disqualify a representative, the Appeals Council shall in no 
event impose a period of suspension of less than 1 year.
    (c) If the Appeals Council affirms or changes a hearing officer's 
decision, the period of suspension or the disqualification is effective 
from the date of the Appeals Council's decision.
    (d) If the hearing officer did not impose a period of suspension or 
a disqualification, and the Appeals Council decides to impose one or the 
other, the suspension or disqualification is effective from the date of 
the Appeals Council's decision.
    (e) The Appeals Council shall make its decision in writing and shall 
mail a copy of the decision to the parties at their last known 
addresses.

[45 FR 52106, Aug. 5, 1980, as amended at 56 FR 24133, May 29, 1991]



Sec. 416.1595  When the Appeals Council will dismiss a request for review.

    The Appeals Council may dismiss a request for the review of any 
proceeding to suspend or disqualify a representative in any of the 
following circumstances:
    (a) Upon request of party. The Appeals Council may dismiss a request 
for review upon written request of the party or parties who filed the 
request, if there is no other party who objects to the dismissal.
    (b) Death of party. The Appeals Council may dismiss a request for 
review in the event of the death of the representative.
    (c) Request for review not timely filed. The Appeals Council will 
dismiss a request for review if a party failed to file a request for 
review within the 30-day time period and the Appeals Council does not 
extend the time for good cause.



Sec. 416.1597  Reinstatement after suspension--period of suspension 
expired.

    We shall automatically allow a person to serve again as a 
representative in dealings with us at the end of any suspension.



Sec. 416.1599  Reinstatement after suspension or disqualification--period 
of suspension not expired.

    (a) After more than one year has passed, a person who has been 
suspended or disqualified may ask the Appeals Council for permission to 
serve as a representative again.
    (b) The suspended or disqualified person shall submit any evidence 
he or she wishes to have considered along with the request to be allowed 
to serve as a representative again.
    (c) The Deputy Commissioner for Disability and Income Security 
Programs (or other official the Commissioner may designate), or his or 
her designee, upon notification of receipt of the request, shall have 30 
days in which to present a written report of any experiences with the 
suspended or disqualified person subsequent to that person's suspension 
or disqualification. The Appeals Council shall make available to the 
suspended or disqualified person a copy of the report.
    (d) The Appeals Council shall not grant the request unless it is 
reasonably satisfied that the person will in the future act according to 
the provisions of section 1631(d)(2) of the Act, and to our regulations.
    (e) The Appeals Council shall mail a notice of its decision on the 
request to the suspended or disqualified person. It shall also mail a 
copy to the Deputy Commissioner for Disability and Income Security 
Programs (or other official the Commissioner may designate), or his or 
her designee.
    (f) If the Appeals Council decides not to grant the request it shall 
not consider another request before the end of 1 year from the date of 
the notice of the previous denial.

[45 FR 52106, Aug. 5, 1980, as amended at 56 FR 24133, May 29, 1991; 62 
FR 38455, July 18, 1997; 63 FR 41418, Aug. 4, 1998]



                   Subpart P_Residence and Citizenship

    Authority: Secs. 702(a)(5), 1614 (a)(1)(B) and (e), and 1631 of the 
Social Security Act (42 U.S.C. 902(a)(5), 1382c (a)(1)(B) and (e), and 
1383); 8 U.S.C. 1254a; sec. 502, Pub. L. 94-241, 90 Stat. 268 (48 U.S.C. 
1681 note).

[[Page 1023]]


    Source: 47 FR 3106, Jan. 22, 1982, unless otherwise noted.



Sec. 416.1600  Introduction.

    You are eligible for supplemental security income (SSI) benefits if 
you meet the requirements in subpart B. Among these are requirements 
that you must be a resident of the United States and either a citizen, a 
national, or an alien with a lawful right to reside permanently in the 
United States. In this subpart, we tell you what kinds of evidence show 
that you are a resident of the United States (see Sec. 416.1603) and--
    (a) A citizen or a national of the United States (see Sec. 
416.1610);
    (b) An alien lawfully admitted for permanent residence in the United 
States (see Sec. 416.1615); or
    (c) An alien permanently residing in the United States under color 
of law (see Sec. 416.1618).



Sec. 416.1601  Definitions and terms used in this subpart.

    We or Us means the Social Security Administration.
    You or Your means the person who applies for or receives SSI 
benefits or the person for whom an application is filed.



Sec. 416.1603  How to prove you are a resident of the United States.

    (a) What you should give us. Your home address in the United States 
may be sufficient to establish that you are a resident. However, if we 
have any reason to question that you are a resident of the United States 
we will ask for evidence. You can prove you are a resident of the United 
States by giving us papers or documents showing that you live in the 
United States such as--
    (1) Property, income, or other tax forms or receipts;
    (2) Utility bills, leases or rent payment records;
    (3) Documents that show you participate in a social services program 
in the United States; or
    (4) Other records or documents that show you live in the United 
States.
    (b) What ``resident of the United States'' means. We use the term 
resident of the United States to mean a person who has established an 
actual dwelling place within the geographical limits of the United 
States with the intent to continue to live in the United States.
    (c) What ``United States'' means. We use the term United States in 
this section to mean the 50 States, the District of Columbia, and the 
Northern Mariana Islands.

[47 FR 3106, Jan. 22, 1982, as amended at 62 FR 59813, Nov. 5, 1997]



Sec. 416.1610  How to prove you are a citizen or a national of the United 
States.

    (a) What you should give us. You can prove that you are a citizen or 
a national of the United States by giving us--
    (1) A certified copy of your birth certificate which shows that you 
were born in the United States;
    (2) A certified copy of a religious record of your birth or baptism, 
recorded in the United States within 3 months of your birth, which shows 
you were born in the United States;
    (3) Your naturalization certificate;
    (4) Your United States passport;
    (5) Your certificate of citizenship;
    (6) An identification card for use of resident citizens in the 
United States (Immigration and Naturalization Service Form I-197); or
    (7) An identification card for use of resident citizens of the 
United States by both or naturalization of parents (INS Form I-179).
    (b) How to prove you are an interim citizen of the United States if 
you live in the Northern Mariana Islands. As a resident of the Northern 
Mariana Islands you must meet certain conditions to prove you are an 
interim citizen of the United States. You must prove that you were 
domiciled in the Northern Mariana Islands as required by section 8 of 
the Schedule of Transitional Matters of the Constitution of the Northern 
Mariana Islands, or that you were born there after March 6, 1977. By 
``domiciled'' we mean that you maintained a residence with the intention 
of continuing that residence for an unlimited or indefinite period, and 
that you intended to return to that residence whenever absent, even for 
an extended period. You must also give us proof of your citizenship if 
you are a citizen of

[[Page 1024]]

the Trust Territory of the Pacific Islands of which the Marianas are a 
part.
    (1) You can prove you were domiciled in the Northern Mariana Islands 
by giving us--
    (i) Statements of civil authorities; or
    (ii) Receipts or other evidence that show you were domiciled there.
    (2) You can prove that you are a citizen of the Trust Territory of 
the Pacific Islands by giving us--
    (i) Your identification card issued by the Trust Territory of the 
Pacific Islands and a public or religious record of age which shows you 
were born in this territory;
    (ii) Your voter's registration card;
    (iii) A Chammoro Family Record showing your birth in the Trust 
Territory of the Pacific Islands; or
    (iv) Your naturalization certificate.
    (c) What to do if you cannot give us the information listed in 
paragraph (a) or (b). If you cannot give us any of the documents listed 
in paragraph (a) or (b), we may find you to be a citizen or a national 
of the United States if you--
    (1) Explain why you cannot give us any of the documents; and
    (2) Give us any information you have which shows or results in proof 
that you are a citizen or a national of the United States. The kind of 
information we are most concerned about shows--
    (i) The date and place of your birth in the United States;
    (ii) That you have voted or are otherwise known to be a citizen or 
national of the United States; or
    (iii) The relationship to you and the citizenship of any person 
through whom you obtain citizenship.
    (d) What ``United States'' means. We use the term United States in 
this section to mean the 50 States, the District of Columbia, Puerto 
Rico, Guam, the Virgin Islands of the United States, American Samoa, 
Swain's Island, and the Northern Mariana Islands.

[47 FR 3106, Jan. 22, 1982, as amended at 62 FR 59813, Nov. 5, 1997]



Sec. 416.1615  How to prove you are lawfully admitted for permanent 
residence in the United States.

    (a) What you should give us. You can prove that you are lawfully 
admitted for permanent residence in the United States by giving us--
    (1) An Alien Registration Receipt Card issued by the Immigration and 
Naturalization Service (INS) in accordance with that Agency's current 
regulations;
    (2) A reentry permit;
    (3) An alien identification card issued by the government of the 
Northern Mariana Islands showing that you are admitted to the Northern 
Mariana Islands for permanent residence; or
    (4) INS Form I-688 which shows that you have been granted lawful 
temporary resident status under section 210 or section 210A of the 
Immigration and Nationality Act.
    (b) What to do if you cannot give us the information listed in 
paragraph (a). If you cannot give us any of the documents listed in 
paragraph (a), we may find you to be lawfully admitted for permanent 
residence in the United States if you--
    (1) Explain why you cannot give us any of the documents; and
    (2) Give us any information you have which shows or results in proof 
that you are lawfully admitted for permanent residence in the United 
States.
    (c) What ``United States'' means. We use the term United States in 
this section to mean the 50 States, the District of Columbia, and the 
Northern Mariana Islands.

(Approved by the Office of Management and Budget under control number 
0960-0451)

[47 FR 3106, Jan. 22, 1982, as amended at 52 FR 21943, June 10, 1987; 56 
FR 55075, Oct. 24, 1991; 61 FR 56134, Oct. 31, 1996]



Sec. 416.1618  When you are considered permanently residing in the United 
States under color of law.

    (a) General. We will consider you to be permanently residing in the 
United States under color of law and you may be eligible for SSI 
benefits if you are an alien residing in the United States with the 
knowledge and permission of the Immigration and Naturalization Service 
and that agency does not contemplate enforcing your departure. The 
Immigration and Naturalization Service does not contemplate enforcing 
your departure if it is the policy or practice of that agency not to 
enforce the departure of aliens in the same category or if from all the 
facts and circumstances in your case it appears

[[Page 1025]]

that the Immigration and Naturalization Service is otherwise permitting 
you to reside in the United States indefinitely. We make these decisions 
by verifying your status with the Immigration and Naturalization Service 
following the rules contained in paragraphs (b) through (e) of this 
section.
    (b) Categories of aliens who are permanently residing in the United 
States under color of law. Aliens who are permanently residing in the 
United States under color of law are listed below. None of the 
categories includes applicants for an Immigration and Naturalization 
status other than those applicants listed in paragraph (b)(6) of this 
section or those covered under paragraph (b)(17) of this section. None 
of the categories allows SSI eligibility for nonimmigrants; for example, 
students or visitors. Also listed are the most common documents that the 
Immigration and Naturalization Service provides to aliens in these 
categories:
    (1) Aliens admitted to the United States pursuant to 8 U.S.C. 
1153(a)(7), (section 203(a)(7) of the Immigration and Nationality Act). 
We ask for INS Form I-94 endorsed ``Refugee-Conditional Entry'';
    (2) Aliens paroled into the United States pursuant to 8 U.S.C. 
1182(d)(5) (section 212(d)(5) of the Immigration and Nationality Act) 
including Cuban/Haitian Entrants. We ask for INS Form I-94 with the 
notation that the alien was paroled pursuant to section 212(d)(5) of the 
Immigration and Nationality Act. For Cuban/Haitian Entrants, we ask for 
INS Form I-94 stamped ``Cuban/Haitian Entrant (Status Pending) 
reviewable January 15, 1981. Employment authorized until January 15, 
1981.'' (Although the forms bear this notation, Cuban/Haitian Entrants 
are admitted under section 212(d)(5) of the Immigration and Nationality 
Act.);
    (3) Aliens residing in the United States pursuant to an indefinite 
stay of deportation. We ask for an Immigration and Naturalization 
Service letter with this information or INS Form I-94 with such a 
notation;
    (4) Aliens residing in the United States pursuant to an indefinite 
voluntary departure. We ask for an Immigration and Naturalization 
Service letter or INS Form I-94 showing that a voluntary departure has 
been granted for an indefinite time period;
    (5) Aliens on whose behalf an immediate relative petition has been 
approved and their families covered by the petition, who are entitled to 
voluntary departure (under 8 CFR 242.5(a)(2)(vi)) and whose departure 
the Immigration and Naturalization Service does not contemplate 
enforcing. We ask for a copy of INS Form I-94 or I-210 letter showing 
that status;
    (6) Aliens who have filed applications for adjustment of status 
pursuant to section 245 of the Immigration and Nationality Act (8 U.S.C. 
1255) that the Immigration and Naturalization Service has accepted as 
``properly filed'' (within the meaning of 8 CFR 245.2(a) (1) or (2)) and 
whose departure the Immigration and Naturalization Service does not 
contemplate enforcing. We ask for INS Form I-181 or a passport properly 
endorsed;
    (7) Aliens granted stays of deportation by court order, statute or 
regulation, or by individual determination of the Immigration and 
Naturalization Service pursuant to section 106 of the Immigration and 
Nationality Act (8 U.S.C. 1105a) or relevant Immigration and 
Naturalization Service instructions, whose departure that agency does 
not contemplate enforcing. We ask for INS Form I-94 or a letter from the 
Immigration and Naturalization Service, or copy of a court order 
establishing the alien's status;
    (8) Aliens granted asylum pursuant to section 208 of the Immigration 
and Nationality Act (8 U.S.C. 1158). We ask for INS Form I-94 and a 
letter establishing this status;
    (9) Aliens admitted as refugees pursuant to section 207 of the 
Immigration and Nationality Act (8 U.S.C. 1157) or section 203(a)(7) of 
the Immigration and Nationality Act (8 U.S.C. 1153(a)(7)). We ask for 
INS Form I-94 properly endorsed;
    (10) Aliens granted voluntary departure pursuant to section 242(b) 
of the Immigration and Nationality Act (8 U.S.C. 1252(b)) or 8 CFR 242.5 
whose departure the Immigration and Naturalization Service does not 
contemplate enforcing. We ask for INS

[[Page 1026]]

Form I-94 or I-210 bearing a departure date;
    (11) Aliens granted deferred action status pursuant to Immigration 
and Naturalization Service Operations Instruction 103.1(a)(ii) prior to 
June 15, 1984 or 242.1(a)(22) issued June 15, 1984 and later. We ask for 
INS Form I-210 or a letter showing that departure has been deferred;
    (12) Aliens residing in the United States under orders of 
supervision pursuant to section 242 of the Immigration and Nationality 
Act (8 U.S.C. 1252(d)). We ask for INS Form I-220B;
    (13) Aliens who have entered and continuously resided in the United 
States since before January 1, 1972 (or any date established by section 
249 of the Immigration and Nationality Act, 8 U.S.C. 1259). We ask for 
any proof establishing this entry and continuous residence;
    (14) Aliens granted suspension of deportation pursuant to section 
244 of the Immigration and Nationality Act (8 U.S.C. 1254) and whose 
departure the Immigration and Naturalization Service does not 
contemplate enforcing. We ask for an order from the immigration judge;
    (15) Aliens whose deportation has been withheld pursuant to section 
243(h) of the Immigration and Nationality Act (8 U.S.C. 1253(h)). We ask 
for an order from an immigration judge showing that deportation has been 
withheld;
    (16) Aliens granted lawful temporary resident status pursuant to 
section 245A of the Immigration and Nationality Act (8 U.S.C. 1255a). We 
ask for INS form I-688 showing that status; or
    (17) Any other aliens living in the United States with the knowledge 
and permission of the Immigration and Naturalization Service and whose 
departure that agency does not contemplate enforcing.
    (c) How to prove you are in a category listed in paragraph (b) of 
this section. You must give us proof that you are in one of the 
categories in paragraph (b) of this section. You may give us--
    (1) Any of the documents listed in paragraph (b) of this section; or
    (2) Other information which shows that you are in one of the 
categories listed in paragraph (b) of this section.
    (d) We must contact the Immigration and Naturalization Service. (1) 
We must contact the Immigration and Naturalization Service to verify the 
information you give us to prove you are permanently residing in the 
United States under color of law.
    (2) If you give us any of the documents listed in paragraphs (b) 
(1), (2), (3), (4), (8), (9), (11), (12), (13), (15), or (16) of this 
section, we will pay you benefits if you meet all other eligibility 
requirements. We will contact the Immigration and Naturalization Service 
to verify that the document you give us is currently valid.
    (3) If you give us any of the documents listed in paragraphs (b) 
(5), (6), (7), (10), or (14) of this section, or documents that indicate 
that you meet paragraph (b)(17) of this section, or any other 
information to prove you are permanently residing in the United States 
under color of law, we will contact the Immigration and Naturalization 
Service to verify that the document or other information is currently 
valid. We must also get information from the Immigration and 
Naturalization Service as to whether that agency contemplates enforcing 
your departure. We will apply the following rules:
    (i) If you have a document that shows that you have an Immigration 
and Naturalization Service status that is valid for an indefinite period 
we will assume that the Immigration and Naturalization Service does not 
contemplate enforcing your departure. Therefore, we will pay you 
benefits if you meet all other eligibility requirements. If, based on 
the information we get from the Immigration and Naturalization Service, 
we find that your document is currently valid, we will consider this 
sufficient proof that the Immigration and Naturalization Service does 
not contemplate enforcing your departure. We will continue your 
benefits. However, if we find that your document is not currently valid, 
we will suspend your benefits under Sec. 416.1320.
    (ii) If you have a document that appears currently valid and shows 
you have an Immigration and Naturalization Service status for at least 1 
year, or that shows the Immigration and Naturalization Service is 
allowing you to remain in the United States for a

[[Page 1027]]

specified period due to conditions in your home country, we will assume 
that the Immigration and Naturalization Service does not contemplate 
enforcing your departure. Therefore, we will pay you benefits if you 
meet all other eligibility requirements. If, based on the information we 
get from the Immigration and Naturalization Service, we learn that your 
document is currently valid and that agency does not contemplate 
enforcing your departure, we will continue your benefits. However, if we 
learn that your document is not currently valid or that the Immigration 
and Naturalization Service does contemplate enforcing your departure, we 
will suspend your benefits under Sec. 416.1320.
    (iii) If you have a document that shows you have an Immigration and 
Naturalization Service status valid for less than 1 year, or if your 
document has no expiration date, or if you have no document, we will not 
pay you benefits until the Immigration and Naturalization Service 
confirms that your document is currently valid and we get information 
from that agency that indicates whether it contemplates enforcing your 
departure. If that agency does not contemplate enforcing your departure, 
we will pay you benefits if you meet all other eligibility requirements.
    (iv) If at any time after you begin receiving benefits we receive 
information from the Immigration and Naturalization Service which 
indicates that the Immigration and Naturalization Service contemplates 
enforcing your departure, we will suspend your benefits under Sec. 
416.1320 and any benefits you have received after the date that the 
Immigration and Naturalization Service began contemplating enforcing 
departure will be overpayments under subpart E of this part.
    (e) What ``United States'' means. We use the term United States in 
this section to mean the 50 States, the District of Columbia, and the 
Northern Mariana Islands.

(Approved by the Office of Management and Budget under control number 
0960-0451)

[52 FR 21943, June 10, 1987, as amended at 56 FR 55075, Oct. 24, 1991; 
56 FR 61287, Dec. 2, 1991]



Sec. 416.1619  When you cannot be considered permanently residing in the 
United States under color of law.

    We will not consider you to be permanently residing in the United 
States under color of law and you are not eligible for SSI benefits 
during a period in which you have been granted temporary protected 
status by the Immigration and Naturalization Service under section 244A 
of the Immigration and Nationality Act.

[58 FR 41182, Aug. 3, 1993]



Subpart Q_Referral of Persons Eligible for Supplemental Security Income 
                            to Other Agencies

    Authority: Secs. 702(a)(5), 1611(e)(3), 1615, and 1631 of the Social 
Security Act (42 U.S.C. 902(a)(5), 1382(e)(3), 1382d, and 1383).

    Source: 45 FR 70859, Oct. 27, 1980, unless otherwise noted.

                                 General



Sec. 416.1701  Scope of subpart.

    This subpart describes whom we refer to agencies for (a) vocational 
rehabilitation services or (b) treatment for alcoholism or drug 
addiction. The purpose of these services or treatments is to restore 
your ability to work. This subpart also describes the conditions under 
which you can refuse treatment after we have referred you. If these 
conditions are not met, this subpart describes how your benefits are 
affected when you refuse treatment.

[45 FR 70859, Oct. 27, 1980, as amended at 68 FR 40124, July 7, 2003]



Sec. 416.1705  Definitions.

    As used in this subpart--
    Vocational rehabilitation services refers to services provided blind 
or disabled persons under the State plan approved under the 
Rehabilitation Act of 1973 (see 45 CFR 401.120ff for requirements of 
these State plans).
    We or us refers to either the Social Security Administration or the 
State agency making the disability or blindness determination.
    You or your refers to the person who applies for or receives 
benefits or the person for whom an application is filed.

[[Page 1028]]

             Referral for Vocational Rehabilitation Services



Sec. 416.1710  Whom we refer and when.

    (a) Whom we refer. If you are 16 years of age or older and under 65 
years old, and receiving supplemental security income (SSI) benefits, we 
will refer you to the State agency providing vocational rehabilitation 
services. If you are under age 16, we will refer you to an agency 
administering services under the Maternal and Child Health Services 
(Title V) Block Grant Act.
    (b) When we refer. We will make this referral when we find you 
eligible for benefits or at any other time that we find you might be 
helped by vocational rehabilitation services.

[45 FR 70859, Oct. 27, 1980, as amended at 48 FR 6297, Feb. 23, 1983]

         Referral for Treatment of Alcoholism or Drug Addiction



Sec. 416.1720  Whom we refer.

    We will refer you to an approved facility for treatment of your 
alcoholism or drug addiction if--
    (a) You are disabled;
    (b) You are not blind;
    (c) You are not 65 years old or older; and
    (d) Alcoholism or drug addiction is a contributing factor to your 
disability.



Sec. 416.1725  Effect of your failure to comply with treatment requirements 
for your drug addiction or alcoholism.

    (a) Suspension of benefits. Your eligibility for benefits will be 
suspended beginning with the first month after we notify you in writing 
that we have determined that you have failed to comply with the 
treatment requirements for your drug addiction or alcoholism as defined 
in Sec. 416.940. Your benefits will be suspended and reinstated in 
accordance with the provisions in Sec. 416.1326.
    (b) Termination of benefits. If your benefits are suspended for 12 
consecutive months for failure to comply with treatment in accordance 
with Sec. 416.1326, your eligibility for disability benefits will be 
terminated in accordance with Sec. 416.1331.

[60 FR 8153, Feb. 10, 1995]



                         Subpart R_Relationship

    Authority: Secs. 702(a)(5), 1614(b), (c), and (d), and 1631(d)(1) 
and (e) of the Social Security Act (42 U.S.C. 902(a)(5), 1382c (b), (c), 
and (d), and 1383 (d)(1) and (e)).

    Source: 45 FR 71795, Oct. 30, 1980, unless otherwise noted. 
Redesignated at 46 FR 29211, May 29, 1981; 46 FR 42063, Aug. 19, 1981.



Sec. 416.1801  Introduction.

    (a) What is in this subpart. This subpart contains the basic rules 
for deciding for SSI purposes whether a person is considered married 
and, if so, to whom; whether a person is considered a child; and whether 
a person is considered another person's parent. It tells what 
information and evidence we need to decide these facts.
    (b) Related subparts. Subpart D discusses how to determine the 
amount of a person's benefits; subpart G discusses what changes in a 
person's situation he or she must report to us; subpart K discusses how 
we count income; and subpart L discusses how we count resources (money 
and property). The questions of whether a person is married, to whom a 
person is married, whether a person is a child, and who is a person's 
parent must be answered in order to know which rules in subparts D, G, 
K, and L apply.
    (c) Definitions. In this subpart--
    Eligible spouse means a person--
    (1) Who is eligible for SSI,
    (2) Whom we consider the spouse of another person who is eligible 
for SSI, and
    (3) Who was living in the same household with that person on--
    (i) The first day of the month following the date the application is 
filed (for the initial month of eligibility for payment based on that 
application);
    (ii) The date a request for reinstatement of eligibility is filed 
(for the month of such request); or
    (iii) The first day of the month, for all other months. An 
individual is considered to be living with an eligible spouse during 
temporary absences as defined in Sec. 416.1149 and while receiving 
continued benefits under section 1611(e)(1) (E) or (G) of the Act.
    Spouse means a person's husband or wife under the rules of 
Sec. Sec. 416.1806 through 416.1835 of this part.

[[Page 1029]]

    We and us mean the Social Security Administration.
    You means a person who has applied for or has been receiving SSI 
benefits, or a person for whom someone else has applied for or has been 
receiving SSI benefits.

[45 FR 71795, Oct. 30, 1980. Redesignated at 46 FR 29211, May 29, 1981; 
46 FR 42063, Aug. 19, 1981, as amended at 60 FR 16376, Mar. 30, 1995; 64 
FR 31975, June 15, 1999; 65 FR 16815, Mar. 30, 2000]

                      Who Is Considered Your Spouse



Sec. 416.1802  Effects of marriage on eligibility and amount of benefits.

    (a) If you have an ineligible spouse--(1) Counting income. If you 
apply for or receive SSI benefits, and you are married to someone who is 
not eligible for SSI benefits and are living in the same household as 
that person, we may count part of that person's income as yours. 
Counting part of that person's income as yours may reduce the amount of 
your benefits or even make you ineligible. Section 416.410 discusses the 
amount of benefits and Sec. 416.1163 explains how we count income for 
an individual with an ineligible spouse.
    (2) Counting resources. If you are married to someone who is not 
eligible for SSI benefits and are living in the same household as that 
person, we will count the value of that person's resources (money and 
property), minus certain exclusions, as yours when we determine your 
eligibility. Section 416.1202(a) gives a more detailed statement of how 
we count resources and Sec. 416.1205(a) gives the limit of resources 
allowed for eligibility of a person with an ineligible spouse.
    (b) If you have an eligible spouse--(1) Counting income. If you 
apply for or receive SSI benefits and have an eligible spouse as defined 
in Sec. 416.1801(c), we will count your combined income and calculated 
the benefit amount for you as a couple. Section 416.412 gives a detailed 
statement of the amount of benefits and subpart K of this part explains 
how we count income for an eligible couple.
    (2) Counting resources. If you have an eligible spouse as defined in 
Sec. 416.1801(c), we will count the value of your combined resources 
(money and property), minus certain exclusions, and use the couple's 
resource limit when we determine your eligibility. Section 416.1205(b) 
gives a detailed statement of the resource limit for an eligible couple.
    (c) If you are married, we do not consider you a child. The rules 
for counting income and resources are different for children than for 
adults. (Section 416.1851 discusses the effects of being considered a 
child on eligibility and amount of benefits.) Regardless of your age, if 
you are married we do not consider you to be a child.
    (d)(1) General rule: Benefits depend on whether you are married or 
not married at the beginning of each month. If you get married, even on 
the first day of a month we will treat you as single until the next 
month. If your marriage ends, even on the first day of a month, we will 
treat you as married until the next month.
    (2) Exception: If you both meet eligibility requirements after your 
date of marriage or after your marriage ends. If, in the month that you 
marry, each of you first meets all eligibility requirements after the 
date of your marriage, we will treat you as an eligible couple for that 
month. If, in the month that your marriage ends, each of you first meets 
all eligibility requirements after the date your marriage ends, we will 
treat you as eligible individuals. (See subparts D and E regarding how 
your benefits will be prorated.)

[45 FR 71795, Oct. 30, 1980. Redesignated at 46 FR 29211, May 29, 1981; 
46 FR 42063, Aug. 19, 1981, and amended at 51 FR 13495, Apr. 21, 1986; 
60 FR 16376, Mar. 30, 1995]



Sec. 416.1806  Whether you are married and who is your spouse.

    (a) We will consider someone to be your spouse (and therefore 
consider you to be married) for SSI purposes if--
    (1) You are legally married under the laws of the State where your 
and his or her permanent home is (or was when you lived together);
    (2) We have decided that either of you is entitled to husband's or 
wife's Social Security insurance benefits as the spouse of the other 
(this decision will not affect your SSI benefits for any month before it 
is made); or
    (3) You and an unrelated person of the opposite sex are living 
together in

[[Page 1030]]

the same household at or after the time you apply for SSI benefits, and 
you both lead people to believe that you are husband and wife.
    (b) if more than one person would qualify as your husband or wife 
under paragraph (a) of this section, we will consider the person you are 
presently living with to be your spouse for SSI purposes.

[60 FR 16376, Mar. 30, 1995]



Sec. 416.1816  Information we need concerning marriage when you apply 
for SSI.

    When you apply for SSI benefits, we will ask whether you are 
married. If you are married, we will ask whether you are living with 
your spouse. If you are unmarried or you are married but not living with 
your spouse, we will ask whether you are living in the same household 
with anyone of the opposite sex who is not related to you. If you are, 
we will ask whether you and that person lead other people to believe 
that you are husband and wife.



Sec. 416.1821  Showing that you are married when you apply for SSI.

    (a) General rule: Proof is unnecessary. If you tell us you are 
married we will consider you married unless we have information to the 
contrary. We will also consider you married, on the basis of your 
statement, if you say you are living with an unrelated person of the 
opposite sex and you both lead people to believe you are married. 
However, if we have information contrary to what you tell us, we will 
ask for evidence as described in paragraph (c).
    (b) Exception: If you are a child to whom parental deeming rules 
apply. If you are a child to whom the parental deeming rules apply and 
we receive information from you or others that you are married, we will 
ask for evidence of your marriage. The rules on deeming parental income 
are in Sec. Sec. 416.1165 and 416.1166. The rules on deeming of 
parental resources are in Sec. 416.1202.
    (c) Evidence of marriage. If paragraph (a) or (b) of this section 
indicates that you must show us evidence that you are married, you must 
show us your marriage certificate (which can be the original 
certificate, a certified copy of the public record of marriage, or a 
certified copy of the church record) if you can. If you cannot, you must 
tell us why not and give us whatever evidence you can.

[45 FR 71795, Oct. 30, 1980. Redesignated at 46 FR 29211, May 29, 1981; 
46 FR 42063, Aug. 19, 1981, and amended at 52 FR 8889, Mar. 20, 1987]



Sec. 416.1826  Showing that you are not married when you apply for SSI.

    (a) General rule: Proof is unnecessary. If you do not live with an 
unrelated person of the opposite sex and you say that you are not 
married, we will generally accept your statement unless we have 
information to the contrary.
    (b) Exception: If you are under age 22 and have been married. If you 
are under age 22 and have been married, to prove that your marriage has 
ended you must show us the decree of divorce or annulment or the death 
certificate if you can. If you cannot, you must tell us why not and give 
us whatever evidence you can.
    (c) Exception: If you are living with an unrelated person of the 
opposite sex. (1) If you are living with an unrelated person of the 
opposite sex, you and the person you are living with must explain to us 
what your relationship is and answer questions such as the following:
    (i) What names are the two of you known by?
    (ii) Do you introduce yourselves as husband and wife? If not, how 
are you introduced?
    (iii) What names are used on mail for each of you?
    (iv) Who owns or rents the place where you live?
    (v) Do any deeds, leases, time payment papers, tax papers, or any 
other papers show you as husband and wife?
    (2) We will consider you married to the person you live with unless 
the information we have, including the answers to the questions in 
paragraph (c)(1) of this section, all considered together, show that the 
two of you do not lead people to believe that you are each other's 
husband and wife.



Sec. 416.1830  When we stop considering you and your spouse an eligible 
couple.

    We will stop considering you and your spouse an eligible couple, 
even if

[[Page 1031]]

you both remain eligible, at the beginning of whichever of these months 
comes first--
    (a) The calendar month after the month you stopped living with your 
eligible spouse, or
    (b) The calendar month after the month in which your marriage ends.

[45 FR 71795, Oct. 30, 1980. Redesignated at 46 FR 29211, May 29, 1981; 
46 FR 42063, Aug. 19, 1981, as amended at 60 FR 16376, Mar. 30, 1995]



Sec. 416.1832  When we consider your marriage ended.

    We consider your marriage ended when--
    (a) Your spouse dies;
    (b) Your divorce or annulment becomes final;
    (c) We decide that either of you is not a spouse of the other for 
purposes of husband's or wife's social security insurance benefits, if 
we considered you married only because of Sec. 416.1806(a)(2); or
    (d) You and your spouse stop living together, if we considered you 
married only because of Sec. 416.1806(a)(3).

[45 FR 71795, Oct. 30, 1980. Redesignated at 46 FR 29211, May 29, 1981; 
46 FR 42063, Aug. 19, 1981, as amended at 60 FR 16376, Mar. 30, 1995]



Sec. 416.1835  Information we need about separation or end of marriage 
after you become eligible for SSI.

    (a) If you and your spouse stop living together. If you and your 
spouse stop living together, you must promptly report that fact to us, 
so that we can decide whether there has been a change that affects 
either person's benefits. You must also answer questions such as the 
following. If you cannot answer our questions you must tell us why not 
and give us whatever information you can.
    (1) When did you stop living together?
    (2) Do you expect to live together again?
    (3) If so, when?
    (4) Where is your husband or wife living?
    (5) Is either of you living with someone else as husband and wife?
    (b) Evidence of end of marriage--(1) Death. We will accept your 
statement that your husband or wife died unless we have information to 
the contrary. If we have contrary information, you must show us the 
death certificate if you can. If you cannot, you must tell us why not 
and give us whatever evidence you can.
    (2) Divorce or annulment. If your marriage ends by divorce or 
annulment, you must show us the decree of divorce or annulment if you 
can. If you cannot, you must tell us why not and give us whatever 
evidence you can.
    (3) Other reason. If your marriage ends for reasons other than 
death, divorce, or annulment, you must give us any information we ask 
you to give us about the end of the marriage. If you cannot, you must 
explain why you cannot. We will consider all of the relevant information 
to decide if and when your marriage ends.

                        Who Is Considered a Child



Sec. 416.1851  Effects of being considered a child.

    If we consider you to be a child for SSI purposes, the rules in this 
section apply when we determine your eligibility for SSI and the amount 
of your SSI benefits.
    (a) If we consider you to be a student, we will not count all of 
your earned income when we determine your SSI eligibility and benefit 
amount. Section 416.1110 tells what we mean by earned income. Section 
416.1112(c)(2) tells how much of your earned income we will not count.
    (b) If you have a parent who does not live with you but who pays 
money to help support you, we will not count one-third of that money 
when we count your income. Section 416.1124(c)(9) discusses this rule.
    (c) If you are under age 18 and live with your parent or stepparent 
who is not eligible for SSI benefits, we consider (deem) part of his or 
her income and resources to be your own. Sections 416.1165 and 416.1166 
explain the rules and the exception to the rules on deeming your 
parent's income to be yours, and Sec. 416.1202 explains the rules and 
the exception to the rules on deeming your parent's resources to be 
yours.

[45 FR 71795, Oct. 30, 1980. Redesignated at 46 FR 29211, May 29, 1981; 
46 FR 42063, Aug. 19, 1981, and amended at 52 FR 8889, Mar. 20, 1987]

[[Page 1032]]



Sec. 416.1856  Who is considered a child.

    We consider you to be a child if--
    (a)(1) You are under 18 years old; or
    (2) You are under 22 years old and you are a student regularly 
attending school or college or training that is designed to prepare you 
for a paying job;
    (b) You are not married; and
    (c) You are not the head of a household.



Sec. 416.1861  Deciding whether you are a child: Are you a student?

    (a) Are you a student? You are a student regularly attending school 
or college or training that is designed to prepare you for a paying job 
if you are enrolled for one or more courses of study and you attend 
class--
    (1) In a college or university for at least 8 hours a week under a 
semester or quarter system;
    (2) In grades 7-12 for at least 12 hours a week;
    (3) In a course of training to prepare you for a paying job, and you 
are attending that training for at least 15 hours a week if the training 
involves shop practice or 12 hours a week if it does not involve shop 
practice (this kind of training includes anti-poverty programs, such as 
the Job Corps, and government-supported courses in self-improvement); or
    (4) Less than the amount of time given in paragraph (a) (1), (2), or 
(3) of this section for reasons you cannot control, such as illness, if 
the circumstances justify your reduced credit load or attendance.
    (b) If you have to stay home. You may be a student regularly 
attending school, college, or training to prepare you for a paying job 
if--
    (1) You have to stay home because of your disability;
    (2) You are studying at home a course or courses given by a school 
(grades 7-12), college, university, or government agency; and
    (3) A home visitor or tutor directs your study or training.
    (c) When you are not in school--(1) When school is out. We will 
consider you to be a student regularly attending school, college, or 
training to prepare you for a paying job even when classes are out if 
you actually attend regularly just before the time classes are out and 
you--
    (i) Tell us that you intend to resume attending regularly when 
school opens again; or
    (ii) Actually do resume attending regularly when school opens again.
    (2) Other times. Your counselor or teacher may believe you need to 
stay out of class for a short time during the course or between courses 
to enable you to continue your study or training. That will not stop us 
from considering you to be a student regularly attending school, 
college, or training to prepare you for a paying job if you are in--
    (i) A course designed to prepare disabled people for work; or
    (ii) A course to prepare you for a job that is specially set up for 
people who cannot work at ordinary jobs.
    (d) Last month of school. We will consider you to be a student 
regularly attending school, college, or training to prepare you for a 
paying job for the month in which you complete or stop your course of 
study or training.
    (e) When we need evidence that you are a student. We need evidence 
that you are a student if--
    (1) You are 18 years old or older but under age 22, because we will 
not consider you to be a child unless we consider you to be a student; 
or
    (2) We consider you to be a child and you expect to earn over $195 
in any 3-month period, because we will not count all of your earned 
income if we consider you to be a student.
    (f) What evidence we need. If we need evidence that you are a 
student, you must--
    (1) Show us any paper you have that shows you are a student in a 
school, college, or training program, such as a student identification 
card or tuition receipt; and
    (2) Tell us--
    (i) What courses you are taking;
    (ii) How many hours a week you spend in classes;
    (iii) The name and address of the school or college you attend or 
the agency training you; and
    (iv) The name and telephone number of someone at the school, 
college, or agency who can tell us more about your courses, in case we 
need information you cannot give us.

[[Page 1033]]



Sec. 416.1866  Deciding whether you are a child: Are you the head of a 
household?

    (a) Meaning of head of household. You are the head of a household if 
you have left your parental home on a permanent basis and you are 
responsible for the day-to-day decisions on the operation of your own 
household. If you live with your parent(s) or stepparents, we will 
ordinarily assume you are not the head of a household. However, we will 
consider you to be the head of a household if for some reason (such as 
your parent's illness) you are the one who makes the day-to-day 
decisions. You need not have someone living with you to be the head of a 
household.
    (b) If you share decision-making equally. If you live with one or 
more people and everyone has an equal voice in the decision-making (for 
example, a group of students who share off-campus housing), that group 
is not a household. Each person who has left the parental home on a 
permanent basis is the head of his or her own household.

                      Who Is Considered Your Parent



Sec. 416.1876  Effects a parent (or parents) can have on the child's 
benefits.

    Section 416.1851 (b) and (c) tells what effects a parent's income 
and resources can have on his or her child's benefits.



Sec. 416.1881  Deciding whether someone is your parent or stepparent.

    (a) We consider your parent to be--
    (1) Your natural mother or father; or
    (2) A person who legally adopted you.
    (b) We consider your stepparent to be the present husband or wife of 
your natural or adoptive parent. A person is not your stepparent if your 
natural or adoptive parent, to whom your stepparent was married, has 
died, or if your parent and stepparent have been divorced or their 
marriage has been annulled.
    (c) Necessary evidence. We will accept your statement on whether or 
not someone is your parent or stepparent unless we have information to 
the contrary. If we have contrary information, you must show us, if you 
can, one or more of the following kinds of evidence that would help to 
prove whether or not the person is your parent or stepparent: 
Certificate of birth, baptism, marriage, or death, or decree of 
adoption, divorce, or annulment. If you cannot, you must tell us why not 
and show us any other evidence that would help to show whether or not 
the person is your parent or stepparent.



                 Subpart S_Interim Assistance Provisions

    Authority: Secs. 702(a)(5) and 1631 of the Social Security Act (42 
U.S.C. 902(a)(5) and 1383).

    Source: 46 FR 47449, Sept. 27, 1981, unless otherwise noted.

                              Introduction



Sec. 416.1901  Scope of subpart S.

    (a) General. This subpart explains that we may withhold your SSI 
benefit and/or State supplementary payments and send them to the State 
(or a political subdivision of the State) as repayment for interim 
assistance it gave you while your application for SSI was pending, or 
while your SSI benefits were suspended or terminated if you are 
subsequently found to have been eligible for such benefits. Before we 
will do this, the State must have entered into an interim assistance 
agreement with us authorizing such reimbursement, and you must have 
given written authorization for us to repay the State (or a political 
subdivision of the State).
    (b) Organization of this subpart. We have organized this subpart as 
follows:
    (1) Definitions. Section 416.1902 contains definitions of terms used 
in this subpart.
    (2) Authorizations. Sections 416.1904 through 416.1908 give the 
rules that apply to your written authorization.
    (3) Interim assistance agreements. Section 416.1910 gives the 
requirements for interim assistance agreements between us and the State.
    (4) Appeals. Sections 416.1920 through 416.1922 describe your appeal 
rights in the State and in SSA.

[46 FR 47449, Sept. 27, 1981, as amended at 56 FR 19262, Apr. 26, 1991]



Sec. 416.1902  Definitions.

    For purposes of this subpart--

[[Page 1034]]

    Authorization means your written permission, in a form legally 
acceptable to us and to the State from which you received interim 
assistance, for us to withhold the appropriate SSI benefit payment and 
send it to the State.
    Interim assistance means assistance the State gives you, including 
payments made on your behalf to providers of goods or services, to meet 
your basic needs, beginning with the first month for which you are 
eligible for payment of SSI benefits and ending with, and including, the 
month your SSI payments begin, or assistance the State gives you 
beginning with the day for which your eligibility for SSI benefits is 
reinstated after a period of suspension or termination and ending with, 
and including, the month the Commissioner makes the first payment of 
benefits following the suspension or termination if it is determined 
subsequently that you were eligible for benefits during that period. It 
does not include assistance the State gives to or for any other person. 
If the State has prepared and cannot stop delivery of its last 
assistance payment to you when it receives your SSI benefit payment from 
us, that assistance payment is included as interim assistance to be 
reimbursed. Interim assistance does not include assistance payments 
financed wholly or partly with Federal funds.
    SSI benefit payment means your Federal benefit and any State 
supplementary payment made by us to you on behalf of a State (see 
subpart T of this part) which is due you at the time we make the first 
payment of benefits or when your benefits are reinstated after 
suspension or termination. Advance payment, as defined in Sec. 416.520, 
payment based upon presumptive disability or presumptive blindness, as 
defined in Sec. 416.931, or certain payments made under the 
administrative immediate payment procedure, are not considered SSI 
benefit payments for interim assistance purposes.
    State for purposes of an interim assistance agreement, means a State 
of the United States, the District of Columbia, or the Northern Mariana 
Islands. For all other purposes (for example, payment, appeals, notices) 
State also means a political subdivision of any of these.
    We, Us, or Our means the Social Security Administration.
    You or Your means someone who has applied for or is already 
receiving SSI benefits.

[46 FR 47449, Sept. 28, 1981; 46 FR 50947, Oct. 16, 1981, as amended at 
56 FR 19262, Apr. 26, 1991; 56 FR 25446, June 4, 1991; 62 FR 38455, July 
18, 1997; 64 FR 31975, June 15, 1999]

                             Authorizations



Sec. 416.1904  Authorization to withhold SSI benefits.

    We may withhold your SSI benefit payment and send it to the State to 
repay the State for the interim assistance it gave to you, if--
    (a) We have an interim assistance agreement with the State at the 
time your authorization goes into effect; and
    (b) Your authorization is in effect at the time we make the SSI 
benefit payment.



Sec. 416.1906  When your authorization is in effect.

    Your authorization for us to withhold your SSI benefit payment, to 
repay the State for interim assistance the State gives you, is effective 
when we receive it, or (if our agreement with the State allows) when we 
receive notice from the State that it has received your authorization. 
It remains in effect until--
    (a) We make the first SSI benefit payment on your initial 
application for benefits or, in the case of an authorization effective 
for a period of suspense or termination, until the initial payment 
following the termination or suspension of your benefits.
    (b) We make a final determination on your claim (if your SSI claim 
is denied, the denial is the final determination, unless you file a 
timely appeal as described in subpart N of this part);
    (c) You and the State agree to terminate your authorization; or
    (d) If earlier than the event in paragraph (a), (b), or (c) of this 
section, the date (if any) specified in your authorization.

[46 FR 47449, Sept. 27, 1981, as amended at 56 FR 19262, Apr. 26, 1991]

[[Page 1035]]



Sec. 416.1908  When we need another authorization.

    Once an event described in Sec. 416.1906 occurs, your authorization 
is no longer effective. If you reapply for SSI benefits, or the 
authorization has expired, the State must obtain a new authorization 
from you in order for us to repay the State for interim assistance it 
gives you.

                      Interim Assistance Agreements



Sec. 416.1910  Requirements for interim assistance agreement.

    An interim assistance agreement must be in effect between us and the 
State if we are to repay the State for interim assistance. The following 
requirements must be part of the agreement:
    (a) SSA to repay the State. We must agree to repay the State for 
interim assistance it gives you. Repayment to the State takes priority 
over any underpayments due you (see Sec. Sec. 416.525 and 416.542).
    (b) State to pay any excess repayment to you. The State must agree 
that, if we repay it an amount greater than the amount of interim 
assistance it gave to you, the State will--
    (1) Pay the excess amount to you no later than 10 working days from 
the date the State receives repayment from us; or
    (2) Refund the excess amount to us for disposition under the rules 
in subpart E of the this part on payment of benefits if the State cannot 
pay it to you (for example, you die or you move and the State cannot 
locate you).
    (c) State to notify you. The State must agree to give you written 
notice explaining--
    (1) How much we have repaid the State for interim assistance it gave 
you;
    (2) The excess amount, if any, due you; and
    (3) That it will give you an opportunity for a hearing if you 
disagree with State's actions regarding repayment of interim assistance.
    (d) Duration of the agreement. We and the State must agree to the 
length of time that the agreement will remain in effect.
    (e) State to comply with other regulations. The State must agree to 
comply with any other regulations that we find necessary to administer 
the interim assistance provisions.

                                 Appeals



Sec. 416.1920  Your appeal rights in the State.

    Under its interim assistance agreement with us, the State must agree 
to give you an opportunity for a hearing if you disagree with the 
State's actions regarding repayment of interim assistance. For example, 
you are entitled to a hearing by the State if you disagree with the 
State regarding the amount of the repayment the State keeps or the 
amount of any excess the State pays to you. You are not entitled to a 
Federal hearing on the State's actions regarding repayment of interim 
assistance.



Sec. 416.1922  Your appeal rights in SSA.

    If you disagree with the total amount of money we have withheld and 
sent to the State for the interim assistance it gave to you, you have a 
right to appeal to us, as described in subpart N of this part.



     Subpart T_State Supplementation Provisions; Agreement; Payments

    Authority: Secs. 702(a)(5), 1616, 1618, and 1631 of the Social 
Security Act (42 U.S.C. 902(a)(5), 1382e, 1382g, and 1383); sec. 212, 
Pub. L. 93-66, 87 Stat. 155 (42 U.S.C. 1382 note); sec. 8(a), (b)(1)-
(b)(3), Pub. L. 93-233, 87 Stat. 956 (7 U.S.C. 612c note, 1431 note and 
42 U.S.C. 1382e note); secs. 1(a)-(c) and 2(a), 2(b)(1), 2(b)(2), Pub. 
L. 93-335, 88 Stat. 291 (42 U.S.C. 1382 note, 1382e note).

    Source: 40 FR 7640, Feb. 21, 1975, unless otherwise noted.



Sec. 416.2001  State supplementary payments; general.

    (a) State supplementary payments; defined. State supplementary 
payments are any payments made by a State or one of its political 
subdivisions (including any such payments for which reimbursement is 
available from the Social Security Administration pursuant to Pub. L. 
94-23, as amended) to a recipient of supplemental security income 
benefits (or to an individual who would

[[Page 1036]]

be eligible for such benefits except for income), if the payments are 
made:
    (1) In supplementation of the Federal supplemental security income 
benefits; i.e., as a complement to the Federal benefit amount, thereby 
increasing the amount of income available to the recipient to meet his 
needs; and
    (2) Regularly, on a periodic recurring, or routine basis of at least 
once a quarter; and
    (3) In cash, which may be actual currency or any negotiable 
instrument, convertible into cash upon demand; and
    (4) In an amount based on the need or income of an individual or 
couple.
    (b) State; defined. For purposes of this subpart, State means a 
State of the United States or the District of Columbia.
    (c) Mandatory minimum supplementary payments. In order for a State 
to be eligible for payments pursuant to title XIX of the Act with 
respect to expenditures for any quarter beginning after December 1973, 
such State must have in effect an agreement with the Commissioner under 
which such State will provide to aged, blind, and disabled individuals 
(as defined in Sec. 416.202) residing in the State who were recipients 
of aid or assistance for December 1973 as defined in Sec. 416.121, 
under such State's plan approved under title I, X, XIV, or XVI of the 
Act, mandatory minimum supplementary payments beginning in January 1974 
in an amount determined in accordance with Sec. 416.2050 in order to 
maintain their income levels of December 1973. (See Sec. Sec. 416.2065 
and 416.2070.)
    (d) Supplementary payments for recipients of special SSI cash 
benefits. A State which makes supplementary payments (regardless of 
whether they are mandatory or optional and whether the payments are 
federally administered), has the option of making those payments to 
individuals who receive cash benefits under section 1619(a) of the Act 
(see Sec. 416.261), or who would be eligible to receive cash benefits 
except for their income.

[40 FR 7640, Feb. 21, 1975, as amended at 43 FR 48995, Oct. 20, 1978; 45 
FR 54748, July 18, 1980; 47 FR 15326, Apr. 9, 1982; 62 FR 38455, July 
18, 1997]



Sec. 416.2005  Administration agreements with SSA.

    (a) Agreement-mandatory only. Subject to the provisions of paragraph 
(d) of this section, any State having an agreement with the Social 
Security Administration (SSA) under Sec. 416.2001(c) may enter into an 
administration agreement with SSA under which SSA will make the 
mandatory minimum supplementary payments on behalf of such State. An 
agreement under Sec. 416.2001(c) and an administration agreement under 
this paragraph may be consolidated into one agreement.
    (b) Agreement--mandatory and optional payments. Subject to the 
provisions of paragraph (d) of this section, any State may enter into an 
agreement with SSA under which the State will provide both mandatory and 
optional State supplementary payments and elect Federal administration 
of such State supplementary payment programs. If SSA agrees to 
administer such State's optional supplementary payments, the State must 
also have SSA administer its mandatory minimum supplementary payments 
unless the State is able to provide sufficient justification for 
exemption from this requirement.
    (c) Administration--combination. Any State may enter into an 
agreement with SSA under which the State will provide mandatory minimum 
supplementary payments and elect Federal administration of such payments 
while providing optional State supplementary payments which it shall 
administer itself. If the State chooses to administer such payment 
itself, it may establish its own criteria for determining eligibility 
requirements as well as the amounts.
    (d) Conditions of administration agreement. The State and SSA may, 
subject to the provisions of this subpart, enter into a written 
agreement, in such form and containing such provisions not inconsistent 
with this part as are found necessary by SSA, under which SSA will 
administer the State supplementary payments on behalf of a State (or 
political subdivision). Under such an agreement between SSA and a State, 
specific Federal and State responsibilities for administration and

[[Page 1037]]

fiscal responsibilities will be stipulated. The regulations in effect 
for the supplemental security income program shall be applicable in the 
Federal administration of State supplementary payments except as may 
otherwise be provided in this subpart as found by SSA to be necessary 
for the effective and efficient administration of both the basic Federal 
benefit and the State supplementary payment. If the State elects options 
available under this subpart (specified in Sec. Sec. 416.2015-
416.2035), such options must be specified in the administration 
agreement.

[40 FR 7640, Feb. 21, 1975, as amended at 62 FR 312, Jan. 3, 1997]



Sec. 416.2010  Essentials of the administration agreements.

    (a) Payments. Any agreement between SSA and a State made pursuant to 
Sec. 416.2005 must provide that, if for optional supplementation, such 
State supplementary payments are made to all individuals and/or couples 
who are:
    (1) Receiving (or at the option of the State would, but for the 
amount of their income, be eligible to receive) supplemental security 
income benefits under title XVI of the Social Security Act, and
    (2) Within the variations and categories (as defined in Sec. 
416.2030) for which the State (or political subdivision) wishes to 
provide a supplementary payment, and
    (3) Residing, subject to the provisions of Sec. 416.2035(a), in 
such State (or political subdivision thereof).
    (b) Administrative costs. (1) SSA shall assess each State that had 
elected Federal administration of optional and/or mandatory State 
supplementary payments an administration fee for administering those 
payments. The administration fee is assessed and paid monthly and is 
derived by multiplying the number of State supplementary payments made 
by SSA on behalf of a State for any month in a fiscal year by the 
applicable dollar rate for the fiscal year. The number of supplementary 
payments made by SSA in a month is the total number of checks issued, 
and direct deposits made, to recipients in that month, that are composed 
in whole or in part of State supplementary funds. The dollar rates are 
as follows:
    (i) For fiscal year 1994, $1.67;
    (ii) For fiscal year 1995, $3.33;
    (iii) For fiscal year 1996, $5.00;
    (iv) For fiscal year 1997, $5.00;
    (v) For fiscal year 1998, $6.20;
    (vi) For fiscal year 1999, $7.60;
    (vii) For fiscal year 2000, $7.80;
    (viii) For fiscal year 2001, $8.10;
    (ix) For fiscal year 2002, $8.50; and
    (x) For fiscal year 2003 and each succeeding fiscal year--
    (A) The applicable rate in the preceding fiscal year, increased by 
the percentage, if any, by which the Consumer Price Index for the month 
of June of the calendar year of the increase exceeds the Consumer Price 
Index for the month of June of the calendar year preceding the calendar 
year of the increase, and rounded to the nearest whole cent; or
    (B) Such different rate as the Commissioner determines is 
appropriate for the State taking into account the complexity of 
administering the State's supplementary payment program.
    (2) SSA shall charge a State an additional services fee if, at the 
request of the State, SSA agrees to provide the State with additional 
services beyond the level customarily provided in the administration of 
State supplementary payments. The additional services fee shall be in an 
amount that SSA determines is necessary to cover all costs, including 
indirect costs, incurred by the Federal Government in furnishing the 
additional services. SSA is not required to perform any additional 
services requested by a State and may, at its sole discretion, refuse to 
perform those additional services. An additional services fee charged a 
State may be a one-time charge or, if the furnished services result in 
ongoing costs to the Federal Government, a monthly or less frequent 
charge to the State for providing such services.
    (c) Agreement period. The agreement period for a State which has 
elected Federal administration of its supplementary payments will extend 
for one year from the date the agreement was signed unless otherwise 
designated. The agreement will be automatically renewed for a period of 
one year unless either the State or SSA gives written

[[Page 1038]]

notice not to renew, at least 90 days before the beginning of the new 
period. For a State to elect Federal administration, it must notify SSA 
of its intent to enter into an agreement, furnishing the necessary 
payment specifications, at least 120 days before the first day of the 
month for which it wishes Federal administration to begin, and have 
executed such agreement at least 30 days before such day.
    (d) Modification or termination. The agreement may be modified at 
any time by mutual consent. The State or SSA may terminate the agreement 
upon 90 days written notice to the other party, provided the effective 
date of the termination is the last day of a quarter. However, the State 
may terminate the agreement upon 45 days written notice to SSA where: 
(1) The State does not wish to comply with a regulation promulgated by 
SSA subsequent to the execution of the agreement; and (2) the State 
provides such written notice within 30 days of the effective date of the 
regulation. The Secretary is not precluded from terminating the 
agreement in less than 90 days where he finds that a State has failed to 
materially comply with the provisions of paragraph (f) of this section 
or Sec. 416.2090.
    (e) Mandatory minimum State supplementation. Any administration 
agreement between SSA and a State under which SSA will make such State's 
mandatory minimum State supplementary payments shall provide that the 
State will:
    (1) Certify income and payment amount. Certify to SSA the names of 
each individual who, for December 1973 was eligible for and a recipient 
of aid or assistance in the form of money payments under a plan of such 
State approved under title I, X, XIV, or XVI of the Act (Sec. 416.121), 
together with the amount of such aid or assistance payable to each such 
individual and the amount of such individual's other income (as defined 
in Sec. 416.2050(b)(2)), and
    (2) Additional data. Provide SSA with such additional data at such 
times as SSA may reasonably require in order to properly, economically, 
and efficiently carry out such administration agreement. This shall 
include required information on changes in countable income as well as 
changes in special needs and circumstances that would result in a 
decrease in the mandatory income level being maintained by the State, 
unless the State has specified in the agreement that the minimum income 
level shall not be lowered by such changes.

[40 FR 7640, Feb. 21, 1975, as amended at 62 FR 313, Jan. 3, 1997; 63 FR 
33849, June 22, 1998]



Sec. 416.2015  Establishing eligibility.

    (a) Applications. Any person who meets the application requirements 
of subpart C of this part is deemed to have filed an application for any 
federally administered State supplementation for which he may be 
eligible unless supplementation has been waived pursuant to Sec. 
416.2047. However, a supplemental statement will be required where 
additional information is necessary to establish eligibility or to 
determine the correct payment amount.
    (b) Evidentiary requirements. The evidentiary requirements and 
developmental procedures of this part are applicable with respect to 
federally administered State supplementary payments.
    (c) Determination. Where not inconsistent with the provisions of 
this subpart, eligibility for and the amount of the State supplementary 
payment will be determined pursuant to the provisions of subparts A 
through Q of this part.
    (d) Categories; aged, blind, disabled. An applicant will be deemed 
to have filed for the State supplementary payment amount provided for 
the category under which his application for a Federal supplemental 
security income benefit is filed. As in the Federal supplemental 
security income program, an individual who establishes eligibility as a 
blind or disabled individual, and continually remains on the rolls, will 
continue to be considered blind or disabled after he attains age 65.
    (e) Concurrent categories. (1) In States where the supplementary 
payment provided for the aged category is higher than for the blind or 
disabled category aged individuals will be paid the State supplement on 
the basis of age.
    (2) If the administration agreement pursuant to Sec. 416.2005(b) 
provides for higher supplementary payments to the

[[Page 1039]]

blind or disabled than to the aged category, then, at the option of the 
State, the agreement may provide that individuals who are age 65 or over 
at time of application and who are blind or disabled may elect to 
receive such higher supplementary payments.



Sec. 416.2020  Federally administered supplementary payments.

    (a) Payment procedures. A federally administered State supplementary 
payment will be made on a monthly basis and will be included in the same 
check as a Federal benefit that is payable. A State supplementary 
payment shall be for the same month as the Federal benefit.
    (b) Maximum amount. There is no restriction on the amount of a State 
supplementary payment that the Federal Government will administer on 
behalf of a State.
    (c) Minimum amount. The Federal Government will not administer 
optional State supplementary payments in amounts less than $1 per month. 
Hence, optional supplementary payment amounts of less than $1 will be 
raised to a dollar.
    (d) Optional supplementation: nine categories possible. A State may 
elect Federal administration of its supplementary payments for up to 
nine categories, depending on the assistance titles in effect in that 
State in January 1972 (i.e., title I, X, XIV, or XVI). It can have no 
more than two categories (one for individuals and one for couples) for 
each title in effect for January 1972:
    (1) Since a State with a title XVI program had just the one title in 
effect, it can supplement only to two categories, the individual (aged, 
blind, or disabled), the couple (both of whom are aged, blind, or 
disabled).
    (2) Other States could supplement up to nine categories, depending 
on the plans they had in effect. Six of these categories would be for:
    (i) Aged Individual,
    (ii) Aged Couple,
    (iii) Blind Individual,
    (iv) Blind Couple,
    (v) Disabled Individual,
    (vi) Disabled Couple.
    (3) In addition to those enumerated in paragraph (d)(2) of this 
section, there are three additional couple categories for which a State 
may elect to provide a federally administered supplement. These 
categories are created when one individual in the couple is:
    (i) Aged and the other blind, or
    (ii) Aged and the other disabled, or
    (iii) Blind and the other disabled.

[40 FR 7640, Feb. 21, 1975, as amended at 50 FR 48579, Nov. 26, 1985]



Sec. 416.2025  Optional supplementation: Countable income.

    (a) Earned and unearned income. No less than the amounts of earned 
or unearned income which were excluded in determining eligibility for or 
amount of a title XVI supplemental security income benefit must be 
excludable by a State in the Federal-State agreement for purposes of 
determining eligibility for or amount of the State supplementary 
payment.
    (b) Effect of countable income on payment amounts. Countable income 
of an eligible individual or eligible couple is determined in the same 
manner as such income is determined under the title XVI supplemental 
security income program. Countable income will affect the amount of the 
State supplementary payments as follows:
    (1) As provided in Sec. 416.420, countable income will first be 
deducted from the Federal benefit rate applicable to an eligible 
individual or eligible couple. In the case of an eligible individual 
living with an ineligible spouse with income (the deeming provisions of 
Sec. 416.1163 apply), the Federal benefit rate from which countable 
income will be deducted is the Federal benefit rate applicable to an 
eligible couple, except that an eligible individual's payment amount may 
not exceed the amount he or she would have received if he or she were 
not subject to the deeming provisions (Sec. 416.1163(e)(2)).
    (2) If countable income is equal to or less than the amount of the 
Federal benefit rate, the full amount of the State supplementary payment 
as specified in the Federal agreement will be made.
    (3) If countable income exceeds the amount of the Federal benefit 
rate, the State supplementary benefit will be reduced by the amount of 
such excess. In the case of an eligible individual living with an 
ineligible spouse with income

[[Page 1040]]

(the deeming methodology of Sec. 416.1163 applies), the State 
supplementary payment rate from which the excess income will be deducted 
is the higher of the State supplementary rates for an eligible couple or 
an eligible individual, except that an eligible individual's payment 
amount may not exceed the amount he or she would have received if he or 
she were not subject to the deeming provisions (see Sec. 
416.1163(e)(2)). For purposes of determining the State supplementary 
couple rate, the ineligible spouse is considered to be in the same 
category as the eligible individual.
    (4) No State supplementary payment will be made where countable 
income is equal to or exceeds the sum of the Federal benefit rate and 
the State supplementary payment rate.
    (c) Effect of additional income exclusions on payment amounts. A 
State has the option of excluding amounts of earned and unearned income 
in addition to the amounts it is required to exclude under paragraph (a) 
of this section in determining a person's eligibility for State 
supplementary payments. Such additional income exclusions affect the 
amount of the State supplementary payments as follows:
    (1) Countable income (as determined under the Federal eligibility 
rules) will first be deducted from the Federal benefit rate applicable 
to an eligible individual or eligible couple.
    (2) Such countable income is then reduced by the amount of the 
additional income exclusion specified by the State.
    (3) If the remaining countable income is equal to or less than the 
amount of the Federal benefit rate, the full amount of the State 
supplementary payment will be made.
    (4) If the remaining countable income exceeds the amount of the 
Federal benefit rate, the State supplementary payment will be reduced by 
the amount of such excess.

(Secs. 1102, 1614(f), 1616(a), 1631, Social Security Act, as amended, 49 
Stat. 647, as amended, 86 Stat. 1473, 1474(a), and 1475 (42 U.S.C. 1302, 
1382c(f), 1382e(a), 1383))

[40 FR 7640, Feb. 21, 1975, as amended at 43 FR 39570, Sept. 6, 1978; 53 
FR 25151, July 5, 1988]



Sec. 416.2030  Optional supplementation: Variations in payments.

    (a) Payment level. The level of State supplementary payments may 
vary for each category the State elects to include in its federally 
administered supplement. These categorical variations of payment levels 
must be specified in the agreement between the Commissioner and the 
State. If any State has in effect for July 1974 an agreement which 
provides for variations in addition to those specified in this section, 
the State may, at its option, continue such variations but only for 
periods ending before July 1, 1976.
    (1) Geographical variations. A State may elect to include two 
different geographical variations. A third may be elected if adequate 
justification, e.g., substantial differences in living costs, can be 
demonstrated. All such variations must be readily identifiable by county 
or ZIP code or other readily identifiable factor.
    (2) Living arrangements. In addition, a State may elect up to six 
variations in recognition of the different needs which result from 
various living arrangements. If a State elects six payment level 
variations based on differences in living arrangements, one of these six 
variations must apply only to individuals in Medicaid facilities, that 
is, facilities receiving title XIX payments with respect to such persons 
for the cost of their care (see Sec. 416.211(b)(1)). In any event, 
States are limited to one payment level variation for residents of 
Medicaid facilities. Types of other living arrangements for which 
payment variations may be allowed include arrangements such as:
    (i) Living alone;
    (ii) Living with an ineligible spouse;
    (iii) Personal care facility; or,
    (iv) Domiciliary or congregate care facility.
    (b) Relationship to actual cost differences. Under the agreement, 
variations in State supplementary payment levels will be permitted for 
each living arrangement the State elects. These differences must be 
based on rational distinctions between both the types of living 
arrangements and the costs of those arrangements.
    (c) Effective month of State supplementary payment category. The 
State

[[Page 1041]]

supplementary payment category which applies in the current month will 
be used to determine the State payment level in that month. This rule 
applies even if the countable income in a prior month is used to 
determine the amount of State supplementary payment.

[40 FR 7640, Feb. 21, 1975, as amended at 50 FR 48579, Nov. 26, 1985; 56 
FR 41455, Aug. 21, 1991; 62 FR 38455, July 18, 1997]



Sec. 416.2035  Optional supplementation: Additional State options.

    (a) Residency requirement. A State or political subdivision may 
impose, as a condition of eligibility, a residency requirement which 
excludes from eligibility for State supplementary payment any individual 
who has resided in such State (or political subdivision thereof) for 
less than a minimum period prescribed by the State. Any such residency 
requirement will be specified in the agreement.
    (b) Lien and relative responsibility. A State which elects Federal 
administration of its supplementary payments may place a lien upon 
property of an individual as a consequence of the receipt of such 
payments or may require that a relative of the individual contribute to 
a reasonable extent to the support of the individual, providing it is 
stated in the agreement that:
    (1) The Commissioner has determined that the specific State laws and 
their enforcement are consistent with the supplemental security income 
program purpose of providing unencumbered cash payments to recipients; 
and
    (2) The Federal Government is not involved in the administration of 
such laws and will not vary the State supplementary payment amount it 
makes to comply with such laws; and
    (3) Neither the basic Federal benefit nor any part of the State 
supplementary payment financed by Federal funds will be subject to the 
liens or encumbrances of such laws.

[40 FR 7640, Feb. 21, 1975, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.2040  Limitations on eligibility.

    Notwithstanding any other provision of this subpart, the eligibility 
of an individual (or couple) for optional State supplementary payments 
administered by the Federal Government in accordance with this subpart 
shall be limited as follows:
    (a) Inmate of public institution. A person who is a resident in a 
public institution for a month, is ineligible for a Federal benefit for 
that month under the provision of Sec. 416.211(a), and does not meet 
the requirements for any of the exceptions in Sec. 416.211 (b), (c), or 
(d), or Sec. 416.212, also shall be ineligible for a federally 
administered State supplementary payment for that month.
    (b) Ineligible persons. No person who is ineligible for a Federal 
benefit for any month under sections 1611(e)(1)(A), (2), (3), or (f) of 
the Act (failure to file; refuses treatment for drug addiction or 
alcoholism; outside the United States) or other reasons (other than the 
amount of income) shall be eligible for such State supplementation for 
such month.
    (c) Recipient eligible for benefits under Sec. 416.212. A recipient 
who is institutionalized and is eligible for either benefit payable 
under Sec. 416.212 for a month or months may also receive federally 
administered State supplementation for that month. Additionally, a 
recipient who would be eligible for benefits under Sec. 416.212 but for 
countable income which reduces his or her Federal SSI benefit to zero, 
may still be eligible to receive federally administered State 
supplementation.

[40 FR 7640, Feb. 21, 1975, as amended at 56 FR 41455, Aug. 21, 1991; 61 
FR 10280, Mar. 13, 1996; 68 FR 40124, July 7, 2003]



Sec. 416.2045  Overpayments and underpayments; federally administered 
supplementation.

    (a) Overpayments. Upon determination that an overpayment has been 
made, adjustments will be made against future federally administered 
State supplementary payments for which the person is entitled. Rules and 
requirements (see Sec. Sec. 416.550 through 416.586) in effect for 
recovery (or waiver) of supplemental security income benefit 
overpayments shall also apply to the recovery (or waiver) of federally 
administered State supplementary overpaid amounts. If the overpaid 
person's entitlement to the State supplementary payments is terminated 
prior to recoupment of the overpaid State

[[Page 1042]]

supplementary payment amount, and the overpayment cannot be recovered 
from a Federal benefit payable under this part, the person's record will 
be annotated (specifying the amount of the overpayment) to permit 
recoupment if the person becomes reentitled to supplementary payments of 
such State or to a Federal benefit under this part.
    (b) Underpayments. Upon determination that an underpayment of State 
supplementary payments is due and payable, the underpaid amount shall be 
paid to the underpaid claimant directly, or his representative. If the 
underpaid person dies before receiving the underpaid amount of State 
supplementary payment the underpaid amount shall be paid to the 
claimant's eligible spouse. If the deceased claimant has no eligible 
spouse, no payment of the underpaid amount shall be made. (See 
Sec. Sec. 416.538 through 416.543.)

[40 FR 7640, Feb. 21, 1975, as amended at 65 FR 16815, Mar. 30, 2000]



Sec. 416.2047  Waiver of State supplementary payments.

    (a) Waiver request in writing. Any person who is eligible to receive 
State supplementary payments or who would be eligible to receive such 
State supplementary payments may waive his right to receive such 
payments if such person makes a written request for waiver of State 
supplementary payments. Any such request made at time of application for 
the Federal benefit shall be effective immediately. Any such request 
filed after the application is filed shall be effective the month the 
request is received in a social security office, or earlier if the 
recipient refunds to the Social Security Administration the amount of 
any supplementary payment(s) made to him for the subject period.
    (b) Revocation of waiver. Any individual who has waived State 
supplementary payments may revoke such waiver at any time by making a 
written request to any social security office. The revocation will be 
effective the month in which it is filed. The date such request is 
received in a social security office or the postmarked date, if the 
written request was mailed, will be the filing date, whichever is 
earlier.



Sec. 416.2050  Mandatory minimum State supplementation.

    (a) Determining the amount. The amount of a mandatory State 
supplementary payment in the case of any eligible individual or couple 
for any month is equal to:
    (1) The amount by which such individual or couple's December 1973 
income (as defined in paragraph (b) of this section) exceeds the amount 
of such individual or couple's title XVI benefit plus other income which 
would have been used by such State in computing the assistance payable 
under the State's approved plan for such month; or
    (2) Such greater amount as the State may specify.
    (b) December 1973 income. ``December 1973 income'' means an amount 
equal to the aggregate of:
    (1) Money payments. The amount of the aid or assistance in the form 
of money payments (as defined in 45 CFR 234.11(a)) which an individual 
would have received (including any part of such amount which is 
attributable to meeting special needs or special circumstances) under a 
State plan approved under title I, X, XIV, or XVI of the Act in 
accordance with the terms and conditions of such plan relating to 
eligibility for and amount of such aid or assistance payable thereunder 
which were in effect for the month of June 1973 together with the bonus 
value of food stamps for January 1972 if for such month such individual 
resides in a State which SSA has determined provides supplementary 
payments the level of which has been found by SSA pursuant to section 8 
of Pub. L. 93-233 (87 Stat. 956) to have been specifically increased so 
as to include the bonus value of food stamps, and
    (2) Income. The amount of the income of such individual other than 
aid or assistance, received by such individual in December 1973, 
remaining after application of all appropriate income exclusions and 
used in computation of the amount of aid or assistance, minus any such 
income which did not result, but which if properly reported, would have 
resulted in a reduction in the amount of such aid or assistance. Income, 
which because a State paid less than 100% of its standard of need, did 
not

[[Page 1043]]

cause a reduction in the amount of aid or assistance is included.
    (c) Special needs or circumstances. Special needs or circumstances 
include needs of essential persons (as defined in Sec. 416.222), 
special allowances for housing, and such other situations for which 
money payments to or for an eligible individual were made under a State 
plan approved under title I, X, XIV, or XVI of the Act as in effect for 
June 1973.
    (d) Optional supplement payable. A recipient meeting the 
requirements of paragraph (a) of this section who would otherwise 
qualify for a payment under a State's program of optional State 
supplementation (provided for by Sec. 416.2010) which is greater than 
the amount required by paragraph (a) of this section, shall be paid such 
greater amount.

[40 FR 7640, Feb. 21, 1975, as amended at 51 FR 10616, Mar. 14, 1986; 62 
FR 313, Jan. 3, 1997]



Sec. 416.2055  Mandatory minimum supplementation reduced.

    If for any month after December 1973 there is a change with respect 
to any special need or special circumstance which, if such change had 
existed in December 1973, would have caused a reduction in the amount of 
such individual's aid or assistance payment, then, for such month and 
for each month thereafter, the amount of the mandatory minimum 
supplement payable to such individual may, at the option of the State, 
be reduced in accordance with the terms and conditions of the State's 
plan approved under title I, X, XIV, or XVI of the Act in effect for the 
month of June 1973.



Sec. 416.2060  Mandatory minimum supplementary payments not applicable.

    An individual eligible for mandatory minimum supplementary payments 
from a State beginning in January 1974 shall not be eligible for such 
payments:
    (a) Month after the month of death. Beginning with the month after 
the month in which the individual dies; or
    (b) Not aged, blind, or disabled. Beginning with the first month 
after the month in which such individual ceases to be an aged, blind, or 
disabled individual (as defined in Sec. 416.202); or
    (c) Not entitled to a Federal payment. During any month in which 
such individual was ineligible to receive supplemental income benefits 
under title XVI of the Social Security Act by reason of the provisions 
of section 1611(e) (1)(A), (2) or (3), 1611(f), or 1615(c) of such Act; 
or
    (d) Month of change in residence. During any full month such 
individual is not a resident of such State.



Sec. 416.2065  Mandatory minimum State supplementation: Agreement deemed.

    A State shall be deemed to have entered into an agreement with the 
Commissioner under which such State shall provide mandatory minimum 
supplementary payments if such State has entered into an agreement with 
the Commissioner under section 1616 of the Act under which:
    (a) Other eligible individuals. Supplementary payments are made to 
individuals other than those aged, blind, and disabled individuals who 
were eligible to receive aid or assistance in the form of money payments 
for the month of December 1973 under a State plan approved under title 
I, X, XIV, or XVI of the Act, under terms and conditions of such plan in 
effect for June 1973, and
    (b) Minimum requirements. Supplementary payments which meet the 
mandatory minimum requirements of this subpart are payable to all aged, 
blind, or disabled individuals who were eligible to receive aid or 
assistance in the form of money payments for the month of December 1973 
under a State plan approved under title I, X, XIV, or XVI of the Act, 
under terms and conditions of such plan in effect for June 1973.

[40 FR 7640, Feb. 21, 1975, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.2070  Mandatory supplementation: State compliance not applicable.

    The requirement that a State must have in effect an agreement with 
the Commissioner whereby such State shall provide individual aged, 
blind, and disabled recipients residing in the

[[Page 1044]]

State mandatory minimum supplementary payments beginning in January 1974 
shall not be applicable in the case of any State where:
    (a) State constitution. The State constitution limits expenditures 
that may be paid as public assistance to, or on behalf of, any needy 
person to an amount that does not exceed the amount of State public 
assistance payments that are matched by Federal funds under title I, IV, 
X, XIV, XVI or XIX of the Social Security Act making it impossible for 
such State to enter into and commence carrying out (on January 1, 1974) 
such agreement with the Commissioner, and
    (b) Attorney General decision. The Attorney General (or other 
appropriate State official) has, prior to July 1, 1973, made a finding 
that the State constitution of such State contains limitations which 
prevent such State from making supplementary payments of the type 
described in section 1616 of the Act.

[40 FR 7640, Feb. 21, 1975, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.2075  Monitoring of mandatory minimum supplementary payments.

    (a) Access to records. Any State entering into an agreement with the 
Commissioner whereby such State will provide mandatory minimum 
supplementary payments in accordance with Sec. 416.2001(c) shall agree 
that the Commissioner shall have access to and the right to examine any 
directly pertinent books, documents, papers, and records of the State 
involving transactions related to this agreement.
    (b) Additional data. Any State entering into an agreement in 
accordance with Sec. 416.2005 shall provide the Commissioner with such 
additional data at such times as the Commissioner may reasonably require 
in order to properly, economically, and efficiently be assessed of such 
State's compliance with such State agreements.

[40 FR 7640, Feb. 21, 1975, as amended at 62 FR 38455, July 18, 1997]



Sec. 416.2090  State funds transferred for supplementary payments.

    (a) Payment transfer and adjustment. (1) Any State which has entered 
into an agreement with SSA which provides for Federal administration of 
such State's supplementary payments shall transfer to SSA:
    (i) An amount of funds equal to SSA's estimate of State 
supplementary payments for any month which shall be made by SSA on 
behalf of such State; and
    (ii) An amount of funds equal to SSA's estimate of administration 
fees for any such month determined in the manner described in Sec. 
416.2010(b)(1); and
    (iii) If applicable, an amount of funds equal to SSA's determination 
of the costs incurred by the Federal government in furnishing additional 
services for the State as described in Sec. 416.2010(b)(2).
    (2) In order for SSA to make State supplementary payments on behalf 
of a State for any month as provided by the agreement, the estimated 
amount of State funds referred to in paragraph (a)(1)(i) of this 
section, necessary to make those payments for the month, together with 
the estimated amount of administration fees referred to in paragraph 
(a)(1)(ii) of this section, for that month, must be on deposit with SSA 
on the State supplementary payment transfer date, which is the fifth 
Federal business day following the day in the month that the regularly 
recurring monthly supplemental security income payments are issued. The 
additional services fee referred to in paragraph (a)(1)(iii) of this 
section shall be on deposit with SSA on the date specified by SSA. The 
amount of State funds paid to SSA for State supplementary payments and 
the amount paid for administration fees will be adjusted as necessary to 
maintain the balance with State supplementary payments paid out by SSA 
on behalf of the State, and administration fees owed to SSA, 
respectively.
    (b) Accounting of State funds. (1) As soon as feasible, after the 
end of each calendar month, SSA will provide the State with a statement 
showing, cumulatively, the total amounts paid by SSA on behalf of the 
State during the current Federal fiscal year; the fees charged by SSA to 
administer such supplementary payments; any additional services fees 
charged the State; the State's total liability therefore; and the end-
of-month balance of the State's cash on deposit with SSA.

[[Page 1045]]

    (2) SSA shall provide an accounting of State funds received as State 
supplementary payments, administration fees, and additional services 
fees, within three calendar months following the termination of an 
agreement under Sec. 416.2005.
    (3) Adjustments will be made because of State funds due and payable 
or amounts of State funds recovered for calendar months for which the 
agreement was in effect. Interest will be incurred by SSA and the States 
with respect to the adjustment and accounting of State supplementary 
payments funds in accordance with applicable laws and regulations of the 
United States Department of the Treasury.
    (c) State audit. Any State entering into an agreement with SSA which 
provides for Federal administration of the State's supplementary 
payments has the right to an audit (at State expense) of the payments 
made by SSA on behalf of such State. The Secretary and the State shall 
mutually agree upon a satisfactory audit arrangement to verify that 
supplementary payments paid by SSA on behalf of the State were made in 
accordance with the terms of the administration agreement under Sec. 
416.2005. Resolution of audit findings shall be made in accordance with 
the provisions of the State's agreement with SSA.
    (d) Advance payment and adjustment not applicable. The provisions of 
paragraphs (a) and (b) of this section shall not apply with respect to 
any State supplementary payment for which reimbursement is available 
from the Social and Rehabilitation Service pursuant to the Indochina 
Migration and Refugee Assistance Act of 1975 (Pub. L. 94-23; 89 Stat. 
87), as amended, since such amounts are not considered to be State 
supplementary payments.

[40 FR 7640, Feb. 21, 1975, as amended at 41 FR 36018, Aug. 26, 1976; 62 
FR 313, Jan. 3, 1997]



Sec. 416.2095  Pass-along of Federal benefit increases.

    (a) General. This section and the four sections that follow describe 
the rules for passing along increases in the Federal SSI benefit to 
recipients of State supplementary payments.
    (1) Section 416.2095(b) indicates when the pass-along rules apply to 
State supplementary payments.
    (2) Section 416.2096 describes the basic pass-along rules. The 
States must have an agreement to ``pass-along'' increases in Federal SSI 
benefits. A State passes along an increase when it maintains (rather 
than decreases) the levels of all its supplementary payments after a 
Federal benefit increase has occurred. Generally, a pass-along of the 
increase permits recipients to receive an additional amount in combined 
benefits equal to the Federal benefit increase. Except for the 
supplementary payment level made to residents of Medicaid facilities 
(see Sec. 416.2096(d)), a State can decrease one or more of its payment 
levels if it meets an annual total expenditures test.
    (3) Section 416.2097 explains the required combined supplementary/
SSI payment level.
    (4) Section 416.2098 explains how to compute the March 1983, 
December 1981, and December 1976 supplementary payment levels.
    (5) Section 416.2099 discusses what information a State must provide 
to the Commissioner concerning its supplementation programs so that the 
Commissioner can determine whether the State is in compliance. That 
section also discusses the basis for findings of noncompliance and what 
will occur if a State is found out of compliance.
    (b) When the pass-along provisions apply. (1) The pass-along 
requirements apply to all States (and the District of Columbia) that 
make supplementary payments on or after June 30, 1977, and wish to 
participate in the Medicaid program.
    (2) The pass-along requirements apply to both optional State 
supplementary payments of the type described in Sec. 416.2001(a) and 
mandatory minimum State supplementary payments as described in Sec. 
416.2001(c), whether or not these State supplementary payments are 
Federally administered.

[[Page 1046]]

    (3) The requirements apply to State supplementary payments both for 
recipients who receive Federal SSI benefits and those who, because of 
countable income, receive only a State supplementary payment.
    (4) The requirements apply to State supplementary payments for 
recipients eligible for a State supplementary payment on or after June 
30, 1977.
    (5) Supplementary payments made by a State include payments made by 
a political subdivision (including Indian tribes) where--
    (i) The payment levels are set by the State; and
    (ii) The payments are funded in whole or in part by the State.

[52 FR 36241, Sept. 28, 1987, as amended at 54 FR 19165, May 4, 1989; 62 
FR 38455, July 18, 1997]



Sec. 416.2096  Basic pass-along rules.

    (a) State agreements to maintain supplementary payment levels. (1) 
In order to be eligible to receive Medicaid reimbursement, any State 
that makes supplementary payments, other than payments to residents of 
Medicaid facilities where Medicaid pays more than 50 percent of the cost 
of their care (see paragraph (d) of this section for definition of 
Medicaid facility and Sec. 416.414 for discussion of the reduced SSI 
benefit amount payable to residents of Medicaid facilities), on or after 
June 30, 1977, must have in effect an agreement with the Commissioner. 
In this agreement--
    (i) The State must agree to continue to make the supplementary 
payments;
    (ii) For months from July 1977 through March 1983, the State must 
agree to maintain the supplementary payments at levels at least equal to 
the December 1976 levels (or, if a State first makes supplementary 
payments after December 1976, the levels for the first month the State 
makes supplementary payments). For months in the period July 1, 1982 
through March 31, 1983, a State may elect to maintain the levels 
described in paragraph (b)(2) of this section; and
    (iii) For months after March 1983, the State must agree to maintain 
supplementary payments at least sufficient to maintain the combined 
supplementary/SSI payment levels in effect in March 1983, increased by 
any subsequent SSI benefit increases, except as provided in Sec. 
416.2097(b) and Sec. 416.2097(c).
    (2) We will find that the State has met the requirements of 
paragraph (a)(1) of this section if the State has the appropriate 
agreement in effect and complies with the conditions in either paragraph 
(b) or (c) of this section. We will consider a State to have made 
supplementary payments on or after June 30, 1977, unless the State 
furnishes us satisfactory evidence to the contrary.
    (b) Meeting the pass-along requirements--supplementary payment 
levels. The provisions of this paragraph do not apply to the 
supplementary payment level for residents of Medicaid facilities (see 
paragraph (d) of this section).
    (1) We will consider a State to have met the requirements for 
maintaining its supplementary payment levels (described in Sec. 
416.2098) for a particular month or months after March 1983 if the 
combined supplementary/SSI payment levels have not been reduced below 
the levels in effect in March 1983 (or if a State first made 
supplementary payments after March 1983, the combined supplementary/SSI 
payment levels in effect the first month the State made supplementary 
payments), increased by any subsequent Federal SSI benefit increases, 
except as provided in Sec. 416.2097(b) and Sec. 416.2097(c). We will 
consider a State to have met the requirements for maintaining its 
supplementary payment levels for a particular month or months between 
June 1977 and April 1983 if the supplementary payment levels have not 
been reduced below the levels in effect in December 1976 (or if a State 
first made supplementary payments after December 1976, the levels in 
effect the first month the State made supplementary payments, or in 
certain cases described in paragraph (b)(2) of this section, the levels 
in effect in December 1981.)
    (2) We will also consider a State to have met the requirements for 
maintaining its supplementary payment levels for a particular month or 
months in the period July 1, 1982, through March 31, 1983, if the State 
had met the requirements of paragraph (c) of this section for a 
particular month or months in the 12-month period July

[[Page 1047]]

1, 1981 through June 30, 1982, and, with respect to any month in the 
period July 1, 1982 through March 31, 1983, the State maintained the 
payment levels in effect in December 1981.
    (3) If a State reduced any of its supplementary payment levels for a 
month or months within any 12-month period beginning with the effective 
date of a Federal benefit increase, we will consider the State to have 
met the requirement to maintain its supplementary payment levels if--
    (i) Within 12 months after the relevant 12-month period, the State 
restores the levels retroactively; and
    (ii) The State makes a single retroactive benefit payment to each of 
the beneficiaries eligible for the retroactive payment.
    (c) Meeting the passalong requirement--total expenditures. 
Exception-- The provisions of this paragraph do not apply to the 
supplementary payment level for residents of Medicaid facilities (see 
paragraph (d) of this section).
    (1) If a State does not meet the conditions in paragraph (b) of this 
section, we will consider a State to have met the requirement for 
maintaining supplementary payment levels for a particular month or 
months if total State expenditures for supplementary payments in the 12-
month period within which the month or months fall, beginning on the 
effective date of a Federal SSI benefit increase, are at least equal to 
the total State expenditures for supplementary payments in the 12-month 
period immediately before the Federal SSI benefit increase provided that 
the State was in compliance for such preceding 12-month period. The 
combined Federal/State payment level for those persons receiving a 
mandatory minimum State supplementary payment can be no lower than the 
recipient's total income for December 1973 as defined in section 
212(a)(3)(B) of Pub. L. 93-66.
    (2) If total State expenditures in the relevant 12-month period are 
less than the total expenditures in the preceding 12-month period (a 
``shortfall''), we also will consider a State to have met the 
requirement for maintaining supplementary payment levels for the 
relevant 12-month period if in the following 12-month period the State 
increases the total expenditures required for that period by an amount 
at least equal to the amount of the shortfall in the relevant 12-month 
period. The increased amount up to the amount needed to correct the 
shortfall shall be deemed to be an expenditure in the relevant 12-month 
period, for pass-along purposes only. (See paragraph (c)(5) of this 
section.)
    (3)(i) Exception for the 6-month period from July 1, 1983 through 
December 31, 1983: We will consider the State to have met the total-
expenditures requirement for the 6-month period July 1, 1983 through 
December 31, 1983, if--
    (A) Total expenditures for State supplementary payments for the 
period July 1, 1983 through December 31, 1983, equal or exceed the total 
of such expenditures for the period July l, 1982 through December 31, 
1982;
    (B) Total expenditures for State supplementary payments for the 
period January 1, 1983 through December 31, 1983, equal or exceed the 
total of such expenditures for the period January 1, 1982 through 
December 31, 1982; or
    (C) Total expenditures for State supplementary payments for the 
period July 1, 1983 through December 31, 1983 equal or exceed one-half 
of the total of such expenditures for the period July 1, 1982 through 
June 30, 1983. The provisions of paragraphs (c)(4) and (c)(5) of this 
section and of Sec. 416.2099 (b), (c), and (d) shall apply to this 6-
month period in the same manner as they apply to the 12-month periods 
referred to therein.
    (ii) Exception for the 12-month period ending June 30, 1981: If a 
State did not meet the conditions in paragraph (b) of this section, we 
will consider a State to have met the maintenance-of-supplementary-
payment-levels requirement for this 12-month period if the State's 
expenditures for supplementary payments in that period were at least 
equal to its expenditures for such payments for the 12-month period 
ending June 30, 1977 (or, if the State made no supplementary payments in 
that period, the expenditures for the first 12-month period ending June 
30 in which the State made such payments); if a State made additional 
State supplementary payments during the period July 1, 1981 through June 
30, 1982, in

[[Page 1048]]

order to make up a shortfall in the 12-month period ending June 30, 1981 
(determined by a comparison with the preceding 12-month period) which 
later resulted in an excess payment (determined by comparison with the 
12-month period July 1, 1976 through June 30, 1977) we will credit the 
State with the amount of the excess payments if the State so requests. 
This credit will be applied to any shortfall(s) in total expenditures 
(should one exist) in any period(s) ending on or before December 31, 
1986.
    (4) Total State expenditures for supplementary payments are the 
State's total payments for both mandatory minimum and optional State 
supplementary payments in the appropriate 12-month period less any 
amounts deemed to be expenditures for another 12-month period under 
paragraph (c)(2) of this section, less the amount of any payments 
recovered and other adjustments made in that period. Total State 
expenditures do not include State administrative expenses, interim 
assistance payments, vendor payments, or payments made under other 
Federal programs, such as titles IV, XIX, or XX of the Social Security 
Act.
    (5) Adjustments in total State supplementary payments made after the 
expiration of the relevant 12-month period for purposes of meeting total 
State expenditures under paragraph (c) of this section shall be 
considered a State expenditure in the relevant 12-month period only for 
purposes of the pass-along requirement. For purposes of Sec. 416.2090 
of this part, which discusses the rules for limitation on fiscal 
liability of States (hold harmless), these retroactive adjustments are 
State expenditures when made and shall be counted as a State expenditure 
in the fiscal year in which the adjustments are made.
    (6) To determine whether a State's expenditures for supplementary 
payments in the 12-month period beginning on the effective date of any 
increase in the level of SSI benefits are not less than the State's 
expenditures for the payments in the preceding 12-month period, in 
computing the State's expenditures, we disregard, pursuant to a one-time 
election of the State, all expenditures by the State for the retroactive 
supplementary payments that are required to be made under the Sullivan 
v. Zebley, 493 U.S. 521 (1990) class action.
    (d) Payments to residents to Medicaid facilities. A Medicaid 
facility is a medical care facility where Medicaid pays more than 50 
percent of the cost of a person's care. In order to be eligible to 
receive Medicaid reimbursement, any State that has a supplementary 
payment level for residents of Medicaid facilities on or after October 
1, 1987, must have in effect an agreement with the Commissioner to 
maintain such supplementary payment level at least equal to the October 
1987 level (or if a State first makes such supplementary payments after 
October 1, 1987, but before July 1, 1988, the level for the first month 
the State makes such supplementary payments).

[52 FR 36241, Sept. 28, 1987, as amended at 54 FR 19165, May 4, 1989; 56 
FR 55453, Oct. 28, 1991; 62 FR 30984, June 6, 1997; 62 FR 38455, July 
18, 1997; 65 FR 16815, Mar. 30, 2000]



Sec. 416.2097  Combined supplementary/SSI payment levels.

    (a) Other than the level for residents of Medicaid facilities (see 
paragraph (d) of this section), the combined supplementary/SSI payment 
level for each payment category that must be provided in any month after 
March 1983 (or if a State first made supplementary payments after March 
1983, the combined supplementary SSI payment levels in effect the first 
month the State made supplementary payments) in order for a State to 
meet the requirement of the first sentence of Sec. 416.2096(b) is the 
sum of--
    (1) The SSI Federal benefit rate (FBR) for March 1983 for a 
recipient with no countable income;
    (2) That portion of the July 1983 benefit increase computed in 
accordance with paragraph (b) of this section;
    (3) The full amount of all SSI benefit increases after July 1983; 
and
    (4) The State supplementary payment level for March 1983 as 
determined under Sec. 416.2098.
    (b) The monthly FBR's were increased in July 1983 by $20 for an 
eligible individual and $30 for an eligible couple, and the monthly 
increment for essential persons was increased by $10

[[Page 1049]]

in lieu of the expected cost-of-living adjustment which was delayed 
until January 1984. However, in computing the required combined 
supplementary/SSI payment levels for the purpose of determining pass-
along compliance, we use only the amounts by which the FBR's and the 
essential person increment would have increased had there been a cost-
of-living adjustment in July 1983 (a 3.5 percent increase would have 
occurred). These amounts are $9.70 for an eligible individual, $14.60 
for an eligible couple and $4.50 for an essential person.
    (c) For the 24-month period January 1, 1984, through December 31, 
1985, a State will not be found out of compliance with respect to its 
payment levels if in the period January 1, 1986, through December 31, 
1986, its supplementary payment levels are not less than its 
supplementary payment levels in effect in December 1976 increased by the 
percentage by which the FBR has increased after December 1976 and before 
February 1986. The FBR for an individual in December 1976 was $167.80. 
The FBR for an individual in effect on January 31, 1986, was $336.00, an 
increase of 100.24 percent over the December 1976 FBR. In order for a 
State to take advantage of this provision for the 24-month period 
January 1, 1984, through December 31, 1985, the State supplementary 
payment levels in effect for calendar year 1986 must be at least 100.24 
percent higher than the State supplementary payment levels in effect in 
December 1976. This provision does not apply to State supplementary 
payments to recipients in Federal living arrangement ``D'' (residents of 
a medical facility where title XIX pays more than 50 percent of the 
costs).
    (d) The combined supplementary/SSI payment level which must be 
maintained for residents of Medicaid facilities is the State supplement 
payable on October 1, 1987, or if no such payments were made on October 
1, 1987, the supplementary payment amount made in the first month that a 
supplementary payment was made after October 1987 but before July 1, 
1988, plus the Federal benefit rate in effect in October 1987 increased 
by $5 for an individual/$10 for a couple effective July 1, 1988.

[52 FR 36242, Sept. 28, 1987, as amended at 54 FR 19165, May 4, 1989; 54 
FR 23018, May 30, 1989]



Sec. 416.2098  Supplementary payment levels.

    (a) General. For the purpose of determining the combined 
supplementary/SSI payment levels described in Sec. 416.2097(a) (i.e., 
the levels that must be provided in any month after March 1983), the 
supplementary payment level, except for the level for residents of 
Medicaid facilities (see Sec. 416.2097(d)), for each payment category 
must be no less than the total State payment for March 1983 for that 
payment category that a State provided an eligible individual (or 
couple) with no countable income in excess of the FBR for March 1983. 
For States that did not make supplementary payments in March 1983, the 
supplementary payment level for each payment category must be no less 
than the total State payment for the first month after March 1983 in 
which a State makes supplementary payments.
    (b) Calculation of the required mandatory minimum State 
supplementary payment level. (1) Except for States described in 
paragraph (b)(2) of this section, the mandatory minimum State 
supplementary payment level for March 1983 is a recipient's December 
1973 income, as defined in section 212(a)(3)(B) of Pub. L. 93-66, plus 
any State increases prior to April 1983, less any reductions made at any 
time after December 1973 due to changes in special needs or 
circumstances, less the March 1983 FBR. The amount determined under the 
previous sentence shall continue for April, May, and June 1983. For July 
1983 and later the amount calculated in the first sentence shall 
continue except that it may be reduced by the amount of the July 1983 
Federal increase that was not related to the cost of living (i.e., 
$10.30), so long as that reduction does not cause the mandatory minimum 
State supplementary level to fall below that required by section 
212(a)(3)(A) of Pub. L. 93-66.
    (2) Section 1618(c) of the Act permitted any State that had 
satisfied the requirements of section 1618 of the Act

[[Page 1050]]

by the total-expenditures method for the 12-month period July 1, 1981, 
through June 30, 1982, and that elected to change and meet the section 
1618 requirements by the maintenance-of-payment-levels method for the 
period July 1, 1982, through June 30, 1983, to do so by paying benefits 
at levels no lower than the levels of such payments in effect for 
December 1981. However, a recipient's December 1981 total income 
(December 1981 mandatory minimum State supplement plus the FBR) could 
not be less than the recipient's total income for December 1973 as 
defined in section 212(a)(3)(B) of Pub. L. 93-66. For a State that 
elected the option in the preceding two sentences, the mandatory minimum 
State supplementary payment level for March 1983 is a recipient's 
December 1981 total income (but not less than the total income for 
December 1973 as defined by section 212(a)(3)(B) of Pub. L. 93-66) plus 
any State increases after December 1981 and prior to April 1983, less 
any reductions made at any time after December 1981 due to changes in 
special needs or circumstances, less the March 1983 FBR. The amount 
determined under the previous sentence shall continue for April, May, 
and June 1983. For July 1983 and later, the amount calculated under the 
preceding sentence defining the required March 1983 mandatory minimum 
State supplementary payment level would continue except that it may be 
reduced by the amount of the July 1983 Federal increase that was not 
related to the cost of living (i.e., $10.30), so long as that reduction 
does not cause the mandatory minimum State supplementary level to fall 
below that required by section 212(a)(3)(A) of Pub. L. 93-66.
    (c) Calculation of the required optional State supplementary payment 
level for flat grant amounts. The optional State supplementary payment 
level for March 1983 for flat grant amounts is the total amount that an 
eligible individual (or couple) with no countable income received for 
March 1983 in excess of the FBR for March 1983. The amount determined 
under the previous sentence shall continue for April, May, and June 
1983. For July 1983 and later the amount calculated in the first 
sentence shall continue except that it may be reduced by the amount of 
the July 1983 Federal increase that was not related to the cost of 
living (i.e., $10.30). If the State varied its payment levels for 
different groups of recipients (e.g., paid recipients different amounts 
based on eligibility categories, geographic areas, living arrangements, 
or marital status), each variation represents a separate supplementary 
payment level.
    (d) Calculation of the required optional State supplementary payment 
level for individually budgeted grant amounts. The optional State 
supplementary payment level for individually budgeted grant amounts for 
March 1983 is the amount that the State budgeted for March 1983 in 
excess of the March 1983 FBR for an eligible individual (or couple) 
having the same needs and no countable income. The amount determined 
under the previous sentence shall continue for April, May, and June 
1983. For July 1983 and later the amount calculated in the first 
sentence shall continue except that it may be reduced by the amount of 
the July 1983 Federal increase that was not related to the cost of 
living (i.e., $10.30).
    (e) Optional State supplementary payment level for per diem based 
grant amounts. (1) The optional State supplementary payment level for 
March 1983 for per diem grant amounts is the total dollar amount that 
the State paid to an eligible individual (or couple) with no countable 
income at rates in effect for March 1983 (number of days in the calendar 
month multiplied by the March 1983 per diem rate plus any March 1983 
personal needs allowance) in excess of the March 1983 FBR.

    Example: 

March 1983:
     $15.40  Per diem rate.
        x31  Days in month.
------------
     477.40
 
     477.40
     +42.00  Personal needs allowance.
------------
     519.40
 
     519.40  Combined State supplementary/SSI payment.
    -284.30  March 1983 FBR.
------------
     235.10  State supplementary payment level.
 

    (2) The optional State supplementary payment level for months 
subsequent to March 1983 for per diem grant

[[Page 1051]]

amounts is the total dollar amount that the State paid to an individual 
(or couple) with no countable income at rates in effect in March 1983 
(number of days in the calendar month multiplied by the March 1983 per 
diem rate plus any March 1983 personal needs allowance) in excess of the 
March 1983 FBR for an individual (or couple) with no countable income 
increased by all FBR increases subsequent to March 1983 with the 
exception of the July 1, 1983 increase. For the July 1, 1983 increase to 
the FBR, a State need pass-along only that portion of the increase which 
represented the increase in the cost of living adjustment (3.5 percent).

    Example: Note: Example assumes the State passed along only $9.70 of 
the $20.00 increase in the FBR effective July 1, 1983.
    The March 1983 combined supplementary/SSI payment level for a 31-day 
month was $519.40.

July 1983
 level:
    $519.40  March 1983 combined payment.
      +9.70  July 1983 COLA-equivalent.
------------
     529.10  Required July 1983 combined payment level.
     529.10  Required July 1983 combined payment level.
    -304.30  July 1983 FBR.
------------
     224.80  Required State Supplementary payment level.
     529.10  Required July 1983 combined payment level.
     -42.00  Personal needs allowance.
------------
     487.10
     487.10
        +31  Days in month.
------------
      15.71  Per diem rate.
 

    The required July 1983 combined supplementary/SSI payment level for 
a 31-day month was $529.10. This amount is equal to the March 1983 
combined payment amount for a 31-day month plus the July 1983 COLA-
equivalent ($519.40 + $9.70).

    (f) Required Optional State supplementary payment level for months 
prior to April 1983. In determining pass-along compliance under the 
maintenance-of-payment-levels test for months from July 1977 through 
March 1983, we used December 1976 (or December 1981 under the 
circumstances described in paragraph (g) of this section) as the 
standard month for determining the required State supplementary payment 
level. To determine the December 1976 State supplementary payment levels 
for categories described in paragraphs (a) through (e) of this section 
substitute ``December 1976'' for ``March 1983'' and ``January 1977'' for 
``April 1983'' whenever they appear in these paragraphs only.
    (g) Alternative required Optional State supplementary payment level 
for July 1982 through March 1983. States which were in compliance solely 
under the total-expenditures test for the 12-month period ending June 
30, 1982, had the option of substituting December 1981 for December 1976 
and switching to the maintenance-of-payment-levels test for July 1982 
through March 1983 (see Sec. 416.2096(b)(2)). If this situation 
applies, determine the December 1981 State supplementary payment levels 
for categories described in paragraphs (a) through (e) of this section 
by substituting ``December 1981'' for ``March 1983'' and ``January 
1982'' for ``April 1983'' whenever they appear in these paragraphs only.

[52 FR 36243, Sept. 28, 1987; 53 FR 4135, Feb. 12, 1988, as amended at 
54 FR 19165, May 4, 1989; 54 FR 23018, May 30, 1989]



Sec. 416.2099  Compliance with pass-along.

    (a) Information regarding compliance. Any State required to enter 
into a pass-along agreement with the Commissioner shall provide 
appropriate and timely information to demonstrate to the Commissioner's 
satisfaction that the State is meeting the pass-along requirements. The 
information shall include, where relevant--
    (1) The State's December 1976 supplementary payment levels, any 
subsequent supplementary payment levels, and any change in State 
eligibility requirements. If the State made no supplementary payments in 
December 1976, it shall provide such information about the first month 
in which it makes supplementary payments;
    (2) The State's March 1983 supplementary payment levels, any 
subsequent supplementary payment levels, and any changes in State 
eligibility requirements;
    (3) The total State expenditures for supplementary payments in the 
12-month period beginning July 1976 through June 1977, in each 
subsequent 12-month period, and in any other 12-

[[Page 1052]]

month period beginning on the effective date of a Federal SSI benefit 
increase. The State shall also submit advance estimates of its total 
supplementary payments in each 12-month period covered by the agreement;
    (4) The total State expenditures for supplementary payments in the 
6-month periods July 1, 1982 through December 31, 1982 and July 1, 1983 
through December 31, 1983; and
    (5) The State supplementary payment level payable to residents of 
Medicaid facilities (see Sec. 416.2096(d)) on October 1, 1987 (or, if a 
State first makes such supplementary payments after October 1, 1987, but 
before July 1, 1988, the level for the month the State first makes such 
supplementary payments). The State shall also report all changes in such 
payment levels.
    (b) Records. Except where the Commissioner administers the State 
supplementary payments, the State shall maintain records about its 
supplementary payment levels and total 12-month (or 6-month where 
applicable) expenditures for supplementary payments and permit 
inspection and audit by the Commissioner or someone designated by the 
Commissioner.
    (c) Noncompliance by the States. Any State that makes supplementary 
payments on or after June 30, 1977, and does not have a pass-along 
agreement with the Commissioner in effect, shall be determined by the 
Commissioner to be ineligible for payments under title XIX of the Act. A 
State does not have an agreement in effect if it has not entered into an 
agreement or has not complied with the terms of the agreement. 
Ineligibility shall apply to total expenditures for any calendar quarter 
beginning after June 30, 1977, for which a State has not entered into an 
agreement. A State that enters into an agreement but does not maintain 
its payment levels or meet the total-expenditures test in a particular 
12-month or transitional 6-month period, shall be determined by the 
Commissioner not to have an agreement in effect for any month that the 
State did not meet the pass-along requirements during that particular 
period. The State shall then be ineligible for title XIX payments for 
any calendar quarter containing a month for which an agreement was not 
in effect. If a State first makes supplementary payments beginning with 
a month after June 1977, ineligibility shall apply to any calendar 
quarter beginning after the calendar quarter in which the State first 
makes payments.
    (d) Notices to States about potential noncompliance. Within 90 days 
after the end of the relevant 12-month period, the Commissioner shall 
send a notice to any State that has not maintained its supplementary 
payment levels and that appears not to have maintained its total 
expenditures during the period. The notice will advise the State of the 
available methods of compliance and the time within which corrective 
action must be taken (see Sec. Sec. 416.2096(b)(3) and 416.2096(c)(2)) 
in order to avoid a determination of noncompliance. If the State fails 
to take the corrective action, the Commissioner shall make a timely 
determination of noncompliance.

(Approved by the Office of Management and Budget under control number 
0960-0240)

[52 FR 36244, Sept. 28, 1987, as amended at 54 FR 19165, May 4, 1989; 62 
FR 38455, July 18, 1997]



              Subpart U_Medicaid Eligibility Determinations

    Authority: Secs. 702(a)(5), 1106, 1631(d)(1), and 1634 of the Social 
Security Act (42 U.S.C. 902(a)(5), 1306, 1383(d)(1), and 1383c).

    Source: 53 FR 12941, Apr. 20, 1988, unless otherwise noted.



Sec. 416.2101  Introduction.

    (a) What is in this subpart. This subpart describes the agreements 
we make with States under which we determine the Medicaid eligibility of 
individuals who receive Supplemental Security Income (SSI) benefits. It 
includes a general description of the services we will provide under 
these agreements and the costs to the States for the services.
    (b) Related regulations. The comprehensive regulations on 
eligibility for the Medicaid program, administered by the Health Care 
Financing Administration, are in part 435 of title 42 of the Code of 
Federal Regulations.
    (c) Definitions. In this subpart----

[[Page 1053]]

    SSI benefits means Federal SSI benefits, including special SSI cash 
benefits under section 1619(a) of the Social Security Act. In addition, 
we consider a person who has special SSI eligibility status under 
section 1619(b) of the Social Security Act to be receiving SSI benefits.
    State Medicaid Plan means a State's medical assistance plan which 
the Secretary has approved under title XIX of the Act for Federal 
payment of a share of the State's medical assistance expenses.
    State supplementary payments means supplementary payments we 
administer for a State under subpart T of this part.
    We, us, or our refers to the Social Security Administration.



Sec. 416.2111  Conditions for our agreeing to make Medicaid eligibility 
determinations.

    We will agree to make Medicaid eligibility determinations for a 
State only if the State's Medicaid eligibility requirements for 
recipients of SSI benefits and for recipients of State supplementary 
payments are the same as the requirements for receiving SSI benefits and 
the requirements for receiving State supplementary payments, 
respectively. Exceptions: We may agree to make Medicaid eligibility 
determinations--
    (a) For one, two, or all of the three categories of people (i.e., 
aged, blind, and disabled) who receive SSI benefits or State 
supplementary payments; or
    (b) Even though the State's Medicaid eligibility requirements for 
recipients of SSI benefits or of State supplementary payments, or both, 
differ from the requirements for SSI or State supplementary payments, or 
both, in ways mandated by Federal law.



Sec. 416.2116  Medicaid eligibility determinations.

    If a State requests, we may agree, under the conditions in this 
subpart, to make Medicaid eligibility determinations on behalf of the 
State. Under these agreements, we make the Medicaid determinations when 
determinations or redeterminations are necessary for SSI purposes. Our 
determinations may include non-SSI requirements that are mandated by 
Federal law. When we determine that a person is eligible for Medicaid in 
accordance with Sec. 416.2111 or that we are not making the 
determination, we notify the State of that fact.



Sec. 416.2130  Effect of the agreement and responsibilities of States.

    (a) An agreement under this subpart does not change--
    (1) The provisions of a State's Medicaid plan;
    (2) The conditions under which the Secretary will approve a State's 
Medicaid plan; or
    (3) A State's responsibilities under the State Medicaid plan.
    (b) Following are examples of functions we will not agree to carry 
out for the State:
    (1) Stationing of our employees at hospitals or nursing homes to 
take Medicaid applications;
    (2) Determining whether a person is eligible for Medicaid for any 
period before he or she applied for SSI benefits;
    (3) Giving approval for emergency medical care under Medicaid before 
a determination has been made on whether a person is eligible for SSI 
benefits;
    (4) Setting up or running a State's system for requiring a person to 
pay part of the cost of services he or she receives under Medicaid; or
    (5) Giving identification cards to people to show that they are 
eligible for Medicaid.



Sec. 416.2140  Liability for erroneous Medicaid eligibility determinations.

    If the State suffers any financial loss, directly or indirectly, 
through using any information we provide under an agreement described in 
this subpart, we will not be responsible for that loss. However, if we 
erroneously tell a State that a person is eligible for Medicaid and the 
State therefore makes erroneous Medicaid payments, the State will be 
paid the Federal share of those payments under the Medicaid program as 
if they were correct.



Sec. 416.2145  Services other than Medicaid determinations.

    We will agree under authority of section 1106 of the Act and 31 
U.S.C. 6505

[[Page 1054]]

to provide services other than Medicaid determinations to help the State 
administer its Medicaid program. We will do this only if we determine it 
is the most efficient and economical way to accomplish the State's 
purpose and does not interfere with administration of the SSI program. 
The services can be part of a Medicaid eligibility determination 
agreement or a separate agreement. Under either agreement we will--
    (a) Give the State basic information relevant to Medicaid 
eligibility from individuals' applications for SSI benefits;
    (b) Give the State answers to certain purely Medicaid-related 
questions (in addition to any that may be necessary under Sec. 
416.2111(b)), such as whether the SSI applicant has any unpaid medical 
expenses for the current month or the previous 3 calendar months;
    (c) Conduct statistical or other studies for the State; and
    (d) Provide other services the State and we agree on.



Sec. 416.2161  Charges to States.

    (a) States with Medicaid eligibility determination agreement. A 
State with which we have an agreement to make Medicaid eligibility 
determinations is charged in the following manner:
    (1) If making Medicaid determinations and providing basic SSI 
application information for a State causes us additional cost, the State 
must pay half of that additional cost. ``Additional cost'' in this 
section means cost in addition to costs we would have had anyway in 
administering the SSI program.
    (2) The State must pay half our additional cost caused by providing 
any information that we collect for Medicaid purposes and by any other 
services directly related to making Medicaid eligibility determinations.
    (3) The State must pay our full additional cost for statistical or 
other studies and any other services that are not directly related to 
making Medicaid eligibility determinations.
    (b) States without Medicaid eligibility determination agreement. A 
State with which we do not have an agreement to make Medicaid 
eligibility determinations is charged in the following manner:
    (1) If providing basic SSI application information causes us 
additional cost, the State must pay our full additional cost.
    (2) The State must pay our full additional cost caused by providing 
any information that we collect for Medicaid purposes and for 
statistical or other studies and any other services.



Sec. 416.2166  Changing the agreement.

    The State and we can agree in writing to change the agreement at any 
time.



Sec. 416.2171  Duration of agreement.

    An agreement under this subpart is automatically renewed for 1 year 
at the end of the term stated in the agreement and again at the end of 
each 1-year renewal term, unless--
    (a) The State and we agree in writing to end it at any time;
    (b) Either the State or we end it at any time without the other's 
consent by giving written notice at least 90 days before the end of a 
term, or 120 days before any other ending date selected by whoever wants 
to end the agreement; or
    (c)(1) The State fails to pay our costs as agreed;
    (2) We notify the State in writing, at least 30 days before the 
ending date we select, why we intend to end the agreement; and
    (3) The State does not give a good reason for keeping the agreement 
in force beyond the ending date we selected. If the State does provide a 
good reason, the termination will be postponed or the agreement will be 
kept in force until the end of the term.



Sec. 416.2176  Disagreements between a State and us.

    (a) If a State with which we have an agreement under this subpart 
and we are unable to agree about any question of performance under the 
agreement, the State may appeal the question to the Commissioner of 
Social Security. The Commissioner or his or her designee will, within 90 
days after receiving the State's appeal, give the State either a written 
decision or a written explanation of why a decision cannot

[[Page 1055]]

be made within 90 days, what is needed before a decision can be made, 
and when a decision is expected to be made.
    (b) The Commissioner's decision will be the final decision of the 
Social Security Administration.

[53 FR 12941, Apr. 20, 1988, as amended at 62 FR 38456, July 18, 1997]



        Subpart V_Payments for Vocational Rehabilitation Services

    Authority: Secs. 702(a)(5), 1615, 1631(d)(1) and (e), and 1633(a) of 
the Social Security Act (42 U.S.C. 902(a)(5), 1382d, 1383(d)(1) and (e), 
and 1383b(a)).

    Source: 48 FR 6297, Feb. 10, 1983, unless otherwise noted.

                           General Provisions



Sec. 416.2201  General.

    In general, sections 1615(d) and (e) of the Social Security Act (the 
Act) authorize payment from the general fund for the reasonable and 
necessary costs of vocational rehabilitation (VR) services provided 
certain disabled or blind individuals who are eligible for supplemental 
security income (SSI) benefits, special SSI eligibility status, or 
federally administered State supplementary payments. In this subpart, 
such benefits, status, or payments are referred to as disability or 
blindness benefits (see Sec. 416.2203). Subject to the provisions of 
this subpart, payment may be made for VR services provided an individual 
during a month(s) for which the individual is eligible for disability or 
blindness benefits, including the continuation of such benefits under 
section 1631(a)(6) of the Act, or for which the individual's disability 
or blindness benefits are suspended (see Sec. 416.2215). Paragraphs (a) 
and (b) of this section describe the cases in which the State VR 
agencies and alternate participants can be paid for the VR services 
provided such an individual under this subpart. The purpose of sections 
1615(d) and (e) of the Act is to make VR services more readily available 
to disabled or blind individuals and ensure that savings accrue to the 
general fund. Payment will be made for VR services provided on behalf of 
such an individual in cases where--
    (a) The furnishing of the VR services results in the individual's 
completion of a continuous 9-month period of substantial gainful 
activity (SGA) as specified in Sec. Sec. 416.2210 through 416.2211; or
    (b) The individual continues to receive disability or blindness 
benefits, even though his or her disability or blindness has ceased, 
under section 1631(a)(6) of the Act because of his or her continued 
participation in an approved VR program which we have determined will 
increase the likelihood that he or she will not return to the disability 
or blindness rolls (see Sec. 416.2212).

[68 FR 40124, July 7, 2003]



Sec. 416.2202  Purpose and scope.

    This subpart describes the rules under which the Commissioner will 
pay the State VR agencies or alternate participants for VR services. 
Payment will be provided for VR services provided on behalf of disabled 
or blind individuals under one or more of the provisions discussed in 
Sec. 416.2201.
    (a) Sections 416.2201 through 416.2203 describe the purpose of these 
regulations and the meaning of terms we frequently use in them.
    (b) Section 416.2204 explains how State VR agencies or alternate 
participants may participate in the payment program under this subpart.
    (c) Section 416.2206 describes the basic qualifications for 
alternate participants.
    (d) Sections 416.2208 through 416.2209 describe the requirements and 
conditions under which we will pay a State VR agency or alternate 
participant under this subpart.
    (e) Sections 416.2210 through 416.2211 describe when an individual 
has completed a continuous period of SGA and when VR services will be 
considered to have contributed to that period.
    (f) Section 416.2212 describes when payment will be made to a VR 
agency or alternate participant because an individual's disability or 
blindness benefits are continued based on his or her participation in a 
VR program which we have determined will increase the likelihood that he 
or she will not return to the disability rolls.

[[Page 1056]]

    (g) Sections 416.2214 through 416.2215 describe services for which 
payment will be made.
    (h) Section 416.2216 describes the filing deadlines for claims for 
payment for VR services.
    (i) Section 416.2217 describes the payment conditions.
    (j) Section 416.2218 describes the applicability of these 
regulations to alternate participants.
    (k) Section 416.2219 describes how we will make payment to State VR 
agencies or alternate participants for rehabilitation services.
    (l) Sections 416.2220 and 416.2221 describe the audits and the 
prepayment and postpayment validation reviews we will conduct.
    (m) Section 416.2222 discusses confidentiality of information and 
records.
    (n) Section 416.2223 provides for the applicability of other Federal 
laws and regulations.
    (o) Section 416.2227 provides for the resolution of disputes.

[48 FR 6297, Feb. 10, 1983, as amended at 55 FR 8456, Mar. 8, 1990; 59 
FR 11916, Mar. 15, 1994; 62 FR 38456, July 18, 1997; 68 FR 40124, July 
7, 2003]



Sec. 416.2203  Definitions.

    For purposes of this subpart:
    Accept the recipient as a client for VR services means that the 
State VR agency determines that the individual is eligible for VR 
services and places the individual into an active caseload status for 
development of an individualized written rehabilitation program.
    Act means the Social Security Act, as amended.
    Alternate participants means any public or private agencies (except 
participating State VR agencies (see Sec. 416.2204)), organizations, 
institutions, or individuals with whom the Commissioner has entered into 
an agreement or contract to provide VR services.
    Blindness means ``blindness'' as defined in section 1614(a)(2) of 
the Act.
    Commissioner means the Commissioner of Social Security or the 
Commissioner's designee.
    Disability means ``disability'' as defined in section 1614(a)(3) of 
the Act.
    Disability or blindness benefits, as defined for this subpart only, 
refers to regular SSI benefits under section 1611 of the Act (see Sec. 
416.202), special SSI cash benefits under section 1619(a) of the Act 
(see Sec. 416.261), special SSI eligibility status under section 
1619(b) of the Act (see Sec. 416.264), and/or a federally administered 
State supplementary payment under section 1616 of the Act or section 
212(b) of Public Law 93-66 (see Sec. 416.2001), for which an individual 
is eligible based on disability or blindness, as appropriate.
    Medical recovery for purposes of this subpart is established when a 
disabled or blind recipient's eligibility ceases for any medical reason 
(other than death). The determination of medical recovery is made by the 
Commissioner in deciding a recipient's continuing eligibility for 
benefits.
    Place the recipient into an extended evaluation process means that 
the State VR agency determines that an extended evaluation of the 
individual's VR potential is necessary to determine whether the 
individual is eligible for VR services and places the individual into an 
extended evaluation status.
    SGA means substantial gainful activity performed by an individual as 
defined in Sec. Sec. 416.971 through 416.975 of this subpart or Sec. 
404.1584 of this chapter.
    Special SSI eligibility status refers to the special status 
described in Sec. Sec. 416.264 through 416.269 relating to eligibility 
for Medicaid.
    State means any of the 50 States of the United States, the District 
of Columbia, or the Northern Mariana Islands. It includes the State VR 
agency.
    Vocational rehabilitation services has the meaning assigned to it 
under title I of the Rehabilitation Act of 1973.
    VR agency means an agency of the State which has been designated by 
the State to provide vocational rehabilitation services under title I of 
the Rehabilitation Act of 1973.
    We, us, and our refer to the Social Security Administration (SSA).

[48 FR 6297, Feb. 10, 1983, as amended at 55 FR 8456, Mar. 8, 1990; 55 
FR 19423, May 9, 1990; 59 FR 1637, Jan. 12, 1994; 59 FR 11916, Mar. 15, 
1994; 61 FR 31026, June 19, 1996; 62 FR 38456, July 18, 1997; 68 FR 
40125, July 7, 2003]

[[Page 1057]]



Sec. 416.2204  Participation by State VR agencies or alternate participants.

    (a) General. In order to participate in the payment program under 
this subpart through its VR agency(ies), a State must have a plan which 
meets the requirements of title I of the Rehabilitation Act of 1973, as 
amended. An alternate participant must have a similar plan and otherwise 
qualify under Sec. 416.2206.
    (b) Participation by States. (1) The opportunity to participate 
through its VR agency(ies) with respect to disabled or blind recipients 
in the State will be offered first to the State in accordance with 
paragraph (c) of this section, unless the State has notified us in 
advance under paragraph (e)(1) of this section of its decision not to 
participate or to limit such participation.
    (2) A State with one or more approved VR agencies may choose to 
limit participation of those agencies to a certain class(es) of disabled 
or blind recipients. For example, a State with separate VR agencies for 
the blind and disabled may choose to limit participation to the VR 
agency for the blind. In such a case, we would give the State, through 
its VR agency for the blind, the opportunity to participate with respect 
to blind recipients in the State in accordance with paragraph (d) of 
this section. We would arrange for VR services for disabled recipients 
in the State through an alternate participant(s). A State that chooses 
to limit participation of its VR agency(ies) must notify us in advance 
under paragraph (e)(1) of this section of its decision to limit such 
participation.
    (3) If a State chooses to participate by using a State agency other 
than a VR agency with a plan for VR services approved under title I of 
the Rehabilitation Act of 1973, as amended, that State agency may 
participate only as an alternate participant.
    (c) Opportunity for participation through State VR agencies. (1) 
Unless a State has decided not to participate or to limit participation, 
we will give the State the opportunity to participate through its VR 
agency(ies) with respect to disabled or blind recipients in the State by 
referring such recipients first to the State VR agency(ies) for 
necessary VR services. A State, through its VR agency(ies), may 
participate with respect to any recipient so referred by accepting the 
recipient as a client for VR services or placing the recipient into an 
extended evaluation process and notifying us under paragraph (c)(2) of 
this section of such acceptance or placement.
    (2)(i) In order for the State to participate with respect to a 
disabled or blind recipient whom we referred to a State VR agency, the 
State VR agency must notify the appropriate Regional Commissioner (SSA) 
in writing or through electronic notification of its decision either to 
accept the recipient as a client for VR services or to place the 
recipient into an extended evaluation process. The notice must be 
received by the appropriate Regional Commissioner (SSA) no later than 
the close of the fourth month following the month in which we referred 
the recipient to the State VR agency. If we do not receive such notice 
with respect to a recipient whom we referred to the State VR agency, we 
may arrange for VR services for that recipient through an alternate 
participant.
    (ii) In any case in which a State VR agency notifies the appropriate 
Regional Commissioner (SSA) in writing within the stated time period 
under paragraph (c)(2)(i) of this section of its decision to place the 
recipient into an extended evaluation process, the State VR agency also 
must notify that Regional Commissioner in writing upon completion of the 
evaluation of its decision whether or not to accept the recipient as a 
client for VR services. If we receive a notice of a decision by the 
State VR agency to accept the recipient as a client for VR services 
following the completion of the extended evaluation, the State may 
continue to participate with respect to such recipient. If we receive a 
notice of a decision by the State VR agency not to accept the recipient 
as a client for VR services following the completion of the extended 
evaluation, we may arrange for VR services for that recipient through an 
alternate participant.
    (d) Opportunity for limited participation through State VR agencies. 
If a State has decided under paragraph (e)(1) of this section to limit 
participation of its VR agency(ies) to a certain

[[Page 1058]]

class(es) of disabled or blind recipients in the State, we will give the 
State the opportunity to participate with respect to such class(es) of 
disabled or blind recipients by referring such recipients first to the 
State VR agency(ies) for necessary VR services. The State, through its 
VR agency(ies), may participate with respect to any recipient so 
referred by accepting the recipient as a client for VR services or 
placing the recipient into an extended evaluation process and notifying 
us under paragraph (c)(2) of this section of such acceptance or 
placement.
    (e) Decision of a State not to participate or to limit 
participation. (1) A State may choose not to participate through its VR 
agency(ies) with respect to any disabled or blind recipients in the 
State, or it may choose to limit participation of its VR agency(ies) to 
a certain class(es) of disabled or blind recipients in the State. A 
State which decides not to participate or to limit participation must 
provide advance written notice of that decision to the appropriate 
Regional Commissioner (SSA). Unless a State specifies a later month, a 
decision not to participate or to limit participation will be effective 
beginning with the third month following the month in which the notice 
of the decision is received by the appropriate Regional Commissioner 
(SSA). The notice of the State decision must be submitted by an official 
authorized to act for the State for this purpose. A State must provide 
to the appropriate Regional Commissioner (SSA) an opinion from the 
State's Attorney General, verifying the authority of the official who 
sent the notice to act for the State. This opinion will not be necessary 
if the notice is signed by the Governor of the State.
    (2)(i) If a State has decided not to participate through its VR 
agency(ies), we may arrange for VR services through an alternate 
participant(s) for disabled or blind recipients in the State.
    (ii) If a State has decided to limit participation of its VR 
agency(ies) to a certain class(es) of disabled or blind recipients, we 
may arrange for VR services through an alternate participant(s) for the 
class(es) of disabled or blind recipients in the State excluded from the 
scope of the State's participation.
    (3) A State which has decided not to participate or to limit 
participation may participate later through its VR agency(ies) in 
accordance with paragraph (c) of this section, provided that such 
participation will not conflict with any previous commitment which we 
may have made to an alternate participant(s) under paragraph (e)(2) of 
this section. A State which decides to resume participation under 
paragraph (c) of this section must provide advance written notice of 
that decision to the appropriate Regional Commissioner (SSA). Unless a 
commitment to an alternate participant(s) requires otherwise, a decision 
of a State to resume participation under paragraph (c) of this section 
will be effective beginning with the third month following the month in 
which the notice of the decision is received by the appropriate Regional 
Commissioner (SSA) or, if later, with a month specified by the State. 
The notice of the State decision must be submitted by an official 
authorized to act for the State as explained in paragraph (e)(1) of this 
section.
    (f) Use of alternate participants. The Commissioner, by written 
agreement or contract, may arrange for VR services through an alternate 
participant(s) for any disabled or blind recipient in the State with 
respect to whom the State is unwilling to participate through its VR 
agency(ies). In such a case, we may refer the recipient to such 
alternate participant for necessary VR services. The Commissioner will 
find that a State is unwilling to participate with respect to any of the 
following disabled or blind recipients in that State:
    (1) A disabled or blind recipient whom we referred to a State VR 
agency under paragraph (c) or (d) of this section if we do not receive a 
notice within the stated time period under paragraph (c)(2)(i) of this 
section of a decision by the VR agency either to accept the recipient as 
a client for VR services or to place the recipient into an extended 
evaluation process;
    (2) A disabled or blind recipient with respect to whom we receive a 
notice

[[Page 1059]]

under paragraph (c)(2)(ii) of this section of a decision by the VR 
agency not to accept the recipient as a client for VR services following 
the completion of the extended evaluation;
    (3) The class(es) of disabled or blind recipients excluded from the 
scope of the State's participation if the State has decided to limit 
participation of its VR agency(ies); and
    (4) All disabled or blind recipients in the State if the State has 
decided not to participate through its VR agency(ies).

[59 FR 11917, Mar. 15, 1994]



Sec. 416.2206  Basic qualifications for alternate participants.

    (a) General. We may arrange for VR services through an alternate 
participant by written agreement or contract as explained in Sec. 
416.2204(f). An alternate participant may be a public or private agency, 
organization, institution or individual (that is, any entity whether 
for-profit or not-for-profit), other than a State VR agency.
    (1) An alternate participant must--
    (i) Be licensed, certified, accredited, or registered, as 
appropriate, to provide VR services in the State in which it provides 
services; and
    (ii) Under the terms of the written contract or agreement, have a 
plan similar to the State plan described in Sec. 416.2204(a) which 
shall govern the provision of VR services to individuals.
    (2) We will not use as an alternate participant any agency, 
organization, institution, or individual--
    (i) Whose license, accreditation, certification, or registration is 
suspended or revoked for reasons concerning professional competence or 
conduct or financial integrity;
    (ii) Who has surrendered such license, accreditation, certification, 
or registration pending a final determination of a formal disciplinary 
proceeding; or
    (iii) Who is precluded from Federal procurement or nonprocurement 
programs.
    (b) Standards for the provision of VR services. An alternate 
participant's plan must provide, among other things, that the provision 
of VR services to individuals will meet certain minimum standards, 
including, but not limited to, the following:
    (1) All medical and related health services furnished will be 
prescribed by, or provided under the formal supervision of, persons 
licensed to prescribe or supervise the provision of these services in 
the State;
    (2) Only qualified personnel and rehabilitation facilities will be 
used to furnish VR services; and
    (3) No personnel or rehabilitation facility described in paragraph 
(a)(2)(i), (ii), or (iii) of this section will be used to provide VR 
services.

[59 FR 11918, Mar. 15, 1994]

                           Payment Provisions



Sec. 416.2208  Requirements for payment.

    (a) The State VR agency or alternate participant must file a claim 
for payment in each individual case within the time periods specified in 
Sec. 416.2216;
    (b) The claim for payment must be in a form prescribed by us and 
contain the following information:
    (1) A description of each service provided;
    (2) When the service was provided; and
    (3) The cost of the service;
    (c) The VR services for which payment is being requested must have 
been provided during the period specified in Sec. 416.2215;
    (d) The VR services for which payment is being requested must have 
been provided under a State plan for VR services approved under title I 
of the Rehabilitation Act of 1973, as amended, or, in the case of an 
alternate participant, under a negotiated plan, and must be services 
that are described in Sec. 416.2214;
    (e) The individual must meet one of the VR payment provisions 
specified in Sec. 416.2201;
    (f) The State VR agency or alternate participant must maintain, and 
provide as we may require, adequate documentation of all services and 
costs for all disabled or blind recipients with respect to whom a State 
VR agency or alternate participant could potentially request payment for 
services and costs under this subpart; and
    (g) The amount to be paid must be reasonable and necessary and be in

[[Page 1060]]

compliance with the cost guidelines specified in Sec. 416.2217.

[48 FR 6297, Feb. 10, 1983, as amended at 55 FR 8456, Mar. 8, 1990; 59 
FR 11918, Mar. 15, 1994]



Sec. 416.2209  Responsibility for making payment decisions.

    The Commissioner will decide:
    (a) Whether a continuous period of 9 months of SGA has been 
completed;
    (b) Whether a disability or blindness recipient whose disability or 
blindness has ceased should continue to receive benefits under section 
1631(a)(6) of the Social Security Act for a month after October 1984 or, 
in the case of a blindness recipient, for a month after March 1988, 
based on his or her continued participation in a VR program;
    (c) If and when medical recovery has occurred;
    (d) Whether documentation of VR services and expenditures is 
adequate;
    (e) If payment is to be based on completion of a continuous 9-month 
period of SGA, whether the VR services contributed to the continuous 
period of SGA;
    (f) Whether a VR service is a service described in Sec. 416.2214; 
and
    (g) What VR costs were reasonable and necessary and will be paid.

[55 FR 8456, Mar. 8, 1990, as amended at 59 FR 11918, Mar. 15, 1994; 61 
FR 31026, June 19, 1996; 68 FR 40125, July 7, 2003]



Sec. 416.2210  What we mean by ``SGA'' and by ``a continuous period of 9 
months''.

    (a) What we mean by ``SGA''. In determining whether an individual's 
work is SGA, we will follow the rules in Sec. Sec. 416.972 through 
416.975. We will follow these same rules for individuals who are 
statutorily blind, but we will evaluate the earnings in accordance with 
the rules in Sec. 404.1584(d) of this chapter.
    (b) What we mean by ``a continuous period of 9 months''. A 
continuous period of 9 months ordinarily means a period of 9 consecutive 
calendar months. Exception: When an individual does not perform SGA in 9 
consecutive calendar months, he or she will be considered to have done 
so if--
    (1) The individual performs 9 months of SGA within 10 consecutive 
months and has monthly earnings that meet or exceed the guidelines in 
Sec. 416.974(b)(2), or Sec. 404.1584(d) of this chapter if the 
individual is statutorily blind, or
    (2) The individual performs at least 9 months of SGA within 12 
consecutive months, and the reason for not performing SGA in 2 or 3 of 
those months was due to circumstances beyond his or her control and 
unrelated to the impairment (e.g., the employer closed down for 3 
months).
    (c) What work we consider. In determining if a continuous period of 
SGA has been completed, all of an individual's work activity may be 
evaluated for purposes of this section, including work performed before 
October 1, 1981, during a trial work period, and after eligibility for 
disability or blindness payments ended. We will ordinarily consider only 
the first 9 months of SGA that occurs. The exception will be if an 
individual who completed 9 months of SGA later stops performing SGA, 
received VR services and then performs SGA for a 9-month period. See 
Sec. 416.2215 for the use of the continuous period in determining 
payment for VR services.

[48 FR 6297, Feb. 10, 1983, as amended at 55 FR 8457, Mar. 8, 1990]



Sec. 416.2211  Criteria for determining when VR services will be considered 
to have contributed to a continuous period of 9 months.

    The State VR agency or alternate participant may be paid for VR 
services if such services contribute to the individual's performance of 
a continuous 9-month period of SGA. The following criteria apply to 
individuals who received more than just evaluation services. If a State 
VR agency or alternate participant claims payment for services to an 
individual who received only evaluation services, it must establish that 
the individual's continuous period or medical recovery (if medical 
recovery occurred before completion of a continuous period) would not 
have occurred without the services provided. In applying the criteria 
below, we will consider services described in Sec. 416.2214 that were 
initiated, coordinated or provided, including services before October 1, 
1981.
    (a) Continuous period without medical recovery. If an individual who 
has completed a ``continuous period'' of SGA

[[Page 1061]]

has not medically recovered as of the date of completion of the period, 
the determination as to whether VR services contributed will depend on 
whether the continuous period began one year or less after VR services 
ended or more than one year after VR services ended.
    (1) One year or less. Any VR services which significantly motivated 
or assisted the individual in returning to, or continuing in, SGA will 
be considered to have contributed to the continuous period.
    (2) More than one year. (i) If the continuous period was preceded by 
transitional work activity (employment or self-employment which 
gradually evolved, with or without periodic interruption, into SGA), and 
that work activity began less than a year after VR services ended, any 
VR services which significantly motivated or assisted the individual in 
returning to, or continuing in, SGA will be considered to have 
contributed to the continuous period.
    (ii) If the continuous period was not preceded by transitional work 
activity that began less than a year after VR services ended, VR 
services will be considered to have contributed to the continuous period 
only if it is reasonable to conclude that the work activity which 
constitutes a continuous period could not have occurred without the VR 
services (e.g., training).
    (b) Continuous period with medical recovery occurring before 
completion. (1) If an individual medically recovers before a continuous 
period has been completed, VR services under paragraph (a) of this 
section will not be payable unless some VR services contributed to the 
medical recovery. VR services will be considered to have contributed to 
the medical recovery if--
    (i) The individualized written rehabilitation program (IWRP), or in 
the case of an alternate participant, a similar document, included 
medical services; and
    (ii) The medical recovery occurred, at least in part, because of 
these medical services. (For example, the individual's medical recovery 
was based on improvement in a back condition which, at least in part, 
stemmed from surgery initiated, coordinated or provided under an IWRP).
    (2) In some instances, the State VR agency or alternate participant 
will not have provided, initiated, or coordinated medical services. If 
this happens, payment for VR services may still be possible under 
paragraph (a) of this section if: (i) The medical recovery was not 
expected by us; and (ii) the individual's impairment is determined by us 
to be of such a nature that any medical services provided would not 
ordinarily have resulted in, or contributed to, the medical cessation.

[48 FR 6297, Feb. 10, 1983, as amended at 59 FR 11918, Mar. 15, 1994]



Sec. 416.2212  Payment for VR services in a case where an individual 

continues to receive disability or blindness benefits based on 
participation in an approved VR program.

    Section 1631(a)(6) of the Act contains the criteria we will use in 
determining if an individual whose disability or blindness has ceased 
should continue to receive disability or blindness benefits because of 
his or her continued participation in an approved VR program. A VR 
agency or alternate participant can be paid for the cost of VR services 
provided to an individual if the individual was receiving benefits based 
on this provision in a month(s) after October 1984 or, in the case of a 
blindness recipient, in a month(s) after March 1988. If this requirement 
is met, a VR agency or alternate participant can be paid for the costs 
of VR services provided within the period specified in Sec. 416.2215, 
subject to the other payment and administrative provisions of this 
subpart.

[55 FR 8457, Mar. 8, 1990, as amended at 61 FR 31026, June 19, 1996]



Sec. 416.2214  Services for which payment may be made.

    (a) General. Payment may be made for VR services provided by a State 
VR agency in accordance with title I of the Rehabilitation Act of 1973, 
as amended, or by an alternate participant under a negotiated plan, 
subject to the limitations and conditions in this subpart. VR services 
for which payment may be made under this subpart include only those 
services described in paragraph (b) of this section which are--

[[Page 1062]]

    (1) Necessary to determine an individual's eligibility for VR 
services or the nature and scope of the services to be provided; or
    (2) Provided by a State VR agency under an IWRP, or by an alternate 
participant under a similar document, but only if the services could 
reasonably be expected to motivate or assist the individual in returning 
to, or continuing in, SGA.
    (b) Specific services. Payment may be made under this subpart only 
for the following VR services:
    (1) An assessment for determining an individual's eligibility for VR 
services and vocational rehabilitation needs by qualified personnel, 
including, if appropriate, an assessment by personnel skilled in 
rehabilitation technology, and which includes determining--
    (i) The nature and extent of the physical or mental impairment(s) 
and the resultant impact on the individual's employability;
    (ii) The likelihood that an individual will benefit from vocational 
rehabilitation services in terms of employability; and
    (iii) An employment goal consistent with the capacities of the 
individual and employment opportunities;
    (2) Counseling and guidance, including personal adjustment 
counseling, and those referrals and other services necessary to help an 
individual secure needed services from other agencies;
    (3) Physical and mental restoration services necessary to correct or 
substantially modify a physical or mental condition which is stable or 
slowly progressive and which constitutes an impediment to suitable 
employment at or above the SGA level;
    (4) Vocational and other training services, including personal and 
vocational adjustment, books, tools, and other training materials, 
except that training or training services in institutions of higher 
education will be covered under this section only if maximum efforts 
have been made by the State VR agency or alternate participant to secure 
grant assistance in whole or in part from other sources;
    (5) Maintenance expenses that are extra living expenses over and 
above the individual's normal living expenses and that are incurred 
solely because of and while the individual is participating in the VR 
program and that are necessary in order for the individual to benefit 
from other necessary VR services;
    (6) Travel and related expenses necessary to transport an individual 
for purpose of enabling the individual's participation in other 
necessary VR services;
    (7) Services to family members of a disabled or blind individual 
only if necessary to the successful vocational rehabilitation of that 
individual;
    (8) Interpreter services and note-taking services for an individual 
who is deaf and tactile interpreting for an individual who is deaf and 
blind;
    (9) Reader services, rehabilitation teaching services, note-taking 
services, and orientation and mobility services for an individual who is 
blind;
    (10) Telecommunications, sensory, and other technological aids and 
devices;
    (11) Work-related placement services to secure suitable employment;
    (12) Post-employment services necessary to maintain, regain or 
advance into suitable employment at or above the SGA level;
    (13) Occupational licenses, tools, equipment, initial stocks, and 
supplies;
    (14) Rehabilitation technology services; and
    (15) Other goods and services that can reasonably be expected to 
motivate or assist the individual in returning to, or continuing in, 
SGA.

[59 FR 11919, Mar. 15, 1994]



Sec. 416.2215  When services must have been provided.

    (a) In order for the VR agency or alternate participant to be paid, 
the services must have been provided--
    (1) After September 30, 1981;
    (2) During a month(s) for which--
    (i) The individual is eligible for disability or blindness benefits 
or continues to receive such benefits under section 1631(a)(6) of the 
Act (see Sec. 416.2212); or
    (ii) The disability or blindness benefits of the individual are 
suspended due to his or her ineligibility for the benefits (see subpart 
M of this part concerning suspension for ineligibility); and

[[Page 1063]]

    (3) Before completion of a continuous 9-month period of SGA or 
termination of disability or blindness benefits, whichever occurs first 
(see subpart M of this part concerning termination of benefits).
    (b) If an individual who is receiving disability or blindness 
benefits under this part, or whose benefits under this part are 
suspended, also is entitled to disability benefits under part 404 of 
this chapter, the determination as to when services must have been 
provided may be made under this section or Sec. 404.2115 of this 
chapter, whichever is advantageous to the State VR agency or alternate 
participant that is participating in both VR programs.

[61 FR 31026, June 19, 1996]



Sec. 416.2216  When claims for payment for VR services must be made 
(filing deadlines).

    The State VR agency or alternate participant must file a claim for 
payment in each individual case within the following time periods:
    (a) A claim for payment for VR services based on the completion of a 
continuous 9-month period of SGA must be filed within 12 months after 
the month in which the continuous 9-month period of SGA is completed.
    (b) A claim for payment for VR services provided to an individual 
whose disability or blindness benefits were continued after disability 
or blindness has ceased because of that individual's continued 
participation in a VR program must be filed as follows:
    (1) If a written notice requesting that a claim be filed was sent to 
the State VR agency or alternate participant, a claim must be filed 
within 90 days following the month in which VR services end, or if 
later, within 90 days after receipt of the notice.
    (2) If no written notice was sent to the State VR agency or 
alternate participant, a claim must be filed within 12 months after the 
month in which VR services end.

[55 FR 8457, Mar. 8, 1990, as amended at 61 FR 31026, June 19, 1996; 68 
FR 40125, July 7, 2003]



Sec. 416.2217  What costs will be paid.

    In accordance with section 1615(d) and (e) of the Social Security 
Act, the Commissioner will pay the State VR agency or alternate 
participant for the VR services described in Sec. 416.2214 which were 
provided during the period described in Sec. 416.2215 and which meet 
the criteria in Sec. 416.2211 or Sec. 416.2212, but subject to the 
following limitations:
    (a) The cost must have been incurred by the State VR agency or 
alternate participant;
    (b) The cost must not have been paid or be payable from some other 
source. For this purpose, State VR agencies or alternate participants 
will be required to seek payment or services from other sources in 
accordance with the ``similar benefit'' provisions under 34 CFR part 
361, including making maximum efforts to secure grant assistance in 
whole or part from other sources for training or training services in 
institutions of higher education. Alternate participants will not be 
required to consider State VR services a similar benefit.
    (c)(1) The cost must be reasonable and necessary, in that it 
complies with the written cost-containment policies of the State VR 
agency or, in the case of an alternate participant, it complies with 
similar written policies established under a negotiated plan. A cost 
which complies with these policies will be considered necessary only if 
the cost is for a VR service described in Sec. 416.2214. The State VR 
agency or alternate participant must maintain and use these cost-
containment policies, including any reasonable and appropriate fee 
schedules, to govern the costs incurred for all VR services, including 
the rates of payment for all purchased services, for which payment will 
be requested under this subpart. For the purpose of this subpart, the 
written cost-containment policies must provide guidelines designed to 
ensure--
    (i) The lowest reasonable cost for such services; and
    (ii) Sufficient flexibility so as to allow for an individual's 
needs.
    (2) The State VR agency shall submit to us before the end of the 
first calendar quarter of each year a written statement certifying that 
cost-containment policies are in effect and are adhered to in procuring 
and providing goods and services for which the State VR agency requests 
payment under

[[Page 1064]]

this subpart. Such certification must be signed by the State's chief 
financial official or the head of the VR agency. Each certification must 
specify the basis upon which it is made, e.g., a recent audit by an 
authorized State, Federal or private auditor (or other independent 
compliance review) and the date of such audit (or compliance review). In 
the case of an alternate participant, these certification requirements 
shall be incorporated into the negotiated agreement or contract. We may 
request the State VR agency or alternate participant to submit to us a 
copy(ies) of its specific written cost-containment policies and 
procedures (e.g., any guidelines and fee schedules for a given year), if 
we determine that such additional information is necessary to ensure 
compliance with the requirements of this subpart. The State VR agency or 
alternate participant shall provide such information when requested by 
us.
    (d) The total payment in each case, including any prior payments 
related to earlier continuous 9-month periods of SGA made under this 
subpart, must not be so high as to preclude a ``net saving'' to the 
general funds (a ``net saving'' is the difference between the estimated 
savings to the general fund, if payments for disability or blindness 
remain reduced or eventually terminate, and the total amount we pay to 
the State VR agency or alternate participant);
    (e) Any payment to the State VR agency for either direct or indirect 
VR expenses must be consistent with the cost principles described in OMB 
Circular No. A-87, published at 46 FR 9548 on Janauary 28, 1981 (see 
Sec. 416.2218(a) for cost principles applicable to alternate 
participants);
    (f) Payment for VR services or costs may be made under more than one 
of the VR payment provisions described in Sec. Sec. 416.2211 and 
416.2212 of this subpart and similar provisions in Sec. Sec. 404.2111 
and 404.2112 of subpart V of part 404. However, payment will not be made 
more than once for the same VR service or cost; and
    (g) Payment will be made for administrative costs and for counseling 
and placement costs. This payment may be on a formula basis, or on an 
actual cost basis, whichever the State VR agency prefers. The formula 
will be negotiated. The payment will also be subject to the preceding 
limitations.

[48 FR 6297, Feb. 10, 1983. Redesignated and amended at 55 FR 8457, 
8458, Mar. 8, 1990; 55 FR 14916, Apr. 19, 1990; 59 FR 11919, Mar. 15, 
1994; 61 FR 31027, June 19, 1996; 62 FR 38456, July 18, 1997; 68 FR 
40125, July 7, 2003]

                        Administrative Provisions



Sec. 416.2218  Applicability of these provisions to alternate participants.

    When an alternate participant provides rehabilitation services under 
this subpart, the payment procedures stated herein shall apply except 
that:
    (a) Payment must be consistent with the cost principles described in 
45 CFR part 74 or 41 CFR part 1-15 as appropriate; and
    (b) Any disputes, including appeals of audit determinations, shall 
be resolved in accordance with applicable statutes and regulations which 
will be specified in the negotiated agreement or contract.

[48 FR 6297, Feb. 10, 1983. Redesignated at 55 FR 8457, Mar. 8, 1990]



Sec. 416.2219  Method of payment.

    Payment to the State VR agencies or alternate participants pursuant 
to this subpart will be made either by advancement of funds or by 
payment for services provided (with necessary adjustments for any 
overpayments and underpayments), as decided by the Commissioner.

[55 FR 8458, Mar. 8, 1990]



Sec. 416.2220  Audits.

    (a) General. The State or alternate participant shall permit us and 
the Comptroller General of the United States (including duly authorized 
representatives) access to and the right to examine records relating to 
the services and costs for which payment was requested or made under 
these regulations. These records shall be retained by the State or 
alternate participant for the periods of time specified for retention of 
records in the Federal Procurement Regulations (41 CFR parts 1-20).

[[Page 1065]]

    (b) Audit basis. Auditing will be based on cost principles and 
written guidelines in effect at the time services were provided and 
costs were incurred. The State VR agency or alternate participant will 
be informed and given a full explanation of any questioned items. They 
will be given a reasonable time to explain questioned items. Any 
explanation furnished by the State VR agency or alternate participant 
will be given full consideration before a final determination is made on 
questioned items in the audit report.
    (c) Appeal of audit determinations. The appropriate SSA Regional 
Commissioner will notify the State VR agency or alternate participant in 
writing of his or her final determination on the audit report. If the 
State VR agency (see Sec. 416.2218(b) for alternate participants) 
disagrees with that determination, it may request reconsideration in 
writing within 60 days after receiving the Regional Commissioner's 
notice of the determination. The Commissioner will make a determination 
and notify the State VR agency of that decision in writing, usually, no 
later than 45 days from the date of the appeal. The decision by the 
Commissioner will be final and conclusive unless the State VR agency 
appeals that decision in writing in accordance with 45 CFR part 16 to 
the Department of Health and Human Services' Departmental Appeals Board 
within 30 days after receiving it.

[48 FR 6297, Feb. 10, 1983, as amended at 55 FR 8458, Mar. 8, 1990; 62 
FR 38456, July 18, 1997]



Sec. 416.2221  Validation reviews.

    (a) General. We will conduct a validation review of a sample of the 
claims for payment filed by each State VR agency or alternate 
participant. We will conduct some of these reviews on a prepayment basis 
and some on a postpayment basis. We may review a specific claim, a 
sample of the claims, or all the claims filed by any State VR agency or 
alternate participant, if we determine that such review is necessary to 
ensure compliance with the requirements of this subpart. For each claim 
selected for review, the State VR agency or alternate participant must 
submit such records of the VR services and costs for which payment has 
been requested or made under this subpart, or copies of such records, as 
we may require to ensure that the services and costs meet the 
requirements for payment. For claims for cases described in Sec. 
416.2201(a), a clear explanation or existing documentation which 
demonstrates how the service contributed to the individual's performance 
of a continuous 9-month period of SGA must be provided. For claims for 
cases described in Sec. 416.2201 (b) or (c), a clear explanation or 
existing documentation which demonstrates how the service was reasonably 
expected to motivate or assist the individual to return to or continue 
in SGA must be provided. If we find in any prepayment validation review 
that the scope or content of the information is inadequate, we will 
request additional information and will withhold payment until adequate 
information has been provided. The State VR agency or alternate 
participant shall permit us (including duly authorized representatives) 
access to, and the right to examine, any records relating to such 
services and costs. Any review performed under this section will not be 
considered an audit for purposes of this subpart.
    (b) Purpose. The primary purpose of these reviews is--
    (1) To ensure that the VR services and costs meet the requirements 
for payment under this subpart;
    (2) To assess the validity of our documentation requirements; and
    (3) To assess the need for additional validation reviews or 
additional documentation requirements for any State VR agency or 
alternate participant to ensure compliance with the requirements under 
this subpart.
    (c) Determinations. In any validation review, we will determine 
whether the VR services and costs meet the requirements for payment and 
determine the amount of payment. We will notify in writing the State VR 
agency or alternate participant of our determination. If we find in any 
postpayment validation review that more or less than the correct amount 
of payment was made for a claim, we will determine that an overpayment 
or underpayment has occurred and will notify the State VR agency or 
alternate participant that

[[Page 1066]]

we will make the appropriate adjustment.
    (d) Appeals. If the State VR agency or alternate participant 
disagrees with our determination under this section, it may appeal that 
determination in accordance with Sec. 416.2227. For purposes of this 
section, an appeal must be filed within 60 days after receiving the 
notice of our determination.

[59 FR 11920, Mar. 15, 1994]



Sec. 416.2222  Confidentiality of information and records.

    The State or alternate participant shall comply with the provisions 
for confidentiality of information, including the security of systems, 
and records requirements described in 20 CFR part 401 and pertinent 
written guidelines (see Sec. 416.2223).



Sec. 416.2223  Other Federal laws and regulations.

    Each State VR agency and alternate participant shall comply with the 
provisions of other Federal laws and regulations that directly affect 
its responsibilities in carrying out the vocational rehabilitation 
function.



Sec. 416.2227  Resolution of disputes.

    (a) Disputes on the amount to be paid. The appropriate SSA official 
will notify the State VR agency or alternate participant in writing of 
his or her determination concerning the amount to be paid. If the State 
VR agency (see Sec. 416.2218(b) for alternate participants) disagrees 
with that determination, the State VR agency may request reconsideration 
in writing within 60 days after receiving the notice of determination. 
The Commissioner will make a determination and notify the State VR 
agency of that decision in writing, usually, no later than 45 days from 
the date of the State VR agency's appeal. The decision by the 
Commissioner will be final and conclusive upon the State VR agency 
unless the State VR agency appeals that decision in writing in 
accordance with 45 CFR part 16 to the Department of Health and Human 
Services' Departmental Appeals Board within 30 days after receiving the 
Commissioner's decision.
    (b) Disputes on whether there was a continuous period of SGA and 
whether VR services contributed to a continuous period of SGA. The rules 
in paragraph (a) of this section will apply, except that the 
Commissioner's decision will be final and conclusive. There is no right 
of appeal to the Departmental Appeals Board.
    (c) Disputes on determinations made by the Commissioner which affect 
a disabled or blind beneficiary's rights to benefits. Determinations 
made by the Commissioner which affect an individual's right to benefits 
(e.g., determinations that disability or blindness benefits should be 
terminated, denied, suspended, continued or begun at a different date 
than alleged) cannot be appealed by a State VR agency or alternate 
participant. Because these determinations are an intergral part of the 
disability or blindness benefits claims process, they can only be 
appealed by the beneficiary or applicant whose rights are affected or by 
his or her authorized representative. However, if an appeal of an 
unfavorable determination is made by the individual and is successful, 
the new determination would also apply for purposes of this subpart. 
While a VR agency or alternate participant cannot appeal a determination 
made by the Commissioner which affects a beneficiary's or applicant's 
rights, the VR agency can furnish any evidence it may have which would 
support a revision of a determination.

[48 FR 6297, Feb. 10, 1983, as amended at 55 FR 8458, Mar. 8, 1990; 62 
FR 38456, July 18, 1997]



PART 422_ORGANIZATION AND PROCEDURES--Table of Contents




      Subpart A_Organization and Functions of the Social Security 
                             Administration

Sec.
422.1 Organization and functions.
422.5 District offices and branch offices.

                      Subpart B_General Procedures

422.101 Material included in this subpart.
422.103 Social security numbers.
422.104 Who can be assigned a social security number.
422.105 Presumption of authority of nonimmigrant alien to accept 
          employment.
422.106 Filing applications with other government agencies.
422.107 Evidence requirements.

[[Page 1067]]

422.108 Criminal penalties.
422.110 Individual's request for change in record.
422.112 Employer identification numbers.
422.114 Annual wage reporting process.
422.120 Earnings reported without a social security number or with an 
          incorrect employee name or social security number.
422.122 Information on deferred vested pension benefits.
422.125 Statements of earnings; resolving earnings discrepancies.
422.130 Claim procedure.
422.135 Reports by beneficiaries.
422.140 Reconsideration of initial determination.

       Subpart C_Procedures of the Office of Hearings and Appeals

422.201 Material included in this subpart.
422.203 Hearings.
422.205 Review by Appeals Council.
422.210 Judicial review.

                       Subpart D_Claims Collection

422.301 Material included in this subpart.
422.305 Report of overdue program overpayment debts to consumer 
          reporting agencies.
422.306 Report of overdue administrative debts to credit reporting 
          agencies.
422.310 Collection of overdue debts by administrative offset.
422.315 Review of our records related to the debt.
422.317 Review of the debt.

    Subpart E_Collection of Debts by Administrative Wage Garnishment

422.401 What is the scope of this subpart?
422.402 What special definitions apply to this subpart?
422.403 When may we use administrative wage garnishment?
422.405 What notice will we send you about administrative wage 
          garnishment?
422.410 What actions will we take after we send you the notice?
422.415 Will we reduce the amount that your employer must withhold from 
          your pay when withholding that amount causes financial 
          hardship?
422.420 May you inspect and copy our records related to the debt?
422.425 How will we conduct our review of the debt?
422.430 When will we refund amounts of your pay withheld by 
          administrative wage garnishment?
422.435 What happens when we decide to send an administrative wage 
          garnishment order to your employer?
422.440 What are your employer's responsibilities under an 
          administrative wage garnishment order?
422.445 May we bring a civil action against your employer for failure to 
          comply with our administrative wage garnishment order?

                Subpart F_Applications and Related Forms

422.501 Applications and other forms used in Social Security 
          Administration programs.
422.505 What types of applications and related forms are used to apply 
          for retirement, survivors, and disability insurance benefits?
422.510 Applications and related forms used in the health insurance for 
          the aged program.
422.512 Applications and related forms used in the black lung benefits 
          program.
422.515 Forms used for withdrawal, reconsideration and other appeals, 
          and appointment of representative.
422.520 Forms related to maintenance of earnings records.
422.525 Where applications and other forms are available.
422.527 Private printing and modification of prescribed applications and 
          other forms.

Subpart G_Administrative Review Process Under the Coal Industry Retiree 
                       Health Benefit Act of 1992

422.601 Scope and purpose.
422.602 Terms used in this subpart.
422.603 Overview of the review process.
422.604 Request for detailed information.
422.605 Request for review.
422.606 Processing the request for review.
422.607 Limited reopening of assignments.

                  Subpart H_Use of SSA Telephone Lines

422.701 Scope and purpose.
422.705 When SSA employees may listen-in to or record telephone 
          conversations.
422.710 Procedures SSA will follow.

    Source: 32 FR 13653, Sept. 29, 1967, unless otherwise noted.



      Subpart A_Organization and Functions of the Social Security 
                             Administration

    Authority: Secs. 205, 218, 221, and 701-704 of the Social Security 
Act (42 U.S.C. 405, 418, 421, and 901-904).



Sec. 422.1  Organization and functions.

    (a) General. A complete description of the organization and 
functions of the Social Security Administration (pursuant to 5 U.S.C. 
552(a), as amended by

[[Page 1068]]

Pub. L. 90-23, the Public Information Act) was published in the Federal 
Register of July 15, 1967 (32 FR 10458), and was subsequently revised on 
April 16, 1968 (33 FR 5828), and amended on July 18, 1968 (33 FR 10292). 
Further amendments to or revisions of the description will be published 
in the Federal Register when and if required by changes in the 
organization or functions of the Social Security Administration. Such 
description (referred to as the SSA Statement of Organization, 
Functions, and Delegations of Authority) is printed and kept up to date 
in the Social Security Administration Organizational Manual, a copy of 
which is maintained in each district office and branch office of the 
Social Security Administration and is available for inspection and 
copying.
    (b) Information included in description. This description includes 
information about the organization and functions of each component of 
the Social Security Administration. It also includes a listing of all 
district offices and branch offices within the organization of the 
Bureau of District Office Operations, and a listing of field offices 
within the organization of the Bureau of Hearings and Appeals where the 
public may secure information, make submittals or requests, or obtain 
decisions.

[34 FR 435, Jan. 11, 1969, as amended at 62 FR 38456, July 18, 1997]



Sec. 422.5  District offices and branch offices.

    There are over 700 social security district offices and branch 
offices located in the principal cities and other urban areas or towns 
of the United States. In addition, there are over 3,300 contact 
stations, located in population and trading centers, which are visited 
on a regularly, recurring, preannounced basis. A schedule of these 
visits can be obtained from the nearest district office or branch 
office. The address of the nearest district office or branch office can 
be obtained from the local telephone directory or from the post office. 
Each district office and branch office has a list of all district 
offices and branch offices throughout the country and their addresses. 
The principal officer in each district office is the manager. The 
principal officer in each branch office is the officer-in-charge. Each 
district office and branch office also has a list of field offices of 
the Bureau of Hearings and Appeals and their addresses. The 
administrative hearing examiner is the principal officer in each field 
office. For procedures relating to claims see Sec. 422.130, subpart J 
of part 404 of this chapter, and Sec. 404.1520 of this chapter (the 
latter relating to disability determinations). For procedures on request 
for hearing by an Administrative Law Judge and review by the Appeals 
Council see subpart C of this part 422.



                      Subpart B_General Procedures

    Authority: Secs. 205, 232, 702(a)(5), 1131, and 1143 of the Social 
Security Act (42 U.S.C. 405, 432, 902(a)(5), 1320b-1, and 1320b-13).



Sec. 422.101  Material included in this subpart.

    This subpart describes the procedures relating to applications for 
and assignment of social security numbers, maintenance of earnings 
records of individuals by the Social Security Administration, requests 
for statements of earnings or for revision of earnings records, and 
general claims procedures, including filing of applications, submission 
of evidence, determinations, and reconsideration of initial 
determinations.



Sec. 422.103  Social security numbers.

    (a) General. The Social Security Administration (SSA) maintains a 
record of the earnings reported for each individual assigned a social 
security number. The individual's name and social security number 
identify the record so that the wages or self-employment income reported 
for or by the individual can be properly posted to the individual's 
record. Additional procedures concerning social security numbers may be 
found in Internal Revenue Service, Department of the Treasury regulation 
26 CFR 31.6011(b)-2.
    (b) Applying for a number--(1) Form SS-5. An individual needing a 
social security number may apply for one by filing a signed form SS-5, 
``Application for A Social Security Number Card,'' at

[[Page 1069]]

any social security office and submitting the required evidence. Upon 
request, the social security office may distribute a quantity of form 
SS-5 applications to labor unions, employers, or other representative 
organizations. An individual outside the United States may apply for a 
social security number card at the Department of Veterans Affairs 
Regional Office, Manila, Philippines, at any U.S. foreign service post, 
or at a U.S. military post outside the United States. (See Sec. 422.106 
for special procedures for filing applications with other government 
agencies.) Additionally, a U.S. resident may apply for a social security 
number for a nonresident dependent when the number is necessary for U.S. 
tax purposes or some other valid reason, the evidence requirements of 
Sec. 422.107 are met, and we determine that a personal interview with 
the dependent is not required. Form SS-5 may be obtained at:
    (i) Any local social security office;
    (ii) The Social Security Administration, 300 N. Greene Street, 
Baltimore, MD 21201;
    (iii) Offices of District Directors of Internal Revenue;
    (iv) U.S. Postal Service offices (except the main office in cities 
having a social security office);
    (v) U.S. Employment Service offices in cities which do not have a 
social security office;
    (vi) The Department of Veterans Affairs Regional Office, Manila, 
Philippines;
    (vii) Any U.S. foreign service post; and
    (viii) U.S. military posts outside the U.S.
    (2) Birth registration document. SSA may enter into an agreement 
with officials of a State, including, for this purpose, the District of 
Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, and New York City, 
to establish, as part of the official birth registration process, a 
procedure to assist SSA in assigning social security numbers to newborn 
children. Where an agreement is in effect, a parent, as part of the 
official birth registration process, need not complete a form SS-5 and 
may request that SSA assign a social security number to the newborn 
child.
    (3) Immigration form. SSA may enter into an agreement with the 
Department of State (DOS) and the Immigration and Naturalization Service 
(INS) to assist SSA by collecting enumeration data as part of the 
immigration process. Where an agreement is in effect, an alien need not 
complete a Form SS-5 with SSA and may request, through DOS or INS, as 
part of the immigration process, that SSA assign a social security 
number and issue a social security number card to him/her. Requests for 
SSNs to be assigned via this process will be made on forms provided by 
DOS and INS.
    (c) How numbers are assigned--(1) Request on form SS-5. If the 
applicant has completed a form SS-5, the social security office, the 
Department of Veterans Affairs Regional Office, Manila, Philippines, the 
U.S. foreign service post, or the U.S. military post outside the United 
States that receives the completed form SS-5 will require the applicant 
to furnish documentary evidence, as necessary, to assist SSA in 
establishing the age, U.S. citizenship or alien status, true identity, 
and previously assigned social security number(s), if any, of the 
applicant. A personal interview may be required of the applicant. (See 
Sec. 422.107 for evidence requirements.) After review of the 
documentary evidence, the completed form SS-5 is forwarded or data from 
the SS-5 is transmitted to SSA's central office in Baltimore, Md., where 
the data is electronically screened against SSA's files. If the 
applicant requests evidence to show that he or she has filed an 
application for a social security number card, a receipt or equivalent 
document may be furnished. If the electronic screening or other 
investigation does not disclose a previously assigned number, SSA's 
central office assigns a number and issues a social security number 
card. If investigation discloses a previously assigned number for the 
applicant, a duplicate social security number card is issued.
    (2) Request on birth registration document. Where a parent has 
requested a social security number for a newborn child as part of an 
official birth registration process described in paragraph (b)(2) of 
this section, the State

[[Page 1070]]

vital statistics office will electronically transmit the request to 
SSA's central office in Baltimore, MD, along with the child's name, date 
and place of birth, sex, mother's maiden name, father's name (if shown 
on the birth registration), address of the mother, and birth certificate 
number. This birth registration information received by SSA from the 
State vital statistics office will be used to establish the age, 
identity, and U.S. citizenship of the newborn child. Using this 
information, SSA will assign a number to the child and send the social 
security number card to the child at the mother's address.
    (3) Request on immigration document. Where an alien has requested a 
social security number as part of the immigration process described in 
paragraph (b)(3) of this section, INS will electronically transmit to 
SSA's central office in Baltimore, MD, the data elements collected for 
immigration purposes, by both INS and DOS, that SSA needs to assign the 
alien a social security number along with other data elements as agreed 
upon by SSA and DOS or INS. The data elements received by SSA will be 
used to establish the age, identity, and lawful alien status or 
authority to work of the alien. Using this data, SSA will assign a 
social security number to the alien and send the social security number 
card to him/her at the address the alien provides to DOS or INS (or to 
the sponsoring agency of a refugee, if no personal mailing address is 
available).
    (d) Social security number cards. A person who is assigned a social 
security number will receive a social security number card from SSA 
within a reasonable time after the number has been assigned. (See Sec. 
422.104 regarding the assignment of social security number cards to 
aliens.) Social security number cards are the property of SSA and must 
be returned upon request.
    (e) Replacement of social security number card. In the case of a 
lost or damaged social security number card, a duplicate card bearing 
the same name and number may be issued. In the case of a need to change 
the name on the card, a corrected card bearing the same number and the 
new name may be issued. In both cases, a Form SS-5 must be completed. A 
Form SS-5 can be obtained from any Social Security office or from one of 
the sources noted in paragraph (b) of this section. For evidence 
requirements, see Sec. 422.107.

[55 FR 46664, Nov. 6, 1990, as amended at 63 FR 56554, Oct. 22, 1998]



Sec. 422.104  Who can be assigned a social security number.

    (a) Persons eligible for SSN assignment. We can assign you a social 
security number if you meet the evidence requirements in Sec. 422.107 
and you are:
    (1) A United States citizen; or
    (2) An alien lawfully admitted to the United States for permanent 
residence or under other authority of law permitting you to work in the 
United States (Sec. 422.105 describes how we determine if a 
nonimmigrant alien is permitted to work in the United States); or
    (3) An alien who cannot provide evidence of alien status showing 
lawful admission to the U.S., or an alien with evidence of lawful 
admission but without authority to work in the U.S., if the evidence 
described in Sec. 422.107(e) does not exist, but only for a valid 
nonwork reason. We consider you to have a valid nonwork reason if:
    (i) You need a social security number to satisfy a Federal statute 
or regulation that requires you to have a social security number in 
order to receive a Federally-funded benefit to which you have otherwise 
established entitlement and you reside either in or outside the U.S.; or
    (ii) You need a social security number to satisfy a State or local 
law that requires you to have a social security number in order to 
receive public assistance benefits to which you have otherwise 
established entitlement, and you are legally in the United States.
    (b) Annotation for a nonwork purpose. If we assign you a social 
security number as an alien for a nonwork purpose, we will indicate in 
our records that you are not authorized to work. We will also mark your 
social security card with a legend such as ``NOT VALID FOR EMPLOYMENT.'' 
If earnings are reported to us on your number, we will inform the 
Department of Homeland Security of the reported earnings.

[68 FR 55308, Sept. 25, 2003]

[[Page 1071]]



Sec. 422.105  Presumption of authority of nonimmigrant alien to accept 
employment.

    A nonimmigrant alien shall be presumed to have permission to engage 
in employment if the alien presents a Form I-94 issued by the 
Immigration and Naturalization Service (INS) that reflects a 
classification permitting work. (See 8 CFR 274a.12 for Form I-94 
classifications.) A nonimmigrant alien who has not been issued a Form I-
94, or whose Form I-94 does not reflect a classification permitting 
work, must submit a current document authorized by the INS that verifies 
authorization to work has been granted, e.g., an employment 
authorization document, to enable SSA to issue an SSN card that is valid 
for work purposes.

[63 FR 56554, Oct. 22, 1998]



Sec. 422.106  Filing applications with other government agencies.

    (a) Agreements. In carrying out its responsibilities to assign 
social security numbers, SSA enters into agreements with the United 
States Attorney General, other Federal officials, and State and local 
welfare agencies. An example of these agreements is discussed in 
paragraph (b) of this section.
    (b) States. SSA and a State may enter into an agreement that 
authorizes employees of a State or one of its subdivisions to accept 
social security number card applications from some individuals who apply 
for or are receiving welfare benefits under a State-administered Federal 
program. Under such an agreement, a State employee is also authorized to 
certify the application to show that he or she has reviewed the required 
evidence of the applicant's age, identity, and U.S. citizenship. The 
employee is also authorized to obtain evidence to assist SSA in 
determining whether the applicant has previously been assigned a number. 
The employee will then send the application to SSA which will issue a 
social security number card.

[55 FR 46665, Nov. 6, 1990, as amended at 63 FR 56555, Oct. 22, 1998]



Sec. 422.107  Evidence requirements.

    (a) General. An applicant for an original social security number 
card must submit documentary evidence that the Commissioner of Social 
Security regards as convincing evidence of age, U.S. citizenship or 
alien status, and true identity. An applicant for a duplicate or 
corrected social security number card must submit convincing documentary 
evidence of identity and may also be required to submit convincing 
documentary evidence of age and U.S. citizenship or alien status. An 
applicant for an original, duplicate, or corrected social security 
number card is also required to submit evidence to assist us in 
determining the existence and identity of any previously assigned 
number(s). A social security number will not be assigned, or an 
original, duplicate, or corrected card issued, unless all the evidence 
requirements are met. An in-person interview is required of an applicant 
who is age 12 or older applying for an original social security number 
except for an alien who requests a social security number as part of the 
immigration process as described in Sec. 422.103(b)(3). An in-person 
interview may also be required of other applicants. All documents 
submitted as evidence must be originals or copies of the original 
documents certified by the custodians of the original records and are 
subject to verification.
    (b) Evidence of age. An applicant for an original social security 
number is required to submit convincing evidence of age. An applicant 
for a duplicate or corrected social security number card may also be 
required to submit evidence of age. Examples of the types of evidence 
which may be submitted are a birth certificate, a religious record 
showing age or date of birth, a hospital record of birth, or a passport. 
(See Sec. 404.716.)
    (c) Evidence of identity. An applicant for an original social 
security number or a duplicate or corrected social security number card 
is required to submit convincing documentary evidence of identity. 
Documentary evidence of identity may consist of a driver's license, 
identity card, school record, medical record, marriage record, passport, 
Department of Homeland Security document, or other similar document 
serving to identify the individual. The document must contain sufficient 
information to identify the applicant,

[[Page 1072]]

including the applicant's name and (1) the applicant's age, date of 
birth, or parents' names; and/or (2) a photograph or physical 
description of the individual. A birth record is not sufficient evidence 
to establish identity for these purposes.
    (d) Evidence of U.S. citizenship. Generally, an applicant for an 
original, duplicate, or corrected social security number card may prove 
that he or she is a U.S. citizen by birth by submitting a birth 
certificate or other evidence, as described in paragraphs (b) and (c) of 
this section, that shows a U.S. place of birth. Where a foreign-born 
applicant claims U.S. citizenship, the applicant for a social security 
number or a duplicate or corrected social security number card is 
required to present documentary evidence of U.S. citizenship. If 
required evidence is not available, a social security number card will 
not be issued until satisfactory evidence of U.S. citizenship is 
furnished. Any of the following is generally acceptable evidence of U.S. 
citizenship for a foreign-born applicant:
    (1) Certificate of naturalization;
    (2) Certificate of citizenship;
    (3) U.S. passport;
    (4) U.S. citizen identification card issued by the Immigration and 
Naturalization Service;
    (5) Consular report of birth (State Department form FS-240 or FS-
545); or
    (6) Other verification from the Immigration and Naturalization 
Service, U.S. Department of State, or Federal or State court records 
confirming citizenship.
    (e) Evidence of alien status. When a person who is not a U.S. 
citizen applies for an original social security number or a duplicate or 
corrected social security number card, he or she is required to submit, 
as evidence of alien status, a current document issued by the 
Immigration and Naturalization Service in accordance with that agency's 
regulations. The document must show that the applicant has been lawfully 
admitted to the United States, either for permanent residence or under 
authority of law permitting him or her to work in the United States, or 
that the applicant's alien status has changed so that it is lawful for 
him or her to work. If the applicant fails to submit such a document, a 
social security number card will not be issued. If the applicant submits 
an unexpired Immigration and Naturalization Service document(s) which 
shows current authorization to work, a social security number will be 
assigned or verified and a card which can be used for work will be 
issued. If the authorization of the applicant to work is temporary or 
subject to termination by the Immigration and Naturalization Service, 
the SSA records may be so annotated. If the document(s) does not provide 
authorization to work and the applicant wants a social security number 
for a work purpose, no social security number will be assigned. If the 
applicant requests the number for a nonwork purpose and provides 
evidence documenting that the number is needed for a valid nonwork 
purpose, the number may be assigned and the card issued will be 
annotated with a nonwork legend. The SSA record will be annotated to 
show that a number has been assigned and a card issued for a nonwork 
purpose. In that case, if earnings are later reported to SSA, the 
Immigration and Naturalization Service will be notified of the report. 
SSA may also notify that agency if earnings are reported for a social 
security number that was valid for work when assigned but for which work 
authorization expired or was later terminated by the Immigration and 
Naturalization Service. SSA may also annotate the record with other 
remarks, if appropriate.
    (f) Failure to submit evidence. If the applicant does not comply 
with a request for the required evidence or other information within a 
reasonable time, SSA may attempt another contact with the applicant. If 
there is still no response, a social security number card will not be 
issued.
    (g) Invalid or expired documents. SSA will not issue an original, 
duplicate, or corrected social security number card when an applicant 
presents invalid or expired documents. Invalid documents are either 
forged documents that supposedly were issued by the custodian of the 
record, or properly issued documents that were improperly changed

[[Page 1073]]

after they were issued. An expired document is one that was valid for 
only a limited time and that time has passed.

[55 FR 46665, Nov. 6, 1990, as amended at 60 FR 32446, June 22, 1995; 62 
FR 38456, July 18, 1997; 63 FR 56555, Oct. 22, 1998; 68 FR 55308, Sept. 
25, 2003]



Sec. 422.108  Criminal penalties.

    A person may be subject to criminal penalties for furnishing false 
information in connection with earnings records or for wrongful use or 
misrepresentation in connection with social security numbers, pursuant 
to section 208 of the Social Security Act and sections of title 18 
U.S.C. (42 U.S.C. 408; 18 U.S.C. 1001 and 1546).

[39 FR 10242, Mar. 19, 1974]



Sec. 422.110  Individual's request for change in record.

    (a) Form SS-5. An individual who wishes to change the name or other 
personal identifying information previously submitted in connection with 
an application for a social security number card may complete and sign a 
Form SS-5 except as provided in paragraph (b) of this section. The 
person must prove his/her identity and may be required to provide other 
evidence. (See Sec. 422.107 for evidence requirements.) A Form SS-5 may 
be obtained from any local social security office or from one of the 
sources noted in Sec. 422.103(b). The completed request for change in 
records may be submitted to any SSA office, or, if the individual is 
outside the U.S., to the Department of Veterans Affairs Regional Office, 
Manila, Philippines, or to any U.S. foreign service post or U.S. 
military post. If the request is for a change in name, a new social 
security number card with the new name and bearing the same number 
previously assigned will be issued to the person making the request.
    (b) Assisting in enumeration. SSA may enter into an agreement with 
officials of the Department of State and the Immigration and 
Naturalization Service to assist SSA by collecting as part of the 
immigration process information to change the name or other personal 
identifying information previously submitted in connection with an 
application or request for a social security number card. If the request 
is for a change in name, a new social security number card with the new 
name and bearing the same number previously assigned will be issued.

[63 FR 56555, Oct. 22, 1998]



Sec. 422.112  Employer identification numbers.

    (a) General. Most employers are required by section 6109 of the 
Internal Revenue Code and by Internal Revenue Service (IRS) regulations 
at 26 CFR 31.6011(b)-1 to obtain an employer identification number (EIN) 
and to include it on wage reports filed with SSA. A sole proprietor who 
does not pay wages to one or more employees or who is not required to 
file any pension or excise tax return is not subject to this 
requirement. To apply for an EIN, employers file Form SS-4, 
``Application for Employer Identification Number,'' with the IRS. For 
the convenience of employers, Form SS-4 is available at all SSA and IRS 
offices. Household employers, agricultural employers, and domestic 
corporations which elect social security coverage for employees of 
foreign subsidiaries who are citizens or residents of the U.S. may be 
assigned an EIN by IRS without filing an SS-4.
    (b) State and local governments. When a State submits a modification 
to its agreement under section 218 of the Act, which extends coverage to 
periods prior to 1987, SSA will assign a special identification number 
to each political subdivision included in that modification. SSA will 
send the State a Form SSA-214-CD, ``Notice of Identifying Number,'' to 
inform the State of the special identification number(s). The special 
number will be used for reporting the pre-1987 wages to SSA. The special 
number will also be assigned to an interstate instrumentality if pre-
1987 coverage is obtained and SSA will send a Form SSA-214-CD to the 
interstate instrumentality to notify it of the number assigned.

[60 FR 42433, Aug. 16, 1995, as amended at 64 FR 33016, June 21, 1999]



Sec. 422.114  Annual wage reporting process.

    (a) General. Under the authority of section 232 of the Act, SSA and 
IRS

[[Page 1074]]

have entered into an agreement that sets forth the manner by which SSA 
and IRS will ensure that the processing of employee wage reports is 
effective and efficient. Under this agreement, employers are instructed 
by IRS to file annual wage reports with SSA on paper Forms W-2, ``Wage 
and Tax Statement,'' and Forms W-3, ``Transmittal of Income and Tax 
Statements,'' or equivalent W-2 and W-3 magnetic media reports. Special 
versions of these forms for Puerto Rico, Guam, American Samoa, the 
Virgin Islands, and the Commonwealth of the Northern Mariana Islands are 
also filed with SSA. SSA processes all wage reporting forms for updating 
to SSA's earnings records and IRS tax records, identifies employer 
reporting errors and untimely filed forms for IRS penalty assessment 
action, and takes action to correct any reporting errors identified, 
except as provided in paragraph (c) of this section. SSA also processes 
Forms W-3c, ``Transmittal of Corrected Income Tax Statements,'' and W-
2c, ``Statement of Corrected Income and Tax Amounts'' (and their 
magnetic media equivalents) that employers are required to file with SSA 
when certain previous reporting errors are discovered.
    (b) Magnetic media reporting requirements. Under IRS regulations at 
26 CFR 301.6011-2, employers who file 250 or more W-2 wage reports per 
year must file them on magnetic media in accordance with requirements 
provided in SSA publications, unless IRS grants the employer a waiver. 
Basic SSA requirements are set out in SSA's Technical Instruction 
Bulletin No. 4, ``Magnetic Media Reporting.'' Special filing 
requirements for U.S. territorial employers are set out in SSA Technical 
Instruction Bulletins No. 5 (Puerto Rico), No. 6 (Virgin Islands), and 
No. 7 (Guam and American Samoa). At the end of each year, SSA mails 
these technical instructions to employers (or third parties who file 
wage reports on their behalf) for their use in filing wage reports for 
that year.
    (c) Processing late and incorrect magnetic media wage transmittals. 
If an employer's transmittal of magnetic media wage reports is received 
by SSA after the filing due date, SSA will notify IRS of the late filing 
so that IRS can decide whether to assess penalties for late filing, 
pursuant to section 6721 of the Internal Revenue Code. If reports do not 
meet SSA processing requirements (unprocessable reports) or are out of 
balance on critical money amounts, SSA will return them to the employer 
to correct and resubmit. In addition, beginning with wage reports filed 
for tax year 1993, if 90 percent or more of an employer's magnetic media 
wage reports have no social security numbers or incorrect employee names 
or social security numbers so that SSA is unable to credit their wages 
to its records, SSA will not attempt to correct the errors, but will 
instead return the reports to the employer to correct and resubmit (see 
also Sec. 422.120(b)). An employer must correct and resubmit incorrect 
and unprocessable magnetic media wage reports to SSA within 45 days from 
the date of the letter sent with the returned report. Upon request, SSA 
may grant the employer a 15-day extension of the 45-day period. If an 
employer does not submit corrected reports to SSA within the 45-day (or, 
if extended by SSA, 60-day) period, SSA will notify IRS of the late 
filing so that IRS can decide whether to assess a penalty. If an 
employer timely resubmits the reports as corrected magnetic media 
reports, but they are unprocessable or out of balance on W-2 money 
totals, SSA will return the resubmitted reports for the second and last 
time for the employer to correct and return to SSA. SSA will enclose 
with the resubmitted and returned forms a letter informing the employer 
that he or she must correct and return the reports to SSA within 45 days 
or be subject to IRS penalties for late filing.
    (d) Paper form reporting requirements. The format and wage reporting 
instructions for paper forms are determined jointly by IRS and SSA. 
Basic instructions on how to complete the forms and file them with SSA 
are provided in IRS forms materials available to the public. In 
addition, SSA provides standards for employers (or third parties who 
file wage reports for them) to follow in producing completed reporting 
forms from computer software; these standards appear in SSA publication, 
``Software Specifications and Edits for

[[Page 1075]]

Annual Wage Reporting.'' Requests for this publication should be sent 
to: Social Security Administration, Office of Financial Policy and 
Operations, Attention: AWR Software Standards Project, P.O. Box 17195, 
Baltimore, MD 21235.
    (e) Processing late and incorrect paper form reports. If SSA 
receives paper form wage reports after the due date, SSA will notify IRS 
of the late filing so that IRS can decide whether to assess penalties 
for late filing, pursuant to section 6721 of the Internal Revenue Code. 
SSA will ask an employer to provide replacement forms for illegible, 
incomplete, or clearly erroneous paper reporting forms, or will ask the 
employer to provide information necessary to process the reports without 
having to resubmit corrected forms. (For wage reports where earnings are 
reported without a social security number or with an incorrect name or 
social security number, see Sec. 422.120.) If an employer fails to 
provide legible, complete, and correct W-2 reports within 45 days, SSA 
may identify the employers to IRS for assessment of employer reporting 
penalties.
    (f) Reconciliation of wage reporting errors. After SSA processes 
wage reports, it matches them with the information provided by employers 
to the IRS on Forms 941, ``Employer's Quarterly Federal Tax Return,'' 
for that tax year. Based upon this match, if the total social security 
or medicare wages reported to SSA for employees is less than the totals 
reported to IRS, SSA will write to the employer and request corrected 
reports or an explanation for the discrepancy. If the total social 
security or medicare wages reported to SSA for employees is more than 
the totals reported to IRS, IRS will resolve the difference with the 
employer. If the employer fails to provide SSA with corrected reports or 
information that shows the wage reports filed with SSA are correct, SSA 
will ask IRS to investigate the employer's wage and tax reports to 
resolve the discrepancy and to assess any appropriate reporting 
penalties.

[60 FR 42433, Aug. 16, 1995]



Sec. 422.120  Earnings reported without a social security number or with 
an incorrect employee name or social security number.

    (a) Correcting an earnings report. If an employer reports an 
employee's wages to SSA without the employee's social security number or 
with a different employee name or social security number than shown in 
SSA's records for him or her, SSA will write to the employee at the 
address shown on the wage report and request the missing or corrected 
information. If the wage report does not show the employee's address or 
shows an incomplete address, SSA will write to the employer and request 
the missing or corrected employee information. SSA notifies IRS of all 
wage reports filed without employee social security numbers so that IRS 
can decide whether to assess penalties for erroneous filing, pursuant to 
section 6721 of the Internal Revenue Code. If an individual reports 
self-employment income to IRS without a social security number or with a 
different name or social security number than shown in SSA's records, 
SSA will write to the individual and request the missing or corrected 
information. If the employer, employee, or self-employed individual does 
not provide the missing or corrected report information in response to 
SSA's request, the wages or self-employment income cannot be identified 
and credited to the proper individual's earnings records. In such cases, 
the information is maintained in a ``Suspense File'' of uncredited 
earnings. Subsequently, if identifying information is provided to SSA 
for an individual whose report is recorded in the Suspense File, the 
wages or self-employment income then may be credited to his or her 
earnings record.
    (b) Returning incorrect reports. SSA may return to the filer, 
unprocessed, an employer's annual wage report submittal if 90 percent or 
more of the wage reports in that submittal are unidentified or 
incorrectly identified. In such instances, SSA will advise the filer to 
return corrected wage reports within 45 days to avoid any possible IRS 
penalty assessment for failing to file correct reports timely with SSA. 
(See also Sec. 422.114(c).) Upon request, SSA may

[[Page 1076]]

grant the employer a 15-day extension of the 45-day period.

[60 FR 42434, Aug. 16, 1995]



Sec. 422.122  Information on deferred vested pension benefits.

    (a) Claimants for benefits. Each month, SSA checks the name and 
social security number of each new claimant for social security benefits 
or for hospital insurance coverage to see whether the claimant is listed 
in SSA's electronic pension benefit record. This record contains 
information received from IRS on individuals for whom private pension 
plan administrators have reported to IRS, as required by section 6057 of 
the Internal Revenue Code, as possibly having a right to future 
retirement benefits under the plan. SSA sends a notice to each new 
claimant for whom it has pension benefit information, as required by 
section 1131 of the Act. If the claimant filed for the lump-sum death 
payment on the social security account of a relative, SSA sends the 
claimant the pension information on the deceased individual. In either 
case, SSA sends the notice after it has made a decision on the claim for 
benefits. The notice shows the type, payment frequency, and amount of 
pension benefit, as well as the name and address of the plan 
administrator as reported to the IRS. This information can then be used 
by the claimant to claim any pension benefits still due from the pension 
plan.
    (b) Requesting deferred vested pension benefit information from SSA 
files. Section 1131 of the Act also requires SSA to provide available 
pension benefit information on request. SSA will provide this pension 
benefit information only to the individual who has the pension coverage 
(or a legal guardian or parent, in the case of a minor, on the 
individual's behalf). However, if the individual is deceased, the 
information may be provided to someone who would be eligible for any 
underpayment of benefits that might be due the individual under section 
204(d) of the Act. All requests for such information must be in writing 
and should contain the following information: the individual's name, 
social security number, date of birth, and any information the requestor 
may have concerning the name of the pension plan involved and the month 
and year coverage under the plan ended; the name and address of the 
person to whom the information is to be sent; and the requester's 
signature under the following statement: ``I am the individual to whom 
the information applies (or ``I am related to the individual as his or 
her ------------''). I know that if I make any representation which I 
know is false to obtain information from Social Security records, I 
could be punished by a fine or imprisonment or both.'' Such requests 
should be sent to: Social Security Administration, Office of Central 
Records Operations, P.O. Box 17055, Baltimore, Maryland 21235.

[60 FR 42434, Aug. 16, 1995]



Sec. 422.125  Statements of earnings; resolving earnings discrepancies.

    (a) Obtaining a statement of earnings and estimated benefits. An 
individual may obtain a statement of the earnings on his earnings record 
and an estimate of social security benefits potentially payable on his 
record either by writing, calling, or visiting any social security 
office, or by waiting until we send him one under the procedure 
described in Sec. 404.812 of this chapter. An individual may request 
this statement by completing the proper form or by otherwise providing 
the information the Social Security Administration requires, as 
explained in Sec. 404.810(b) of this chapter.
    (b) Statement of earnings and estimated benefits. Upon receipt of 
such a request or as required by section 1143(c) of the Social Security 
Act, the Social Security Administration will provide the individual, 
without charge, a statement of earnings and benefit estimates or an 
earnings statement. See Sec. Sec. 404.811 through 404.812 of this 
chapter concerning the information contained in these statements.
    (c) Detailed earnings statements. A more detailed earnings statement 
will be furnished upon request, generally without charge, where the 
request is program related under Sec. 402.170 of this part. If the 
request for a more detailed statement is not program related under Sec. 
402.170 of this part, a charge will be imposed according to the 
guidelines set out in Sec. 402.175 of this part.

[[Page 1077]]

    (d) Request for revision of earnings records. If an individual 
disagrees with a statement of earnings credited to his social security 
account, he may request a revision by writing to the Bureau of Data 
Processing and Accounts, Social Security Administration, Baltimore, MD 
21235, or by calling at or writing to any social security district 
office or branch office or, if the individual is in the Philippines, by 
calling at or writing to the Veterans' Administration Regional Office, 
Manila, Philippines. Upon receipt of a request for revision, the Social 
Security Administration will initiate an investigation of the 
individual's record of earnings. Form OAR-7008, ``Statement of 
Employment for Wages and Self-Employment,'' is used by the Social 
Security Administration for obtaining information from the individual 
requesting a revision to aid the Administration in the investigation. 
These forms are available at any of the sources listed in this 
paragraph. If an individual receives a Form OAR-7008 from the Bureau of 
Data Processing and Accounts, the completed form should be returned to 
that office. In the course of the investigation the district office or 
branch office, where appropriate, contacts the employer and the employee 
or the self-employed individual, whichever is applicable, for the 
purpose of obtaining the information and evidence necessary to reconcile 
any discrepancy between the allegations of the individual and the 
records of the Administration. See subpart I of part 404 of this chapter 
for requirements for filing requests for revision, and for limitation on 
the revision of records of earnings.
    (e) Notice to individual of determination. After the investigation 
has been completed and a determination affecting the individual's 
earnings record has been made, the Social Security Administration will 
notify the individual in writing of the status of his earnings record 
and inform him at the same time of the determination made in his case 
and of his right to a reconsideration if he is dissatisfied with such 
determination (see Sec. 422.140).
    (f) Notice to individual of adverse adjustment of his account. 
Written notice is given to an individual or his survivor in any case 
where the Social Security Administration adversely adjusts the 
individual's self-employment income. Where, subsequent to the issuance 
of a statement of earnings to an individual, an adverse adjustment is 
made of an amount of wages included in the statement, written notice of 
the adverse adjustment is given to the individual or his survivor. 
Written notice of the adverse adjustment is also given to the survivor 
if the statement of earnings had been given to such survivor. The 
individual or his survivor is requested to notify the Social Security 
Administration promptly if he disagrees, and he is informed that the 
adjustment will become final unless he notifies the Administration of 
his disagreement (if any) within 6 months from the date of the letter, 
or within 3 years, 3 months, and 15 days after the year to which the 
adjustment relates, whichever is later.

[32 FR 13653, Sept. 29, 1967, as amended at 35 FR 7891, May 22, 1970; 35 
FR 8426, May 29, 1970; 39 FR 26721, July 23, 1974; 41 FR 50998, Nov. 19, 
1976; 50 FR 28568, July 15, 1985; 57 FR 54919, Nov. 23, 1992; 61 FR 
18078, Apr. 24, 1996; 65 FR 16816, Mar. 30, 2000]



Sec. 422.130  Claim procedure.

    (a) General. The Social Security Administration provides facilities 
for the public to file claims and to obtain assistance in completing 
them. An appropriate application form and related forms for use in 
filing a claim for monthly benefits, the establishment of a period of 
disability, a lump-sum death payment, or entitlement to hospital 
insurance benefits or supplementary medical insurance benefits can be 
obtained from any district office, branch office, contact station, or 
resident station of the Social Security Administration, from the 
Division of Foreign Claims, Post Office Box 1756, Baltimore, MD 21203, 
or from the Veteran's Administration Regional Office, Manila, 
Philippines. See Sec. 404.614 of this chapter for offices at which 
applications may be filed. See 42 CFR part 405, subpart A, for 
conditions of entitlement to hospital insurance benefits and 42 CFR part 
405, subpart B, for information relating to enrollment under the 
supplementary medical insurance benefits program.
    (b) Submission of evidence. An individual who files an application 
for

[[Page 1078]]

monthly benefits, the establishment of a period of disability, a lump-
sum death payment, or entitlement to hospital insurance benefits or 
supplementary medical insurance benefits, either on his own behalf or on 
behalf of another, must establish by satisfactory evidence the material 
allegations in his application, except as to earnings shown in the 
Social Security Administration's records (see subpart H of part 404 of 
this chapter for evidence requirements in nondisability cases and 
subpart P of part 404 of this chapter for evidence requirements in 
disability cases). Instructions, report forms, and forms for the various 
proofs necessary are available to the public in district offices, branch 
offices, contact stations, and resident stations of the Social Security 
Administration, and the Veteran's Administration Regional Office, 
Manila, Philippines. These offices assist individuals in preparing their 
applications and in obtaining the proofs required in support of their 
applications.
    (c) Determinations and notice to individuals. In the case of an 
application for benefits, the establishment of a period of disability, a 
lump-sum death payment, a recomputation of a primary insurance amount, 
or entitlement to hospital insurance benefits or supplementary medical 
insurance benefits, the Social Security Administration, after obtaining 
the necessary evidence, will make a determination as to the entitlement 
of the individual claiming or for whom is claimed such benefits, and 
will notify the applicant of the determination and of his right to a 
reconsideration if he is dissatisfied with the determination (see Sec. 
422.140). Also see Sec. 404.1520 of this chapter for a discussion of 
the respective roles of State agencies and the Administration in the 
making of disability determinations and Sec. 404.1521 of this chapter 
for information regarding initial determinations as to entitlement or 
termination of entitlement in disability cases. See section 1869(a) of 
the Social Security Act for determinations under the health insurance 
for the aged program and sections 1816 and 1842 of the Act for the role 
of intermediaries, carriers, and State agencies in performing certain 
functions under such program, e.g., payment of claims pursuant to an 
agreement with the Social Security Administration.

[32 FR 13653, Sept. 29, 1967, as amended at 44 FR 34942, June 18, 1979; 
65 FR 16816, Mar. 30, 2000]



Sec. 422.135  Reports by beneficiaries.

    (a) A recipient of monthly benefits and a person for whom a period 
of disability has been established are obligated to report to the Social 
Security Administration the occurrence of certain events which may 
suspend or terminate benefits or which may cause a cessation of a period 
of disability. (See Sec. Sec. 404.415 et seq. and 404.1571 of this 
chapter.)
    (b) A person who files an application for benefits receives oral and 
written instructions about events which may cause a suspension or 
termination, and also appropriate forms and instruction cards for 
reporting such events. Pursuant to section 203(h)(1)(A) of the Act, 
under certain conditions a beneficiary must, within 3 months and 15 days 
after the close of a taxable year, submit to the Social Security 
Administration and annual report of his earnings and of any substantial 
services in self-employment performed during such taxable year. The 
purpose of the annual report is to furnish the Social Security 
Administration with information for making final adjustments in the 
payment of benefits for that year. An individual may also be requested 
to submit other reports to the Social Security Administration from time 
to time.

[32 FR 13653, Sept. 29, 1967, as amended at 65 FR 16816, Mar. 30, 2000]



Sec. 422.140  Reconsideration of initial determination.

    Any part who is dissatisfied with an initial determination with 
respect to entitlement to monthly benefits, a lump-sum death payment, a 
period of disability, a revision of an earnings record, with respect to 
any other right under title II of the Social Security Act, or with 
respect to entitlement to hospital insurance benefits or supplementary 
medical insurance benefits, or the amount of hospital insurance 
benefits, may request that the Social Security Administration reconsider 
such

[[Page 1079]]

determination. The information in Sec. 404.1503 of this chapter as to 
the respective roles of State agencies and the Social Security 
Administration in the making of disability determinations is also 
generally applicable to the reconsideration of initial determinations 
involving disability. However, in cases in which a disability hearing as 
described in Sec. Sec. 404.914 through 404.918 and 416.1414 through 
416.1418 is available, the reconsidered determination may be issued by a 
disability hearing officer or by the Director of the Office of 
Disability Hearings or his or her delegate. After such initial 
determination has been reconsidered, the Social Security Administration 
will mail to each of the parties written notice and inform him or her of 
his right to a hearing before an administrative law judge (see Sec. 
422.201). Regulations relating to the details of reconsideration of 
initial determinations with respect to rights under title II of the Act 
or with respect to entitlement to hospital insurance benefits or 
supplementary medical insurance benefits may be found in part 404, 
subpart J of this chapter.

[51 FR 308, Jan. 3, 1986]



       Subpart C_Procedures of the Office of Hearings and Appeals

    Authority: Secs. 205, 221, and 702(a)(5) of the Social Security Act 
(42 U.S.C. 405, 421, and 902(a)(5)); 30 U.S.C. 923(b).



Sec. 422.201  Material included in this subpart.

    This subpart describes in general the procedures relating to 
hearings before an administrative law judge of the Office of Hearings 
and Appeals, review by the Appeals Council of the hearing decision or 
dismissal, and court review. It also describes the procedures for 
requesting such hearing or Appeals Council review, and for instituting a 
civil action for court review. For detailed provisions relating to 
hearings before an administrative law judge, review by the Appeals 
Council, and court review, see the following references as appropriate 
to the matter involved:
    (a) Title II of the Act, Sec. Sec. 404.929 through 404.983 of this 
chapter;
    (b) Title XVI of the Act, Sec. Sec. 416.1429 through 416.1483 of 
this chapter;
    (c) Title XVIII of the Act, 42 CFR 405.720 through 405.750, 498.17, 
498.40 through 498.95, 417.260 through 417.263, 473.40 through 473.46, 
and 1001.128. For regulations relating to hearings under title XVIII for 
a provider of services dissatisfied with the intermediary's 
determination as to the amount of program reimbursement due to or from 
the provider, see 42 CFR 405.1809 through 405.1890. Such hearings are 
conducted by a hearing officer designated by the intermediary or by the 
Provider Reimbursement Review Board, as appropriate.
    (d) Part B of title IV of the Federal Mine Safety and Health Act of 
1977 as amended, Sec. Sec. 410.630 through 410.670.

[41 FR 53791, Dec. 9, 1976, as amended at 44 FR 34942, June 18, 1979; 54 
FR 4268, Jan. 30, 1989]



Sec. 422.203  Hearings.

    (a) Right to request a hearing. (1) After a reconsidered or a 
revised determination (i) of a claim for benefits or any other right 
under title II of the Social Security Act; or (ii) of eligibility or 
amount of benefits or any other matter under title XVI of the Act, 
except where an initial or reconsidered determination involving an 
adverse action is revised, after such revised determination has been 
reconsidered; or (iii) as to entitlement under part A or part B of title 
XVIII of the Act, or as to the amount of benefits under part A of such 
title XVIII (where the amount in controversy is $100 or more); or of 
health services to be provided by a health maintenance organization 
without additional costs (where the amount in controversy is $100 or 
more); or as to the amount of benefits under part B of title XVIII 
(where the amount in controversy is $500 or more); or as to a 
determination by a peer review organization (PRO) under title XI (where 
the amount in controversy is $200 or more); or as to certain 
determinations made under section 1154, 1842(1), 1866(f)(2), or 1879 of 
the Act; any party to such a determination may, pursuant to the 
applicable section of the Act, file a written request for a hearing on 
the determination. After a reconsidered determination of a claim for 
benefits under

[[Page 1080]]

part B of title IV (Black Lung benefits) of the Federal Mine Safety and 
Health Act of 1977 (30 U.S.C. 921 through 925), a party to the 
determination may file a written request for hearing on the 
determination.
    (2) After (i) a reconsidered or revised determination that an 
institution, facility, agency, or clinic does not qualify as a provider 
of services, or (ii) a determination terminating an agreement with a 
provider of services, such institution, facility, agency, or clinic may, 
pursuant to section 1866 of the Act, file a written request for a 
hearing on the determination.
    (3) After (i) a reconsidered or revised determination that an 
independent laboratory, supplier of portable X-ray services, or end-
stage renal disease treatment facility or other person does not meet the 
conditions for coverage of its services or (ii) a determination that it 
no longer meets such conditions has been made, such laboratory, 
supplier, treatment facility may, under 42 CFR 498.40 of this chapter, 
file a written request for a hearing on the determination. (For hearing 
rights of independent laboratories, suppliers of portable X-ray 
services, and end-stage renal disease treatment facilities and other 
person see 42 CFR 498.5.)
    (b) Request for hearing. (1) A request for a hearing under paragraph 
(a) of this section may be made on Form HA-501, ``Request for Hearing,'' 
or Form HA-501.1, ``Request for Hearing, part A Hospital Insurance 
Benefits,'' or by any other writing requesting a hearing. The request 
shall be filed at an office of the Social Security Administration, 
usually a district office or a branch office, or at the Veterans' 
Administration Regional Office in the Philippines (except in title XVI 
cases), or at a hearing office of the Office of Hearings and Appeals, or 
with the Appeals Council. A qualified railroad retirement beneficiary 
may, if he prefers, file a request for a hearing under part A of title 
XVIII with the Railroad Retirement Board. Form HA-501 may be obtained 
from any social security district office or branch office, from the 
Office of Hearings and Appeals, Social Security Administration, P.O. Box 
3200, Arlington, VA 22203, or from any other office where a request for 
a hearing may be filed.
    (2) Unless for good cause shown an extension of time has been 
granted, a request for hearing must be filed within 60 days after the 
receipt of the notice of the reconsidered or revised determination, or 
after an initial determination described in 42 CFR 498.3 (b) and (c) 
(see Sec. Sec. 404.933, 410.631, and 416.1433 of this chapter and 42 
CFR 405.722, 498.40, and 417.260.)
    (c) Hearing decision or other action. Generally, the administrative 
law judge will either decide the case after hearing (unless hearing is 
waived) or, if appropriate, dismiss the request for hearing. With 
respect to a hearing on a determination under paragraph (a)(1) of this 
section, the administrative law judge may certify the case with a 
recommended decision to the Appeals Council for decision. If the 
determination on which the hearing request is based relates to the 
amount of benefits under part A or B of title XVIII of the Act, to 
health services to be provided by a health maintenance organization 
without additional costs, or to PRO determinations, the administrative 
law judge shall dismiss the request for hearing if he or she finds that 
the amount in controversy is less than $100 for appeals arising under 
part A or concerning health maintenance organization benefits; less than 
$200 for appeals arising from PRO determinations; and less than $500 for 
appeals arising under part B. Hearing decisions must be based on the 
evidence of record, under applicable provisions of the law and 
regulations and appropriate precedents.

[41 FR 53791, Dec. 9, 1976, as amended at 44 FR 34942, June 18, 1979; 51 
FR 308, Jan. 3, 1986; 54 FR 4268, Jan. 30, 1989]



Sec. 422.205  Review by Appeals Council.

    (a) Any party to a hearing decision or dismissal may request a 
review of such action by the Appeals Council. The Health Care Financing 
Administration or, as appropriate, the Office of the Inspector General 
is a party to a hearing on a determination under Sec. 422.203 (a)(2) 
and (a)(3) and to administrative appeals involving matters under section 
1128(b)(6) of the Act (see 42 CFR 498.42). This request may be made on 
Form

[[Page 1081]]

HA-520, ``Request for Review of Hearing Decision/Order,'' or by any 
other writing specifically requesting review. Form HA-520 may be 
obtained from any social security district office or branch office, from 
the Office of Hearings and Appeals Social Security Administration, P.O. 
Box 3200, Arlington, VA 22203, or at any other office where a request 
for a hearing may be filed. (For time and place of filing, see 
Sec. Sec. 404.968, 410.661, and 416.1468 of this chapter, and 42 CFR 
405.724, 498.82 and 417.261.)
    (b) Whenever the Appeals Council reviews a hearing decision under 
Sec. Sec. 404.967 or 404.969, 410.662, 416.1467, or 416.1469 of this 
chapter, or 42 CFR 405.724 or 417.261 or 473.46 and the claimant does 
not appear personally or through representation before the Council to 
present oral argument, such review will be conducted by a panel of not 
less than two members of the Council designated in the manner prescribed 
by the Chairman or Deputy Chairman of the Council. In the event of 
disagreement between a panel composed of only two members, the Chairman 
or Deputy Chairman, or his delegate, who must be a member of the 
Council, shall participate as a third member of the panel. When the 
claimant appears in person or through representation before the Council 
in the location designated by the Council, the review will be conducted 
by a panel of not less than three members of the Council designated in 
the manner prescribed by the Chairman or Deputy Chairman. Concurrence of 
a majority of a panel shall constitute the decision of the Appeals 
Council unless the case is considered as provided under paragraph (e) of 
this section.
    (c) The denial of a request for review of a hearing decision 
concerning a determination under Sec. 422.203(a)(1) shall be by such 
appeals officer or appeals officers or by such member or members of the 
Appeals Council as may be designated in the manner prescribed by the 
Chair or Deputy Chair. The denial of a request for review of a hearing 
dismissal, the dismissal of a request for review, the denial of a 
request for review of a hearing decision whenever such hearing decision 
after such denial would not be subject to judicial review as explained 
in Sec. 422.210(a), or the refusal of a request to reopen a hearing or 
Appeals Council decision concerning a determination under Sec. 
422.203(a)(1) shall be by such member or members of the Appeals Council 
as may be designated in the manner prescribed by the Chair or Deputy 
Chair.
    (d) A review or a denial of review of a hearing decision or a 
dismissal of a request for review with respect to requests by parties 
under 42 CFR 498.82 or 1001.128 in accordance with Sec. 498.83 will be 
conducted by a panel of at least two members of the Appeals Council 
designated by the Chairman or Deputy Chairman and one person from the 
U.S. Public Health Service designated by the Surgeon General, Public 
Health Service, Department of Health and Human Services, or his 
delegate. This person shall serve on an ad hoc basis and shall be 
considered for this purpose as a member of the Appeals Council. 
Concurrence of a majority of the panel shall constitute the decision of 
the Appeals Council unless the case is considered as provided under 
paragraph (e) of this section.
    (e) On call of the Chairman, the Appeals Council may meet en banc or 
a representative body of Appeals Council members may be convened to 
consider any case arising under paragraph (b), (c), or (d) of this 
section. Such representative body shall be comprised of a panel of not 
less than five members designated by the Chairman as deemed appropriate 
for the matter to be considered, including a person from the U.S. Public 
Health Service in a matter under paragraph (d) of this section. The 
Chairman or Deputy Chairman shall preside, or in his absence, the 
Chairman shall designate a member of the Appeals Council to preside. A 
majority vote of the designated panel, or of the members present and 
voting shall constitute the decision of the Appeals Council.
    (f) The Chairman may designate an administrative law judge to serve 
as a member of the Appeals Council for temporary assignments. An 
administrative law judge shall not be designated to serve as a member on 
any panel where such panel is conducting

[[Page 1082]]

review on a case in which such individual has been previously involved.

[41 FR 53792, Dec. 9, 1976, as amended at 44 FR 34942, June 18, 1979; 54 
FR 4268, Jan. 30, 1989; 60 FR 7120, Feb. 7, 1995]



Sec. 422.210  Judicial review.

    (a) General. A claimant may obtain judicial review of a decision by 
an administrative law judge if the Appeals Council has denied the 
claimant's request for review, or of a decision by the Appeals Council 
when that is the final decision of the Commissioner. A claimant may also 
obtain judicial review of a reconsidered determination, or of a decision 
of an administrative law judge, where, under the expedited appeals 
procedure, further administrative review is waived by agreement under 
Sec. Sec. 404.926, 410.629d, or 416.1426 of this chapter or 42 CFR 
405.718a-e as appropriate. For judicial review as to the amount of 
benefits under part A or part B of title XVIII of the Social Security 
Act, or of health services to be provided by a health maintenance 
organization without additional cost, the amount in controversy must be 
$1,000 or more as provided under section 1869(b) and section 
1876(c)(5)(B) of the Act. For judicial review of a determination by a 
PRO, the amount in controversy must be $2,000 or more. An institution or 
agency may obtain judical review of a decision by the Appeals Council 
that it is not a provider of services, or of a decision by the Appeals 
Council terminating an agreement entered into by the institution or 
agency with the Commissioner (see section 1866(b)(2) of the Act). The 
Social Security Act does not provide for a right to judicial review of a 
final decision of the Commissioner regarding the status of an entity 
which is not a ``provider of services'', such as an independent 
laboratory. Providers of services or other persons may seek judicial 
review of a final administrative determination made pursuant to section 
1128(b)(6) of the Act. There are no amount-in-controversy limitations on 
these rights of appeal.
    (b) Court in which to institute civil action. Any civil action 
described in paragraph (a) of this section must be instituted in the 
district court of the United States for the judicial district in which 
the claimant resides or where such individual or institution or agency 
has his principal place of business. If the individual does not reside 
within any such judicial district, or if such individual or institution 
or agency does not have his principal place of business within any such 
judicial district, the civil action must be instituted in the District 
Court of the United States for the District of Columbia.
    (c) Time for instituting civil action. Any civil action described in 
paragraph (a) of this section must be instituted within 60 days after 
the Appeals Council's notice of denial of request for review of the 
administrative law judge's decision or notice of the decision by the 
Appeals Council is received by the individual, institution, or agency, 
except that this time may be extended by the Appeals Council upon a 
showing of good cause. For purposes of this section, the date of receipt 
of notice of denial of request for review of the presiding officer's 
decision or notice of the decision by the Appeals Council shall be 
presumed to be 5 days after the date of such notice, unless there is a 
reasonable showing to the contrary. Where pursuant to the expedited 
appeals procedures an agreement has been entered into under 42 CFR 
405.718c, a civil action under section 205(g) of the Act must be 
commenced within 60 days from the date of the signing of such agreement 
by, or on behalf of, the Commissioner, except where the time described 
in the first sentence of this paragraph (c) has been extended by the 
Commissioner upon a showing of good cause. Where pursuant to the 
expedited appeals procedures an agreement has been entered into under 
Sec. Sec. 404.926, 410.629d, or 416.1426 of this chapter, a civil 
action under section 205(g) of the Act must be commenced within 60 days 
after the date the individual receives notice (a signed copy of the 
agreement will be mailed to the individual and will constitute notice) 
of the signing of such agreement by, or on behalf of, the Commissioner, 
except where the time described in this paragraph (c) has been extended 
by the Commissioner upon a showing of good cause.
    (d) Proper defendant. Where any civil action described in paragraph 
(a) of this section is instituted, the person

[[Page 1083]]

holding the Office of the Commissioner shall, in his official capacity, 
be the proper defendant. Any such civil action properly instituted shall 
survive notwithstanding any change of the person holding the Office of 
the Commissioner or any vacancy in such office. If the complaint is 
erroneously filed against the United States or against any agency, 
officer, or employee of the United States other than the Commissioner, 
the plaintiff will be notified that he has named an incorrect defendant 
and will be granted 60 days from the date of receipt of such notice in 
which to commence the action against the correct defendant, the 
Commissioner.

[41 FR 53792, Dec. 9, 1976, as amended at 44 FR 34942, June 18, 1979; 49 
FR 46370, Nov. 26, 1984; 49 FR 48036, Dec. 10, 1984; 54 FR 4268, Jan. 
30, 1989; 62 FR 38456, July 18, 1997]



                       Subpart D_Claims Collection

    Authority: Secs. 204(f), 205(a), 702(a)(5), and 1631(b) of the 
Social Security Act (42 U.S.C. 404(f), 405(a), 902(a)(5), and 1383(b)); 
31 U.S.C. 3711(e); 31 U.S.C. 3716.

    Source: 62 FR 64278, Dec. 5, 1997, unless otherwise noted.



Sec. 422.301  Material included in this subpart.

    This subpart describes the procedures relating to collection of:
    (a) Overdue administrative debts, and
    (b) Overdue program overpayments described in Sec. Sec. 404.527 and 
416.590 of this chapter.

[62 FR 64278, Dec. 5, 1997, as amended at 66 FR 67081, Dec. 28, 2001]



Sec. 422.305  Report of overdue program overpayment debts to consumer 
reporting agencies.

    (a) Debts we will report. We will report to consumer reporting 
agencies all overdue program overpayment debts over $25.
    (b) Notice to debtor. Before we report any such debt to a consumer 
reporting agency, we will send the debtor written notice of the 
following:
    (1) We have determined that payment of the debt is overdue;
    (2) We will refer the debt to a consumer reporting agency at the 
expiration of not less than 60 calendar days after the date of the 
notice unless, within that 60-day period, the debtor pays the full 
amount of the debt or takes either of the actions described in 
paragraphs (b)(6) or (b)(7) of this section;
    (3) The specific information we will provide to the consumer 
reporting agency, including information that identifies the debtor 
(e.g., name, address, and social security number) and the amount, 
status, and history of the debt;
    (4) The debtor has the right to a complete explanation of the debt;
    (5) The debtor may dispute the accuracy of the information to be 
provided to the consumer reporting agency;
    (6) The debtor may request a review of the debt by giving us 
evidence showing that he or she does not owe all or part of the amount 
of the debt or that we do not have the right to collect it; and
    (7) The debtor may request an installment payment plan.
    (c) Disputing the information that we would send to consumer 
reporting agencies. If a debtor believes that the information we propose 
to send to consumer reporting agencies is incorrect, the debtor may ask 
us to correct such information. If, within 60 calendar days from the 
date of our notice described in paragraph (b) of this section, the 
debtor notifies us that any information to be sent to consumer reporting 
agencies is incorrect, we will not send the information to consumer 
reporting agencies until we determine the correct information.

[62 FR 64278, Dec. 5, 1997, as amended at 66 FR 67081, Dec. 28, 2001]



Sec. 422.306  Report of overdue administrative debts to credit reporting 
agencies.

    (a) Debts we will report. We will report to credit reporting 
agencies all overdue administrative debts over $25. Some examples of 
administrative debts are as follows: overpayments of pay and allowances 
paid to employees, debts for civil monetary penalties imposed under 
section 1140(b) of the Act, debts for unpaid fees for reimbursable 
services performed by SSA (e.g., disclosures of information), and 
contractor debts.

[[Page 1084]]

    (b) Notice to debtor. Before we report any administrative debt to a 
credit reporting agency, we will send the debtor written notice of the 
following:
    (1) We have determined that payment of the debt is overdue;
    (2) We will refer the debt to a credit reporting agency at the 
expiration of not less than 60 calendar days after the date of the 
notice unless, within that 60-day period, the debtor pays the full 
amount of the debt or takes either of the actions described in 
paragraphs (b)(6) or (b)(7) of this section;
    (3) The specific information we will provide to the credit reporting 
agency, including information that identifies the debtor (e.g., name, 
address, social security number, and employer identification number) and 
the amount, status, and history of the debt;
    (4) The debtor has the right to a complete explanation of the debt;
    (5) The debtor may dispute the accuracy of the information to be 
provided to the credit reporting agency;
    (6) The debtor may request a review of the debt by giving us 
evidence showing that he or she does not owe all or part of the amount 
of the debt or that we do not have the right to collect it; and
    (7) The debtor may request an installment payment plan.



Sec. 422.310  Collection of overdue debts by administrative offset.

    (a) Referral to the Department of the Treasury for offset. We will 
recover overdue debts by offsetting Federal payments due the debtor 
through the Treasury Offset Program (TOP). TOP is a Governmentwide 
delinquent debt matching and payment offset process operated by the 
Department of the Treasury, whereby debts owed to the Federal Government 
are collected by offsetting them against Federal payments owed the 
debtor.
    (b) Debts we will refer. We will refer for administrative offset all 
overdue debts over $25.
    (c) Notice to debtor. Before we refer any debt for collection by 
administrative offset, we will send the debtor written notice that:
    (1) We have determined that payment of the debt is overdue;
    (2) We will refer the debt for administrative offset at the 
expiration of not less than 60 calendar days after the date of the 
notice unless, within that 60-day period, the debtor pays the full 
amount of the debt or takes either of the actions described in 
paragraphs (c)(4) or (c)(5) of this section;
    (3) The debtor may inspect or copy our records relating to the debt;
    (4) The debtor may request a review of the debt by giving us 
evidence showing that the debtor does not owe all or part of the amount 
of the debt or that we do not have the right to collect it; and
    (5) The debtor may request an installment payment plan.



Sec. 422.315  Review of our records related to the debt.

    (a) Notification by the debtor. The debtor may request to inspect or 
copy our records related to the debt.
    (b) Our response. In response to a request from the debtor described 
in paragraph (a) of this section, we will notify the debtor of the 
location and time at which the debtor may inspect or copy our records 
related to the debt. We may also, at our discretion, mail to the debtor 
copies of the records relating to the debt.



Sec. 422.317  Review of the debt.

    (a) Notification and presentation of evidence by the debtor. A 
debtor who receives a notice described in Sec. 422.305(b), Sec. 
422.306(b), or Sec. 422.310(c) has a right to have us review the debt. 
To exercise this right, within 60 calendar days from the date of our 
notice, the debtor must notify us and give us evidence that he or she 
does not owe all or part of the debt or that we do not have the right to 
collect it. If the debtor does not notify us and give us this evidence 
within the 60 calendar-day period, we may take the action described in 
our notice.
    (b) Review of the evidence. If the debtor notifies us and presents 
evidence within the 60 calendar-day period described in paragraph (a) of 
this section, we will not take the action described in our notice unless 
and until we consider all of the evidence and send the debtor our 
findings that all or part of the debt is overdue and legally 
enforceable.

[[Page 1085]]

    (c) Findings by SSA. Following our review of all of the evidence 
presented, we will issue written findings, including the supporting 
rationale for the findings. Issuance of these findings will be the final 
Agency action on the debtor's request for review. If we find that the 
debt is not overdue or we do not have the right to collect it, we will 
not send information about the debt to consumer or other credit 
reporting agencies or refer the debt to the Department of the Treasury 
for administrative offset.



    Subpart E_Collection of Debts by Administrative Wage Garnishment

    Authority: Secs. 205(a), 702(a)(5) and 1631(d)(1) of the Social 
Security Act (42 U.S.C. 405(a), 902(a)(5) and 1383(d)(1)) and 31 U.S.C. 
3720D.

    Source: 68 FR 74184, Dec. 23, 2003, unless otherwise noted.



Sec. 422.401  What is the scope of this subpart?

    This subpart describes the procedures relating to our use of 
administrative wage garnishment under 31 U.S.C. 3720D to recover past 
due debts that you owe.



Sec. 422.402  What special definitions apply to this subpart?

    (a) Administrative wage garnishment is a process whereby we order 
your employer to withhold a certain amount from your disposable pay and 
send the withheld amount to us. The law requires your employer to comply 
with our garnishment order.
    (b) Debt means any amount of money or property that we determine is 
owed to the United States and that arises from a program that we 
administer or an activity that we perform. These debts include program 
overpayments made under title II or title XVI of the Social Security Act 
and any other debt that meets the definition of ``claim'' or ``debt'' at 
31 U.S.C. 3701(b).
    (c) Disposable pay means that part of your total compensation 
(including, but not limited to, salary or wages, bonuses, commissions, 
and vacation pay) from your employer after deduction of health insurance 
premiums and amounts withheld as required by law. Amounts withheld as 
required by law include such things as Federal, State and local taxes 
but do not include amounts withheld under court order.
    (d) We, our, or us means the Social Security Administration.
    (e) You means an individual who owes a debt to the United States 
within the scope of this subpart.



Sec. 422.403  When may we use administrative wage garnishment?

    (a) General. Subject to the exceptions described in paragraph (b) of 
this section and the conditions described in paragraphs (c) and (d) of 
this section, we may use administrative wage garnishment to collect any 
debt that is past due. We may use administrative wage garnishment while 
we are taking other action regarding the debt, such as, using tax refund 
offset under Sec. Sec. 404.520-404.526 and 416.580-416.586 of this 
chapter and taking action under subpart D of this part.
    (b) Exceptions. (1) We will not use this subpart to collect a debt 
from salary or wages paid by the United States Government.
    (2) If you have been separated involuntarily from employment, we 
will not order your employer to withhold amounts from your disposable 
pay until you have been reemployed continuously for at least 12 months. 
You have the burden of informing us about an involuntary separation from 
employment.
    (3) We will not use this subpart to collect a debt while your 
disability benefits are stopped during the reentitlement period, under 
Sec. 404.1592a(a)(2) of this chapter, because you are engaging in 
substantial gainful activity.
    (4) We will not use this subpart to collect a debt while your 
Medicare entitlement is continued because you are deemed to be entitled 
to disability benefits under section 226(b) of the Social Security Act 
(42 U.S.C. 426(b)).
    (5) We will not use this subpart to collect a debt if you have 
decided to participate in the Ticket to Work and Self-Sufficiency 
Program and your ticket is in use as described in Sec. Sec. 411.170 
through 411.225 of this chapter.
    (c) Overpayments under title II of the Social Security Act. This 
subpart applies to overpayments under title II of the

[[Page 1086]]

Social Security Act if all of the following conditions are met:
    (1) You are not receiving title II benefits.
    (2) We have completed our billing system sequence (i.e., we have 
sent you an initial notice of the overpayment, a reminder notice, and a 
past-due notice) or we have suspended or terminated collection activity 
in accordance with applicable rules, such as, the Federal Claims 
Collection Standards in 31 CFR 903.2 or 31 CFR 903.3.
    (3) We have not made an installment payment arrangement with you or, 
if we have made such an arrangement, you have failed to make any payment 
for two consecutive months.
    (4) You have not requested waiver pursuant to Sec. 404.506 or Sec. 
404.522 of this chapter or, after a review conducted pursuant to those 
sections, we have determined that we will not waive collection of the 
overpayment.
    (5) You have not requested reconsideration of the initial 
overpayment determination pursuant to Sec. Sec. 404.907 and 404.909 of 
this chapter or, after a review conducted pursuant to Sec. 404.913 of 
this chapter, we have affirmed all or part of the initial overpayment 
determination.
    (6) We cannot recover your overpayment pursuant to Sec. 404.502 of 
this chapter by adjustment of benefits payable to any individual other 
than you. For purposes of this paragraph, an overpayment will be deemed 
to be unrecoverable from any individual who was living in a separate 
household from yours at the time of the overpayment and who did not 
receive the overpayment.
    (d) Overpayments under title XVI of the Social Security Act. This 
subpart applies to overpayments under title XVI of the Social Security 
Act if all of the following conditions are met:
    (1) You are not receiving benefits under title XVI of the Social 
Security Act.
    (2) We are not collecting your title XVI overpayment by reducing 
title II benefits payable to you.
    (3) We have completed our billing system sequence (i.e., we have 
sent you an initial notice of the overpayment, a reminder notice, and a 
past-due notice) or we have suspended or terminated collection activity 
under applicable rules, such as, the Federal Claims Collection Standards 
in 31 CFR 903.2 or 31 CFR 903.3.
    (4) We have not made an installment payment arrangement with you or, 
if we have made such an arrangement, you have failed to make any payment 
for two consecutive months.
    (5) You have not requested waiver pursuant to Sec. 416.550 or Sec. 
416.582 of this chapter or, after a review conducted pursuant to those 
sections, we have determined that we will not waive collection of the 
overpayment.
    (6) You have not requested reconsideration of the initial 
overpayment determination pursuant to Sec. Sec. 416.1407 and 416.1409 
of this chapter or, after a review conducted pursuant to Sec. 416.1413 
of this chapter, we have affirmed all or part of the initial overpayment 
determination.
    (7) We cannot recover your overpayment pursuant to Sec. 416.570 of 
this chapter by adjustment of benefits payable to any individual other 
than you. For purposes of this paragraph, if you are a member of an 
eligible couple that is legally separated and/or living apart, we will 
deem unrecoverable from the other person that part of your overpayment 
which he or she did not receive.



Sec. 422.405  What notice will we send you about administrative wage 
garnishment?

    (a) General. Before we order your employer to collect a debt by 
deduction from your disposable pay, we will send you written notice of 
our intention to do so.
    (b) Contents of the notice. The notice will contain the following 
information:
    (1) We have determined that payment of the debt is past due;
    (2) The nature and amount of the debt;
    (3) Information about the amount that your employer could withhold 
from your disposable pay each payday (the payment schedule);
    (4) No sooner than 60 calendar days after the date of the notice, we 
will order your employer to withhold the debt from your disposable pay 
unless, within that 60-day period, you pay the full amount of the debt 
or take either of the actions described in paragraphs (b)(6) or (7) of 
this section;

[[Page 1087]]

    (5) You may inspect and copy our records about the debt (see Sec. 
422.420);
    (6) You may request a review of the debt (see Sec. 422.425) or the 
payment schedule stated in the notice (see Sec. 422.415); and
    (7) You may request to pay the debt by monthly installment payments 
to us.
    (c) Mailing address. We will send the notice to the most current 
mailing address that we have for you in our records.
    (d) Electronic record of the notice. We will keep an electronic 
record of the notice that shows the date we mailed the notice to you and 
the amount of your debt.



Sec. 422.410  What actions will we take after we send you the notice?

    (a) General. (1) We will not send an administrative wage garnishment 
order to your employer before 60 calendar days elapse from the date of 
the notice described in Sec. 422.405.
    (2) If paragraph (b) of this section does not apply and you do not 
pay the debt in full or do not take either of the actions described in 
Sec. 422.405(b)(6) or (7) within 60 calendar days from the date of the 
notice described in Sec. 422.405, we may order your employer to 
withhold and send us part of your disposable pay each payday until your 
debt is paid.
    (3) If you request review of the debt or the payment schedule after 
the end of the 60 calendar day period described in paragraph (a)(2) of 
this section and paragraph (b) of this section does not apply, we will 
conduct the review. However, we may send the administrative wage 
garnishment order to your employer without further delay. If we sent the 
administrative wage garnishment order to your employer and we do not 
make our decision on your request within 60 calendar days from the date 
that we received your request, we will tell your employer to stop 
withholding from your disposable pay. Withholding will not resume before 
we conduct the review and notify you of our decision.
    (4) We may send an administrative wage garnishment order to your 
employer without further delay if:
    (i) You request an installment payment plan after receiving the 
notice described in Sec. 422.405, and
    (ii) We arrange such a plan with you, and
    (iii) You fail to make payments in accordance with that arrangement 
for two consecutive months.
    (b) Good cause for failing to request review on time. If we decide 
that you had good cause for failing to request review within the 60-day 
period mentioned in paragraph (a)(2) of this section, we will treat your 
request for review as if we received it within that 60-day period.
    (1) Determining good cause. In determining whether you had good 
cause, we will consider--
    (i) Any circumstances that kept you from making the request on time;
    (ii) Whether our action misled you;
    (iii) Whether you had any physical, mental, educational, or 
linguistic limitations (including any lack of facility with the English 
language) which prevented you from making a request on time or from 
understanding the need to make a request on time.
    (2) Examples of good cause. Examples of facts supporting good cause 
include, but are not limited to, the following.
    (i) Your serious illness prevented you from contacting us yourself 
or through another person.
    (ii) There was a death or serious illness in your family.
    (iii) Fire or other accidental cause destroyed important records.
    (iv) You did not receive the notice described in Sec. 422.405.
    (v) In good faith, you sent the request to another government agency 
within the 60-day period, and we received the request after the end of 
that period.
    (3) If we issued the administrative wage garnishment order. If we 
determine that you had good cause under paragraph (b) of this section 
and we already had sent an administrative wage garnishment order to your 
employer, we will tell your employer to stop withholding from your 
disposable pay. Withholding will not resume until we conduct the review 
and notify you of our decision.



Sec. 422.415  Will we reduce the amount that your employer must withhold 
from your pay when withholding that amount causes financial hardship?

    (a) General. Unless paragraph (d) of this section applies, we will 
reduce the

[[Page 1088]]

amount that your employer must withhold from your pay when you request 
the reduction and we find financial hardship. In any event, we will not 
reduce the amount your employer must withhold each payday below $10. 
When we decide to reduce the amount that your employer withholds, we 
will give you and your employer written notice.
    (1) You may ask us at any time to reduce the amount due to financial 
hardship.
    (2) If you request review of the payment schedule stated in the 
notice described in Sec. 422.405 within the 60-day period stated in the 
notice, we will not issue a garnishment order to your employer until we 
notify you of our decision.
    (b) Financial hardship. We will find financial hardship when you 
show that withholding a particular amount from your pay would deprive 
you of income necessary to meet your ordinary and necessary living 
expenses. You must give us evidence of your financial resources and 
expenses.
    (c) Ordinary and necessary living expenses. Ordinary and necessary 
living expenses include:
    (1) Fixed expenses such as food, clothing, housing, utilities, 
maintenance, insurance, tax payments;
    (2) Medical, hospitalization and similar expenses;
    (3) Expenses for the support of others for whom you are legally 
responsible; and
    (4) Other reasonable and necessary miscellaneous expenses which are 
part of your standard of living.
    (d) Fraud and willful concealment or failure to furnish information. 
(1) We will not reduce the amount that your employer withholds from your 
disposable pay if your debt was caused by:
    (i) Your intentional false statement, or
    (ii) Your willful concealment of, or failure to furnish, material 
information.
    (2) ``Willful concealment'' means an intentional, knowing and 
purposeful delay in providing, or failure to reveal, material 
information.



Sec. 422.420  May you inspect and copy our records related to the debt?

    You may inspect and copy our records related to the debt. You must 
notify us of your intention to review our records. After you notify us, 
we will arrange with you the place and time the records will be 
available to you. At our discretion, we may send copies of the records 
to you.



Sec. 422.425  How will we conduct our review of the debt?

    (a) You must request review and present evidence. If you receive a 
notice described in Sec. 422.405, you have the right to have us review 
the debt. To exercise this right, you must request review and give us 
evidence that you do not owe all or part of the debt or that we do not 
have the right to collect it. If you do not request review and give us 
this evidence within 60 calendar days from the date of our notice, we 
may issue the garnishment order to your employer without further delay. 
If you request review of the debt and present evidence within that 60 
calendar-day period, we will not send a garnishment order to your 
employer unless and until we consider all of the evidence and send you 
our findings that all or part of the debt is overdue and we have the 
right to collect it.
    (b) Review of the evidence. If you request review of the debt, we 
will review our records related to the debt and any evidence that you 
present.
    (c) Our findings. Following our review of all of the evidence, we 
will send you written findings, including the supporting rationale for 
the findings. Issuance of these findings will be our final action on 
your request for review. If we find that you do not owe the debt, or the 
debt is not overdue, or we do not have the right to collect it, we will 
not send a garnishment order to your employer.



Sec. 422.430  When will we refund amounts of your pay withheld by 
administrative wage garnishment?

    If we find that you do not owe the debt or that we have no right to 
collect it, we will promptly refund to you any amount withheld from your 
disposable pay under this subpart that we received and cancel any 
administrative

[[Page 1089]]

wage garnishment order that we issued. Refunds under this section will 
not bear interest unless Federal law or contract requires interest.



Sec. 422.435  What happens when we decide to send an administrative 
wage garnishment order to your employer?

    (a) The wage garnishment order. The wage garnishment order that we 
send to your employer will contain only the information necessary for 
the employer to comply with the order. This information includes:
    (1) Your name, address, and social security number,
    (2) The amount of the debt,
    (3) Information about the amount to be withheld, and
    (4) Information about where to send the withheld amount.
    (b) Electronic record of the garnishment order. We will keep an 
electronic record of the garnishment order that shows the date we mailed 
the order to your employer.
    (c) Employer certification. Along with the garnishment order, we 
will send your employer a certification form to complete about your 
employment status and the amount of your disposable pay available for 
withholding. Your employer must complete the certification and return it 
to us within 20 days of receipt.
    (d) Amounts to be withheld from your disposable pay. After receipt 
of the garnishment order issued under this section, your employer must 
begin withholding from your disposable pay each payday the lesser of:
    (1) The amount indicated on the order (up to 15% of your disposable 
pay); or
    (2) The amount by which your disposable pay exceeds thirty times the 
minimum wage as provided in 15 U.S.C. 1673(a)(2).
    (e) Multiple withholding orders. If your disposable pay is subject 
to more than one withholding order, we apply the following rules to 
determine the amount that your employer will withhold from your 
disposable pay:
    (1) Unless otherwise provided by Federal law or paragraph (e)(2) of 
this section, a garnishment order issued under this section has priority 
over other withholding orders served later in time.
    (2) Withholding orders for family support have priority over 
garnishment orders issued under this section.
    (3) If at the time we issue a garnishment order to your employer 
amounts are already being withheld from your pay under another 
withholding order, or if a withholding order for family support is 
served on your employer at any time, the amounts to be withheld under 
this section will be the lesser of:
    (i) The amount calculated under paragraph (d) of this section; or
    (ii) The amount calculated by subtracting the amount(s) withheld 
under the withholding order(s) with priority from 25% of your disposable 
pay.
    (4) If you owe more than one debt to us, we may issue multiple 
garnishment orders. If we issue more than one garnishment order, the 
total amount to be withheld from your disposable pay under such orders 
will not exceed the amount set forth in paragraph (d) or (e)(3) of this 
section, as appropriate.
    (f) You may request that your employer withhold more. If you request 
in writing that your employer withhold more than the amount determined 
under paragraphs (d) or (e) of this section, we will order your employer 
to withhold the amount that you request.



Sec. 422.440  What are your employer's responsibilities under an 
administrative wage garnishment order?

    (a) When withholding must begin. Your employer must withhold the 
appropriate amount from your disposable pay on each payday beginning on 
the first payday after receiving the garnishment order issued under this 
section. If the first payday is within 10 days after your employer 
receives the order, then your employer must begin withholding on the 
first or second payday after your employer receives the order. 
Withholding must continue until we notify your employer to stop 
withholding.
    (b) Payment of amounts withheld. Your employer must promptly pay to 
us all amounts withheld under this section.
    (c) Other assignments or allotments of pay. Your employer cannot 
honor an assignment or allotment of your pay to the extent that it would 
interfere with

[[Page 1090]]

or prevent withholding under this section, unless the assignment or 
allotment is made under a family support judgement or order.
    (d) Effect of withholding on employer pay and disbursement cycles. 
Your employer will not be required to vary its normal pay and 
disbursement cycles in order to comply with the garnishment order.
    (e) When withholding ends. When we have fully recovered the amounts 
you owe, including interest, penalties, and administrative costs that we 
charge you as allowed by law, we will tell your employer to stop 
withholding from your disposable pay. As an added precaution, we will 
review our debtors' accounts at least annually to ensure that 
withholding has been terminated for accounts paid in full.
    (f) Certain actions by an employer against you are prohibited. 
Federal law prohibits an employer from using a garnishment order issued 
under this section as the basis for discharging you from employment, 
refusing to employ you, or taking disciplinary action against you. If 
your employer violates this prohibition, you may file a civil action 
against your employer in a Federal or State court of competent 
jurisdiction.



Sec. 422.445  May we bring a civil action against your employer for failure 
to comply with our administrative wage garnishment order?

    (a) We may bring a civil action against your employer for any amount 
that the employer fails to withhold from your disposable pay in 
accordance with Sec. 422.435(d), (e) and (f). Your employer may also be 
liable for attorney fees, costs of the lawsuit and (in the court's 
discretion) punitive damages.
    (b) We will not file a civil action against your employer before we 
terminate collection action against you, unless earlier filing is 
necessary to avoid expiration of any applicable statute of limitations 
period. For purposes of this section, ``terminate collection action'' 
means that we have terminated collection action in accordance with the 
Federal Claims Collection Standards (31 CFR 903.3) or other applicable 
standards. In any event, we will consider that collection action has 
been terminated if we have not received any payments to satisfy the debt 
for a period of one year.



                Subpart F_Applications and Related Forms

    Authority: Secs. 205 and 702(a)(5) of the Social Security Act (42 
U.S.C. 405 and 902(a)(5)). Section 422.512 is also issued under 30 
U.S.C. 901 et seq.



Sec. 422.501  Applications and other forms used in Social Security 
Administration programs.

    This subpart lists the applications and some of the related forms 
prescribed by the Social Security Administration for use by the public 
in applying for benefits under titles II and XVIII of the Social 
Security Act and the black lung benefits program (Part B, title IV of 
the Federal Coal Mine Health and Safety Act of 1969, as amended).

[38 FR 11450, May 8, 1973]



Sec. 422.505  What types of applications and related forms are used to 
apply for retirement, survivors, and disability insurance benefits?

    (a) Applications. Prescribed applications include our traditional 
pre-printed forms, and applications our employees complete on computer 
screens based on information you give us. We then print a copy on paper, 
have you sign it and process the signed application electronically. You 
may also use SSA's Internet website to submit an SSA-approved 
application to us. You can complete an Internet application on a 
computer (or other suitable device, such as an electronic kiosk) and 
electronically transmit the form to us using an SSA-approved electronic 
signature. If, however, we do not have an approved electronic signature 
established when you file your Internet application, you must print and 
sign the completed application and deliver the form to us.
    (b) Related forms. The following are some related forms:

SSA-3--Marriage Certification. (For use in connection with Application 
for Wife's or Husband's Insurance Benefits, (Form SSA-2))

[[Page 1091]]

SSA-11--Request to be Selected as Payee. (For use when an individual 
proposing to be substituted for the current payee files an application 
to receive payment of benefits on behalf of disabled child, or a child 
under 18, or an incapable or incompetent beneficiary or for himself/
herself if he/she has a payee.)
SSA-21--Supplement to Claim of Person Outside of the United States. (To 
be completed by or on behalf of a person who is, was, or will be outside 
the United States.)
SSA-25--Certificate of Election for Reduced Spouse's Benefits. (For use 
by a wife or husband age 62 to full retirement age who has an entitled 
child in his or her care and elects to receive reduced benefits for 
months during which he or she will not have a child in his or her care.)
SSA-721--Statement of Death by Funeral Director. (This form may be used 
as evidence of death (see Sec. 404.704 of this chapter).)
SSA-760--Certificate of Support (Parent's, Husband's or Widower's). (For 
use in collecting evidence of support.)
SSA-766--Statement of Self-Employment Income. (For use by a claimant to 
establish insured status based on self-employment income in the current 
year.)
SSA-783--Statement Regarding Contributions. (This form may be used as 
evidence of total contributions for a child.)
SSA-787--Physician's/Medical Officer's Statement of Patient's Capability 
to Manage Benefits. (This form may be used to request evidence of 
capability from various medical sources.)
SSA-824--Report on Individual with Mental Impairment. (For use in 
obtaining medical evidence from medical sources when the claimant has 
been treated for a mental impairment.)
SSA-827--Authorization for Source to Release Information to the Social 
Security Administration. (To be completed by a disability claimant to 
authorize release of medical or other information.)
SSA-1002--Statement of Agricultural Employer (Years Prior to 1988). (For 
use by employer to provide evidence of annual wage payments for 
agricultural work.)
SSA-1372--Student's Statement Regarding School Attendance. (For use in 
connection with request for payment of child's insurance benefits for a 
child who is age 18 through 19 and a full-time student.
SSA-1388--Report of Student Beneficiary at End of School Year. (For use 
in confirming continuing eligibility to benefits or indicating the need 
for suspension or termination action.)
SSA-1724--Claim for Amount Due in the Case of a Deceased Beneficiary. 
(For use in requesting amounts payable under title II to a deceased 
beneficiary.)
SSA-3368--Disability Report--Adult. (For use in recording information 
about the claimant's condition, source of medical evidence and other 
information needed to process the claim to a determination or decision.)
SSA-3369--Disability Report--Work History. (For use in recording work 
history information.)
SSA-3826-F4--Medical Report--General. (For use in helping disability 
claimants in obtaining medical records from their doctors or other 
medical sources.)
SSA-3827--Medical Report--(Individual with Childhood Impairment). (For 
use in requesting information to determine if an individual's impairment 
meets the requirements for payment of childhood disability benefits.)
SSA-4111--Certificate of Election for Reduced Widow(er)s Benefits. (For 
use by applicants for certain reduced widow's or widower's benefits.)
SSA-7156--Farm Self-Employment Questionnaire. (For use in connection 
with claims for benefits based on farm income to determine whether the 
income is covered under the Social Security Act.)
SSA-7160--Employment Relationship Questionnaire. (For use by an 
individual and the alleged employer to determine the individual's 
employment status.)
SSA-7163--Questionnaire about Employment or Self-Employment Outside the 
United States. (To be completed by or on behalf of a beneficiary who is, 
was, or will be employed or self-employed outside the United States.)

[69 FR 499, Jan. 6, 2004]



Sec. 422.510  Applications and related forms used in the health insurance 
for the aged program.

    (a) Application forms. The following forms are prescribed for use in 
applying for entitlement to benefits under the health insurance for the 
aged program:

SSA-18--Application for Hospital Insurance Entitlement. (For use by 
individuals who are not entitled to retirement benefits under title II 
of the Social Security Act or under the Railroad Retirement Act. This 
form may also be used for enrollment in the supplementary medical 
insurance benefits plan.)
SSA-40--Application for Enrollment in the Supplementary Medical 
Insurance Program. (This form is mailed directly to beneficiaries at the 
beginning of their initial enrollment period.)
SSA-40A--Application for Enrollment in Supplementary Medical Insurance. 
(For use by civil service employees who are not eligible for enrollment 
in the hospital insurance plan.)

[[Page 1092]]

SSA-40B--Application for Medical Insurance. (For general use in 
requesting medical insurance protection.)
SSA-40C--Application for Enrollment. (This form is mailed to 
beneficiaries as a followup on Form SSA-40 (Application for Enrollment 
in the Supplementary Medical Insurance Program).)
SSA-40F--Application for Medical Insurance. (For use by beneficiaries 
residing outside the United States.)


An individual who upon attainment of age 65 is entitled to a monthly 
benefit based on application OA-C1, SSA-2, OA-C7, OA-C10, SSA-10A, OA-
C13, or SSA-14 is automatically entitled to hospital insurance 
protection. (For conditions of entitlement to hospital insurance 
benefits, see 42 CFR part 405, subpart A. For medical insurance 
protection, an applicant must request supplementary medical insurance 
coverage (see Forms SSA-40, SSA-40A, SSA-40B, SSA-40C, and SSA-40F under 
Sec. 422.510(a)). (For conditions of entitlement to supplementary 
medical insurance benefits, see 42 CFR part 405, subpart B.)
    (b) Related forms. The following are the prescribed forms for use in 
requesting payment for services under the hospital insurance benefits 
program and the supplementary medical insurance benefits program and 
other related forms:

SSA-1453--Inpatient Hospital and Extended Care Admission and Billing. 
(To be completed by hospital for payment of hospital expenses for 
treatment of patient confined in hospital.)
SSA-1483--Provider Billing for Medical and Other Health Services. (To be 
completed by hospital for payment of hospital expenses for treatment of 
patient who is not confined in the hospital.)
SSA-1484--Explanation of Accommodation Furnished. (To be completed by 
the hospital to explain accommodation of a patient in other than a 
semiprivate (two- to four-bed) room.)
SSA-1486--Inpatient Admission and Billing--Christian Science Sanatorium. 
(To be completed by a Christian Science sanatorium for payment for 
treatment of patients confined in the sanatorium.)
SSA-1487--Home Health Agency Report and Billing. (For use by an 
organization providing home health services.)
SSA-1490--Request for Medicare Payment. (For use by patient or physician 
to request payment for medical expenses.)
SSA-1554--Provider Billing for Patient Services by Physicians. (For use 
by hospital for payment for services provided by hospital-based 
physicians.)
SSA-1556--Prepayment Plan for Group Medical Practices Dealing Through a 
Carrier. (For use by organizations (which have been determined to be 
group practice prepayment plans for medicare purposes) for reimbursement 
for medical services provided to beneficiaries.)
SSA-1660--Request for Information--Medicare Payment For Services to a 
Patient Now Deceased. (For use in requesting amounts payable under title 
XVIII to a deceased beneficiary.)
SSA-1739--Request for Enrollment Card Information by Foreign 
Beneficiary. (Used to notify beneficiaries approaching age 65 who reside 
in foreign countries that they are eligible to enroll for SMI. They 
return this form if they wish additional information and an application, 
SSA-40F.)
SSA-1966--Health Insurance Card. (This card is issued to a person 
entitled to benefits under the health insurance for the aged program and 
designates whether he is entitled to hospital insurance benefits or 
supplementary medical insurance benefits or both.
SSA-1980--Carrier or Intermediary Request for SSA Assistance.
SSA-2384--Third Party Premium Billing Request. (For use by a 
nonbeneficiary enrollee who must pay premiums by direct remittance and 
is having his premium notices sent to a third party to assure 
continuance of supplementary medical insurance.)

[32 FR 18030, Dec. 16, 1967, as amended at 38 FR 11451, May 8, 1973; 44 
FR 34943, June 18, 1979]



Sec. 422.512  Applications and related forms used in the black lung benefits 
program.

    (a) Application forms. The following forms are prescribed for use in 
applying for entitlement to benefits under part B of title IV of the 
Federal Coal Mine Health and Safety Act of 1969, as amended by the Black 
Lung Benefits Act of 1972:

SSA-46--Application for Benefits Under the Federal Coal Mine Health and 
Safety Act of 1969, as Amended (Coal Miner's Claim of Total Disability).
SSA-47--Application for Benefits Under the Federal Coal Mine Health and 
Safety Act of 1969, as Amended (Widow's Claim).
SSA-48--Application for Benefits Under the Federal Coal Mine Health and 
Safety Act of 1969, as Amended (Child's Claim).

[[Page 1093]]

SSA-49--Application for Benefits Under the Federal Coal Mine Health and 
Safety Act of 1969, as Amended (Parent's, Brother's and Sister's Claim).

    (b) Related forms. The following are some related forms:

SSA-50--Request To Be Selected as Payee. (For use when the individual 
proposing to be substituted for current payee files application to 
receive payment of black lung benefits on behalf of himself, a disabled 
child or child under age 18, a student beneficiary, or an incompetent 
beneficiary.)
SSA-2179--Report by Person Entitled to Black Lung Benefits. (For use by 
person entitled to black lung benefits to report events which affect 
benefits.)
SAA-2210--Statement of Coal Mine Employment by United Mine Workers of 
America.
SSA-2325--Medical Report (Pneumoconiosis).

[38 FR 11451, May 8, 1973]



Sec. 422.515  Forms used for withdrawal, reconsideration and other appeals, 
and appointment of representative.

    The following is a list of forms prescribed by the Social Security 
Administration for use by the public to request a withdrawal of an 
application, a reconsideration of an initial determination, a hearing, a 
review of an administrative law judge's decision, or for use where a 
person is authorized to represent a claimant.

SSA-521--Request for Withdrawal of Application. (For use by an 
individual to cancel his application.)
SSA-561--Request for Reconsideration. (For use by an individual who 
disagrees with an initial determination concerning (a) entitlement to 
benefits or any other right under title II of the Social Security Act, 
or (b) entitlement to hospital insurance benefits or supplementary 
medical insurance benefits under title XVIII of the act, or (c) 
entitlement to black lung benefits under title IV of the Federal Coal 
Mine Health and Safety Act. See Sec. 422.140 for a discussion of the 
reconsideration procedure.)
SSA-1696--Appointment of Representative. (For use by person other than 
an attorney authorized by a claimant to act for him in a claim or 
related matter.)
SSA-1763--Request for Termination of Supplementary Medical Insurance. 
(For use by an enrollee in requesting that his supplementary medical 
insurance coverage be terminated.)
SSA-1965--Request for Hearing--Part B Medicare Claim. (For use by an 
individual enrollee or his assignee to obtain a hearing before a hearing 
officer designated by the carrier concerning benefits payable under part 
B of title XVIII.)
HA-501--Request for Hearing. (For use by an individual or institution to 
obtain a hearing on a claim for title II benefits before an 
administrative law judge of the Social Security Administration.)

    Note: This form is also used to request a hearing regarding 
entitlement to hospital insurance benefits or supplementary medical 
insurance benefits under title XVIII of the act. (See Sec. 422.203 for 
a discussion of the hearing procedure.)

HA-501.1--Request for Hearing--Part A Health Insurance. (For use by an 
individual or institution to obtain a hearing before an administrative 
law judge of the Social Security Administration concerning the amount of 
hospital insurance benefits under title XVIII.)
HA-512.1--Notice by Attorney of Appointment as Representative. (For use 
by an attorney authorized by a claimant to act for him in a claim or 
related matter.)
HA-520--Request for Review of Hearing Examiner's Action. (For use by an 
individual or institution to obtain a review of a decision by an 
administrative law judge of the Social Security Administration.)

[38 FR 11452, May 8, 1973]



Sec. 422.520  Forms related to maintenance of earnings records.

    The following forms are used by the Social Security Administration 
and by the public in connection with the maintenance of earnings records 
of wage-earners and self-employed persons:

SS-4--Application for Employer Identification Number.
SS-4A--Agricultural Employer's Application. (For use by employers of 
agricultural workers to request an employer identification number under 
the FICA.)
SS-5--Application for a Social Security Number (or Replacement of Lost 
Card).
SS-15--Certificate Waiving Exemption From Taxes Under the FICA. (For use 
by certain nonprofit organizations requesting coverage of its 
employees.)
SS-15a--List of Concurring Employees. (To be signed by each employee who 
concurs in the filing of the Certificate Waiving Exemption From Taxes 
Under the FICA, Form SS-15.)
SSI-21--Social Security and Your Household Employee. (For use by 
employers of household workers to request information from the Internal 
Revenue Service Center regarding filing employee tax returns.)
OA-702--Social Security Number Card.

[[Page 1094]]

Form 2031--Waiver Certificate To Elect Social Security Coverage for Use 
by Ministers, Certain Members of Religious Orders, and Christian Science 
Practitioners.
Form 4029--Application for Exemption from Tax on Self-Employment Income 
and Waiver of Benefits. (To be completed by self-employed individuals 
who are members of certain recognized religious sects (or division 
thereof) and do not wish to pay FICA taxes or participate in the 
programs provided under titles II and XVIII.)
Form 4361--Application for Exemption From Self-Employment Tax for Use by 
Ministers, Members of Religious Orders, and Christian Science 
Practitioners.
Form 4415--Election To Exempt From Self-Employment Coverage Fees 
Received by Certain Public Officers and Employees of a State or 
Political Subdivision Thereof.
OAAN-5028--Evidence of Application for Social Security Number Card.
OAAN-7003--Request for Change in Social Security Records. (For use by an 
individual to change information given on original application for a 
social security number.)
OAR-7004--Request for Statement of Earnings. (For use by worker to 
obtain a statement of earnings recorded in his earnings record.)
OAR-7008--Request for Correction of Earnings Record. (For use by an 
individual who wishes to have his earnings record revised.)
SSA-7011--Statement of Employer. (For use by an employer to provide 
evidence of wage payments in cases of a wage discrepancy in an 
individual's earnings record.)

[38 FR 11452, May 8, 1973]



Sec. 422.525  Where applications and other forms are available.

    All applications and related forms prescribed for use in the 
programs administered by the Social Security Administration pursuant to 
the provisions of titles II and XVIII of the act, and part B of title IV 
of the Federal Coal Mine Health and Safety Act of 1969 are printed under 
the specifications of the Administration and distributed free of charge 
to the public, institutions, or organizations for the purposes described 
therein. All prescribed forms can be obtained upon request from any 
social security district office or branch office (see Sec. 422.5). 
Forms appropriate for use in requesting payment for services provided 
under the health insurance for the aged and disabled programs can also 
be obtained from the intermediaries or carriers (organizations under 
contract with the Social Security Administration to make payment for 
such services) without charge. Form 2031 (Waiver Certificate to Elect 
Social Security Coverage for Use by Ministers, Certain Members of 
Religious Orders, and Christian Science Practitioners), Form 4029 
(Application for Exemption From Tax on Self-Employment Income and Waiver 
of Benefits), Form 4361 (Application for Exemption From Self-Employment 
Tax for Use by Ministers, Members of Religious Orders, and Christian 
Science Practitioners), Form 4415 (Election to Exempt From Self-
Employment Coverage Fees Received by Certain Public Officers and 
Employees of a State or a Political Subdivision Thereof), Form SS-4 
(Application for Employer Identification Number), Form SS-4A 
(Agricultural Employer's Application for Identification Number), Form 
SS-5 (Application for a Social Security Number (or Replacement of Lost 
Card)), Form SS-15 (Certificate Waiving Exemption From Taxes Under the 
FICA), and Form SS-15a (List of Concurring Employees) can also be 
obtained without charge from offices of the Internal Revenue Service. 
For other offices where applications and certain other forms can be 
obtained, see subparts B and C of this part 422.

[38 FR 11452, May 8, 1973]



Sec. 422.527  Private printing and modification of prescribed applications 
and other forms.

    Any person, institution, or organization wishing to reproduce, 
duplicate, or privately print any application or other form prescribed 
by the Administration should obtain the prior approval of the 
Administration. Requests for approval to so reproduce any prescribed 
form must be in writing and include the reason or need for such 
reproduction, the intended user of the form, the proposed modifications, 
if any, the proposed format, with printing or other specifications, the 
type of automatic data processing machinery (e.g., printer, burster, 
mail handling), if any, for which the form is being designed, estimated 
printing quantity, estimated cost per thousand, estimated annual

[[Page 1095]]

usage, and such other pertinent information as may be required by the 
Administration. All requests are to be forwarded to: Social Security 
Administration, Printing and Records Management Branch, Baltimore, MD 
21235.

[33 FR 11281, Aug. 8, 1968]



Subpart G_Administrative Review Process Under the Coal Industry Retiree 
                       Health Benefit Act of 1992

    Authority: 26 U.S.C. 9701-9708.

    Source: 58 FR 52916, Oct. 13, 1993, unless otherwise noted.



Sec. 422.601  Scope and purpose.

    The regulations in this subpart describe how the Social Security 
Administration (SSA) will conduct reviews of assignments it makes under 
provisions of the Coal Industry Retiree Health Benefit Act of 1992 (the 
Coal Act). Under the Coal Act, certain retired coal miners and their 
eligible family members (beneficiaries) are assigned to particular coal 
operators (or related persons). These operators are then responsible for 
paying the annual health and death benefit premiums for these 
beneficiaries as well as the annual premiums for certain unassigned coal 
miners and eligible members of their families. We will notify the 
assigned operators of these assignments and give each operator an 
opportunity to request detailed information about an assignment and to 
request review of an assignment. We also inform the United Mine Workers 
of America (UMWA) Combined Benefit Fund Trustees of each assignment made 
and the unassigned beneficiaries so they can assess appropriate annual 
premiums against the assigned operators. This subpart explains how 
assigned operators may request such additional information, how they may 
request review of an assignment, and how reviews will be conducted.



Sec. 422.602  Terms used in this subpart.

    Assignment means our selection of the coal operator or related 
person to be charged with the responsibility of paying the annual health 
and death benefit premiums of certain coal miners and their eligible 
family members.
    Beneficiary means either a coal industry retiree who, on July 20, 
1992, was eligible to receive, and receiving, benefits as an eligible 
individual under the 1950 or the 1974 UMWA Benefit Plan, or an 
individual who was eligible to receive, and receiving, benefits on July 
20, 1992 as an eligible relative of a coal industry retiree.
    Evidence of a prima facie case of error means documentary evidence, 
records, and written statements submitted to us by the assigned operator 
(or related person) that, standing alone, shows our assignment was in 
error. The evidence submitted must, when considered by itself without 
reference to other contradictory evidence that may be in our possession, 
be sufficient to persuade a reasonable person that the assignment was 
erroneous. Examples of evidence that may establish a prima facie case of 
error include copies of Federal, State, or local government tax records; 
legal documents such as business incorporation, merger, and bankruptcy 
papers; health and safety reports filed with Federal or State agencies 
that regulate mining activities; payroll and other employment business 
records; and information provided in trade journals and newspapers.
    A related person to a signatory operator means a person or entity 
which as of July 20, 1992, or, if earlier, the time immediately before 
the coal operator ceased to be in business, was a member of a controlled 
group of corporations which included the signatory operator, or was a 
trade or business which was under common control with a signatory 
operator, or had a partnership interest (other than as a limited 
partner) or joint venture with a signatory operator in a business within 
the coal industry which employed eligible beneficiaries, or is a 
successor in interest to a person who was a related person.
    We or us refers to the Social Security Administration.
    You as used in this subpart refers to the coal operator (or related 
person) assigned premium responsibility for a specific beneficiary under 
the Coal Act.

[58 FR 52916, Oct. 13, 1993, as amended at 62 FR 38456, July 18, 1997]

[[Page 1096]]



Sec. 422.603  Overview of the review process.

    Our notice of assignment will inform you as the assigned operator 
(or related person) which beneficiaries have been assigned to you, the 
reason for the assignment, and the dates of employment on which the 
assignment was based. The notice will explain that, if you disagree with 
the assignment for any beneficiary listed in the notice of assignment, 
you may request from us detailed information as to the work history of 
the miner and the basis for the assignment. Such request must be filed 
with us within 30 days after you receive the notice of assignment, as 
explained in Sec. 422.604. The notice will also explain that if you 
still disagree with the assignment after you have received the detailed 
information, you may submit evidence that shows there is a prima facie 
case of error in that assignment and request review. Such request must 
be filed with us within 30 days after you receive the detailed 
information, as explained in Sec. 422.605. Alternatively, you may 
request review within 30 days after you receive the notice of 
assignment, even if you have not first requested the detailed 
information. In that case, you still may request the detailed 
information within that 30-day period. (See Sec. 422.606(c) for further 
details.)



Sec. 422.604  Request for detailed information.

    (a) General. After you receive our notice of assignment listing the 
beneficiaries for whom you have premium responsibility, you may request 
detailed information as to the work histories of any of the listed 
miners and the basis for the assignment. Your request for detailed 
information must:
    (1) Be in writing;
    (2) Be filed with us within 30 days of receipt of that notice of 
assignment. Unless you submit evidence showing a later receipt of the 
notice, we will assume the notice was received by you within 5 days of 
the date appearing on the notice. We will consider the request to be 
filed as of the date we receive it. However, if we receive the request 
after the 30-day period, the postmark date on the envelope may be used 
as the filing date. If there is no postmark or the postmark is 
illegible, the filing date will be deemed to be the fifth day prior to 
the day we received the request; and
    (3) Identify the individual miners about whom you are requesting the 
detailed information.
    (b) The detailed information we will provide. We will send you 
detailed information as to the work history and the basis for the 
assignment for each miner about whom you requested such information. 
This information will include the name and address of each employer for 
whom the miner has worked since 1978 or since 1946 (whichever period is 
appropriate), the amount of wages paid by each employer and the period 
for which the wages were reported. We will send you the detailed 
information with a notice informing you that you have 30 days from the 
date you receive the information to submit to SSA evidence of a prima 
facie case of error (as defined in Sec. 422.602) and request review of 
the assignment if you have not already requested review. The notice will 
also inform you that, if you are seeking evidence to make a case of 
prima facie error, you may include with a timely filed request for 
review a written request for additional time to obtain and submit such 
evidence to us. Under these circumstances, you will have 90 days from 
the date of your request to submit the evidence before we determine 
whether we will review the assignment.



Sec. 422.605  Request for review.

    We will review an assignment if you request review and show that 
there is a prima facie case of error regarding the assignment. This 
review is a review on the record and will not entail a face-to-face 
hearing. We will review an assignment if:
    (a) You are an assigned operator (or related person);
    (b) Your request is in writing and states your reasons for believing 
the assignment is erroneous;
    (c) Your request is filed with us no later than 30 days from the 
date you received the detailed information described in Sec. 422.604, 
or no later than 30 days from the date you received the notice of 
assignment if you choose not to request detailed information. Unless

[[Page 1097]]

you submit evidence showing a later receipt of the notice, we will 
assume you received the detailed information or the notice of assignment 
within 5 days of the date shown thereon. We will consider the request to 
be filed as of the date we receive it. However, if we receive the 
request after the 30-day period, the postmark date on the envelope may 
be used as the filing date. If there is no postmark or the postmark is 
illegible, the filing date will be deemed to be the fifth day prior to 
the day we received the request; and
    (d) Your request is accompanied by evidence establishing a prima 
facie case of error regarding the assignment. If your request for review 
includes a request for additional time to submit such evidence, we will 
give you an additional 90 days from the date of your request for review 
to submit such evidence to us.



Sec. 422.606  Processing the request for review.

    Upon receipt of your written request for review of an assignment and 
where relevant, the expiration of any additional times allowed under 
Sec. Sec. 422.605(d) and 422.606(c), we will take the following action:
    (a) Request not timely filed. If your request is not filed within 
the time limits set out in Sec. 422.605(c), we will deny your request 
for review on that basis and send you a notice explaining that we have 
taken this action;
    (b) Lack of evidence. If your request is timely filed under Sec. 
422.605(c) but you have not provided evidence constituting a prima facie 
case of error, we will deny your request for review on that basis and 
send you a notice explaining that we have taken this action;
    (c) Request for review without requesting detailed information. If 
your request is filed within 30 days after you received the notice of 
assignment and you have not requested detailed information, we will not 
process your request until at least 30 days after the date you received 
the notice of assignment. You may still request detailed information 
within that 30-day period, in which case we will not process your 
request for review until at least 30 days after you received the 
detailed information, so that you may submit additional evidence if you 
wish;
    (d) Reviewing the evidence. If your request meets the filing 
requirements of Sec. 422.605 and is accompanied by evidence 
constituting a prima facie case of error, we will review the assignment. 
We will review all evidence submitted with your request for review, 
together with the evidence used in making the assignment. An SSA 
employee who was not involved in the original assignment will perform 
the review. The review will be a review on the record and will not 
involve a face-to-face hearing.
    (e) Original decision correct. If, following this review of the 
evidence you have submitted and the evidence in our file, we make a 
determination that the assignment is correct, we will send you a notice 
explaining the basis for our decision. We will not review the decision 
again, except as provided in Sec. 422.607.
    (f) Original decision erroneous. If, following this review of the 
evidence you have submitted and the evidence in our file, we make a 
determination that the assignment is erroneous, we will send you a 
notice to this effect. We will then determine who the correct operator 
is and assign the affected beneficiary(s) to that coal operator (or 
related person). If no assigned operator can be identified, the affected 
beneficiary(s) will be treated as ``unassigned.'' We will notify the 
UMWA Combined Benefit Fund Trustees of the review decision so that any 
premium liability of the initial assigned operator can be adjusted.



Sec. 422.607  Limited reopening of assignments.

    On our own initiative, we may reopen and revise an assignment, 
whether or not it has been reviewed as described in this subpart, under 
the following conditions:
    (a) The assignment reflects an error on the face of our records or 
the assignment was based upon fraud; and
    (b) We sent to the assigned operator (or related person) notice of 
the assignment within 12 months of the time we decided to reopen that 
assignment.

[[Page 1098]]



                  Subpart H_Use of SSA Telephone Lines

    Authority: Secs. 205(a) and 702(a)(5) of the Social Security Act (42 
U.S.C. 405 and 902(a)(5)).

    Source: 63 FR 57058, Oct. 26, 1998, unless otherwise noted.



Sec. 422.701  Scope and purpose.

    The regulations in this subpart describe the limited circumstances 
under which SSA is authorized to listen-in to or record telephone 
conversations. The purpose of this subpart is to inform the public and 
SSA employees of those circumstances and the procedures that SSA will 
follow when conducting telephone service observation activities.



Sec. 422.705  When SSA employees may listen-in to or record telephone 
conversations.

    SSA employees may listen-in to or record telephone conversations on 
SSA telephone lines under the following conditions:
    (a) Law enforcement/national security. When performed for law 
enforcement, foreign intelligence, counterintelligence or communications 
security purposes when determined necessary by the Commissioner of 
Social Security or designee. Such determinations shall be in writing and 
shall be made in accordance with applicable laws, regulations and 
Executive Orders governing such activities. Communications security 
monitoring shall be conducted in accordance with procedures approved by 
the Attorney General. Line identification equipment may be installed on 
SSA telephone lines to assist Federal law enforcement officials in 
investigating threatening telephone calls, bomb threats and other 
criminal activities.
    (b) Public safety. When performed by an SSA employee for public 
safety purposes and when documented by a written determination by the 
Commissioner of Social Security or designee citing the public safety 
needs. The determination shall identify the segment of the public 
needing protection and cite examples of the possible harm from which the 
public requires protection. Use of SSA telephone lines identified for 
reporting emergency and other public safety-related situations will be 
deemed as consent to public safety monitoring and recording. (See Sec. 
422.710(a)(1))
    (c) Public service monitoring. When performed by an SSA employee 
after the Commissioner of Social Security or designee determines in 
writing that monitoring of such lines is necessary for the purposes of 
measuring or monitoring SSA's performance in the delivery of service to 
the public; or monitoring and improving the integrity, quality and 
utility of service provided to the public. Such monitoring will occur 
only on telephone lines used by employees to provide SSA-related 
information and services to the public. Use of such telephone lines will 
be deemed as consent to public service monitoring. (See Sec. 
422.710(a)(2) and (c)).
    (d) All-party consent. When performed by an SSA employee with the 
prior consent of all parties for a specific instance. This includes 
telephone conferences, secretarial recordings and other administrative 
practices. The failure to identify all individuals listening to a 
conversation by speaker phone is not prohibited by this or any other 
section.



Sec. 422.710  Procedures SSA will follow.

    SSA component(s) that plan to listen-in to or record telephone 
conversations under Sec. 422.705(b) or (c) shall comply with the 
following procedures.
    (a) Prepare a written certification of need to the Commissioner of 
Social Security or designee at least 30 days before the planned 
operational date. A certification as used in this section means a 
written justification signed by the Deputy Commissioner of the 
requesting SSA component or designee, that specifies general information 
on the following: the operational need for listening-in to or recording 
telephone conversations; the telephone lines and locations where 
monitoring is to be performed; the position titles (or a statement about 
the types) of SSA employees involved in the listening-in to or recording 
of telephone conversations; the general operating times and an 
expiration date for the monitoring. This certification of need must 
identify

[[Page 1099]]

the telephone lines which will be subject to monitoring, e.g., SSA 800 
number voice and text telephone lines, and include current copies of any 
documentation, analyses, determinations, policies and procedures 
supporting the application, and the name and telephone number of a 
contact person in the SSA component which is requesting authority to 
listen-in to or record telephone conversations.
    (1) When the request involves listening-in to or recording telephone 
conversations for public safety purposes, the requesting component head 
or designee must identify the segment of the public needing protection 
and cite examples of the possible harm from which the public requires 
protection.
    (2) When the request involves listening-in to or recording telephone 
conversations for public service monitoring purposes, the requesting 
component head or designee must provide a statement in writing why such 
monitoring is necessary for measuring or monitoring the performance in 
the delivery of SSA service to the public; or monitoring and improving 
the integrity, quality and utility of service provided to the public.
    (b) At least every 5 years, SSA will review the need for each 
determination authorizing listening-in or recording activities in the 
agency. SSA components or authorized agents involved in conducting 
listening-in or recording activities must submit documentation as 
described in Sec. 422.710(a) to the Commissioner of Social Security or 
a designee to continue or terminate telephone service observation 
activities.
    (c) SSA will comply with the following controls, policies and 
procedures when listening-in or recording is associated with public 
service monitoring.
    (1) SSA will provide a message on SSA telephone lines subject to 
public service monitoring that will inform callers that calls on those 
lines may be monitored for quality assurance purposes. SSA will also 
continue to include information about telephone monitoring activities in 
SSA brochures and/or pamphlets as notification that some incoming and 
outgoing SSA telephone calls are monitored to ensure SSA's clients are 
receiving accurate and courteous service.
    (2) SSA employees authorized to listen-in to or record telephone 
calls are permitted to annotate personal identifying information about 
the calls, such as a person's name, Social Security number, address and/
or telephone number. When this information is obtained from public 
service monitoring as defined in Sec. 422.705(c), it will be used for 
programmatic or policy purposes; e.g., recontacting individuals to 
correct or supplement information relating to benefits, for assessment 
of current/proposed policies and procedures, or to correct SSA records. 
Privacy Act requirements must be followed if data are retrievable by 
personal identifying information.
    (3) SSA will take appropriate corrective action, when possible, if 
information obtained from monitoring indicates SSA may have taken an 
incorrect action which could affect the payment of or eligibility to SSA 
benefits.
    (4) Telephone instruments subject to public service monitoring will 
be conspicuously labeled.
    (5) Consent from both parties is needed to tape record SSA calls for 
public service monitoring purposes.
    (d) The recordings and records pertaining to the listening-in to or 
recording of any conversations covered by this subpart shall be used, 
safeguarded and destroyed in accordance with SSA records management 
program.



PART 423_SERVICE OF PROCESS--Table of Contents




Sec.
423.1 Suits against the Social Security Administration and its employees 
          in their official capacities.
423.3 Other process directed to the Social Security Administration or 
          the Commissioner.
423.5 Process against Social Security Administration officials in their 
          individual capacities.
423.7 Acknowledgment of mailed process.
423.9 Effect of regulations in this part.

    Authority: Sec. 701 and 702(a)(5) of the Social Security Act (42 
U.S.C. 901 and 902(a)(5)).

    Source: 60 FR 18992, Apr. 14, 1995, unless otherwise noted.

[[Page 1100]]



Sec. 423.1  Suits against the Social Security Administration and its 
employees in their official capacities.

    Summonses and complaints to be served by mail on the Social Security 
Administration, the Commissioner of Social Security, or other employees 
of the Social Security Administration in their official capacities 
should be sent to the General Counsel, Social Security Administration, 
Room 611, Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 
21235.



Sec. 423.3  Other process directed to the Social Security Administration 
or the Commissioner.

    Subpoenas and other process (other than summonses and complaints) 
that are required to be served on the Social Security Administration or 
the Commissioner of Social Security in his or her official capacity 
should be served as follows:
    (a) If authorized by law to be served by mail, any mailed process 
should be sent to the General Counsel, Social Security Administration, 
Room 611, Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 
21235.
    (b) If served by an individual, the process should be delivered to 
the mail room staff in the Office of the General Counsel, Room 611, 6401 
Security Blvd., Baltimore, MD 21235 or, in the absence of that staff, to 
any Deputy General Counsel or secretary to any Deputy General Counsel of 
the Social Security Administration.



Sec. 423.5  Process against Social Security Administration officials 
in their individual capacities.

    Process to be served on Social Security Administration officials in 
their individual capacities must be served in compliance with the 
requirements for service of process on individuals who are not 
governmental officials. The Office of the General Counsel is authorized 
but not required to accept process to be served on Social Security 
Administration officials in their individual capacities if the suit 
relates to an employee's official duties.



Sec. 423.7  Acknowledgment of mailed process.

    The Social Security Administration will not provide a receipt or 
other acknowledgment of process received, except for a return receipt 
associated with certified mail and, where required, the acknowledgment 
described in rule 4(e) of the Federal Rules of Civil Procedure (28 
U.S.C. App. 4(e)).



Sec. 423.9  Effect of regulations in this part.

    The regulations in this part are intended solely to identify Social 
Security Administration officials who are authorized to accept service 
of process. Litigants must comply with all requirements pertaining to 
service of process that are established by statute and court rule even 
though they are not repeated in this part.

                        PARTS 424	428 [RESERVED]



PART 429_ADMINISTRATIVE REGULATIONS--Table of Contents




                   Tort Claims Against the Government

Sec.
429.101 Scope of regulations.
429.102 Administrative claims; when presented; place of filing.
429.103 Administrative claims; who may file.
429.104 Administrative claims; evidence and information to be submitted.
429.105 Investigation, examination, and determination of claims.
429.106 Final denial of claims.
429.107 Payment of approved claims.
429.108 Release.
429.109 Penalties.
429.110 Limitation on SSA's authority.

    Authority: Sec. 702(a)(5) of the Social Security Act (42 U.S.C. 
902(a)(5)), 28 U.S.C. 2672; 28 CFR part 14.

    Source: 62 FR 24329, May 2, 1997, unless otherwise noted.

                   Tort Claims Against the Government



Sec. 429.101  Scope of regulations.

    The regulations in this part shall apply only to claims asserted 
under the Federal Tort Claims Act, as amended, 28 U.S.C. sections 2671-
2680, for money damages against the United States for

[[Page 1101]]

damage to or loss of property or personal injury or death caused by the 
negligent or wrongful act or omission of any employee of the Social 
Security Administration (SSA) while acting within the scope of his 
office or employment.



Sec. 429.102  Administrative claims; when presented; place of filing.

    (a) For purposes of the regulations in this part, a claim shall be 
deemed to have been presented when SSA receives, at a place designated 
in paragraph (c) of this section, an executed Standard Form 95 or other 
written notification of an incident accompanied by a claim for money 
damages in a sum certain for damage to or loss of property, for personal 
injury, or for death, alleged to have occurred by reason of the 
incident. A claim which should have been presented to SSA but which was 
mistakenly addressed to or filed with another Federal agency, shall be 
deemed to be presented to SSA as of the date that the claim is received 
by SSA. A claim mistakenly addressed to or filed with SSA shall 
forthwith be transferred to the appropriate Federal agency, if 
ascertainable, or returned to the claimant.
    (b) A claim presented in compliance with paragraph (a) of this 
section may be amended by the claimant at any time prior to final action 
by the SSA Claims Officer or prior to the exercise of the claimant's 
option to bring suit under 28 U.S.C. 2675(a). Amendments shall be 
submitted in writing and signed by the claimant. Upon the timely filing 
of an amendment to a pending claim, SSA shall have 6 months in which to 
make a final disposition of the claim as amended and the claimant's 
option under 28 U.S.C. 2675(a) shall not accrue until 6 months after the 
filing of an amendment.
    (c) Forms may be obtained from and claims may be filed with the SSA 
Claims Officer, Room 611, Altmeyer Building, 6401 Security Boulevard, 
Baltimore, Maryland 21235.



Sec. 429.103  Administrative claims; who may file.

    (a) A claim for injury to or loss of property may be presented by 
the owner of the property interest which is the subject of the claim, 
his duly authorized agent, or his legal representative.
    (b) A claim for personal injury may be presented by the injured 
person, his duly authorized agent, or his legal representative.
    (c) A claim based on death may be presented by the executor or 
administrator of the decedent's estate or by any other person legally 
entitled to assert such a claim under applicable state law.
    (d) A claim for loss wholly compensated by an insurer with the 
rights of a subrogee may be presented by the insurer. A claim for loss 
partially compensated by an insurer with the rights of a subrogee may be 
presented by the insurer or the insured individually, as their 
respective interests appear, or jointly. Whenever an insurer presents a 
claim asserting the rights of a subrogee, he shall present with his 
claim appropriate evidence that he has the rights of a subrogee.
    (e) A claim presented by an agent or legal representative shall be 
presented in the name of the claimant, be signed by the agent or legal 
representative, show the title or legal capacity of the person signing, 
and be accompanied by evidence of his authority to present a claim on 
behalf of the claimant as agent, executor, administrator, parent, 
guardian, or other representative.



Sec. 429.104  Administrative claims; evidence and information to be 
submitted.

    (a) Death. In support of a claim based on death, the claimant may be 
required to submit the following evidence or information:
    (1) An authenticated death certificate or other competent evidence 
showing cause of death, date of death, and age of the decedent.
    (2) Decedent's employment or occupation at time of death, including 
his monthly or yearly salary or earnings (if any), and the duration of 
his last employment or occupation.
    (3) Full names, addresses, birth dates, kinship, and marital status 
of the decedent's survivors, including identification of those survivors 
who were dependent for support upon the decedent at the time of his 
death.

[[Page 1102]]

    (4) Degree of support afforded by the decedent to each survivor 
dependent upon him for support at the time of his death.
    (5) Decedent's general physical and mental condition before death.
    (6) Itemized bills for medical and burial expenses incurred by 
reason of the incident causing death, or itemized receipts of payments 
for such expenses.
    (7) If damages for pain and suffering prior to death are claimed, a 
physician's detailed statement specifying the injuries suffered, 
duration of pain and suffering, any drugs administered for pain and the 
decedent's physical condition in the interval between injury and death.
    (8) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the death or the 
damages claimed.
    (b) Personal injury. In support of a claim for personal injury, 
including pain and suffering, the claimant may be required to submit the 
following evidence or information:
    (1) A written report by his attending physician or dentist setting 
forth the nature and extent of the injury, nature and extent of 
treatment, any degree of temporary or permanent disability, the 
prognosis, period of hospitalization, and any diminished earning 
capacity. In addition, the claimant may be required to submit to a 
physical or mental examination by a physician employed or designated by 
SSA. A copy of the report of the examining physician shall be made 
available to the claimant upon the claimant's written request provided 
that claimant has, upon request, furnished the report referred to in the 
first sentence of this paragraph (b)(1) and has made or agrees to make 
available to SSA any other physician's reports previously or thereafter 
made of the physical or mental condition which is the subject matter of 
his claim.
    (2) Itemized bills for medical, dental, and hospital expenses 
incurred, or itemized receipts of payment for such expenses.
    (3) If the prognosis reveals the necessity for future treatment, a 
statement of expected duration of and expenses for such treatment.
    (4) If a claim is made for loss of time from employment, a written 
statement from his employer showing actual time lost from employment, 
whether he is a full or part-time employee, and wages or salary actually 
lost.
    (5) If a claim is made for loss of income and the claimant is self-
employed, documentary evidence showing the amount of earnings actually 
lost.
    (6) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the personal injury 
or the damages claimed.
    (c) Property damage. In support of a claim for damage to or loss of 
property, real or personal, the claimant may be required to submit the 
following evidence or information:
    (1) Proof of ownership.
    (2) A detailed statement of the amount claimed with respect to each 
item of property.
    (3) An itemized receipt of payment for necessary repairs or itemized 
written estimates of the cost of such repairs.
    (4) A statement listing date of purchase, purchase price, market 
value of the property as of date of damage, and salvage value, where 
repair is not economical.
    (5) Any other evidence or information which may have a bearing 
either on the responsibility of the United States for the injury to or 
loss of property or the damages claimed.
    (d) Time limit. All evidence required to be submitted by this 
section shall be furnished by the claimant within a reasonable time. 
Failure of a claimant to furnish evidence necessary to a determination 
of his claim within three months after a request therefor has been 
mailed to his last known address may be deemed an abandonment of the 
claim. The claim may be thereupon disallowed.



Sec. 429.105  Investigation, examination, and determination of claims.

    When a claim is received, SSA shall make such investigation as may 
be necessary or appropriate for a determination of the validity of the 
claim and thereafter shall forward the claim, together with all 
pertinent material, and a recommendation based on the

[[Page 1103]]

merits of the case, with regard to allowance or disallowance of the 
claim, to the SSA Claims Officer to whom authority has been delegated to 
adjust, determine, compromise and settle all claims hereunder.



Sec. 429.106  Final denial of claims.

    (a) Final denial of an administrative claim shall be in writing and 
sent to the claimant, his attorney, or legal representative by certified 
or registered mail. The notification of final denial may include a 
statement of the reasons for the denial and shall include a statement 
that, if the claimant is dissatisfied with SSA's action, he may file 
suit in an appropriate U.S. District Court not later than 6 months after 
the date of mailing of the notification.
    (b) Prior to the commencement of suit and prior to the expiration of 
the 6-month period after the date of mailing, by certified or registered 
mail of notice of final denial of the claim as provided in 28 U.S.C. 
2401(b), a claimant, his duly authorized agent, or legal representative, 
may file a written request with SSA for reconsideration of a final 
denial of a claim under paragraph (a) of this section. Upon the timely 
filing of a request for reconsideration SSA shall have 6 months from the 
date of filing in which to make a final disposition of the claim and the 
claimant's option under 28 U.S.C. 2675(a) to bring suit shall not accrue 
until 6 months after the filing of a request for reconsideration. Final 
SSA action on a request for reconsideration shall be effected in 
accordance with the provisions of paragraph (a) of this section.



Sec. 429.107  Payment of approved claims.

    (a) Upon allowance of his claim, claimant or his duly authorized 
agent shall sign the voucher for payment, Standard Form 1145, before 
payment is made.
    (b) When the claimant is represented by an attorney, the voucher for 
payment (SF 1145) shall designate both the claimant and his attorney as 
``payees.'' The check shall be delivered to the attorney whose address 
shall appear on the voucher.



Sec. 429.108  Release.

    Acceptance by the claimant, his agent or legal representative, of 
any award, compromise or settlement made hereunder, shall be final and 
conclusive on the claimant, his agent or legal representative and any 
other person on whose behalf or for whose benefit the claim has been 
presented, and shall constitute a complete release of any claim against 
the United States and against any employee of the Government whose act 
or omission gave rise to the claim, by reason of the same subject 
matter.



Sec. 429.109  Penalties.

    A person who files a false claim or makes a false or fraudulent 
statement in a claim against the United States may be liable to a fine 
of not more than $10,000 or to imprisonment of not more than 5 years, or 
both (18 U.S.C. Sec. Sec. 287; 1001), and, in addition, to a forfeiture 
of $2,000 and a penalty of double the loss or damage sustained by the 
United States (31 U.S.C. Sec. 231).



Sec. 429.110  Limitation on SSA's authority.

    (a) An award, compromise or settlement of a claim hereunder in 
excess of $25,000 shall be effected only with the prior written approval 
of the Attorney General or his designee. For the purposes of this 
paragraph, a principal claim and any derivative or subrogated claim 
shall be treated as a single claim.
    (b) An administrative claim may be adjusted, determined, compromised 
or settled hereunder only after consultation with the Department of 
Justice when, in the opinion of SSA:
    (1) A new precedent or a new point of law is involved; or
    (2) A question of policy is or may be involved; or
    (3) The United States is or may be entitled to indemnity or 
contribution from a third party and SSA is unable to adjust the third 
party claim; or
    (4) The compromise of a particular claim, as a practical matter, 
will or may control the disposition of a related claim in which the 
amount to be paid may exceed $25,000.
    (c) An administrative claim may be adjusted, determined, compromised 
or

[[Page 1104]]

settled only after consultation with the Department of Justice when it 
is learned that the United States or an employee, agent or cost plus 
contractor of the United States is involved in litigation based on a 
claim arising out of the same incident or transaction.



PART 430_PERSONNEL--Table of Contents




    Authority: Section 702(a)(5) of the Social Security Act (42 U.S.C. 
902(a)(5)).

                    Indemnification of SSA Employees



Sec. 430.101  Policy.

    (a) The Social Security Administration (SSA) may indemnify, in whole 
or in part, its employees (which for the purpose of this regulation 
includes former employees) for any verdict, judgment or other monetary 
award which is rendered against any such employee, provided that the 
conduct giving rise to the verdict, judgment or award was taken within 
the scope of his or her employment with SSA and that such 
indemnification is in the interest of the United States, as determined 
by the Commissioner, or his or her designee, in his or her discretion.
    (b) SSA may settle or compromise a personal damage claim against its 
employee by the payment of available funds, at any time, provided the 
alleged conduct giving rise to the personal damage claim was taken 
within the scope of employment and that such settlement or compromise is 
in the interest of the United States, as determined by the Commissioner, 
or his or her designee, in his or her discretion.
    (c) Absent exceptional circumstances, as determined by the 
Commissioner or his or her designee, SSA will not entertain a request 
either to agree to indemnify or to settle a personal damage claim before 
entry of an adverse verdict, judgment or monetary award.
    (d) When an employee of SSA becomes aware that an action has been 
filed against the employee in his or her individual capacity as a result 
of conduct taken within the scope of his or her employment, the employee 
should immediately notify SSA that such an action is pending.
    (e) The employee may, thereafter, request either:
    (1) Indemnification to satisfy a verdict, judgment or award entered 
against the employee; or
    (2) Payment to satisfy the requirements of a settlement proposal. 
The employee shall submit a written request, with documentation 
including copies of the verdict, judgment, award or settlement proposal, 
as appropriate, to the Deputy Commissioner or other designated official, 
who shall thereupon submit to the General Counsel, in a timely manner, a 
recommended disposition of the request. The General Counsel shall also 
seek the views of the Department of Justice. The General Counsel shall 
forward the request, the Deputy Commissioner's or other designated 
official's recommended disposition, and the General Counsel's 
recommendation to the Commissioner or his or her designee for decision.
    (f) Any payment under this section either to indemnify an SSA 
employee or to settle a personal damage claim shall be contingent upon 
the availability of appropriated funds.

[62 FR 39935, July 25, 1997]

                        PARTS 431	434 [RESERVED]



  PART 435_UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS 
  
  WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER NON-PROFIT 
  ORGANIZATIONS, AND COMMERCIAL ORGANIZATIONS--Table of Contents




                            Subpart A_General

Sec.
435.1 Purpose.
435.2 Definitions.
435.3 Effect on other issuances.
435.4 Deviations.
435.5 Subawards.

                    Subpart B_Pre-Award Requirements

435.10 Purpose.
435.11 Pre-award policies.
435.12 Forms for applying for Federal assistance.
435.13 Debarment and suspension. [Reserved]
435.14 Special award conditions.
435.15 Metric system of measurement.

[[Page 1105]]

435.16 Resource Conservation and Recovery Act.
435.17 Certifications and representations.

                    Subpart C_Post-Award Requirements

                    Financial and Program Management

435.20 Purpose of financial and program management.
435.21 Standards for financial management systems.
435.22 Payment.
435.23 Cost sharing or matching.
435.24 Program income.
435.25 Revision of budget and program plans.
435.26 Non-Federal audits.
435.27 Allowable costs.
435.28 Period of availability of funds.

                           Property Standards

435.30 Purpose of property standards.
435.31 Insurance coverage.
435.32 Real property.
435.33 Federally-owned and exempt property.
435.34 Equipment.
435.35 Supplies and other expendable property.
435.36 Intangible property.
435.37 Property trust relationship.

                          Procurement Standards

435.40 Purpose of procurement standards.
435.41 Recipient responsibilities.
435.42 Codes of conduct.
435.43 Competition.
435.44 Procurement procedures.
435.45 Cost and price analysis.
435.46 Procurement records.
435.47 Contract administration.
435.48 Contract provisions.

                           Reports and Records

435.50 Purpose of reports and records.
435.51 Monitoring and reporting program performance.
435.52 Financial reporting.
435.53 Retention and access requirements for records.

                       Termination and Enforcement

435.60 Purpose of termination and enforcement.
435.61 Termination.
435.62 Enforcement.

                 Subpart D_After-the-Award Requirements

435.70 Purpose.
435.71 Closeout procedures.
435.72 Subsequent adjustments and continuing responsibilities.
435.73 Collection of amounts due.

                           Subpart E_Disputes

435.80 Appeal process.
435.81 Initial appeal
435.82 Appeal of decision of ACOAG

Appendix A to Part 435--Contract Provisions

    Authority: 5 U.S.C. 301.

    Source: 68 FR 28712, May 27, 2003, unless otherwise noted.



                            Subpart A_General



Sec. 435.1  Purpose.

    This part establishes the Social Security Administration (SSA) 
administrative requirements for grants and agreements awarded to 
institutions of higher education, hospitals, other non-profit 
organizations, and commercial organizations. Subpart E of this part, 
which sets forth the SSA appeal process for disputes arising under SSA 
awards, applies to all SSA grants and cooperative agreements, including 
awards to the State, local and Indian tribal governments covered by 20 
CFR part 437. SSA will not impose additional or inconsistent 
requirements, except as provided in Sec. Sec. 435.4 and 435.14. Non-
profit organizations that implement Federal programs for the States are 
also subject to State requirements. For availability of OMB circulars, 
see 5 CFR 1310.3.



Sec. 435.2  Definitions.

    Accrued expenditures means the charges incurred by the recipient 
during a given period requiring the provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subrecipients, and 
other payees; and,
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required.
    Accrued income means the sum of:
    (1) Earnings during a given period from:
    (i) Services performed by the recipient, and
    (ii) Goods and other tangible property delivered to purchasers, and
    (2) Amounts becoming owed to the recipient for which no current 
services

[[Page 1106]]

or performance is required by the recipient.
    Acquisition cost of equipment means the net invoice price of the 
equipment, including the cost of modifications, attachments, 
accessories, or auxiliary apparatus necessary to make the property 
usable for the purpose for which it was acquired. Other charges, such as 
the cost of installation, transportation, taxes, duty or protective in-
transit insurance, must be included or excluded from the unit 
acquisition cost in accordance with the recipient's regular accounting 
practices.
    Advance means a payment made by Treasury check or other appropriate 
payment mechanism to a recipient upon its request either before outlays 
are made by the recipient or through the use of predetermined payment 
schedules.
    Award means financial assistance that provides support or 
stimulation to accomplish a public purpose. Awards include grants and 
other agreements in the form of money or property in lieu of money, by 
the Federal Government to an eligible recipient. The term does not 
include: technical assistance, which provides services instead of money; 
other assistance in the form of loans, loan guarantees, interest 
subsidies, or insurance; direct payments of any kind to individuals; 
and, contracts which are required to be entered into and administered 
under procurement laws and regulations.
    Cash contributions means the recipient's cash outlay, including the 
outlay of money contributed to the recipient by third parties.
    Closeout means the process by which SSA determines that all 
applicable administrative actions and all required work of the award 
have been completed by the recipient and SSA.
    Contract means a procurement contract under an award or subaward, 
and a procurement subcontract under a recipient's or subrecipient's 
contract.
    Cost sharing or matching means that portion of project or program 
costs not borne by the Federal government.
    Date of completion means the date on which all work under an award 
is completed or the date on the award document, or any supplement or 
amendment thereto, on which SSA sponsorship ends.
    Disallowed costs means those charges to an award that the Federal 
awarding agency determines to be unallowable, in accordance with the 
applicable Federal cost principles or other terms and conditions 
contained in the award.
    Equipment means tangible nonexpendable personal property including 
exempt property charged directly to the award having a useful life of 
more than one year and an acquisition cost of $5000 or more per unit. 
However, consistent with recipient policy, lower limits may be 
established.
    Excess property means property under the control of SSA that, as 
determined by the head thereof, is no longer required for its needs or 
the discharge of its responsibilities.
    Exempt property means tangible personal property acquired in whole 
or in part with Federal funds, where SSA has statutory authority to vest 
title in the recipient without further obligation to the Federal 
Government. An example of exempt property authority is contained in the 
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6306), for 
property acquired under an award to conduct basic or applied research by 
a non-profit institution of higher education or non-profit organization 
whose principal purpose is conducting scientific research.
    Federal funds authorized means the total amount of Federal funds 
obligated by the Federal Government for use by the recipient. This 
amount may include any authorized carryover of unobligated funds from 
prior funding periods when permitted by agency regulations or agency 
implementing instructions.
    Federal share of real property, equipment, or supplies means that 
percentage of the property's acquisition costs and any improvement 
expenditures paid with Federal funds.
    Funding period means the period of time when Federal funding is 
available for obligation by the recipient.
    Intangible property and debt instruments means, but is not limited 
to, trademarks, copyrights, patents and patent applications and such 
property as loans, notes and other debt instruments, lease agreements, 
stock and

[[Page 1107]]

other instruments of property ownership, whether considered tangible or 
intangible.
    Obligations means the amounts of orders placed, contracts and grants 
awarded, services received and similar transactions during a given 
period that require payment by the recipient during the same or a future 
period.
    Outlays or expenditures mean charges made to the project or program. 
They may be reported on a cash or accrual basis.
    (1) Cash basis. For reports prepared on a cash basis, outlays are 
the sum of cash disbursements for direct charges for goods and services, 
the amount of indirect expense charged, the value of third party in-kind 
contributions applied and the amount of cash advances and payments made 
to subrecipients.
    (2) Accrual basis. For reports prepared on an accrual basis, outlays 
are the sum of cash disbursements for direct charges for goods and 
services, the amount of indirect expense incurred, the value of in-kind 
contributions applied, and the net increase (or decrease) in the amounts 
owed by the recipient for goods and other property received, for 
services performed by employees, contractors, subrecipients and other 
payees and other amounts becoming owed under programs for which no 
current services or performance are required.
    Personal property means property of any kind except real property. 
It may be tangible, having physical existence, or intangible, having no 
physical existence, such as copyrights, patents, or securities.
    Prior approval means written approval by an authorized SSA official 
evidencing prior consent.
    Program income means gross income earned by the recipient that is 
directly generated by a supported activity or earned as a result of the 
award (see exclusions in Sec. 435.24 (e) and (h)). Program income 
includes, but is not limited to, income from fees for services 
performed, the use or rental of real or personal property acquired under 
federally-funded projects, the sale of commodities or items fabricated 
under an award, license fees and royalties on patents and copyrights, 
and interest on loans made with award funds. Interest earned on advances 
of Federal funds is not program income. Except as otherwise provided in 
SSA regulations or the terms and conditions of the award, program income 
does not include the receipt of principal on loans, rebates, credits, 
discounts, etc., or interest earned on any of them.
    Project costs means all allowable costs, as set forth in the 
applicable Federal cost principles, incurred by a recipient and the 
value of the contributions made by third parties in accomplishing the 
objectives of the award during the project period.
    Project period means the period established in the award document 
during which Federal sponsorship begins and ends.
    Property means, unless otherwise stated, real property, equipment, 
intangible property and debt instruments.
    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes movable machinery and equipment.
    Recipient means an organization receiving financial assistance 
directly from SSA to carry out a project or program. The term includes 
public and private institutions of higher education, public and private 
hospitals, and other quasi-public and private non-profit organizations 
such as, but not limited to, community action agencies, research 
institutes, educational associations, and health centers. The term may 
include commercial organizations, foreign or international organizations 
(such as agencies of the United Nations) which are recipients, 
subrecipients, or contractors or subcontractors of recipients or 
subrecipients at the discretion of SSA. The term does not include 
government-owned contractor-operated facilities or research centers 
providing continued support for mission-oriented, large-scale programs 
that are government-owned or controlled, or are designated as federally-
funded research and development centers.
    Research and development means all research activities, both basic 
and applied, and all development activities

[[Page 1108]]

that are supported at universities, colleges, and other non-profit 
institutions. ``Research'' is defined as a systematic study directed 
toward fuller scientific knowledge or understanding of the subject 
studied. ``Development'' is the systematic use of knowledge and 
understanding gained from research directed toward the production of 
useful materials, devices, systems, or methods, including design and 
development of prototypes and processes. The term research also includes 
activities involving the training of individuals in research techniques 
where such activities utilize the same facilities as other research and 
development activities and where such activities are not included in the 
instruction function.
    Small awards means a grant or cooperative agreement not exceeding 
the simplified acquisition threshold fixed at 41 U.S.C. 403(11) 
(currently $100,000).
    SSA means the Federal agency that provides an award to the 
recipient.
    Subaward means an award of financial assistance in the form of 
money, or property in lieu of money, made under an award by a recipient 
to an eligible subrecipient or by a subrecipient to a lower tier 
subrecipient. The term includes financial assistance when provided by 
any legal agreement, even if the agreement is called a contract, but 
does not include procurement of goods and services nor does it include 
any form of assistance which is excluded from the definition of 
``award'' in this section.
    Subrecipient means the legal entity to which a subaward is made and 
which is accountable to the recipient for the use of the funds provided. 
The term may include foreign or international organizations (such as 
agencies of the United Nations) at the discretion of the Federal 
awarding agency.
    Supplies means all personal property excluding equipment, intangible 
property, and debt instruments as defined in this section, and 
inventions of a contractor conceived or first actually reduced to 
practice in the performance of work under a funding agreement (``subject 
inventions''), as defined in 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts, and Cooperative Agreements.''
    Suspension means an action by SSA that temporarily withdraws Federal 
sponsorship under an award, pending corrective action by the recipient 
or pending a decision to terminate the award by SSA. Suspension of an 
award is a separate action from suspension under Federal agency 
regulations implementing Executive Orders 12549 and 12689, ``Debarment 
and Suspension.''
    Termination means the cancellation of Federal sponsorship, in whole 
or in part, under an agreement at any time prior to the date of 
completion.
    Third party in-kind contributions mean the value of non-cash 
contributions provided by non-Federal third parties. Third party in-kind 
contributions may be in the form of real property, equipment, supplies 
and other expendable property, and the value of goods and services 
directly benefiting and specifically identifiable to the project or 
program.
    Unliquidated obligations, for financial reports prepared on a cash 
basis, means the amount of obligations incurred by the recipient that 
have not been paid. For reports prepared on an accrued expenditure 
basis, they represent the amount of obligations incurred by the 
recipient for which an outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by SSA 
that has not been obligated by the recipient and is determined by 
deducting the cumulative obligations from the cumulative funds 
authorized.
    Unrecovered indirect cost means the difference between the amount 
awarded and the amount that could have been awarded under the 
recipient's approved negotiated indirect cost rate.
    Working capital advance means a procedure in which funds are 
advanced to the recipient to cover its estimated disbursement needs for 
a given initial period.



Sec. 435.3  Effect on other issuances.

    For awards subject to this part, the requirements of this part 
apply, rather than the administrative requirements of other codified 
program regulations, program manuals, handbooks and other nonregulatory 
materials, except to the

[[Page 1109]]

extent they are required by statute, or authorized in accordance with 
the deviations provision in Sec. 435.4.



Sec. 435.4  Deviations.

    The Office of Management and Budget (OMB) may grant exceptions for 
classes of grants or recipients subject to the requirements of this part 
when exceptions are not prohibited by statute. However, in the interest 
of maximum uniformity, exceptions from the requirements of this part 
will be permitted only in unusual circumstances. SSA may apply more 
restrictive requirements to a class of recipients when approved by OMB. 
SSA may apply less restrictive requirements when awarding small awards, 
except for those requirements that are statutory. SSA may also make 
exceptions on a case-by-case basis.



Sec. 435.5  Subawards.

    Unless sections of this part specifically exclude subrecipients from 
coverage, the provisions of this part will be applied to subrecipients 
performing work under awards if such subrecipients are institutions of 
higher education, hospitals, other non-profit, or commercial 
organizations. State and local government subrecipients are subject to 
the provisions of 20 CFR Part 437, ``Uniform Administrative Requirements 
for Grants and Cooperative Agreements to State and Local Governments.''



                    Subpart B_Pre-Award Requirements



Sec. 435.10  Purpose.

    Sections 435.11 through 435.17 prescribe forms and instructions and 
other pre-award matters to be used in applying for Federal awards.



Sec. 435.11  Pre-award policies.

    (a) Use of grants and cooperative agreements, and contracts. In each 
instance, SSA will decide on the appropriate award instrument (i.e., 
grant, cooperative agreement, or contract). The Federal Grant and 
Cooperative Agreement Act (31 U.S.C. 6301-08) governs the use of grants, 
cooperative agreements and contracts.
    (1) Grants and cooperative agreements. A grant or cooperative 
agreement will be used only when the principal purpose of a transaction 
is to accomplish a public purpose of support or stimulation authorized 
by Federal statute. The statutory criterion for choosing between grants 
and cooperative agreements is that for the latter, ``substantial 
involvement is expected between the executive agency and the State, 
local government, or other recipient when carrying out the activity 
contemplated in the agreement.''
    (2) Contracts. Contracts will be used when the principal purpose is 
acquisition of property or services for the direct benefit or use of the 
Federal Government.
    (b) Public notice and priority setting. SSA will notify the public 
of its intended funding priorities for discretionary grant programs, 
unless funding priorities are established by Federal statute.



Sec. 435.12  Forms for applying for Federal assistance.

    (a) SSA must comply with the applicable report clearance 
requirements of 5 CFR part 1320, ``Controlling Paperwork Burdens on the 
Public,'' with regard to all forms used by SSA in place of or as a 
supplement to the Standard Form 424 (SF-424) series.
    (b) Applicants must use the SF-424 series or those forms and 
instructions prescribed by SSA.
    (c) For Federal programs covered by Executive Order 12372, 
``Intergovernmental Review of Federal Programs'' (3 CFR, 1982 Comp., p. 
197), the applicant must complete the appropriate sections of the SF-424 
(Application for Federal Assistance) indicating whether the application 
was subject to review by the State Single Point of Contact (SPOC). The 
name and address of the SPOC for a particular State can be obtained from 
SSA or the Catalog of Federal Domestic Assistance. The SPOC will advise 
the applicant whether the program for which application is made has been 
selected by that State for review.

[[Page 1110]]



Sec. 435.13  Debarment and suspension. [Reserved]



Sec. 435.14  Special award conditions.

    (a) When special conditions may apply. SSA may impose additional 
requirements, as needed, if an applicant or recipient:
    (1) Has a history of poor performance,
    (2) Is not financially stable,
    (3) Has a management system that does not meet the standards 
prescribed in this part,
    (4) Has not conformed to the terms and conditions of a previous 
award, or
    (5) Is not otherwise responsible.
    (b) Notice of special conditions. When imposing additional 
requirements, SSA will notify the recipient in writing as to:
    (1) The nature of the additional requirements,
    (2) The reason why the additional requirements are being imposed,
    (3) The nature of the corrective action needed,
    (4) The time allowed for completing the corrective actions, and
    (5) The method for requesting reconsideration of the additional 
requirements imposed.
    (c) Any special conditions will be promptly removed once the 
conditions that prompted them have been corrected.



Sec. 435.15  Metric system of measurement.

    The Metric Conversion Act, as amended by the Omnibus Trade and 
Competitiveness Act (15 U.S.C. 205) declares that the metric system is 
the preferred measurement system for U.S. trade and commerce. The Act 
requires each Federal agency to establish a date or dates, in 
consultation with the Secretary of Commerce, when the metric system of 
measurement will be used in the agency's procurements, grants, and other 
business-related activities. Metric implementation may take longer where 
the use of the system is initially impractical or likely to cause 
significant inefficiencies in the accomplishment of federally-funded 
activities. SSA follows the provisions of Executive Order 12770, 
``Metric Usage in Federal Government Programs'' (3 CFR, 1991 Comp., p. 
343).



Sec. 435.16  Resource Conservation and Recovery Act.

    Any State agency or agency of a political subdivision of a State 
which is using appropriated Federal funds must comply with section 6002 
of the Resource Conservation and Recovery Act (Public Law 94-580; 42 
U.S.C. 6962). Section 6002 requires that preference be given in 
procurement programs to the purchase of specific products containing 
recycled materials identified in guidelines developed by the 
Environmental Protection Agency (EPA) (40 CFR parts 247 through 254). 
Accordingly, State and local institutions of higher education, 
hospitals, and non-profit organizations that receive direct Federal 
awards or other Federal funds must give preference in their procurement 
programs funded with Federal funds to the purchase of recycled products 
pursuant to the EPA guidelines.



Sec. 435.17  Certifications and representations.

    Unless prohibited by statute or codified regulation, SSA will allow 
recipients to submit certifications and representations required by 
statute, executive order, or regulation on an annual basis, if the 
recipients have ongoing and continuing relationships with the agency. 
Annual certifications and representations must be signed by responsible 
officials with the authority to ensure recipients' compliance with the 
pertinent requirements.



                    Subpart C_Post-Award Requirements

                    Financial and Program Management



Sec. 435.20  Purpose of financial and program management.

    Sections 435.21 through 435.28 prescribe standards for financial 
management systems, methods for making payments and rules for: 
satisfying cost sharing and matching requirements, accounting for 
program income, budget revision approvals, making audits, determining 
allowability of cost, and establishing fund availability.

[[Page 1111]]



Sec. 435.21  Standards for financial management systems.

    (a) Introduction. SSA requires recipients to relate financial data 
to performance data and develop unit cost information whenever 
practical.
    (b) Basic requirements. Recipients' financial management systems 
must provide for the following:
    (1) Accurate, current and complete disclosure of the financial 
results of each federally-sponsored project or program in accordance 
with the reporting requirements set forth in Sec. 435.52. If SSA 
requires reporting on an accrual basis from a recipient that maintains 
its records on other than an accrual basis, the recipient will not be 
required to establish an accrual accounting system. These recipients may 
develop such accrual data for its reports on the basis of an analysis of 
the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for federally-sponsored activities. These records must contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, outlays, income and interest.
    (3) Effective control over and accountability for all funds, 
property and other assets. Recipients must adequately safeguard all such 
assets and assure they are used solely for authorized purposes.
    (4) Comparison of outlays with budget amounts for each award. 
Whenever appropriate, financial information should be related to 
performance and unit cost data.
    (5) Written procedures to minimize the time elapsing between the 
transfer of funds to the recipient from the U.S. Treasury and the 
issuance or redemption of checks, warrants or payments by other means 
for program purposes by the recipient. To the extent that the provisions 
of the Cash Management Improvement Act (CMIA) (Public Law 101-453; 31 
U.S.C. 6501) govern, payment methods of State agencies, 
instrumentalities, and fiscal agents must be consistent with CMIA 
Treasury-State Agreements or the CMIA default procedures codified at 31 
CFR part 205, ``Withdrawal of Cash from the Treasury for Advances under 
Federal Grant and Other Programs.''
    (6) Written procedures for determining the reasonableness, 
allocability and allowability of costs in accordance with the provisions 
of the applicable Federal cost principles and the terms and conditions 
of the award.
    (7) Accounting records including cost accounting records that are 
supported by source documentation.
    (c) Bonding and insurance requirements. Where the Federal Government 
guarantees or insures the repayment of money borrowed by the recipient, 
SSA, at its discretion, may require adequate bonding and insurance if 
the bonding and insurance requirements of the recipient are not deemed 
adequate to protect the interest of the Federal Government.
    (d) Fidelity bond coverage requirements. SSA may require adequate 
fidelity bond coverage where the recipient lacks sufficient coverage to 
protect the Federal Government's interest.
    (e) Obtaining bonds. Where bonds are required in the situations 
described in paragraphs (c) and (d) of this section, the bonds must be 
obtained from companies holding certificates of authority as acceptable 
sureties, as prescribed in 31 CFR part 223, ``Surety Companies Doing 
Business with the United States.''



Sec. 435.22  Payment.

    (a) Introduction. Payment methods must minimize the time elapsing 
between the transfer of funds from the United States Treasury and the 
issuance or redemption of checks, warrants, or payment by other means by 
the recipients. Payment methods of State agencies or instrumentalities 
must be consistent with Treasury-State CMIA agreements or default 
procedures codified at 31 CFR part 205.
    (b) Advance payment method and requirements. (1) Recipients will be 
paid in advance, provided they maintain or demonstrate the willingness 
to maintain:
    (i) Written procedures that minimize the time elapsing between the 
transfer of funds and disbursement by the recipient, and

[[Page 1112]]

    (ii) Financial management systems that meet the standards for fund 
control and accountability as established in Sec. 435.21.
    (2) Cash advances to a recipient organization will be limited to the 
minimum amounts needed and be timed to be in accordance with the actual, 
immediate cash requirements of the recipient organization in carrying 
out the purpose of the approved program or project. The timing and 
amount of cash advances must be as close as is administratively feasible 
to the actual disbursements by the recipient organization for direct 
program or project costs and the proportionate share of any allowable 
indirect costs.
    (c) Advance payment consolidation and mechanisms. Whenever possible, 
advances must be consolidated to cover anticipated cash needs for all 
awards made by SSA to the recipient.
    (1) Advance payment mechanisms include, but are not limited to, 
Treasury check and electronic funds transfer.
    (2) Advance payment mechanisms are subject to 31 CFR part 205.
    (3) Recipients are authorized to submit requests for advances and 
reimbursements at least monthly when electronic fund transfers are not 
used.
    (d) How to request advance payment. Requests for Treasury check 
advance payment must be submitted on SF-270, ``Request for Advance or 
Reimbursement,'' or other forms that may be authorized by OMB. This form 
is not to be used when Treasury check advance payments are made to the 
recipient automatically through the use of a predetermined payment 
schedule or if precluded by special SSA instructions for electronic 
funds transfer.
    (e) Reimbursement method. Reimbursement is the preferred method when 
the advance payment requirements in paragraph (b) of this section cannot 
be met. SSA may also use this method on any construction agreement, or 
if the major portion of the construction project is accomplished through 
private market financing or Federal loans, and the Federal assistance 
constitutes a minor portion of the project.
    (1) When the reimbursement method is used, SSA will make payment 
within 30 days after receipt of the billing, unless the billing is 
improper.
    (2) Recipients will be authorized to submit a request for 
reimbursement at least monthly when electronic funds transfers are not 
used.
    (f) Working capital advance method. If a recipient cannot meet the 
criteria for advance payments and SSA has determined that reimbursement 
is not feasible because the recipient lacks sufficient working capital, 
SSA may provide cash on a working capital advance basis. Under this 
procedure, SSA will advance cash to the recipient to cover its estimated 
disbursement needs for an initial period generally geared to the 
awardee's disbursing cycle. Thereafter, SSA will reimburse the recipient 
for its actual cash disbursements. The working capital advance method of 
payment will not be used for recipients unwilling or unable to provide 
timely advances to their subrecipient to meet the subrecipient's actual 
cash disbursements.
    (g) Requesting additional cash payments. To the extent available, 
recipients must disburse funds available from repayments to and interest 
earned on a revolving fund, program income, rebates, refunds, contract 
settlements, audit recoveries and interest earned on such funds before 
requesting additional cash payments.
    (h) Withholding of payments. Unless otherwise required by statute, 
SSA will not withhold payments for proper charges made by recipients at 
any time during the project period unless paragraph (h)(1) or (2) of 
this section apply.
    (1) A recipient has failed to comply with the project objectives, 
the terms and conditions of the award, or Federal reporting 
requirements.
    (2) The recipient or subrecipient is delinquent in a debt to the 
United States as defined in OMB Circular A-129, ``Managing Federal 
Credit Programs.'' Under such conditions, SSA may, upon reasonable 
notice, inform the recipient that payments will not be made for 
obligations incurred after a specified date until the conditions are 
corrected or the indebtedness to the Federal Government is liquidated.
    (i) Standards governing the use of banks and other institutions as 
depositories of funds advanced under awards. (1) Except for situations 
described in paragraph (i)(2) of this section, SSA

[[Page 1113]]

will not require separate depository accounts for funds provided to a 
recipient or establish any eligibility requirements for depositories for 
funds provided to a recipient. However, recipients must be able to 
account for the receipt, obligation and expenditure of funds.
    (2) Advances of Federal funds must be deposited and maintained in 
insured accounts whenever possible.
    (j) Use of women-owned and minority-owned banks. Consistent with the 
national goal of expanding the opportunities for women-owned and 
minority-owned business enterprises, recipients will be encouraged to 
use women-owned and minority-owned banks (a bank that is owned at least 
50 percent by women or minority group members).
    (k) Use of interest bearing accounts. Recipients must maintain 
advances of Federal funds in interest bearing accounts, unless paragraph 
(k)(1), (2) or (3) of this section apply.
    (1) The recipient receives less than $120,000 in Federal awards per 
year.
    (2) The best reasonably available interest bearing account would not 
be expected to earn interest in excess of $250 per year on Federal cash 
balances.
    (3) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (l) Remittance of interest earned. For those entities where CMIA and 
its implementing regulations do not apply, interest earned on Federal 
advances deposited in interest bearing accounts must be remitted 
annually to Department of Health and Human Services, Payment Management 
System, Rockville, MD 20852. Interest amounts up to $250 per year may be 
retained by the recipient for administrative expense. State universities 
and hospitals must comply with CMIA, as it pertains to interest. If an 
entity subject to CMIA uses its own funds to pay pre-award costs for 
discretionary awards without prior written approval from SSA, it waives 
its right to recover the interest under CMIA.
    (m) Forms for requesting advances and reimbursements. Except as 
noted elsewhere in this part, only the following forms are authorized 
for the recipients in requesting advances and reimbursements. SSA will 
not require more than an original and two copies of these forms.
    (1) SF-270, Request for Advance or Reimbursement. SSA has adopted 
the SF-270 as a standard form for all nonconstruction programs when 
electronic funds transfer or predetermined advance methods are not used. 
SSA, however, has the option of using this form for construction 
programs in lieu of the SF-271, ``Outlay Report and Request for 
Reimbursement for Construction Programs.''
    (2) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. SSA has adopted the SF-271 as the standard form 
to be used for requesting reimbursement for construction programs. 
However, SSA may substitute the SF-270 when SSA determines that it 
provides adequate information to meet Federal needs.



Sec. 435.23  Cost sharing or matching.

    (a) All contributions, including cash and third party in-kind, will 
be accepted as part of the recipient's cost sharing or matching when 
such contributions meet all of the following criteria:
    (1) Are verifiable from the recipient's records.
    (2) Are not included as contributions for any other federally-
assisted project or program.
    (3) Are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.
    (4) Are allowable under the applicable cost principles.
    (5) Are not paid by the Federal Government under another award, 
except where authorized by Federal statute to be used for cost sharing 
or matching.
    (6) Are provided for in the approved budget when required by SSA.
    (7) Conform to other provisions of this part, as applicable.
    (b) Unrecovered indirect costs may be included as part of cost 
sharing or matching only with the prior approval of SSA.
    (c) Values for recipient contributions of services and property will 
be established in accordance with the applicable cost principles. If SSA 
authorizes recipients to donate buildings or land for construction/
facilities acquisition

[[Page 1114]]

projects or long-term use, the value of the donated property for cost 
sharing or matching will be the lesser of paragraph (c)(1) or (2) of 
this section.
    (1) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation.
    (2) The current fair market value. However, when there is sufficient 
justification, SSA may approve the use of the current fair market value 
of the donated property, even if it exceeds the certified value at the 
time of donation to the project.
    (d) Volunteer services furnished by professional and technical 
personnel, consultants, and other skilled and unskilled labor may be 
counted as cost sharing or matching if the service is an integral and 
necessary part of an approved project or program. Rates for volunteer 
services must be consistent with those paid for similar work in the 
recipient's organization. In those instances in which the required 
skills are not found in the recipient organization, rates must be 
consistent with those paid for similar work in the labor market in which 
the recipient competes for the kind of services involved. In either 
case, paid fringe benefits that are reasonable, allowable, and allocable 
may be included in the valuation.
    (e) When an employer other than the recipient furnishes the services 
of an employee, these services must be valued at the employee's regular 
rate of pay (plus an amount of fringe benefits that are reasonable, 
allowable, and allocable, but exclusive of overhead costs), provided 
these services are in the same skill for which the employee is normally 
paid.
    (f) Donated supplies may include such items as expendable equipment, 
office supplies, laboratory supplies or workshop and classroom supplies. 
Value assessed to donated supplies included in the cost sharing or 
matching share must be reasonable and may not exceed the fair market 
value of the property at the time of the donation.
    (g) The method used for determining cost sharing or matching for 
donated equipment, buildings and land for which title passes to the 
recipient may differ according to the purpose of the award, if paragraph 
(g)(1) or (2) of this section apply.
    (1) If the purpose of the award is to assist the recipient in the 
acquisition of equipment, buildings or land, the total value of the 
donated property may be claimed as cost sharing or matching.
    (2) If the purpose of the award is to support activities that 
require the use of equipment, buildings or land, normally only 
depreciation or use charges for equipment and buildings may be made. 
However, the full value of equipment or other capital assets and fair 
rental charges for land may be allowed, provided that SSA has approved 
the charges.
    (h) The value of donated property must be determined in accordance 
with the usual accounting policies of the recipient, with the following 
qualifications:
    (1) The value of donated land and buildings may not exceed its fair 
market value at the time of donation to the recipient as established by 
an independent appraiser (e.g., certified real property appraiser or 
General Services Administration representative) and certified by a 
responsible official of the recipient.
    (2) The value of donated equipment may not exceed the fair market 
value of equipment of the same age and condition at the time of 
donation.
    (3) The value of donated space may not exceed the fair rental value 
of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.
    (4) The value of loaned equipment may not exceed its fair rental 
value.
    (5) The following requirements pertain to the recipient's supporting 
records for in-kind contributions from third parties:
    (i) Volunteer services must be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees.
    (ii) The basis for determining the valuation for personal service, 
material, equipment, buildings and land must be documented.

[[Page 1115]]



Sec. 435.24  Program income.

    (a) Introduction. SSA will apply the standards set forth in this 
section in requiring recipient organizations to account for program 
income related to projects financed in whole or in part with Federal 
funds.
    (b) Use of program income. Except as provided in paragraph (h) of 
this section, program income earned during the project period must be 
retained by the recipient and, in accordance with SSA regulations or the 
terms and conditions of the award, must be used in one or more of the 
following ways. Program income must be:
    (1) Added to funds committed to the project by the Federal awarding 
agency and recipient and used to further eligible project or program 
objectives.
    (2) Used to finance the non-Federal share of the project or program.
    (3) Deducted from the total project or program allowable cost in 
determining the net allowable costs on which the Federal share of costs 
is based.
    (c) Use of excess program income. When an agency authorizes the 
disposition of program income as described in paragraph (b)(1) or (b)(2) 
of this section, program income in excess of any limits stipulated must 
be used in accordance with paragraph (b)(3) of this section.
    (d) When the use of program income is not specified. In the event 
that SSA does not specify in its regulations or the terms and conditions 
of the award how program income is to be used, paragraph (b)(3) of this 
section will apply automatically to all projects or programs except 
research. For awards that support research, paragraph (b)(1) of this 
section will apply automatically unless SSA indicates in the terms and 
conditions another alternative on the award or the recipient is subject 
to special award conditions, as indicated in Sec. 435.14.
    (e) Program income earned after end of project period. Unless SSA 
regulations or the terms and conditions of the award provide otherwise, 
recipients will have no obligation to the Federal Government regarding 
program income earned after the end of the project period.
    (f) Costs incident to generation of program income. If authorized by 
SSA regulations or the terms and conditions of the award, costs incident 
to the generation of program income may be deducted from gross income to 
determine program income, provided these costs have not been charged to 
the award.
    (g) Proceeds from sale of property. Proceeds from the sale of 
property must be handled in accordance with the requirements of the 
Property Standards (See Sec. Sec. 435.30 through 435.37).
    (h) Program income from license fees and royalties. Unless SSA 
regulations or the terms and condition of the award provide otherwise, 
recipients have no obligation to the Federal Government with respect to 
program income earned from license fees and royalties for copyrighted 
material, patents, patent applications, trademarks, and inventions 
produced under an award. However, Patent and Trademark Amendments (35 
U.S.C. 18) apply to inventions made under an experimental, 
developmental, or research award.



Sec. 435.25  Revision of budget and program plans.

    (a) The budget plan is the financial expression of the project or 
program as approved during the award process. It may include either the 
Federal and non-Federal share, or only the Federal share, depending upon 
SSA requirements. It must be related to performance for program 
evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section.
    (c) For nonconstruction awards, recipients must request prior 
approvals from SSA for one or more of the following program or budget 
related reasons:
    (1) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (2) Change in a key person specified in the application or award 
document.
    (3) The absence for more than three months, or a 25 percent 
reduction in time devoted to the project, by the approved project 
director or principal investigator.

[[Page 1116]]

    (4) The need for additional Federal funding.
    (5) The transfer of amounts budgeted for indirect costs to absorb 
increases in direct costs, or vice versa, if approval is required by 
SSA.
    (6) The inclusion, unless waived by SSA, of costs that require prior 
approval in accordance with OMB Circular A-21, ``Cost Principles for 
Educational Institutions,'' OMB Circular A-122, ``Cost Principles for 
Non-Profit Organizations,'' or 45 CFR part 74 Appendix E, ``Principles 
for Determining Costs Applicable to Research and Development under 
Grants and Contracts with Hospitals,'' or 48 CFR part 31, ``Contract 
Cost Principles and Procedures,'' as applicable.
    (7) The transfer of funds allotted for training allowances (direct 
payment to trainees) to other categories of expense.
    (8) Unless described in the application and funded in the approved 
awards, the subaward, transfer or contracting out of any work under an 
award. This provision does not apply to the purchase of supplies, 
material, equipment or general support services.
    (d) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (e) Except for requirements listed in paragraphs (c)(1) and (c)(4) 
of this section, SSA may waive cost-related and administrative prior 
written approvals required by this part and OMB Circulars A-21 and A-
122. Such waivers may include authorizing recipients to do any one or 
more of the following:
    (1) Incur pre-award costs 90 calendar days prior to award or more 
than 90 calendar days with the prior approval of SSA. All pre-award 
costs are incurred at the recipient's risk (i.e., SSA is under no 
obligation to reimburse such costs if for any reason the recipient does 
not receive an award or if the award is less than anticipated and 
inadequate to cover such costs).
    (2) Initiate a one-time extension of the expiration date of the 
award of up to 12 months unless one or more of the following conditions 
apply. For one-time extensions, the recipient must notify SSA in writing 
with the supporting reasons and revised expiration date at least 10 days 
before the expiration date specified in the award. This one-time 
extension may not be exercised merely for the purpose of using 
unobligated balances.
    (i) The terms and conditions of award prohibit the extension.
    (ii) The extension requires additional Federal funds.
    (iii) The extension involves any change in the approved objectives 
or scope of the project.
    (3) Carry forward unobligated balances to subsequent funding 
periods.
    (4) For awards that support research, unless SSA provides otherwise 
in the award or in the SSA regulations, the prior approval requirements 
described in paragraph (e) of this section are automatically waived 
(i.e., recipients need not obtain such prior approvals) unless one of 
the conditions included in paragraph (e)(2) applies.
    (f) SSA may, at its option, restrict the transfer of funds among 
direct cost categories or programs, functions and activities for awards 
in which the Federal share of the project exceeds $100,000 and the 
cumulative amount of such transfers exceeds or is expected to exceed 10 
percent of the total budget as last approved by SSA. No transfers are 
permitted that would cause any Federal appropriation or part thereof to 
be used for purposes other than those consistent with the original 
intent of the appropriation.
    (g) All other changes to nonconstruction budgets, except for the 
changes described in paragraph (j) of this section, do not require prior 
approval.
    (h) For construction awards, recipients must request prior written 
approval promptly from SSA for budget revisions whenever paragraph 
(h)(1), (2) or (3) of this section apply.
    (1) The revision results from changes in the scope or the objective 
of the project or program.
    (2) The need arises for additional Federal funds to complete the 
project.
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements may be imposed consistent with 
applicable OMB cost principles listed in Sec. 435.27.

[[Page 1117]]

    (i) No other prior approval requirements for specific items will be 
imposed unless a deviation has been approved by OMB.
    (j) When SSA makes an award that provides support for both 
construction and nonconstruction work, SSA may require the recipient to 
request prior approval before making any fund or budget transfers 
between the two types of work supported.
    (k) For both construction and nonconstruction awards, recipients 
must notify SSA in writing promptly whenever the amount of Federal 
authorized funds is expected to exceed the needs of the recipient for 
the project period by more than $5000 or five percent of the Federal 
award, whichever is greater. This notification is not required if an 
application for additional funding is submitted for a continuation 
award.
    (l) When requesting approval for budget revisions, recipients must 
use the budget forms that were used in the application unless SSA 
indicates a letter of request suffices.
    (m) Within 30 calendar days from the date of receipt of the request 
for budget revisions, SSA will review the request and notify the 
recipient whether the budget revisions have been approved. If the 
revision is still under consideration at the end of 30 calendar days, 
SSA will inform the recipient in writing of the date when the recipient 
may expect the decision.



Sec. 435.26  Non-Federal audits.

    (a) Recipients and subrecipients that are institutions of higher 
education or other non-profit organizations (including hospitals) are 
subject to the audit requirements contained in the Single Audit Act 
Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, 
``Audits of States, Local Governments, and Non-Profit Organizations.''
    (b) State and local governments are subject to the audit 
requirements contained in the Single Audit Act Amendments of 1996 (31 
U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of States, 
Local Governments, and Non-Profit Organizations.''
    (c) For-profit hospitals not covered by the audit provisions of 
revised OMB Circular A-133 are subject to the audit requirements of SSA.
    (d) Commercial organizations are subject to the audit requirements 
of SSA or the prime recipient as incorporated into the award document.



Sec. 435.27  Allowable costs.

    For each kind of recipient, there is a set of Federal principles for 
determining allowable costs. Allowability of costs will be determined in 
accordance with the cost principles applicable to the entity incurring 
the costs. Thus:
    (a) Allowability of costs incurred by State, local or federally-
recognized Indian tribal governments is determined in accordance with 
the provisions of OMB Circular A-87, ``Cost Principles for State, Local, 
and Indian Tribal Governments.''
    (b) Allowability of costs incurred by non-profit organizations is 
determined in accordance with the provisions of OMB Circular A-122, 
``Cost Principles for Non-Profit Organizations.''
    (c) Allowability of costs incurred by institutions of higher 
education is determined in accordance with the provisions of OMB 
Circular A-21, ``Cost Principles for Educational Institutions.''
    (d) Allowability of costs incurred by hospitals is determined in 
accordance with the provisions of Appendix E of 45 CFR part 74, 
``Principles for Determining Costs Applicable to Research and 
Development Under Grants and Contracts with Hospitals.''
    (e) Allowability of costs incurred by commercial organizations and 
those non-profit organizations listed in Attachment C to Circular A-122 
is determined in accordance with the provisions of the Federal 
Acquisition Regulation (FAR) at 48 CFR part 31.



Sec. 435.28  Period of availability of funds.

    Where a funding period is specified, a recipient may charge to the 
grant only allowable costs resulting from obligations incurred during 
the funding period and any pre-award costs authorized by SSA.

[[Page 1118]]

                           Property Standards



Sec. 435.30  Purpose of property standards.

    Sections 435.31 through 435.37 set forth uniform standards governing 
management and disposition of property furnished by the Federal 
Government whose cost was charged to a project supported by a Federal 
award. Recipients must observe these standards under awards and SSA may 
not impose additional requirements, unless specifically required by 
Federal statute. The recipient may use its own property management 
standards and procedures provided it observes the provisions of 
Sec. Sec. 435.31 through 435.37.



Sec. 435.31  Insurance coverage.

    Recipients must, at a minimum, provide the equivalent insurance 
coverage for real property and equipment acquired with Federal funds as 
provided to property owned by the recipient. Federally-owned property 
need not be insured unless required by the terms and conditions of the 
award.



Sec. 435.32  Real property.

    SSA will prescribe requirements for recipients concerning the use 
and disposition of real property acquired in whole or in part under 
awards. Unless otherwise provided by statute, such requirements, at a 
minimum, will contain the following.
    (a) Title. Title to real property will vest in the recipient subject 
to the condition that the recipient will use the real property for the 
authorized purpose of the project as long as it is needed and will not 
encumber the property without approval of SSA.
    (b) Use in other projects. The recipient must obtain written 
approval by SSA for the use of real property in other federally-
sponsored projects when the recipient determines that the property is no 
longer needed for the purpose of the original project. Use in other 
projects is limited to those under federally-sponsored projects (i.e., 
awards) or programs that have purposes consistent with those authorized 
for support by SSA.
    (c) Disposition. When the real property is no longer needed as 
provided in paragraphs (a) and (b) of this section, the recipient must 
request disposition instructions from SSA or its successor Federal 
awarding agency. SSA will observe one or more of the following 
disposition instructions:
    (1) The recipient may be permitted to retain title without further 
obligation to the Federal Government after it compensates the Federal 
Government for that percentage of the current fair market value of the 
property attributable to the Federal participation in the project.
    (2) The recipient may be directed to sell the property under 
guidelines provided by SSA and pay the Federal Government for that 
percentage of the current fair market value of the property attributable 
to the Federal participation in the project (after deducting actual and 
reasonable selling and fix-up expenses, if any, from the sales 
proceeds). When the recipient is authorized or required to sell the 
property, proper sales procedures will be established that provide for 
competition to the extent practicable and result in the highest possible 
return.
    (3) The recipient may be directed to transfer title to the property 
to the Federal Government or to an eligible third party provided that, 
in such cases, the recipient will be entitled to compensation for its 
attributable percentage of the current fair market value of the 
property.



Sec. 435.33  Federally-owned and exempt property.

    (a) Federally-owned property. (1) Title to federally-owned property 
remains vested in the Federal Government. Recipients must submit 
annually an inventory listing of federally-owned property in their 
custody to SSA. Upon completion of the award or when the property is no 
longer needed, the recipient must report the property to SSA for further 
Federal agency utilization.
    (2) If SSA has no further need for the property, it will be declared 
excess and reported to the General Services Administration, unless SSA 
has statutory authority to dispose of the property by alternative 
methods (e.g., the authority provided by the Federal Technology

[[Page 1119]]

Transfer Act (15 U.S.C. 3710 (I)) to donate research equipment to 
educational and non-profit organizations in accordance with Executive 
Order 12821, ``Improving Mathematics and Science Education in Support of 
the National Education Goals'' (3 CFR, 1992 Comp., p. 323). Appropriate 
instructions will be issued to the recipient by SSA.
    (b) Exempt property. When statutory authority exists, SSA has the 
option to vest title to property acquired with Federal funds in the 
recipient without further obligation to the Federal Government and under 
conditions SSA considers appropriate. Such property is ``exempt 
property.'' Should SSA not establish conditions, title to exempt 
property upon acquisition will vest in the recipient without further 
obligation to the Federal Government.



Sec. 435.34  Equipment.

    (a) Title to equipment acquired by a recipient with Federal funds 
will vest in the recipient, subject to conditions of this section.
    (b) The recipient may not use equipment acquired with Federal funds 
to provide services to non-Federal outside organizations for a fee that 
is less than private companies charge for equivalent services, unless 
specifically authorized by Federal statute, for as long as the Federal 
Government retains an interest in the equipment.
    (c) The recipient may use the equipment in the project or program 
for which it was acquired as long as needed, whether or not the project 
or program continues to be supported by Federal funds and may not 
encumber the property without approval of SSA. When no longer needed for 
the original project or program, the recipient must use the equipment in 
connection with its other federally-sponsored activities, in the 
following order of priority:
    (1) Activities sponsored by SSA, then
    (2) Activities sponsored by other Federal awarding agencies.
    (d) During the time that equipment is used on the project or program 
for which it was acquired, the recipient must make it available for use 
on other projects or programs if such other use will not interfere with 
the work on the project or program for which the equipment was 
originally acquired. First preference for such other use must be given 
to other projects or programs sponsored by SSA; second preference must 
be given to projects or programs sponsored by other Federal awarding 
agencies. If the equipment is owned by the Federal Government, use on 
other activities not sponsored by the Federal Government will be 
permissible if authorized by SSA. User charges will be treated as 
program income.
    (e) When acquiring replacement equipment, the recipient may use the 
equipment to be replaced as trade-in or sell the equipment and use the 
proceeds to offset the costs of the replacement equipment subject to the 
approval of SSA.
    (f) The recipient's property management standards for equipment 
acquired with Federal funds and federally-owned equipment must include 
all of the following:
    (1) Equipment records must be maintained accurately and must include 
the following information:
    (i) A description of the equipment.
    (ii) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (iii) Source of the equipment, including the award number.
    (iv) Whether title vests in the recipient or the Federal Government.
    (v) Acquisition date (or date received, if the equipment was 
furnished by the Federal Government) and cost.
    (vi) Information from which one can calculate the percentage of 
Federal participation in the cost of the equipment (not applicable to 
equipment furnished by the Federal Government).
    (vii) Location and condition of the equipment and the date the 
information was reported.
    (viii) Unit acquisition cost.
    (ix) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value where a 
recipient compensates the Federal awarding agency for its share.
    (2) Equipment owned by the Federal Government must be identified to 
indicate Federal ownership.
    (3) A physical inventory of equipment must be taken and the results 
reconciled with the equipment records at

[[Page 1120]]

least once every two years. Any differences between quantities 
determined by the physical inspection and those shown in the accounting 
records must be investigated to determine the causes of the difference. 
The recipient must, in connection with the inventory, verify the 
existence, current utilization, and continued need for the equipment.
    (4) A control system must be in effect to insure adequate safeguards 
to prevent loss, damage, or theft of the equipment. Any loss, damage, or 
theft of equipment must be investigated and fully documented; if the 
equipment was owned by the Federal Government, the recipient must 
promptly notify SSA.
    (5) Adequate maintenance procedures must be implemented to keep the 
equipment in good condition.
    (6) Where the recipient is authorized or required to sell the 
equipment, proper sales procedures must be established which provide for 
competition to the extent practicable and result in the highest possible 
return.
    (g) When the recipient no longer needs the equipment, the equipment 
may be used for other activities in accordance with the following 
standards. For equipment with a current per unit fair market value of 
$5000 or more, the recipient may retain the equipment for other uses 
provided that compensation is made to SSA or its successor. The amount 
of compensation will be computed by applying the percentage of Federal 
participation in the cost of the original project or program to the 
current fair market value of the equipment. If the recipient has no need 
for the equipment, the recipient must request disposition instructions 
from SSA. SSA will determine whether the equipment can be used to meet 
the agency's requirements. If no requirement exists within that agency, 
the availability of the equipment will be reported to the General 
Services Administration by SSA to determine whether a requirement for 
the equipment exists in other Federal agencies. SSA will issue 
instructions to the recipient no later than 120 calendar days after the 
recipient's request and the following procedures will govern:
    (1) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the recipient's request, the recipient 
must sell the equipment and reimburse SSA an amount computed by applying 
to the sales proceeds the percentage of Federal participation in the 
cost of the original project or program. However, the recipient is 
permitted to deduct and retain from the Federal share $500 or ten 
percent of the proceeds, whichever is less, for the recipient's selling 
and handling expenses.
    (2) If the recipient is instructed to ship the equipment elsewhere, 
the recipient will be reimbursed by the Federal Government by an amount 
which is computed by applying the percentage of the recipient's 
participation in the cost of the original project or program to the 
current fair market value of the equipment, plus any reasonable shipping 
or interim storage costs incurred.
    (3) If the recipient is instructed to otherwise dispose of the 
equipment, SSA will reimburse the recipient for such costs incurred in 
its disposition.
    (4) SSA may reserve the right to transfer the title to the Federal 
Government or to a third party named by the Federal Government when such 
third party is otherwise eligible under existing statutes. Such a 
transfer will be subject to the following standards:
    (i) The equipment must be appropriately identified in the award or 
otherwise made known to the recipient in writing.
    (ii) SSA must issue disposition instructions within 120 calendar 
days after receipt of a final inventory. The final inventory must list 
all equipment acquired with grant funds and federally-owned equipment. 
If SSA fails to issue disposition instructions within the 120 calendar 
day period, the recipient must apply the standards of this section, as 
appropriate.
    (iii) When SSA exercises its right to take title, the equipment will 
be subject to the provisions for federally-owned equipment.



Sec. 435.35  Supplies and other expendable property.

    (a) Title to supplies and other expendable property will vest in the 
recipient upon acquisition. If there is a residual inventory of unused 
supplies

[[Page 1121]]

exceeding $5000 in total aggregate value upon termination or completion 
of the project or program and the supplies are not needed for any other 
federally-sponsored project or program, the recipient may retain the 
supplies for use on non-Federal sponsored activities or sell them, but 
must, in either case, compensate the Federal Government for its share. 
The amount of compensation will be computed in the same manner as for 
equipment.
    (b) The recipient may not use supplies acquired with Federal funds 
to provide services to non-Federal outside organizations for a fee that 
is less than private companies charge for equivalent services, unless 
specifically authorized by Federal statute as long as the Federal 
Government retains an interest in the supplies.



Sec. 435.36  Intangible property.

    (a) Copyright. The recipient may copyright any work that is subject 
to copyright and was developed, or for which ownership was purchased, 
under an award. SSA reserves a royalty-free, nonexclusive and 
irrevocable right to reproduce, publish, or otherwise use the work for 
Federal purposes, and to authorize others to do so.
    (b) Patents and inventions. Recipients are subject to applicable 
regulations governing patents and inventions, including government-wide 
regulations issued by the Department of Commerce at 37 CFR part 401, 
``Rights to Inventions Made by Nonprofit Organizations and Small 
Business Firms Under Government Grants, Contracts and Cooperative 
Agreements.''
    (c) Rights of Federal Government. The Federal Government has the 
right to:
    (1) Obtain, reproduce, publish or otherwise use the data first 
produced under an award; and
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (d) FOIA requests for research data. (1) In addition, in response to 
a Freedom of Information Act (FOIA) request for research data relating 
to published research findings produced under an award that were used by 
the Federal Government in developing an agency action that has the force 
and effect of law, SSA shall request, and the recipient shall provide, 
within a reasonable time, the research data so that they can be made 
available to the public through the procedures established under the 
FOIA. If SSA obtains the research data solely in response to a FOIA 
request, SSA may charge the requester a reasonable fee equaling the full 
incremental cost of obtaining the research data. This fee should reflect 
costs incurred by SSA, the recipient, and applicable subrecipients. This 
fee is in addition to any fees SSA may assess under the FOIA (5 U.S.C. 
552(a)(4)(A)).
    (2) The following definitions apply for purposes of this paragraph 
(d):
    (i) Research data is defined as the recorded factual material 
commonly accepted in the scientific community as necessary to validate 
research findings, but not any of the following: preliminary analyses, 
drafts of scientific papers, plans for future research, peer reviews, or 
communications with colleagues. This ``recorded'' material excludes 
physical objects (e.g., laboratory samples). Research data also do not 
include:
    (A) Trade secrets, commercial information, materials necessary to be 
held confidential by a researcher until they are published, or similar 
information which is protected under law; and
    (B) Personnel and medical information and similar information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, such as information that could be used to identify a 
particular person in a research study.
    (ii) Published is defined as either when:
    (A) Research findings are published in a peer-reviewed scientific or 
technical journal; or
    (B) A Federal agency publicly and officially cites the research 
findings in support of an agency action that has the force and effect of 
law.
    (iii) Used by the Federal Government in developing an agency action 
that has the force and effect of law is defined as when an agency 
publicly and officially cites the research findings in support of an 
agency action that has the force and effect of law.

[[Page 1122]]

    (e) Title to intangible property and debt instruments. Title to 
intangible property and debt instruments acquired under an award or 
subaward vests upon acquisition in the recipient. The recipient must use 
that property for the originally-authorized purpose, and the recipient 
may not encumber the property without approval of SSA. When no longer 
needed for the originally authorized purpose, disposition of the 
intangible property will occur in accordance with the provisions of 
Sec. 435.34(g).



Sec. 435.37  Property trust relationship.

    Real property, equipment, intangible property and debt instruments 
that are acquired or improved with Federal funds must be held in trust 
by the recipient as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved. Agencies may 
require recipients to record liens or other appropriate notices of 
record to indicate that personal or real property has been acquired or 
improved with Federal funds and that use and disposition conditions 
apply to the property.

                          Procurement Standards



Sec. 435.40  Purpose of procurement standards.

    Sections 435.41 through 435.48 set forth standards for use by 
recipients in establishing procedures for the procurement of supplies 
and other expendable property, equipment, real property and other 
services with Federal funds. These standards are furnished to ensure 
that such materials and services are obtained in an effective manner and 
in compliance with the provisions of applicable Federal statutes and 
executive orders. SSA may impose no additional procurement standards or 
requirements upon recipients, unless specifically required by Federal 
statute or executive order or approved by OMB.



Sec. 435.41  Recipient responsibilities.

    The standards contained in this section do not relieve the recipient 
of the contractual responsibilities arising under its contract(s). The 
recipient is the responsible authority, without recourse to SSA, 
regarding the settlement and satisfaction of all contractual and 
administrative issues arising out of procurements entered into in 
support of an award or other agreement. This includes disputes, claims, 
protests of award, source evaluation or other matters of a contractual 
nature. Matters concerning violation of statute are to be referred to 
such Federal, State or local authority as may have proper jurisdiction.



Sec. 435.42  Codes of conduct.

    The recipient must maintain written standards of conduct governing 
the performance of its employees engaged in the award and administration 
of contracts. No employee, officer, or agent may participate in the 
selection, award, or administration of a contract supported by Federal 
funds if a real or apparent conflict of interest would be involved. Such 
a conflict would arise when the employee, officer, or agent, any member 
of his or her immediate family, his or her partner, or an organization 
which employs or is about to employ any of the parties indicated in this 
section, has a financial or other interest in the firm selected for an 
award. The officers, employees, and agents of the recipient may neither 
solicit nor accept gratuities, favors, or anything of monetary value 
from contractors, or parties to subagreements. However, recipients may 
set standards for situations in which the financial interest is not 
substantial or the gift is an unsolicited item of nominal value. The 
standards of conduct must provide for disciplinary actions to be applied 
for violations of such standards by officers, employees, or agents of 
the recipient.



Sec. 435.43  Competition.

    All procurement transactions must be conducted in a manner to 
provide, to the maximum extent practical, open and free competition. The 
recipient must be alert to organizational conflicts of interest as well 
as noncompetitive practices among contractors that may restrict or 
eliminate competition or otherwise restrain trade. In order to ensure 
objective contractor performance and eliminate unfair competitive 
advantage, contractors that develop or draft specifications, 
requirements, statements of work, invitations for

[[Page 1123]]

bids and/or requests for proposals must be excluded from competing for 
such procurements. Awards must be made to the bidder or offeror whose 
bid or offer is responsive to the solicitation and is most advantageous 
to the recipient, price, quality and other factors considered. 
Solicitations must clearly set forth all requirements that the bidder or 
offeror must fulfill in order for the bid or offer to be evaluated by 
the recipient. Any and all bids or offers may be rejected when it is in 
the recipient's interest to do so.



Sec. 435.44  Procurement procedures.

    (a) All recipients must establish written procurement procedures. 
These procedures must provide, at a minimum, that paragraphs (a)(1), 
(2), and (3) of this section apply.
    (1) Recipients avoid purchasing unnecessary items.
    (2) Where appropriate, an analysis is made of lease and purchase 
alternatives to determine which would be the most economical and 
practical procurement for the Federal Government.
    (3) Solicitations for goods and services provide for all of the 
following:
    (i) A clear and accurate description of the technical requirements 
for the material, product or service to be procured. In competitive 
procurements, such a description may not contain features, which unduly 
restrict competition.
    (ii) Requirements which the bidder/offeror must fulfill and all 
other factors to be used in evaluating bids or proposals.
    (iii) A description, whenever practicable, of technical requirements 
in terms of functions to be performed or performance required, including 
the range of acceptable characteristics or minimum acceptable standards.
    (iv) The specific features of ``brand name or equal'' descriptions 
that bidders are required to meet when such items are included in the 
solicitation.
    (v) The acceptance, to the extent practicable and economically 
feasible, of products and services dimensioned in the metric system of 
measurement.
    (vi) Preference, to the extent practicable and economically 
feasible, for products and services that conserve natural resources and 
protect the environment and are energy efficient.
    (b) Positive efforts must be made by recipients to utilize small 
businesses, minority-owned firms, and women's business enterprises, 
whenever possible. Recipients of Federal awards must take all of the 
following steps to further this goal:
    (1) Ensure that small businesses, minority-owned firms, and women's 
business enterprises are used to the fullest extent practicable.
    (2) Make information on forthcoming opportunities available and 
arrange time frames for purchases and contracts to encourage and 
facilitate participation by small businesses, minority-owned firms, and 
women's business enterprises.
    (3) Consider in the contract process whether firms competing for 
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
    (4) Encourage contracting with consortiums of small businesses, 
minority-owned firms and women's business enterprises when a contract is 
too large for one of these firms to handle individually.
    (5) Use the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the Department of 
Commerce's Minority Business Development Agency in the solicitation and 
utilization of small businesses, minority-owned firms and women's 
business enterprises.
    (c) The type of procuring instruments used (e.g., fixed price 
contracts, cost reimbursable contracts, purchase orders, and incentive 
contracts) may be determined by the recipient but must be appropriate 
for the particular procurement and for promoting the best interest of 
the program or project involved. The ``cost-plus-a-percentage-of-cost'' 
or ``percentage of construction cost'' methods of contracting may not be 
used.
    (d) Contracts may be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration must be given 
to such matters as contractor integrity, record

[[Page 1124]]

of past performance, financial and technical resources or accessibility 
to other necessary resources. In certain circumstances, contracts with 
certain parties are restricted by agencies' implementation of Executive 
Orders 12549 and 12689, ``Debarment and Suspension'' (3 CFR, 1986 Comp., 
p. 189 and 3 CFR, 1989 Comp., p. 235).
    (e) Recipients must, on request, make available for SSA, pre-award 
review and procurement documents, such as request for proposals or 
invitations for bids, independent cost estimates, etc., when any of the 
following conditions apply:
    (1) A recipient's procurement procedures or operation fails to 
comply with the procurement standards in this part.
    (2) The procurement is expected to exceed the simplified acquisition 
threshold fixed at 41 U.S.C. 403(11) (currently $100,000) and is to be 
awarded without competition or only one bid or offer is received in 
response to a solicitation.
    (3) The procurement, which is expected to exceed the simplified 
acquisition threshold, specifies a ``brand name'' product.
    (4) The proposed award over the simplified acquisition threshold is 
to be awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (5) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the amount of the 
simplified acquisition threshold.



Sec. 435.45  Cost and price analysis.

    Some form of cost or price analysis must be made and documented in 
the procurement files in connection with every procurement action. Price 
analysis may be accomplished in various ways, including the comparison 
of price quotations submitted, market prices and similar indicia, 
together with discounts. Cost analysis is the review and evaluation of 
each element of cost to determine reasonableness, allocability and 
allowability.



Sec. 435.46  Procurement records.

    Procurement records and files for purchases in excess of the 
simplified acquisition threshold must include the following at a 
minimum:
    (a) Basis for contractor selection,
    (b) Justification for lack of competition when competitive bids or 
offers are not obtained, and
    (c) Basis for award cost or price.



Sec. 435.47  Contract administration.

    A system for contract administration must be maintained to ensure 
contractor conformance with the terms, conditions and specifications of 
the contract and to ensure adequate and timely follow up of all 
purchases. Recipients must evaluate contractor performance and document, 
as appropriate, whether contractors have met the terms, conditions and 
specifications of the contract.



Sec. 435.48  Contract provisions.

    The recipient must include, in addition to provisions to define a 
sound and complete agreement, the following provisions in all contracts. 
The following provisions must also be applied to subcontracts:
    (a) Contracts in excess of the simplified acquisition threshold must 
contain contractual provisions or conditions that allow for 
administrative, contractual, or legal remedies in instances in which a 
contractor violates or breaches the contract terms, and provide for such 
remedial actions as may be appropriate.
    (b) All contracts in excess of the simplified acquisition threshold 
must contain suitable provisions for termination by the recipient, 
including the manner by which termination will be effected and the basis 
for settlement. In addition, such contracts must describe conditions 
under which the contract may be terminated for default as well as 
conditions where the contract may be terminated because of circumstances 
beyond the control of the contractor.
    (c) Except as otherwise required by statute, an award that requires 
the contracting (or subcontracting) for construction or facility 
improvements must provide for the recipient to follow its own 
requirements relating to bid guarantees, performance bonds, and payment 
bonds unless the construction contract or subcontract exceeds

[[Page 1125]]

$100,000. For those contracts or subcontracts exceeding $100,000, SSA 
may accept the bonding policy and requirements of the recipient, 
provided SSA has made a determination that the Federal Government's 
interest is adequately protected. If such a determination has not been 
made, the minimum requirements are as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' must consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by statute of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (4) Where bonds are required in the situations described in this 
section, the bonds must be obtained from companies holding certificates 
of authority as acceptable sureties pursuant to 31 CFR part 223, 
``Surety Companies Doing Business with the United States.''
    (d) All negotiated contracts (except those for less than the 
simplified acquisition threshold) awarded by recipients must include a 
provision to the effect that the recipient, SSA, the Comptroller General 
of the United States, or any of their duly authorized representatives, 
will have access to any books, documents, papers and records of the 
contractor which are directly pertinent to a specific program for the 
purpose of making audits, examinations, excerpts and transcriptions.
    (e) All contracts, including small purchases, awarded by recipients 
and their contractors must contain the procurement provisions of 
Appendix A to this part, as applicable.

                           Reports and Records



Sec. 435.50  Purpose of reports and records.

    Sections 435.51 through 435.53 set forth the procedures for 
monitoring and reporting on the recipient's financial and program 
performance and the necessary standard reporting forms. They also set 
forth record retention requirements.



Sec. 435.51  Monitoring and reporting program performance.

    (a) Recipients are responsible for managing and monitoring each 
project, program, subaward, function or activity supported by the award. 
Recipients must monitor subawards to ensure subrecipients have met the 
audit requirements as delineated in Sec. 435.26.
    (b) SSA will prescribe the frequency with which the performance 
reports must be submitted. Except as provided in paragraph (f) of this 
section, performance reports will not be required more frequently than 
quarterly or, less frequently than annually. Annual reports are due 90 
calendar days after the grant year; quarterly or semi-annual reports are 
due 30 days after the reporting period. SSA may require annual reports 
before the anniversary dates of multiple year awards in lieu of these 
requirements. The final performance reports are due 90 calendar days 
after the expiration or termination of the award.
    (c) If inappropriate, a final technical or performance report will 
not be required after completion of the project.
    (d) When required, performance reports must generally contain, for 
each award, brief information on each of the following:
    (1) A comparison of actual accomplishments with the goals and 
objectives established for the period, the findings of the investigator, 
or both. Whenever appropriate and the output of programs or projects can 
be readily quantified, such quantitative data should be related to cost 
data for computation of unit costs.
    (2) Reasons why established goals were not met, if appropriate.

[[Page 1126]]

    (3) Other pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (e) Recipients will not be required to submit more than the original 
and two copies of performance reports.
    (f) Recipients must immediately notify SSA of developments that have 
a significant impact on the award-supported activities. Also, 
notification must be given in the case of problems, delays, or adverse 
conditions, which materially impair the ability to meet the objectives 
of the award. This notification must include a statement of the action 
taken or contemplated, and any assistance needed to resolve the 
situation.
    (g) SSA may make site visits, as needed.
    (h) SSA will comply with clearance requirements of 5 CFR part 1320 
when requesting performance data from recipients.



Sec. 435.52  Financial reporting.

    (a) Authorized forms. The following forms or such other forms as may 
be approved by OMB are authorized for obtaining financial information 
from recipients:
    (1) SF-269 or SF-269A, Financial Status Report. (i) SSA requires 
recipients to use the SF-269 or SF-269A to report the status of funds 
for all nonconstruction projects or programs. However, SSA has the 
option of not requiring the SF-269 or SF-269A when the SF-270, Request 
for Advance or Reimbursement, or SF-272, Report of Federal Cash 
Transactions, is determined to provide adequate information to meet its 
needs, except that a final SF-269 or SF-269A will be required at the 
completion of the project when the SF-270 is used only for advances.
    (ii) SSA may prescribe whether the report will be on a cash or 
accrual basis. If SSA requires accrual information and the recipient's 
accounting records are not normally kept on the accrual basis, the 
recipient will not be required to convert its accounting system, but 
must develop such accrual information through best estimates based on an 
analysis of the documentation on hand.
    (iii) SSA will determine the frequency of the Financial Status 
Report for each project or program, considering the size and complexity 
of the particular project or program. However, the report will not be 
required more frequently than quarterly or less frequently than 
annually. A final report is required at the completion of the agreement.
    (iv) SSA will require recipients to submit the SF-269 or SF-269A (an 
original and no more than two copies) no later than 30 days after the 
end of each specified reporting period for quarterly and semi-annual 
reports, and 90 calendar days for annual and final reports. Extensions 
of reporting due dates may be approved by SSA upon request of the 
recipient.
    (2) SF-272, Report of Federal Cash Transactions. (i) When funds are 
advanced to recipients, SSA will require each recipient to submit the 
SF-272 and, when necessary, its continuation sheet, SF-272a. SSA will 
use this report to monitor cash advanced to recipients and to obtain 
disbursement information for each agreement with the recipients.
    (ii) SSA may require forecasts of Federal cash requirements in the 
``Remarks'' section of the report.
    (iii) When practical and deemed necessary, SSA may require 
recipients to report in the ``Remarks'' section the amount of cash 
advances received in excess of three days. Recipients must provide short 
narrative explanations of actions taken to reduce the excess balances.
    (iv) Recipients are required to submit not more than the original 
and two copies of the SF-272 15 calendar days following the end of each 
quarter. SSA may require a monthly report from those recipients 
receiving advances totaling $1 million or more per year.
    (v) SSA may waive the requirement for submission of the SF-272 for 
any one of the following reasons:
    (A) When monthly advances do not exceed $25,000 per recipient, 
provided that such advances are monitored through other forms contained 
in this section;
    (B) If, in SSA's opinion, the recipient's accounting controls are 
adequate

[[Page 1127]]

to minimize excessive Federal advances; or,
    (C) When the electronic payment mechanisms provide adequate data.
    (b) When SSA needs additional information or more frequent reports, 
the following will be observed:
    (1) When additional information is needed to comply with legislative 
requirements, SSA will issue instructions to require recipients to 
submit such information under the ``Remarks'' section of the reports.
    (2) When SSA determines that a recipient's accounting system does 
not meet the standards in Sec. 435.21, additional pertinent information 
to further monitor awards may be obtained upon written notice to the 
recipient until such time as the system is brought up to standard. SSA, 
in obtaining this information, will comply with report clearance 
requirements of 5 CFR part 1320.
    (3) SSA may shade out any line item on any report if not necessary.
    (4) SSA may accept the identical information from the recipients in 
machine-readable format or computer printouts or electronic outputs in 
lieu of prescribed formats.
    (5) SSA may provide computer or electronic outputs to recipients 
when such expedites or contributes to the accuracy of reporting.



Sec. 435.53  Retention and access requirements for records.

    (a) Purpose. This section sets forth the requirements for record 
retention and access to records for awards to recipients. SSA may not 
impose any other record retention or access requirements upon 
recipients.
    (b) Retention periods. Financial records, supporting documents, 
statistical records, and all other records pertinent to an award must be 
retained for a period of three years from the date of submission of the 
final expenditure report or, for awards that are renewed quarterly or 
annually, from the date of the submission of the quarterly or annual 
financial report, as authorized by SSA. The only exceptions are the 
following:
    (1) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records must be retained until all 
litigation, claims or audit findings involving the records have been 
resolved and final action taken.
    (2) Records for real property and equipment acquired with Federal 
funds must be retained for 3 years after final disposition.
    (3) When records are transferred to or maintained by SSA, the 3-year 
retention requirement is not applicable to the recipient.
    (4) Indirect cost rate proposals, cost allocations plans, etc. as 
specified in paragraph (g) of this section.
    (c) Use of copies. Copies of original records may be substituted for 
the original records if authorized by SSA.
    (d) Records with long term retention value. SSA will request 
transfer of certain records to its custody from recipients when it 
determines that the records possess long term retention value. However, 
in order to avoid duplicate recordkeeping, SSA may make arrangements for 
recipients to retain any records that are continuously needed for joint 
use.
    (e) Federal access to records. SSA, the Inspector General, 
Comptroller General of the United States, or any of their duly 
authorized representatives, have the right of timely and unrestricted 
access to any books, documents, papers, or other records of recipients 
that are pertinent to the awards, in order to make audits, examinations, 
excerpts, transcripts and copies of such documents. This right also 
includes timely and reasonable access to a recipient's personnel for the 
purpose of interview and discussion related to such documents. The 
rights of access in this paragraph are not limited to the required 
retention period, but will last as long as records are retained.
    (f) Public access to records. Unless required by statute, SSA may 
not place restrictions on recipients that limit public access to the 
records of recipients that are pertinent to an award, except when SSA 
can demonstrate that such records will be kept confidential and would 
have been exempted from disclosure pursuant to the Freedom of 
Information Act (5 U.S.C. 552) if the records had belonged to SSA.

[[Page 1128]]

    (g) Retention of indirect cost rate proposals, cost allocations 
plans, etc. Paragraphs (g)(1) and (g)(2) of this section apply to the 
following types of documents, and their supporting records: indirect 
cost rate computations or proposals, cost allocation plans, and any 
similar accounting computations of the rate at which a particular group 
of costs is chargeable (such as computer usage chargeback rates or 
composite fringe benefit rates).
    (1) If submitted for negotiation. If the recipient submits to SSA or 
the subrecipient submits to the recipient the proposal, plan, or other 
computation to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts on the date of 
such submission.
    (2) If not submitted for negotiation. If the recipient is not 
required to submit to SSA or the subrecipient is not required to submit 
to the recipient the proposal, plan, or other computation for 
negotiation purposes, then the 3-year retention period for the proposal, 
plan, or other computation and its supporting records starts at the end 
of the fiscal year (or other accounting period) covered by the proposal, 
plan, or other computation.

                       Termination and Enforcement



Sec. 435.60  Purpose of termination and enforcement.

    Sections 435.61 and 435.62 set forth uniform suspension, termination 
and enforcement procedures.



Sec. 435.61  Termination.

    (a) Awards may be terminated in whole or in part only if paragraphs 
(a)(1) through (a)(3) of this section apply.
    (1) By SSA, if a recipient materially fails to comply with the terms 
and conditions of an award.
    (2) By SSA with the consent of the recipient, in which case the two 
parties will agree upon the termination conditions, including the 
effective date and, in the case of partial termination, the portion to 
be terminated.
    (3) By the recipient upon sending to SSA written notification 
setting forth the reasons for such termination, the effective date, and, 
in the case of partial termination, the portion to be terminated. 
However, if SSA determines in the case of partial termination that the 
reduced or modified portion of the grant will not accomplish the 
purposes for which the grant was made, it may terminate the grant in its 
entirety under either paragraph (a)(1) or (a)(2) of this section.
    (b) If costs are allowed under an award, the responsibilities of the 
recipient referred to in Sec. 435.71(a), including those for property 
management as applicable, will be considered in the termination of the 
award, and provision will be made for continuing responsibilities of the 
recipient after termination, as appropriate.



Sec. 435.62  Enforcement.

    (a) Remedies for noncompliance. If a recipient materially fails to 
comply with the terms and conditions of an award, whether stated in a 
Federal statute, regulation, assurance, application, or notice of award, 
SSA may, in addition to imposing any of the special conditions outlined 
in Sec. 435.14, take one or more of the following actions, as 
appropriate in the circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by SSA.
    (2) Disallow (that is, deny both use of funds and any applicable 
matching credit for) all or part of the cost of the activity or action 
not in compliance.
    (3) Wholly or partly suspend or terminate the current award.
    (4) Withhold further awards for the project or program.
    (5) Take other remedies that may be legally available.
    (b) Hearings and appeals. In taking an enforcement action, SSA must 
provide the recipient an opportunity for hearing, appeal, or other 
administrative proceeding to which the recipient is entitled under any 
statute or regulation applicable to the action involved.
    (c) Effects of suspension and termination. Costs of a recipient 
resulting from obligations incurred by the recipient during a suspension 
or after termination of an award are not allowable unless SSA expressly 
authorizes

[[Page 1129]]

them in the notice of suspension or termination or subsequently. Other 
recipient costs during suspension or after termination that are 
necessary and not reasonably avoidable are allowable if paragraphs 
(c)(1) and (2) of this section apply.
    (1) The costs result from obligations that were properly incurred by 
the recipient before the effective date of suspension or termination, 
are not in anticipation of it, and in the case of a termination, are 
noncancellable.
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to debarment 
and suspension under Executive Orders 12549 and 12689.



                 Subpart D_After-the-Award Requirements



Sec. 435.70  Purpose.

    Sections 435.71 through 435.73 contain closeout procedures and other 
procedures for subsequent disallowances and adjustments.



Sec. 435.71  Closeout procedures.

    (a) Recipients must submit, within 90 calendar days after the date 
of completion of the award, all financial, performance, and other 
reports as required by the terms and conditions of the award. SSA may 
approve extensions when requested by the recipient.
    (b) Unless SSA authorizes an extension, a recipient must liquidate 
all obligations incurred under the award not later than 90 calendar days 
after the funding period or the date of completion as specified in the 
terms and conditions of the award or in agency implementing 
instructions.
    (c) SSA will make prompt payments to a recipient for allowable 
reimbursable costs under the award being closed out.
    (d) The recipient must promptly refund any balances of unobligated 
cash that SSA has advanced or paid and that is not authorized to be 
retained by the recipient for use in other projects. OMB Circular A-129 
governs unreturned amounts that become delinquent debts.
    (e) When authorized by the terms and conditions of the award, SSA 
will make a settlement for any upward or downward adjustments to the 
Federal share of costs after closeout reports are received.
    (f) The recipient must account for any real and personal property 
acquired with Federal funds or received from the Federal Government in 
accordance with Sec. Sec. 435.31 through 435.37.
    (g) In the event a final audit has not been performed prior to the 
closeout of an award, SSA will retain the right to recover an 
appropriate amount after fully considering the recommendations on 
disallowed costs resulting from the final audit.



Sec. 435.72  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following:
    (1) The right of SSA to disallow costs and recover funds on the 
basis of a later audit or other review.
    (2) The obligation of the recipient to return any funds due as a 
result of later refunds, corrections, or other transactions.
    (3) Audit requirements in Sec. 435.26.
    (4) Property management requirements in Sec. Sec. 435.31 through 
435.37.
    (5) Records retention as required in Sec. 435.53.
    (b) After closeout of an award, a relationship created under an 
award may be modified or ended in whole or in part with the consent of 
SSA and the recipient, provided the responsibilities of the recipient 
referred to in Sec. 435.73(a), including those for property management 
as applicable, are considered and provisions made for continuing 
responsibilities of the recipient, as appropriate.



Sec. 435.73  Collection of amounts due.

    (a) Methods of collection. Any funds paid to a recipient in excess 
of the amount to which the recipient is finally determined to be 
entitled under the terms and conditions of the award

[[Page 1130]]

constitute a debt to the Federal Government. If not paid within a 
reasonable period after the demand for payment, SSA may reduce the debt 
by:
    (1) Making an administrative offset against other requests for 
reimbursements;
    (2) Withholding advance payments otherwise due to the recipient; or
    (3) Taking other action permitted by statute.
    (b) Charging of interest. Except as otherwise provided by law, SSA 
will charge interest on an overdue debt in accordance with 4 CFR Chapter 
II, ``Federal Claims Collection Standards.''



                           Subpart E_Disputes



Sec. 435.80  Appeal process.

    (a) Levels of appeal. Grantee institutions (grantees) may appeal 
certain post-award adverse grant administration decisions made by SSA 
officials in the administration of discretionary grant programs. SSA has 
two levels of appeal:
    (1) Initial appeal to the Associate Commissioner for the Office of 
Acquisition and Grants (ACOAG) from an adverse decision rendered by the 
Grant Management Officer (GMO); and
    (2) Final appeal to the Commissioner of Social Security from an 
adverse decision rendered by the ACOAG.
    (b) Decisions that may be appealed. The following types of adverse 
post-award written decisions by the GMO may be appealed:
    (1) A disallowance or other determination denying payment of an 
amount claimed under an award. This does not apply to determinations of 
award amount or disposition of unobligated balances, or selection in the 
award document of an option for disposition of program-related income.
    (2) A termination of an award for failure of the grantee to comply 
with any law, regulation, assurance, term, or condition applicable to 
the award.
    (3) A denial of a noncompeting continuation award under the project 
period system of funding where the denial is for failure to comply with 
the terms and conditions of a previous award.
    (4) A voiding of an award on the basis that it was fraudulently 
obtained or because the award was not authorized by statute or 
regulation.
    (c) Notice of adverse decision and requirements of grantee response. 
The Grants Management Officer's (GMO) adverse post-award written 
decision should include the following statement:
    This is the final decision of the Grants Management Officer. It will 
become the final decision of the Social Security Administration unless 
you submit a request for review of this decision to the Associate 
Commissioner for the Office of Acquisition and Grants, 1710 Gwynn Oak 
Avenue, Baltimore, Maryland 21207-5279. Your request for review must be 
in writing, include a copy of this decision, and fully state why you 
disagree with it. The request for review must be received by the ACOAG 
no later than 30 calendar days after the date of this decision.



Sec. 435.81  Initial appeal.

    (a) Timeliness of appeal to ACOAG. A grantee may appeal an adverse 
decision rendered by the GMO by submitting to the ACOAG a written 
request for review of the adverse decision. The written request for 
review must be received by the ACOAG no later than 30 calendar days 
after the date of the GMO's adverse decision. Any request for review 
that is received after the thirtieth day will be dismissed as untimely.
    (b) Content of appeal to ACOAG. The written request for review 
should fully explain why the grantee disagrees with the GMO's decision, 
state the pertinent facts and law relied upon, and provide any relevant 
documentation in support of the grantee's position.
    (c) Decision of ACOAG. The ACOAG, or the ACOAG's delegate, will 
issue a written decision within 30 calendar days of the date of receipt 
of the written request for review. If the written decision is adverse to 
the grantee, the decision will include the following statement:

    This is the final decision of the Office of Acquisition and Grants. 
It will become the final decision of the Social Security Administration 
unless you submit a request for review of this decision to the 
Commissioner of Social Security, Social Security Administration, 
Baltimore, Maryland 21235-0001. Your request for review must be in 
writing, include a copy of this decision, and fully state why you 
disagree with it. The request for review must be received by the 
Commissioner no later than 15 calendar days after the date

[[Page 1131]]

of this decision. You should also send a copy of the request for review 
to the ACOAG.



Sec. 435.82  Appeal of decision of ACOAG.

    (a) Timeliness of appeal to Commissioner. A grantee may appeal an 
adverse decision rendered by the ACOAG by submitting to the Commissioner 
of Social Security a written request for review of the ACOAG's decision. 
The written request for review must be received by the Commissioner no 
later than 15 calendar days after the date of the ACOAG's adverse 
decision. Any request for review that is filed after the fifteenth day 
will be dismissed as untimely. The grantee should also send a copy of 
the request for review to the ACOAG.
    (b) Content of appeal to Commissioner. The written request for 
review should fully explain why the grantee disagrees with the ACOAG's 
decision, state the pertinent facts and law relied upon, and provide any 
relevant documentation in support of the grantee's position. A copy of 
the ACOAG's decision should also be appended to the request for review.
    (c) Decision of Commissioner. The Commissioner, or the 
Commissioner's delegate, will issue a written decision on the request 
for review. Generally, the decision will be issued within 90 calendar 
days of the date of receipt of the request for review. If a decision is 
not issued within 90 days, the Commissioner, or the Commissioner's 
delegate, will inform the grantee in writing when a decision can be 
expected.
    (d) Final decision of SSA. The decision of the Commissioner, or of 
the Commissioner's delegate, shall be the final decision of the Social 
Security Administration on the matter(s) in dispute.

               Appendix A to Part 435--Contract Provisions

    All contracts, awarded by a recipient including small purchases, 
must contain the following provisions as applicable:
    1. Equal Employment Opportunity--All contracts must contain a 
provision requiring compliance with E.O. 11246, ``Equal Employment 
Opportunity,'' as amended by E.O. 11375, ``Amending Executive Order 
11246 Relating to Equal Employment Opportunity,'' and as supplemented by 
regulations at 41 CFR part 60, ``Office of Federal Contract Compliance 
Programs, Equal Employment Opportunity, Department of Labor.''
    2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C. 
276c)--All contracts and subgrants in excess of $2000 for construction 
or repair awarded by recipients and subrecipients must include a 
provision for compliance with the Copeland ``Anti-Kickback'' Act (18 
U.S.C. 874), as supplemented by Department of Labor regulations (29 CFR 
part 3, ``Contractors and Subcontractors on Public Building or Public 
Work Financed in Whole or in Part by Loans or Grants from the United 
States''). The Act provides that each contractor or subrecipient will be 
prohibited from inducing, by any means, any person employed in the 
construction, completion, or repair of public work, to give up any part 
of the compensation to which he is otherwise entitled. The recipient 
must report all suspected or reported violations to the Federal awarding 
agency.
    3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--When 
required by Federal program legislation, all construction contracts 
awarded by the recipients and subrecipients of more than $2000 must 
include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 
276a to a-7) and as supplemented by Department of Labor regulations (29 
CFR part 5, ``Labor Standards Provisions Applicable to Contracts 
Governing Federally Financed and Assisted Construction''). Under this 
Act, contractors are required to pay wages to laborers and mechanics at 
a rate not less than the minimum wages specified in a wage determination 
made by the Secretary of Labor. In addition, contractors are required to 
pay wages not less than once a week. The recipient must place a copy of 
the current prevailing wage determination issued by the Department of 
Labor in each solicitation and the award of a contract will be 
conditioned upon the acceptance of the wage determination. The recipient 
must report all suspected or reported violations to the Federal awarding 
agency.
    4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
333)--Where applicable, all contracts awarded by recipients in excess of 
$100,000 for construction contracts and for other contracts that involve 
the employment of mechanics or laborers must include a provision for 
compliance with Sections 102 and 107 of the Contract Work Hours and 
Safety Standards Act (40 U.S.C. 327-333), as supplemented by Department 
of Labor regulations (29 CFR part 5). Under Section 102 of the Act, each 
contractor is required to compute the wages of every mechanic and 
laborer on the basis of a standard workweek of 40 hours. Work in excess 
of the standard workweek is permissible provided that the worker is 
compensated at a rate of not less than 1\1/2\ times the basic rate of 
pay for all hours worked in excess of 40 hours in the workweek. Section 
107 of the Act is applicable to construction

[[Page 1132]]

work and provides that no laborer or mechanic will be required to work 
in surroundings or under working conditions which are unsanitary, 
hazardous or dangerous. These requirements do not apply to the purchases 
of supplies or materials or articles ordinarily available on the open 
market, or contracts for transportation or transmission of intelligence.
    5. Rights to Inventions Made Under a Contract or Agreement--
Contracts or agreements for the performance of experimental, 
developmental, or research work must provide for the rights of the 
Federal Government and the recipient in any resulting invention in 
accordance with 37 CFR part 401, ``Rights to Inventions Made by 
Nonprofit Organizations and Small Business Firms Under Government 
Grants, Contracts and Cooperative Agreements,'' and any implementing 
regulations issued by the awarding agency.
    6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--Contracts 
and subgrants of amounts in excess of $100,000 must contain a provision 
that requires the recipient to agree to comply with all applicable 
standards, orders or regulations issued pursuant to the Clean Air Act 
(42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act as 
amended (33 U.S.C. 1251 et seq.). Violations must be reported to the 
Federal awarding agency and the Regional Office of the Environmental 
Protection Agency (EPA).
    7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors who 
apply or bid for an award of more than $100,000 must file the required 
certification. Each tier certifies to the tier above that it will not 
and has not used Federal appropriated funds to pay any person or 
organization for influencing or attempting to influence an officer or 
employee of any agency, a member of Congress, officer or employee of 
Congress, or an employee of a member of Congress in connection with 
obtaining any Federal contract, grant or any other award covered by 31 
U.S.C. 1352. Each tier must also disclose any lobbying with non-Federal 
funds that takes place in connection with obtaining any Federal award. 
Such disclosures are forwarded from tier to tier up to the recipient.
    8. Debarment and Suspension (Executive Orders 12549 and 12689)--No 
contract will be made to parties listed on the General Services 
Administration's List of Parties Excluded from Federal Procurement or 
Nonprocurement Programs in accordance with Executive Orders 12549 and 
12689, ``Debarment and Suspension.'' This list contains the names of 
parties debarred, suspended, or otherwise excluded by agencies, and 
contractors declared ineligible under statutory or regulatory authority 
other than Executive Order 12549. Contractors with awards that exceed 
the simplified acquisition threshold must provide the required 
certification regarding its exclusion status and that of its principal 
employees.



PART 436_GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT)--Table 
of Contents




Sec.
436.25 How is this part organized?
436.50 How is this part written?
436.75 Do terms in this part have special meanings?

                            Subpart A_General

436.100 What does this part do?
436.105 Does this part apply to me?
436.110 What is the purpose of the nonprocurement debarment and 
          suspension system?
436.115 How does an exclusion restrict a person's involvement in covered 
          transactions?
436.120 May we grant an exception to let an excluded person participate 
          in a covered transaction?
436.125 Does an exclusion under the nonprocurement system affect a 
          person's eligibility for Federal procurement contracts?
436.130 Does exclusion under the Federal procurement system affect a 
          person's eligibility to participate in nonprocurement 
          transactions?
436.135 May the SSA exclude a person who is not currently participating 
          in a nonprocurement transaction?
436.140 How do I know if a person is excluded?
436.145 Does this part address persons who are disqualified, as well as 
          those who are excluded from nonprocurement transactions?

                     Subpart B_Covered Transactions

436.200 What is a covered transaction?
436.205 Why is it important to know if a particular transaction is a 
          covered transaction?
436.210 Which nonprocurement transactions are covered transactions?
436.215 Which nonprocurement transactions are not covered transactions?
436.220 Are any procurement contracts included as covered transactions?
436.225 How do I know if a transaction in which I may participate is a 
          covered transaction?

[[Page 1133]]

    Subpart C_Responsibilities of Participants Regarding Transactions

                    Doing Business With Other Persons

436.300 What must I do before I enter into a covered transaction with 
          another person at the next lower tier?
436.305 May I enter into a covered transaction with an excluded or 
          disqualified person?
436.310 What must I do if a Federal agency excludes a person with whom I 
          am already doing business in a covered transaction?
436.315 May I use the services of an excluded person as a principal 
          under a covered transaction?
436.320 Must I verify that principals of my covered transactions are 
          eligible to participate?
436.325 What happens if I do business with an excluded person in a 
          covered transaction?
436.330 What requirements must I pass down to persons at lower tiers 
          with whom I intend to do business?

            Disclosing Information--Primary Tier Participants

436.335 What information must I provide before entering into a covered 
          transaction with the SSA?
436.340 If I disclose unfavorable information required under Sec. 
          436.335, will I be prevented from participating in the 
          transaction?
436.345 What happens if I fail to disclose the information required 
          under Sec. 436.335?
436.350 What must I do if I learn of information required under Sec. 
          436.335 after entering into a covered transaction with the 
          SSA?

             Disclosing Information--Lower Tier Participants

436.355 What information must I provide to a higher tier participant 
          before entering into a covered transaction with that 
          participant?
436.360 What happens if I fail to disclose the information required 
          under Sec. 436.355?
436.365 What must I do if I learn of information required under Sec. 
          436.355 after entering into a covered transaction with a 
          higher tier participant?

   Subpart D_Responsibilities of SSA Officials Regarding Transactions

436.400 May I enter into a transaction with an excluded or disqualified 
          person?
436.405 May I enter into a covered transaction with a participant if a 
          principal of the transaction is excluded?
436.410 May I approve a participant's use of the services of an excluded 
          person?
436.415 What must I do if a Federal agency excludes the participant or a 
          principal after I enter into a covered transaction?
436.420 May I approve a transaction with an excluded or disqualified 
          person at a lower tier?
436.425 When do I check to see if a person is excluded or disqualified?
436.430 How do I check to see if a person is excluded or disqualified?
436.435 What must I require of a primary tier participant?
436.440 What method do I use to communicate those requirements to 
          participants?
436.445 What action may I take if a primary tier participant knowingly 
          does business with an excluded or disqualified person?
436.450 What action may I take if a primary tier participant fails to 
          disclose the information required under Sec. 436.335?
436.455 What may I do if a lower tier participant fails to disclose the 
          information required under Sec. 436.355 to the next higher 
          tier?

                 Subpart E_Excluded Parties List System

436.500 What is the purpose of the Excluded Parties List System (EPLS)?
436.505 Who uses the EPLS?
436.510 Who maintains the EPLS?
436.515 What specific information is in the EPLS?
436.520 Who places the information into the EPLS?
436.525 Whom do I ask if I have questions about a person in the EPLS?
436.530 Where can I find the EPLS?

   Subpart F_General Principles Relating to Suspension and Debarment 
                                 Actions

436.600 How do suspension and debarment actions start?
436.605 How does suspension differ from debarment?
436.610 What procedures does the SSA use in suspension and debarment 
          actions?
436.615 How does the SSA notify a person of a suspension or debarment 
          action?
436.620 Do Federal agencies coordinate suspension and debarment actions?
436.625 What is the scope of a suspension or debarment action?
436.630 May the SSA impute the conduct of one person to another?
436.635 May the SSA settle a debarment or suspension action?
436.640 May a settlement include a voluntary exclusion?
436.645 Do other Federal agencies know if the SSA agrees to a voluntary 
          exclusion?

                          Subpart G_Suspension

436.700 When may the suspending official issue a suspension?

[[Page 1134]]

436.705 What does the suspending official consider in issuing a 
          suspension?
436.710 When does a suspension take effect?
436.715 What notice does the suspending official give me if I am 
          suspended?
436.720 How may I contest a suspension?
436.725 How much time do I have to contest a suspension?
436.730 What information must I provide to the suspending official if I 
          contest a suspension?
436.735 Under what conditions do I get an additional opportunity to 
          challenge the facts on which the suspension is based?
436.740 Are suspension proceedings formal?
436.745 How is fact-finding conducted?
436.750 What does the suspending official consider in deciding whether 
          to continue or terminate my suspension?
436.755 When will I know whether the suspension is continued or 
          terminated?
436.760 How long may my suspension last?

                           Subpart H_Debarment

436.800 What are the causes for debarment?
436.805 What notice does the debarring official give me if I am proposed 
          for debarment?
436.810 When does a debarment take effect?
436.815 How may I contest a proposed debarment?
436.820 How much time do I have to contest a proposed debarment?
436.825 What information must I provide to the debarring official if I 
          contest a proposed debarment?
436.830 Under what conditions do I get an additional opportunity to 
          challenge the facts on which the proposed debarment is based?
436.835 Are debarment proceedings formal?
436.840 How is fact-finding conducted?
436.845 What does the debarring official consider in deciding whether to 
          debar me?
436.850 What is the standard of proof in a debarment action?
436.855 Who has the burden of proof in a debarment action?
436.860 What factors may influence the debarring official's decision?
436.865 How long may my debarment last?
436.870 When do I know if the debarring official debars me?
436.875 May I ask the debarring official to reconsider a decision to 
          debar me?
436.880 What factors may influence the debarring official during 
          reconsideration?
436.885 May the debarring official extend a debarment?

                          Subpart I_Definitions

436.900 Adequate evidence.
436.905 Affiliate.
436.910 Agency.
436.915 Agent or representative.
436.920 Civil judgment.
436.925 Conviction.
436.930 Debarment.
436.935 Debarring official.
436.940 Disqualified.
436.945 Excluded or exclusion.
436.950 Excluded Parties List System.
436.955 Indictment.
436.960 Ineligible or ineligibility.
436.965 Legal proceedings.
436.970 Nonprocurement transaction.
436.975 Notice.
436.980 Participant.
436.985 Person.
436.990 Preponderance of the evidence.
436.995 Principal.
436.1000 Respondent.
436.1005 State.
436.1010 Suspending official.
436.1015 Suspension.
436.1020 Voluntary exclusion or voluntarily excluded.

Subpart J [Reserved]

Appendix to Part 436--Covered Transactions

    Authority: 42 U.S.C. 902(a)(5); Sec. 2455, Pub. L. 103-355, 108 
Stat. 3327; E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O. 12689 (3 CFR, 
1989 Comp., p. 235).

    Source: 68 FR 66544, 66578, Nov. 26, 2003, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 436 appear at 68 FR 
66579, Nov. 26, 2003.



Sec. 436.25  How is this part organized?

    (a) This part is subdivided into ten subparts. Each subpart contains 
information related to a broad topic or specific audience with special 
responsibilities, as shown in the following table:

------------------------------------------------------------------------
       In subpart . . .        You will find provisions related to . . .
------------------------------------------------------------------------
A............................  general information about this rule.
B............................  the types of SSA transactions that are
                                covered by the Governmentwide
                                nonprocurement suspension and debarment
                                system.
C............................  the responsibilities of persons who
                                participate in covered transactions.
D............................  the responsibilities of SSA officials who
                                are authorized to enter into covered
                                transactions.
E............................  the responsibilities of Federal agencies
                                for the Excluded Parties List System
                                (Disseminated by the General Services
                                Administration).
F............................  the general principles governing
                                suspension, debarment, voluntary
                                exclusion and settlement.
G............................  suspension actions.

[[Page 1135]]

 
H............................  debarment actions.
I............................  definitions of terms used in this part.
J............................  [Reserved]
------------------------------------------------------------------------

    (b) The following table shows which subparts may be of special 
interest to you, depending on who you are:

------------------------------------------------------------------------
             If you are . . .                   See subpart(s) . . .
------------------------------------------------------------------------
(1) a participant or principal in a         A, B, C, and I.
 nonprocurement transaction.
(2) a respondent in a suspension action...  A, B, F, G and I.
(3) a respondent in a debarment action....  A, B, F, H and I.
(4) a suspending official.................  A, B, D, E, F, G and I.
(5) a debarring official..................  A, B, D, E, F, H and I.
(6) a (n) SSA official authorized to enter  A, B, D, E and I.
 into a covered transaction.
(7) Reserved..............................  J.
------------------------------------------------------------------------



Sec. 436.50  How is this part written?

    (a) This part uses a ``plain language'' format to make it easier for 
the general public and business community to use. The section headings 
and text, often in the form of questions and answers, must be read 
together.
    (b) Pronouns used within this part, such as ``I'' and ``you,'' 
change from subpart to subpart depending on the audience being 
addressed. The pronoun ``we'' always is the SSA.
    (c) The ``Covered Transactions'' diagram in the appendix to this 
part shows the levels or ``tiers'' at which the SSA enforces an 
exclusion under this part.



Sec. 436.75  Do terms in this part have special meanings?

    This part uses terms throughout the text that have special meaning. 
Those terms are defined in Subpart I of this part. For example, three 
important terms are--
    (a) Exclusion or excluded, which refers only to discretionary 
actions taken by a suspending or debarring official under this part or 
the Federal Acquisition Regulation (48 CFR part 9, subpart 9.4);
    (b) Disqualification or disqualified, which refers to prohibitions 
under specific statutes, executive orders (other than Executive Order 
12549 and Executive Order 12689), or other authorities. 
Disqualifications frequently are not subject to the discretion of an 
agency official, may have a different scope than exclusions, or have 
special conditions that apply to the disqualification; and
    (c) Ineligibility or ineligible, which generally refers to a person 
who is either excluded or disqualified.



                            Subpart A_General



Sec. 436.100  What does this part do?

    This part adopts a governmentwide system of debarment and suspension 
for SSA nonprocurement activities. It also provides for reciprocal 
exclusion of persons who have been excluded under the Federal 
Acquisition Regulation, and provides for the consolidated listing of all 
persons who are excluded, or disqualified by statute, executive order, 
or other legal authority. This part satisfies the requirements in 
section 3 of Executive Order 12549, ``Debarment and Suspension'' (3 CFR 
1986 Comp., p. 189), Executive Order 12689, ``Debarment and Suspension'' 
(3 CFR 1989 Comp., p. 235) and 31 U.S.C. 6101 note (Section 2455, Public 
Law 103-355, 108 Stat. 3327).



Sec. 436.105  Does this part apply to me?

    Portions of this part (see table at Sec. 436.25(b)) apply to you if 
you are a(n)--
    (a) Person who has been, is, or may reasonably be expected to be, a 
participant or principal in a covered transaction;
    (b) Respondent (a person against whom the SSA has initiated a 
debarment or suspension action);
    (c) SSA debarring or suspending official; or
    (d) SSA official who is authorized to enter into covered 
transactions with non-Federal parties.

[[Page 1136]]



Sec. 436.110  What is the purpose of the nonprocurement debarment and 
suspension system?

    (a) To protect the public interest, the Federal Government ensures 
the integrity of Federal programs by conducting business only with 
responsible persons.
    (b) A Federal agency uses the nonprocurement debarment and 
suspension system to exclude from Federal programs persons who are not 
presently responsible.
    (c) An exclusion is a serious action that a Federal agency may take 
only to protect the public interest. A Federal agency may not exclude a 
person or commodity for the purposes of punishment.



Sec. 436.115  How does an exclusion restrict a person's involvement in 
covered transactions?

    With the exceptions stated in Sec. Sec. 436.120, 436.315, and 
436.420, a person who is excluded by the SSA or any other Federal agency 
may not:
    (a) Be a participant in an SSA transaction that is a covered 
transaction under subpart B of this part;
    (b) Be a participant in a transaction of any other Federal agency 
that is a covered transaction under that agency's regulation for 
debarment and suspension; or
    (c) Act as a principal of a person participating in one of those 
covered transactions.



Sec. 436.120  May we grant an exception to let an excluded person 
participate in a covered transaction?

    (a) The SSA Debarring Suspension/Official may grant an exception 
permitting an excluded person to participate in a particular covered 
transaction. If the SSA Debarring Suspension/Official grants an 
exception, the exception must be in writing and state the reason(s) for 
deviating from the governmentwide policy in Executive Order 12549.
    (b) An exception granted by one agency for an excluded person does 
not extend to the covered transactions of another agency.



Sec. 436.125  Does an exclusion under the nonprocurement system affect 
a person's eligibility for Federal procurement contracts?

    If any Federal agency excludes a person under its nonprocurement 
common rule on or after August 25, 1995, the excluded person is also 
ineligible to participate in Federal procurement transactions under the 
FAR. Therefore, an exclusion under this part has reciprocal effect in 
Federal procurement transactions.



Sec. 436.130  Does exclusion under the Federal procurement system affect 
a person's eligibility to participate in nonprocurement transactions?

    If any Federal agency excludes a person under the FAR on or after 
August 25, 1995, the excluded person is also ineligible to participate 
in nonprocurement covered transactions under this part. Therefore, an 
exclusion under the FAR has reciprocal effect in Federal nonprocurement 
transactions.



Sec. 436.135  May the SSA exclude a person who is not currently participating 
in a nonprocurement transaction?

    Given a cause that justifies an exclusion under this part, we may 
exclude any person who has been involved, is currently involved, or may 
reasonably be expected to be involved in a covered transaction.



Sec. 436.140  How do I know if a person is excluded?

    Check the Excluded Parties List System (EPLS) to determine whether a 
person is excluded. The General Services Administration (GSA) maintains 
the EPLS and makes it available, as detailed in subpart E of this part. 
When a Federal agency takes an action to exclude a person under the 
nonprocurement or procurement debarment and suspension system, the 
agency enters the information about the excluded person into the EPLS.



Sec. 436.145  Does this part address persons who are disqualified, as 
well as those who are excluded from nonprocurement transactions?

    Except if provided for in Subpart J of this part, this part--

[[Page 1137]]

    (a) Addresses disqualified persons only to--
    (1) Provide for their inclusion in the EPLS; and
    (2) State responsibilities of Federal agencies and participants to 
check for disqualified persons before entering into covered 
transactions.
    (b) Does not specify the--
    (1) SSA transactions for which a disqualified person is ineligible. 
Those transactions vary on a case-by-case basis, because they depend on 
the language of the specific statute, Executive order, or regulation 
that caused the disqualification;
    (2) Entities to which the disqualification applies; or
    (3) Process that the agency uses to disqualify a person. Unlike 
exclusion, disqualification is frequently not a discretionary action 
that a Federal agency takes.



                     Subpart B_Covered Transactions



Sec. 436.200  What is a covered transaction?

    A covered transaction is a nonprocurement or procurement transaction 
that is subject to the prohibitions of this part. It may be a 
transaction at--
    (a) The primary tier, between a Federal agency and a person (see 
appendix to this part); or
    (b) A lower tier, between a participant in a covered transaction and 
another person.



Sec. 436.205  Why is it important if a particular transaction is a covered 
transaction?

    The importance of a covered transaction depends upon who you are.
    (a) As a participant in the transaction, you have the 
responsibilities laid out in Subpart C of this part. Those include 
responsibilities to the person or Federal agency at the next higher tier 
from whom you received the transaction, if any. They also include 
responsibilities if you subsequently enter into other covered 
transactions with persons at the next lower tier.
    (b) As a Federal official who enters into a primary tier 
transaction, you have the responsibilities laid out in subpart D of this 
part.
    (c) As an excluded person, you may not be a participant or principal 
in the transaction unless--
    (1) The person who entered into the transaction with you allows you 
to continue your involvement in a transaction that predates your 
exclusion, as permitted under Sec. 436.310 or Sec. 436.415; or
    (2) An SSA official obtains an exception from the SSA Debarring 
Suspension/Official to allow you to be involved in the transaction, as 
permitted under Sec. 436.120.



Sec. 436.210  Which nonprocurement transactions are covered transactions?

    All nonprocurement transactions, as defined in Sec. 436.970, are 
covered transactions unless listed in Sec. 436.215. (See appendix to 
this part.)



Sec. 436.215  Which nonprocurement transactions are not covered transactions?

    The following types of nonprocurement transactions are not covered 
transactions:
    (a) A direct award to--
    (1) A foreign government or foreign governmental entity;
    (2) A public international organization;
    (3) An entity owned (in whole or in part) or controlled by a foreign 
government; or
    (4) Any other entity consisting wholly or partially of one or more 
foreign governments or foreign governmental entities.
    (b) A benefit to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted). For example, if 
a person receives social security benefits under the Supplemental 
Security Income provisions of the Social Security Act, 42 U.S.C. 1301 et 
seq., those benefits are not covered transactions and, therefore, are 
not affected if the person is excluded.
    (c) Federal employment.
    (d) A transaction that the SSA needs to respond to a national or 
agency-recognized emergency or disaster.
    (e) A permit, license, certificate, or similar instrument issued as 
a means

[[Page 1138]]

to regulate public health, safety, or the environment, unless the SSA 
specifically designates it to be a covered transaction.
    (f) An incidental benefit that results from ordinary governmental 
operations.
    (g) Any other transaction if the application of an exclusion to the 
transaction is prohibited by law.



Sec. 436.220  Are any procurement contracts included as covered transactions?

    (a) Covered transactions under this part--
    (1) Do not include any procurement contracts awarded directly by a 
Federal agency; but
    (2) Do include some procurement contracts awarded by non-Federal 
participants in nonprocurement covered transactions (see appendix to 
this part).
    (b) Specifically, a contract for goods or services is a covered 
transaction if any of the following applies:
    (1) The contract is awarded by a participant in a nonprocurement 
transaction that is covered under Sec. 436.210, and the amount of the 
contract is expected to equal or exceed $25,000.
    (2) The contract requires the consent of an SSA official. In that 
case, the contract, regardless of the amount, always is a covered 
transaction, and it does not matter who awarded it. For example, it 
could be a subcontract awarded by a contractor at a tier below a 
nonprocurement transaction, as shown in the appendix to this part.
    (3) The contract is for federally-required audit services.



Sec. 436.225  How do I know if a transaction in which I may participate 
is a covered transaction?

    As a participant in a transaction, you will know that it is a 
covered transaction because the agency regulations governing the 
transaction, the appropriate agency official, or participant at the next 
higher tier who enters into the transaction with you, will tell you that 
you must comply with applicable portions of this part.



    Subpart C_Responsibilities of Participants Regarding Transactions

                    Doing Business With Other Persons



Sec. 436.300  What must I do before I enter into a covered transaction 
with another person at the next lower tier?

    When you enter into a covered transaction with another person at the 
next lower tier, you must verify that the person with whom you intend to 
do business is not excluded or disqualified. You do this by:
    (a) Checking the EPLS; or
    (b) Collecting a certification from that person if allowed by this 
rule; or
    (c) Adding a clause or condition to the covered transaction with 
that person.



Sec. 436.305  May I enter into a covered transaction with an excluded 
or disqualified person?

    (a) You as a participant may not enter into a covered transaction 
with an excluded person, unless the SSA grants an exception under Sec. 
436.120.
    (b) You may not enter into any transaction with a person who is 
disqualified from that transaction, unless you have obtained an 
exception under the disqualifying statute, Executive order, or 
regulation.



Sec. 436.310  What must I do if a Federal agency excludes a person with 
whom I am already doing business in a covered transaction?

    (a) You as a participant may continue covered transactions with an 
excluded person if the transactions were in existence when the agency 
excluded the person. However, you are not required to continue the 
transactions, and you may consider termination. You should make a 
decision about whether to terminate and the type of termination action, 
if any, only after a thorough review to ensure that the action is proper 
and appropriate.
    (b) You may not renew or extend covered transactions (other than no-
cost time extensions) with any excluded person, unless the SSA grants an 
exception under Sec. 436.120.

[[Page 1139]]



Sec. 436.315  May I use the services of an excluded person as a principal 
under a covered transaction?

    (a) You as a participant may continue to use the services of an 
excluded person as a principal under a covered transaction if you were 
using the services of that person in the transaction before the person 
was excluded. However, you are not required to continue using that 
person's services as a principal. You should make a decision about 
whether to discontinue that person's services only after a thorough 
review to ensure that the action is proper and appropriate.
    (b) You may not begin to use the services of an excluded person as a 
principal under a covered transaction unless the SSA grants an exception 
under Sec. 436.120.



Sec. 436.320  Must I verify that principals of my covered transactions 
are eligible to participate?

    Yes, you as a participant are responsible for determining whether 
any of your principals of your covered transactions is excluded or 
disqualified from participating in the transaction. You may decide the 
method and frequency by which you do so. You may, but you are not 
required to, check the EPLS.



Sec. 436.325  What happens if I do business with an excluded person in 
a covered transaction?

    If as a participant you knowingly do business with an excluded 
person, we may disallow costs, annul or terminate the transaction, issue 
a stop work order, debar or suspend you, or take other remedies as 
appropriate.



Sec. 436.330  What requirements must I pass down to persons at lower tiers 
with whom I intend to do business?

    Before entering into a covered transaction with a participant at the 
next lower tier, you must require that participant to--
    (a) Comply with this subpart as a condition of participation in the 
transaction. You may do so using any method(s), unless Sec. 436.440 
requires you to use specific methods.
    (b) Pass the requirement to comply with this subpart to each person 
with whom the participant enters into a covered transaction at the next 
lower tier.

            Disclosing Information--Primary Tier Participants



Sec. 436.335  What information must I provide before entering into a covered 
transaction with the SSA?

    Before you enter into a covered transaction at the primary tier, you 
as the participant must notify the SSA office that is entering into the 
transaction with you, if you know that you or any of the principals for 
that covered transaction:
    (a) Are presently excluded or disqualified;
    (b) Have been convicted within the preceding three years of any of 
the offenses listed in Sec. 436.800(a) or had a civil judgment rendered 
against you for one of those offenses within that time period;
    (c) Are presently indicted for or otherwise criminally or civilly 
charged by a governmental entity (Federal, State or local) with 
commission of any of the offenses listed in Sec. 436.800(a); or
    (d) Have had one or more public transactions (Federal, State, or 
local) terminated within the preceding three years for cause or default.



Sec. 436.340  If I disclose unfavorable information required under 
Sec. 436.335, will I be prevented from participating in the transaction?

    As a primary tier participant, your disclosure of unfavorable 
information about yourself or a principal under Sec. 436.335 will not 
necessarily cause us to deny your participation in the covered 
transaction. We will consider the information when we determine whether 
to enter into the covered transaction. We also will consider any 
additional information or explanation that you elect to submit with the 
disclosed information.



Sec. 436.345  What happens if I fail to disclose information required 
under Sec. 436.335?

    If we later determine that you failed to disclose information under 
Sec. 436.335 that you knew at the time you entered into the covered 
transaction, we may--
    (a) Terminate the transaction for material failure to comply with 
the

[[Page 1140]]

terms and conditions of the transaction; or
    (b) Pursue any other available remedies, including suspension and 
debarment.



Sec. 436.350  What must I do if I learn of information required under 
Sec. 436.335 after entering into a covered transaction with the SSA?

    At any time after you enter into a covered transaction, you must 
give immediate written notice to the SSA office with which you entered 
into the transaction if you learn either that--
    (a) You failed to disclose information earlier, as required by Sec. 
436.335; or
    (b) Due to changed circumstances, you or any of the principals for 
the transaction now meet any of the criteria in Sec. 436.335.

             Disclosing Information--Lower Tier Participants



Sec. 436.355  What information must I provide to a higher tier participant 
before entering into a covered transaction with that participant?

    Before you enter into a covered transaction with a person at the 
next higher tier, you as a lower tier participant must notify that 
person if you know that you or any of the principals are presently 
excluded or disqualified.



Sec. 436.360  What happens if I fail to disclose the information required 
under Sec. 436.355?

    If we later determine that you failed to tell the person at the 
higher tier that you were excluded or disqualified at the time you 
entered into the covered transaction with that person, we may pursue any 
available remedies, including suspension and debarment.



Sec. 436.365  What must I do if I learn of information required under 

Sec. 436.355 after entering into a covered transaction with a higher 
tier participant?

    At any time after you enter into a lower tier covered transaction 
with a person at a higher tier, you must provide immediate written 
notice to that person if you learn either that--
    (a) You failed to disclose information earlier, as required by Sec. 
436.355; or
    (b) Due to changed circumstances, you or any of the principals for 
the transaction now meet any of the criteria in Sec. 436.355.



   Subpart D_Responsibilities of SSA Officials Regarding Transactions



Sec. 436.400  May I enter into a transaction with an excluded or 
disqualified person?

    (a) You as an agency official may not enter into a covered 
transaction with an excluded person unless you obtain an exception under 
Sec. 436.120.
    (b) You may not enter into any transaction with a person who is 
disqualified from that transaction, unless you obtain a waiver or 
exception under the statute, Executive order, or regulation that is the 
basis for the person's disqualification.



Sec. 436.405  May I enter into a covered transaction with a participant if 
a principal of the transaction is excluded?

    As an agency official, you may not enter into a covered transaction 
with a participant if you know that a principal of the transaction is 
excluded, unless you obtain an exception under Sec. 436.120.



Sec. 436.410  May I approve a participant's use of the services of an 
excluded person?

    After entering into a covered transaction with a participant, you as 
an agency official may not approve a participant's use of an excluded 
person as a principal under that transaction, unless you obtain an 
exception under Sec. 436.120.



Sec. 436.415  What must I do if a Federal agency excludes the participant 
or a principal after I enter into a covered transaction?

    (a) You as an agency official may continue covered transactions with 
an excluded person, or under which an excluded person is a principal, if 
the transactions were in existence when the person was excluded. You are 
not required to continue the transactions, however, and you may consider 
termination. You should make a decision about whether to terminate and 
the type of termination action, if any, only

[[Page 1141]]

after a thorough review to ensure that the action is proper.
    (b) You may not renew or extend covered transactions (other than no-
cost time extensions) with any excluded person, or under which an 
excluded person is a principal, unless you obtain an exception under 
Sec. 436.120.



Sec. 436.420  May I approve a transaction with an excluded or disqualified 
person at a lower tier?

    If a transaction at a lower tier is subject to your approval, you as 
an agency official may not approve--
    (a) A covered transaction with a person who is currently excluded, 
unless you obtain an exception under Sec. 436.120; or
    (b) A transaction with a person who is disqualified from that 
transaction, unless you obtain a waiver or exception under the statute, 
Executive order, or regulation that is the basis for the person's 
disqualification.



Sec. 436.425  When do I check to see if a person is excluded or disqualified?

    As an agency official, you must check to see if a person is excluded 
or disqualified before you--
    (a) Enter into a primary tier covered transaction;
    (b) Approve a principal in a primary tier covered transaction;
    (c) Approve a lower tier participant if agency approval of the lower 
tier participant is required; or
    (d) Approve a principal in connection with a lower tier transaction 
if agency approval of the principal is required.



Sec. 436.430  How do I check to see if a person is excluded or disqualified?

    You check to see if a person is excluded or disqualified in two 
ways:
    (a) You as an agency official must check the EPLS when you take any 
action listed in Sec. 436.425.
    (b) You must review information that a participant gives you, as 
required by Sec. 436.335, about its status or the status of the 
principals of a transaction.



Sec. 436.435  What must I require of a primary tier participant?

    You as an agency official must require each participant in a primary 
tier covered transaction to--
    (a) Comply with subpart C of this part as a condition of 
participation in the transaction; and
    (b) Communicate the requirement to comply with Subpart C of this 
part to persons at the next lower tier with whom the primary tier 
participant enters into covered transactions.



Sec. 436.440  What method do I use to communicate those requirements to 
participants?

    To communicate the requirements to participants, you must include a 
term or condition in the transaction requiring the participant's 
compliance with subpart C of this part and requiring them to include a 
similar term or condition in lower tier covered transactions.

[68 FR 66579, Nov. 26, 2003]



Sec. 436.445  What action may I take if a primary tier participant knowingly 
does business with an excluded or disqualified person?

    If a participant knowingly does business with an excluded or 
disqualified person, you as an agency official may refer the matter for 
suspension and debarment consideration. You may also disallow costs, 
annul or terminate the transaction, issue a stop work order, or take any 
other appropriate remedy.



Sec. 436.450  What action may I take if a primary tier participant fails 
to disclose the information required under Sec. 436.335?

    If you as an agency official determine that a participant failed to 
disclose information, as required by Sec. 436.335, at the time it 
entered into a covered transaction with you, you may--
    (a) Terminate the transaction for material failure to comply with 
the terms and conditions of the transaction; or
    (b) Pursue any other available remedies, including suspension and 
debarment.



Sec. 436.455  What may I do if a lower tier participant fails to disclose 
the information required under Sec. 436.355 to the next higher tier?

    If you as an agency official determine that a lower tier participant

[[Page 1142]]

failed to disclose information, as required by Sec. 436.355, at the 
time it entered into a covered transaction with a participant at the 
next higher tier, you may pursue any remedies available to you, 
including the initiation of a suspension or debarment action.



                 Subpart E_Excluded Parties List System



Sec. 436.500  What is the purpose of the Excluded Parties List System (EPLS)?

    The EPLS is a widely available source of the most current 
information about persons who are excluded or disqualified from covered 
transactions.



Sec. 436.505  Who uses the EPLS?

    (a) Federal agency officials use the EPLS to determine whether to 
enter into a transaction with a person, as required under Sec. 436.430.
    (b) Participants also may, but are not required to, use the EPLS to 
determine if--
    (1) Principals of their transactions are excluded or disqualified, 
as required under Sec. 436.320; or
    (2) Persons with whom they are entering into covered transactions at 
the next lower tier are excluded or disqualified.
    (c) The EPLS is available to the general public.



Sec. 436.510  Who maintains the EPLS?

    In accordance with the OMB guidelines, the General Services 
Administration (GSA) maintains the EPLS. When a Federal agency takes an 
action to exclude a person under the nonprocurement or procurement 
debarment and suspension system, the agency enters the information about 
the excluded person into the EPLS.



Sec. 436.515  What specific information is in the EPLS?

    (a) At a minimum, the EPLS indicates--
    (1) The full name (where available) and address of each excluded or 
disqualified person, in alphabetical order, with cross references if 
more than one name is involved in a single action;
    (2) The type of action;
    (3) The cause for the action;
    (4) The scope of the action;
    (5) Any termination date for the action;
    (6) The agency and name and telephone number of the agency point of 
contact for the action; and
    (7) The Dun and Bradstreet Number (DUNS), or other similar code 
approved by the GSA, of the excluded or disqualified person, if 
available.
    (b)(1) The database for the EPLS includes a field for the Taxpayer 
Identification Number (TIN) (the social security number (SSN) for an 
individual) of an excluded or disqualified person.
    (2) Agencies disclose the SSN of an individual to verify the 
identity of an individual, only if permitted under the Privacy Act of 
1974 and, if appropriate, the Computer Matching and Privacy Protection 
Act of 1988, as codified in 5 U.S.C. 552(a).



Sec. 436.520  Who places the information into the EPLS?

    Federal officials who take actions to exclude persons under this 
part or officials who are responsible for identifying disqualified 
persons must enter the following information about those persons into 
the EPLS:
    (a) Information required by Sec. 436.515(a);
    (b) The Taxpayer Identification Number (TIN) of the excluded or 
disqualified person, including the social security number (SSN) for an 
individual, if the number is available and may be disclosed under law;
    (c) Information about an excluded or disqualified person, generally 
within five working days, after--
    (1) Taking an exclusion action;
    (2) Modifying or rescinding an exclusion action;
    (3) Finding that a person is disqualified; or
    (4) Finding that there has been a change in the status of a person 
who is listed as disqualified.



Sec. 436.525  Whom do I ask if I have questions about a person in the EPLS?

    If you have questions about a person in the EPLS, ask the point of 
contact for the Federal agency that placed the person's name into the 
EPLS. You may find the agency point of contact from the EPLS.

[[Page 1143]]



Sec. 436.530  Where can I find the EPLS?

    (a) You may access the EPLS through the Internet, currently at 
http://epls.arnet.gov.
    (b) As of November 26, 2003, you may also subscribe to a printed 
version. However, we anticipate discontinuing the printed version. Until 
it is discontinued, you may obtain the printed version by purchasing a 
yearly subscription from the Superintendent of Documents, U.S. 
Government Printing Office, Washington, DC 20402, or by calling the 
Government Printing Office Inquiry and Order Desk at (202) 783-3238.



   Subpart F_General Principles Relating to Suspension and Debarment 
                                 Actions



Sec. 436.600  How do suspension and debarment actions start?

    When we receive information from any source concerning a cause for 
suspension or debarment, we will promptly report and investigate it. We 
refer the question of whether to suspend or debar you to our suspending 
or debarring official for consideration, if appropriate.



Sec. 436.605  How does suspension differ from debarment?

    Suspension differs from debarment in that--

------------------------------------------------------------------------
      A suspending official . . .           A debarring official . . .
------------------------------------------------------------------------
(a) Imposes suspension as a temporary    Imposes debarment for a
 status of ineligibility for              specified period as a final
 procurement and nonprocurement           determination that a person is
 transactions, pending completion of an   not presently responsible.
 investigation or legal proceedings.
(b) Must--.............................  Must conclude, based on a
(1) Have adequate evidence that there     preponderance of the evidence,
 may be a cause for debarment of a        that the person has engaged in
 person; and.                             conduct that warrants
(2) Conclude that immediate action is     debarment.
 necessary to protect the Federal
 interest.
(c) Usually imposes the suspension       Imposes debarment after giving
 first, and then promptly notifies the    the respondent notice of the
 suspended person, giving the person an   action and an opportunity to
 opportunity to contest the suspension    contest the proposed
 and have it lifted.                      debarment.
------------------------------------------------------------------------



Sec. 436.610  What procedures does the SSA use in suspension and debarment 
actions?

    In deciding whether to suspend or debar you, we handle the actions 
as informally as practicable, consistent with principles of fundamental 
fairness.
    (a) For suspension actions, we use the procedures in this subpart 
and subpart G of this part.
    (b) For debarment actions, we use the procedures in this subpart and 
subpart H of this part.



Sec. 436.615  How does the SSA notify a person of a suspension or debarment 
action?

    (a) The suspending or debarring official sends a written notice to 
the last known street address, facsimile number, or e-mail address of--
    (1) You or your identified counsel; or
    (2) Your agent for service of process, or any of your partners, 
officers, directors, owners, or joint venturers.
    (b) The notice is effective if sent to any of these persons.



Sec. 436.620  Do Federal agencies coordinate suspension and debarment 
actions?

    Yes, when more than one Federal agency has an interest in a 
suspension or debarment, the agencies may consider designating one 
agency as the lead agency for making the decision. Agencies are 
encouraged to establish methods and procedures for coordinating their 
suspension and debarment actions.



Sec. 436.625  What is the scope of a suspension or debarment action?

    If you are suspended or debarred, the suspension or debarment is 
effective as follows:
    (a) Your suspension or debarment constitutes suspension or debarment 
of all of your divisions and other organizational elements from all 
covered

[[Page 1144]]

transactions, unless the suspension or debarment decision is limited--
    (1) By its terms to one or more specifically identified individuals, 
divisions, or other organizational elements; or
    (2) To specific types of transactions.
    (b) Any affiliate of a participant may be included in a suspension 
or debarment action if the suspending or debarring official--
    (1) Officially names the affiliate in the notice; and
    (2) Gives the affiliate an opportunity to contest the action.



Sec. 436.630  May the SSA impute the conduct of one person to another?

    For purposes of actions taken under this rule, we may impute conduct 
as follows:
    (a) Conduct imputed from an individual to an organization. We may 
impute the fraudulent, criminal, or other improper conduct of any 
officer, director, shareholder, partner, employee, or other individual 
associated with an organization, to that organization when the improper 
conduct occurred in connection with the individual's performance of 
duties for or on behalf of that organization, or with the organization's 
knowledge, approval or acquiescence. The organization's acceptance of 
the benefits derived from the conduct is evidence of knowledge, approval 
or acquiescence.
    (b) Conduct imputed from an organization to an individual, or 
between individuals. We may impute the fraudulent, criminal, or other 
improper conduct of any organization to an individual, or from one 
individual to another individual, if the individual to whom the improper 
conduct is imputed either participated in, had knowledge of, or reason 
to know of the improper conduct.
    (c) Conduct imputed from one organization to another organization. 
We may impute the fraudulent, criminal, or other improper conduct of one 
organization to another organization when the improper conduct occurred 
in connection with a partnership, joint venture, joint application, 
association or similar arrangement, or when the organization to whom the 
improper conduct is imputed has the power to direct, manage, control or 
influence the activities of the organization responsible for the 
improper conduct. Acceptance of the benefits derived from the conduct is 
evidence of knowledge, approval or acquiescence.



Sec. 436.635  May the SSA settle a debarment or suspension action?

    Yes, we may settle a debarment or suspension action at any time if 
it is in the best interest of the Federal Government.



Sec. 436.640  May a settlement include a voluntary exclusion?

    Yes, if we enter into a settlement with you in which you agree to be 
excluded, it is called a voluntary exclusion and has governmentwide 
effect.



Sec. 436.645  Do other Federal agencies know if the SSA agrees to a 
voluntary exclusion?

    (a) Yes, we enter information regarding a voluntary exclusion into 
the EPLS.
    (b) Also, any agency or person may contact us to find out the 
details of a voluntary exclusion.



                          Subpart G_Suspension



Sec. 436.700  When may the suspending official issue a suspension?

    Suspension is a serious action. Using the procedures of this subpart 
and subpart F of this part, the suspending official may impose 
suspension only when that official determines that--
    (a) There exists an indictment for, or other adequate evidence to 
suspect, an offense listed under Sec. 436.800(a), or
    (b) There exists adequate evidence to suspect any other cause for 
debarment listed under Sec. 436.800(b) through (d); and
    (c) Immediate action is necessary to protect the public interest.



Sec. 436.705  What does the suspending official consider in issuing a 
suspension?

    (a) In determining the adequacy of the evidence to support the 
suspension, the suspending official considers how much information is 
available, how credible it is given the circumstances, whether or not 
important allegations are corroborated, and what inferences can 
reasonably be drawn as a result.

[[Page 1145]]

During this assessment, the suspending official may examine the basic 
documents, including grants, cooperative agreements, loan 
authorizations, contracts, and other relevant documents.
    (b) An indictment, conviction, civil judgment, or other official 
findings by Federal, State, or local bodies that determine factual and/
or legal matters, constitutes adequate evidence for purposes of 
suspension actions.
    (c) In deciding whether immediate action is needed to protect the 
public interest, the suspending official has wide discretion. For 
example, the suspending official may infer the necessity for immediate 
action to protect the public interest either from the nature of the 
circumstances giving rise to a cause for suspension or from potential 
business relationships or involvement with a program of the Federal 
Government.



Sec. 436.710  When does a suspension take effect?

    A suspension is effective when the suspending official signs the 
decision to suspend.



Sec. 436.715  What notice does the suspending official give me if I am 
suspended?

    After deciding to suspend you, the suspending official promptly 
sends you a Notice of Suspension advising you--
    (a) That you have been suspended;
    (b) That your suspension is based on--
    (1) An indictment;
    (2) A conviction;
    (3) Other adequate evidence that you have committed irregularities 
which seriously reflect on the propriety of further Federal Government 
dealings with you; or
    (4) Conduct of another person that has been imputed to you, or your 
affiliation with a suspended or debarred person;
    (c) Of any other irregularities in terms sufficient to put you on 
notice without disclosing the Federal Government's evidence;
    (d) Of the cause(s) upon which we relied under Sec. 436.700 for 
imposing suspension;
    (e) That your suspension is for a temporary period pending the 
completion of an investigation or resulting legal or debarment 
proceedings;
    (f) Of the applicable provisions of this subpart, Subpart F of this 
part, and any other SSA procedures governing suspension decision making; 
and
    (g) Of the governmentwide effect of your suspension from procurement 
and nonprocurement programs and activities.



Sec. 436.720  How may I contest a suspension?

    If you as a respondent wish to contest a suspension, you or your 
representative must provide the suspending official with information in 
opposition to the suspension. You may do this orally or in writing, but 
any information provided orally that you consider important must also be 
submitted in writing for the official record.



Sec. 436.725  How much time do I have to contest a suspension?

    (a) As a respondent you or your representative must either send, or 
make rrangements to appear and present, the information and argument to 
the suspending official within 30 days after you receive the Notice of 
Suspension.
    (b) We consider the notice to be received by you--
    (1) When delivered, if we mail the notice to the last known street 
address, or five days after we send it if the letter is undeliverable;
    (2) When sent, if we send the notice by facsimile or five days after 
we send it if the facsimile is undeliverable; or
    (3) When delivered, if we send the notice by e-mail or five days 
after we send it if the e-mail is undeliverable.



Sec. 436.730  What information must I provide to the suspending official 
if I contest a suspension?

    (a) In addition to any information and argument in opposition, as a 
respondent your submission to the suspending official must identify--
    (1) Specific facts that contradict the statements contained in the 
Notice of Suspension. A general denial is insufficient to raise a 
genuine dispute over facts material to the suspension;

[[Page 1146]]

    (2) All existing, proposed, or prior exclusions under regulations 
implementing E.O. 12549 and all similar actions taken by Federal, state, 
or local agencies, including administrative agreements that affect only 
those agencies;
    (3) All criminal and civil proceedings not included in the Notice of 
Suspension that grew out of facts relevant to the cause(s) stated in the 
notice; and
    (4) All of your affiliates.
    (b) If you fail to disclose this information, or provide false 
information, the SSA may seek further criminal, civil or administrative 
action against you, as appropriate.



Sec. 436.735  Under what conditions do I get an additional opportunity to 
challenge the facts on which the suspension is based?

    (a) You as a respondent will not have an additional opportunity to 
challenge the facts if the suspending official determines that--
    (1) Your suspension is based upon an indictment, conviction, civil 
judgment, or other finding by a Federal, State, or local body for which 
an opportunity to contest the facts was provided;
    (2) Your presentation in opposition contains only general denials to 
information contained in the Notice of Suspension;
    (3) The issues raised in your presentation in opposition to the 
suspension are not factual in nature, or are not material to the 
suspending official's initial decision to suspend, or the official's 
decision whether to continue the suspension; or
    (4) On the basis of advice from the Department of Justice, an office 
of the United States Attorney, a State attorney general's office, or a 
State or local prosecutor's office, that substantial interests of the 
government in pending or contemplated legal proceedings based on the 
same facts as the suspension would be prejudiced by conducting fact-
finding.
    (b) You will have an opportunity to challenge the facts if the 
suspending official determines that--
    (1) The conditions in paragraph (a) of this section do not exist; 
and
    (2) Your presentation in opposition raises a genuine dispute over 
facts material to the suspension.
    (c) If you have an opportunity to challenge disputed material facts 
under this section, the suspending official or designee must conduct 
additional proceedings to resolve those facts.



Sec. 436.740  Are suspension proceedings formal?

    (a) Suspension proceedings are conducted in a fair and informal 
manner. The suspending official may use flexible procedures to allow you 
to present matters in opposition. In so doing, the suspending official 
is not required to follow formal rules of evidence or procedure in 
creating an official record upon which the official will base a final 
suspension decision.
    (b) You as a respondent or your representative must submit any 
documentary evidence you want the suspending official to consider.



Sec. 436.745  How is fact-finding conducted?

    (a) If fact-finding is conducted--
    (1) You may present witnesses and other evidence, and confront any 
witness presented; and
    (2) The fact-finder must prepare written findings of fact for the 
record.
    (b) A transcribed record of fact-finding proceedings must be made, 
unless you as a respondent and the SSA agree to waive it in advance. If 
you want a copy of the transcribed record, you may purchase it.



Sec. 436.750  What does the suspending official consider in deciding 
whether to continue or terminate my suspension?

    (a) The suspending official bases the decision on all information 
contained in the official record. The record includes--
    (1) All information in support of the suspending official's initial 
decision to suspend you;
    (2) Any further information and argument presented in support of, or 
opposition to, the suspension; and
    (3) Any transcribed record of fact-finding proceedings.
    (b) The suspending official may refer disputed material facts to 
another official for findings of fact. The suspending official may 
reject any resulting findings, in whole or in part, only after

[[Page 1147]]

specifically determining them to be arbitrary, capricious, or clearly 
erroneous.



Sec. 436.755  When will I know whether the suspension is continued or 
terminated?

    The suspending official must make a written decision whether to 
continue, modify, or terminate your suspension within 45 days of closing 
the official record. The official record closes upon the suspending 
official's receipt of final submissions, information and findings of 
fact, if any. The suspending official may extend that period for good 
cause.



Sec. 436.760  How long may my suspension last?

    (a) If legal or debarment proceedings are initiated at the time of, 
or during your suspension, the suspension may continue until the 
conclusion of those proceedings. However, if proceedings are not 
initiated, a suspension may not exceed 12 months.
    (b) The suspending official may extend the 12 month limit under 
paragraph (a) of this section for an additional 6 months if an office of 
a U.S. Assistant Attorney General, U.S. Attorney, or other responsible 
prosecuting official requests an extension in writing. In no event may a 
suspension exceed 18 months without initiating proceedings under 
paragraph (a) of this section.
    (c) The suspending official must notify the appropriate officials 
under paragraph (b) of this section of an impending termination of a 
suspension at least 30 days before the 12 month period expires to allow 
the officials an opportunity to request an extension.



                           Subpart H_Debarment



Sec. 436.800  What are the causes for debarment?

    We may debar a person for--
    (a) Conviction of or civil judgment for--
    (1) Commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public or private 
agreement or transaction;
    (2) Violation of Federal or State antitrust statutes, including 
those proscribing price fixing between competitors, allocation of 
customers between competitors, and bid rigging;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, tax 
evasion, receiving stolen property, making false claims, or obstruction 
of justice; or
    (4) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects your 
present responsibility;
    (b) Violation of the terms of a public agreement or transaction so 
serious as to affect the integrity of an agency program, such as--
    (1) A willful failure to perform in accordance with the terms of one 
or more public agreements or transactions;
    (2) A history of failure to perform or of unsatisfactory performance 
of one or more public agreements or transactions; or
    (3) A willful violation of a statutory or regulatory provision or 
requirement applicable to a public agreement or transaction;
    (c) Any of the following causes:
    (1) A nonprocurement debarment by any Federal agency taken before 
October 1, 1988, or a procurement debarment by any Federal agency taken 
pursuant to 48 CFR part 9, subpart 9.4, before August 25, 1995;
    (2) Knowingly doing business with an ineligible person, except as 
permitted under Sec. 436.120;
    (3) Failure to pay a single substantial debt, or a number of 
outstanding debts (including disallowed costs and overpayments, but not 
including sums owed the Federal Government under the Internal Revenue 
Code) owed to any Federal agency or instrumentality, provided the debt 
is uncontested by the debtor or, if contested, provided that the 
debtor's legal and administrative remedies have been exhausted;
    (4) Violation of a material provision of a voluntary exclusion 
agreement entered into under Sec. 436.640 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of the provisions of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701); or

[[Page 1148]]

    (d) Any other cause of so serious or compelling a nature that it 
affects your present responsibility.



Sec. 436.805  What notice does the debarring official give me if I am 
proposed for debarment?

    After consideration of the causes in Sec. 436.800 of this subpart, 
if the debarring official proposes to debar you, the official sends you 
a Notice of Proposed Debarment, pursuant to Sec. 436.615, advising 
you--
    (a) That the debarring official is considering debarring you;
    (b) Of the reasons for proposing to debar you in terms sufficient to 
put you on notice of the conduct or transactions upon which the proposed 
debarment is based;
    (c) Of the cause(s) under Sec. 436.800 upon which the debarring 
official relied for proposing your debarment;
    (d) Of the applicable provisions of this subpart, Subpart F of this 
part, and any other SSA procedures governing debarment; and
    (e) Of the governmentwide effect of a debarment from procurement and 
nonprocurement programs and activities.



Sec. 436.810  When does a debarment take effect?

    A debarment is not effective until the debarring official issues a 
decision. The debarring official does not issue a decision until the 
respondent has had an opportunity to contest the proposed debarment.



Sec. 436.815  How may I contest a proposed debarment?

    If you as a respondent wish to contest a proposed debarment, you or 
your representative must provide the debarring official with information 
in opposition to the proposed debarment. You may do this orally or in 
writing, but any information provided orally that you consider important 
must also be submitted in writing for the official record.



Sec. 436.820  How much time do I have to contest a proposed debarment?

    (a) As a respondent you or your representative must either send, or 
make arrangements to appear and present, the information and argument to 
the debarring official within 30 days after you receive the Notice of 
Proposed Debarment.
    (b) We consider the Notice of Proposed Debarment to be received by 
you--
    (1) When delivered, if we mail the notice to the last known street 
address, or five days after we send it if the letter is undeliverable;
    (2) When sent, if we send the notice by facsimile or five days after 
we send it if the facsimile is undeliverable; or
    (3) When delivered, if we send the notice by e-mail or five days 
after we send it if the e-mail is undeliverable.



Sec. 436.825  What information must I provide to the debarring official 
if I contest a proposed debarment?

    (a) In addition to any information and argument in opposition, as a 
respondent your submission to the debarring official must identify--
    (1) Specific facts that contradict the statements contained in the 
Notice of Proposed Debarment. Include any information about any of the 
factors listed in Sec. 436.860. A general denial is insufficient to 
raise a genuine dispute over facts material to the debarment;
    (2) All existing, proposed, or prior exclusions under regulations 
implementing E.O. 12549 and all similar actions taken by Federal, State, 
or local agencies, including administrative agreements that affect only 
those agencies;
    (3) All criminal and civil proceedings not included in the Notice of 
Proposed Debarment that grew out of facts relevant to the cause(s) 
stated in the notice; and
    (4) All of your affiliates.
    (b) If you fail to disclose this information, or provide false 
information, the SSA may seek further criminal, civil or administrative 
action against you, as appropriate.



Sec. 436.830  Under what conditions do I get an additional opportunity 
to challenge the facts on which a proposed debarment is based?

    (a) You as a respondent will not have an additional opportunity to 
challenge the facts if the debarring official determines that--
    (1) Your debarment is based upon a conviction or civil judgment;

[[Page 1149]]

    (2) Your presentation in opposition contains only general denials to 
information contained in the Notice of Proposed Debarment; or
    (3) The issues raised in your presentation in opposition to the 
proposed debarment are not factual in nature, or are not material to the 
debarring official's decision whether to debar.
    (b) You will have an additional opportunity to challenge the facts 
if the debarring official determines that--
    (1) The conditions in paragraph (a) of this section do not exist; 
and
    (2) Your presentation in opposition raises a genuine dispute over 
facts material to the proposed debarment.
    (c) If you have an opportunity to challenge disputed material facts 
under this section, the debarring official or designee must conduct 
additional proceedings to resolve those facts.



Sec. 436.835  Are debarment proceedings formal?

    (a) Debarment proceedings are conducted in a fair and informal 
manner. The debarring official may use flexible procedures to allow you 
as a respondent to present matters in opposition. In so doing, the 
debarring official is not required to follow formal rules of evidence or 
procedure in creating an official record upon which the official will 
base the decision whether to debar.
    (b) You or your representative must submit any documentary evidence 
you want the debarring official to consider.



Sec. 436.840  How is fact-finding conducted?

    (a) If fact-finding is conducted--
    (1) You may present witnesses and other evidence, and confront any 
witness presented; and
    (2) The fact-finder must prepare written findings of fact for the 
record.
    (b) A transcribed record of fact-finding proceedings must be made, 
unless you as a respondent and the SSA agree to waive it in advance. If 
you want a copy of the transcribed record, you may purchase it.



Sec. 436.845  What does the debarring official consider in deciding 
whether to debar me?

    (a) The debarring official may debar you for any of the causes in 
Sec. 436.800. However, the official need not debar you even if a cause 
for debarment exists. The official may consider the seriousness of your 
acts or omissions and the mitigating or aggravating factors set forth at 
Sec. 436.860.
    (b) The debarring official bases the decision on all information 
contained in the official record. The record includes--
    (1) All information in support of the debarring official's proposed 
debarment;
    (2) Any further information and argument presented in support of, or 
in opposition to, the proposed debarment; and
    (3) Any transcribed record of fact-finding proceedings.
    (c) The debarring official may refer disputed material facts to 
another official for findings of fact. The debarring official may reject 
any resultant findings, in whole or in part, only after specifically 
determining them to be arbitrary, capricious, or clearly erroneous.



Sec. 436.850  What is the standard of proof in a debarment action?

    (a) In any debarment action, we must establish the cause for 
debarment by a preponderance of the evidence.
    (b) If the proposed debarment is based upon a conviction or civil 
judgment, the standard of proof is met.



Sec. 436.855  Who has the burden of proof in a debarment action?

    (a) We have the burden to prove that a cause for debarment exists.
    (b) Once a cause for debarment is established, you as a respondent 
have the burden of demonstrating to the satisfaction of the debarring 
official that you are presently responsible and that debarment is not 
necessary.



Sec. 436.860  What factors may influence the debarring official's decision?

    This section lists the mitigating and aggravating factors that the 
debarring

[[Page 1150]]

official may consider in determining whether to debar you and the length 
of your debarment period. The debarring official may consider other 
factors if appropriate in light of the circumstances of a particular 
case. The existence or nonexistence of any factor, such as one of those 
set forth in this section, is not necessarily determinative of your 
present responsibility. In making a debarment decision, the debarring 
official may consider the following factors:
    (a) The actual or potential harm or impact that results or may 
result from the wrongdoing.
    (b) The frequency of incidents and/or duration of the wrongdoing.
    (c) Whether there is a pattern or prior history of wrongdoing. For 
example, if you have been found by another Federal agency or a State 
agency to have engaged in wrongdoing similar to that found in the 
debarment action, the existence of this fact may be used by the 
debarring official in determining that you have a pattern or prior 
history of wrongdoing.
    (d) Whether you are or have been excluded or disqualified by an 
agency of the Federal Government or have not been allowed to participate 
in State or local contracts or assistance agreements on a basis of 
conduct similar to one or more of the causes for debarment specified in 
this part.
    (e) Whether you have entered into an administrative agreement with a 
Federal agency or a State or local government that is not governmentwide 
but is based on conduct similar to one or more of the causes for 
debarment specified in this part.
    (f) Whether and to what extent you planned, initiated, or carried 
out the wrongdoing.
    (g) Whether you have accepted responsibility for the wrongdoing and 
recognize the seriousness of the misconduct that led to the cause for 
debarment.
    (h) Whether you have paid or agreed to pay all criminal, civil and 
administrative liabilities for the improper activity, including any 
investigative or administrative costs incurred by the government, and 
have made or agreed to make full restitution.
    (i) Whether you have cooperated fully with the government agencies 
during the investigation and any court or administrative action. In 
determining the extent of cooperation, the debarring official may 
consider when the cooperation began and whether you disclosed all 
pertinent information known to you.
    (j) Whether the wrongdoing was pervasive within your organization.
    (k) The kind of positions held by the individuals involved in the 
wrongdoing.
    (l) Whether your organization took appropriate corrective action or 
remedial measures, such as establishing ethics training and implementing 
programs to prevent recurrence.
    (m) Whether your principals tolerated the offense.
    (n) Whether you brought the activity cited as a basis for the 
debarment to the attention of the appropriate government agency in a 
timely manner.
    (o) Whether you have fully investigated the circumstances 
surrounding the cause for debarment and, if so, made the result of the 
investigation available to the debarring official.
    (p) Whether you had effective standards of conduct and internal 
control systems in place at the time the questioned conduct occurred.
    (q) Whether you have taken appropriate disciplinary action against 
the individuals responsible for the activity which constitutes the cause 
for debarment.
    (r) Whether you have had adequate time to eliminate the 
circumstances within your organization that led to the cause for the 
debarment.
    (s) Other factors that are appropriate to the circumstances of a 
particular case.



Sec. 436.865  How long may my debarment last?

    (a) If the debarring official decides to debar you, your period of 
debarment will be based on the seriousness of the cause(s) upon which 
your debarment is based. Generally, debarment should not exceed three 
years. However, if circumstances warrant, the debarring official may 
impose a longer period of debarment.
    (b) In determining the period of debarment, the debarring official 
may

[[Page 1151]]

consider the factors in Sec. 436.860. If a suspension has preceded your 
debarment, the debarring official must consider the time you were 
suspended.
    (c) If the debarment is for a violation of the provisions of the 
Drug-Free Workplace Act of 1988, your period of debarment may not exceed 
five years.



Sec. 436.870  When do I know if the debarring official debars me?

    (a) The debarring official must make a written decision whether to 
debar within 45 days of closing the official record. The official record 
closes upon the debarring official's receipt of final submissions, 
information and findings of fact, if any. The debarring official may 
extend that period for good cause.
    (b) The debarring official sends you written notice, pursuant to 
Sec. 436.615 that the official decided, either--
    (1) Not to debar you; or
    (2) To debar you. In this event, the notice:
    (i) Refers to the Notice of Proposed Debarment;
    (ii) Specifies the reasons for your debarment;
    (iii) States the period of your debarment, including the effective 
dates; and
    (iv) Advises you that your debarment is effective for covered 
transactions and contracts that are subject to the Federal Acquisition 
Regulation (48 CFR chapter 1), throughout the executive branch of the 
Federal Government unless an agency head or an authorized designee 
grants an exception.



Sec. 436.875  May I ask the debarring official to reconsider a decision 
to debar me?

    Yes, as a debarred person you may ask the debarring official to 
reconsider the debarment decision or to reduce the time period or scope 
of the debarment. However, you must put your request in writing and 
support it with documentation.



Sec. 436.880  What factors may influence the debarring official during 
reconsideration?

    The debarring official may reduce or terminate your debarment based 
on--
    (a) Newly discovered material evidence;
    (b) A reversal of the conviction or civil judgment upon which your 
debarment was based;
    (c) A bona fide change in ownership or management;
    (d) Elimination of other causes for which the debarment was imposed; 
or
    (e) Other reasons the debarring official finds appropriate.



Sec. 436.885  May the debarring official extend a debarment?

    (a) Yes, the debarring official may extend a debarment for an 
additional period, if that official determines that an extension is 
necessary to protect the public interest.
    (b) However, the debarring official may not extend a debarment 
solely on the basis of the facts and circumstances upon which the 
initial debarment action was based.
    (c) If the debarring official decides that a debarment for an 
additional period is necessary, the debarring official must follow the 
applicable procedures in this subpart, and subpart F of this part, to 
extend the debarment.



                          Subpart I_Definitions



Sec. 436.900  Adequate evidence.

    Adequate evidence means information sufficient to support the 
reasonable belief that a particular act or omission has occurred.



Sec. 436.905  Affiliate.

    Persons are affiliates of each other if, directly or indirectly, 
either one controls or has the power to control the other or a third 
person controls or has the power to control both. The ways we use to 
determine control include, but are not limited to--
    (a) Interlocking management or ownership;
    (b) Identity of interests among family members;
    (c) Shared facilities and equipment;
    (d) Common use of employees; or
    (e) A business entity which has been organized following the 
exclusion of a person which has the same or similar management, 
ownership, or principal employees as the excluded person.

[[Page 1152]]



Sec. 436.910  Agency.

    Agency means any United States executive department, military 
department, defense agency, or any other agency of the executive branch. 
Other agencies of the Federal government are not considered ``agencies'' 
for the purposes of this part unless they issue regulations adopting the 
governmentwide Debarment and Suspension system under Executive orders 
12549 and 12689.



Sec. 436.915  Agent or representative.

    Agent or representative means any person who acts on behalf of, or 
who is authorized to commit, a participant in a covered transaction.



Sec. 436.920  Civil judgment.

    Civil judgment means the disposition of a civil action by any court 
of competent jurisdiction, whether by verdict, decision, settlement, 
stipulation, other disposition which creates a civil liability for the 
complained of wrongful acts, or a final determination of liability under 
the Program Fraud Civil Remedies Act of 1988 (31 U.S.C. 3801-3812).



Sec. 436.925  Conviction.

    Conviction means--
    (a) A judgment or any other determination of guilt of a criminal 
offense by any court of competent jurisdiction, whether entered upon a 
verdict or plea, including a plea of nolo contendere; or
    (b) Any other resolution that is the functional equivalent of a 
judgment, including probation before judgment and deferred prosecution. 
A disposition without the participation of the court is the functional 
equivalent of a judgment only if it includes an admission of guilt.



Sec. 436.930  Debarment.

    Debarment means an action taken by a debarring official under 
subpart H of this part to exclude a person from participating in covered 
transactions and transactions covered under the Federal Acquisition 
Regulation (48 CFR chapter 1). A person so excluded is debarred.



Sec. 436.935  Debarring official.

    (a) Debarring official means an agency official who is authorized to 
impose debarment. A debarring official is either--
    (1) The agency head; or
    (2) An official designated by the agency head.
    (b) [Reserved]



Sec. 436.940  Disqualified.

    Disqualified means that a person is prohibited from participating in 
specified Federal procurement or nonprocurement transactions as required 
under a statute, Executive order (other than Executive Orders 12549 and 
12689) or other authority. Examples of disqualifications include persons 
prohibited under--
    (a) The Davis-Bacon Act (40 U.S.C. 276(a));
    (b) The equal employment opportunity acts and Executive orders; or
    (c) The Clean Air Act (42 U.S.C. 7606), Clean Water Act (33 U.S.C. 
1368) and Executive Order 11738 (3 CFR, 1973 Comp., p. 799).



Sec. 436.945  Excluded or exclusion.

    Excluded or exclusion means--
    (a) That a person or commodity is prohibited from being a 
participant in covered transactions, whether the person has been 
suspended; debarred; proposed for debarment under 48 CFR part 9, subpart 
9.4; voluntarily excluded; or
    (b) The act of excluding a person.



Sec. 436.950  Excluded Parties List System

    Excluded Parties List System (EPLS) means the list maintained and 
disseminated by the General Services Administration (GSA) containing the 
names and other information about persons who are ineligible. The EPLS 
system includes the printed version entitled, ``List of Parties Excluded 
or Disqualified from Federal Procurement and Nonprocurement Programs,'' 
so long as published.



Sec. 436.955  Indictment.

    Indictment means an indictment for a criminal offense. A 
presentment, information, or other filing by a competent authority 
charging a criminal offense shall be given the same effect as an 
indictment.

[[Page 1153]]



Sec. 436.960  Ineligible or ineligibility.

    Ineligible or ineligibility means that a person or commodity is 
prohibited from covered transactions because of an exclusion or 
disqualification.



Sec. 436.965  Legal proceedings.

    Legal proceedings means any criminal proceeding or any civil 
judicial proceeding, including a proceeding under the Program Fraud 
Civil Remedies Act (31 U.S.C. 3801-3812), to which the Federal 
Government or a State or local government or quasi-governmental 
authority is a party. The term also includes appeals from those 
proceedings.



Sec. 436.970  Nonprocurement transaction.

    (a) Nonprocurement transaction means any transaction, regardless of 
type (except procurement contracts), including, but not limited to the 
following:
    (1) Grants.
    (2) Cooperative agreements.
    (3) Scholarships.
    (4) Fellowships.
    (5) Contracts of assistance.
    (6) Loans.
    (7) Loan guarantees.
    (8) Subsidies.
    (9) Insurances.
    (10) Payments for specified uses.
    (11) Donation agreements.
    (b) A nonprocurement transaction at any tier does not require the 
transfer of Federal funds.



Sec. 436.975  Notice.

    Notice means a written communication served in person, sent by 
certified mail or its equivalent, or sent electronically by e-mail or 
facsimile. (See Sec. 436. 615.)



Sec. 436.980  Participant.

    Participant means any person who submits a proposal for or who 
enters into a covered transaction, including an agent or representative 
of a participant.



Sec. 436.985  Person.

    Person means any individual, corporation, partnership, association, 
unit of government, or legal entity, however organized.



Sec. 436.990  Preponderance of the evidence.

    Preponderance of the evidence means proof by information that, 
compared with information opposing it, leads to the conclusion that the 
fact at issue is more probably true than not.



Sec. 436.995  Principal.

    Principal means--
    (a) An officer, director, owner, partner, principal investigator, or 
other person within a participant with management or supervisory 
responsibilities related to a covered transaction; or
    (b) A consultant or other person, whether or not employed by the 
participant or paid with Federal funds, who--
    (1) Is in a position to handle Federal funds;
    (2) Is in a position to influence or control the use of those funds; 
or,
    (3) Occupies a technical or professional position capable of 
substantially influencing the development or outcome of an activity 
required to perform the covered transaction.



Sec. 436.1000  Respondent.

    Respondent means a person against whom an agency has initiated a 
debarment or suspension action.



Sec. 436.1005  State.

    (a) State means--
    (1) Any of the states of the United States;
    (2) The District of Columbia;
    (3) The Commonwealth of Puerto Rico;
    (4) Any territory or possession of the United States; or
    (5) Any agency or instrumentality of a state.
    (b) For purposes of this part, State does not include institutions 
of higher education, hospitals, or units of local government.



Sec. 436.1010  Suspending official.

    (a) Suspending official means an agency official who is authorized 
to impose suspension. The suspending official is either:
    (1) The agency head; or
    (2) An official designated by the agency head.
    (b) [Reserved]

[[Page 1154]]



Sec. 436.1015  Suspension.

    Suspension is an action taken by a suspending official under subpart 
G of this part that immediately prohibits a person from participating in 
covered transactions and transactions covered under the Federal 
Acquisition Regulation (48 CFR chapter 1) for a temporary period, 
pending completion of an agency investigation and any judicial or 
administrative proceedings that may ensue. A person so excluded is 
suspended.



Sec. 436.1020  Voluntary exclusion or voluntarily excluded.

    (a) Voluntary exclusion means a person's agreement to be excluded 
under the terms of a settlement between the person and one or more 
agencies. Voluntary exclusion must have governmentwide effect.
    (b) Voluntarily excluded means the status of a person who has agreed 
to a voluntary exclusion.

Subpart J [Reserved]

               Appendix to Part 436--Covered Transactions
[GRAPHIC] [TIFF OMITTED] TR26NO03.000


[[Page 1155]]





PART 437_UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE 
AGREEMENTS TO STATE AND LOCAL GOVERNMENTS--Table of Contents




                            Subpart A_General

Sec.
437.1 Purpose and scope of this part.
437.2 Scope of subpart.
437.3 Definitions.
437.4 Applicability.
437.5 Effect on other issuances.
437.6 Additions and exceptions.

                    Subpart B_Pre-Award Requirements

437.10 Forms for applying for grants.
437.11 State plans.
437.12 Special grant or subgrant conditions for ``high-risk'' grantees.

                    Subpart C_Post-Award Requirements

                        Financial Administration

437.20 Standards for financial management systems.
437.21 Payment.
437.22 Allowable costs.
437.23 Period of availability of funds.
437.24 Matching or cost sharing.
437.25 Program income.
437.26 Non-Federal audit.

                    Changes, Property, and Subawards

437.30 Changes.
437.31 Real property.
437.32 Equipment.
437.33 Supplies.
437.34 Copyrights.
437.35 Subawards to debarred and suspended parties.
437.36 Procurement.
437.37 Subgrants.

              Reports, Records, Retention, and Enforcement

437.40 Monitoring and reporting program performance.
437.41 Financial reporting.
437.42 Retention and access requirements for records.
437.43 Enforcement.
437.44 Termination for convenience.

                 Subpart D_After-the-Grant Requirements

437.50 Closeout.
437.51 Later disallowances and adjustments.
437.52 Collection of amounts due.

Subpart E--Entitlement [Reserved]

    Authority: 5 U.S.C. 301.

    Source: 68 FR 28729, May 27, 2003, unless otherwise noted.



                            Subpart A_General



Sec. 437.1  Purpose and scope of this part.

    This part establishes the Social Security Administration's 
administrative rules for Federal grants and cooperative agreements and 
subawards to State, local and Indian tribal governments. The provisions 
of 20 CFR part 435, Subpart E (Disputes), also apply to grants and 
cooperative agreements covered by this part 437.



Sec. 437.2  Scope of subpart.

    This subpart contains general rules pertaining to this part and 
procedures for control of exceptions from this part.



Sec. 437.3  Definitions.

    As used in this part:
    Accrued expenditures mean the charges incurred by the grantee during 
a given period requiring the provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subgrantees, 
subcontractors, and other payees; and
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required, such as annuities, insurance 
claims, and other benefit payments.
    Accrued income means the sum of:
    (1) Earnings during a given period from services performed by the 
grantee and goods and other tangible property delivered to purchasers, 
and
    (2) Amounts becoming owed to the grantee for which no current 
services or performance is required by the grantee.
    Acquisition cost of an item of purchased equipment means the net 
invoice unit price of the property including the cost of modifications, 
attachments, accessories, or auxiliary apparatus necessary to make the 
property usable for the purpose for which it was acquired. Other charges 
such as the cost of installation, transportation, taxes, duty or 
protective in-transit insurance, shall be included or excluded from the 
unit acquisition cost in accordance

[[Page 1156]]

with the grantee's regular accounting practices.
    Administrative requirements mean those matters common to grants in 
general, such as financial management, kinds and frequency of reports, 
and retention of records. These are distinguished from programmatic 
requirements, which concern matters that can be treated only on a 
program-by-program or grant-by-grant basis, such as kinds of activities 
that can be supported by grants under a particular program.
    Awarding agency means:
    (1) With respect to a grant, the Social Security Administration, and
    (2) With respect to a subgrant, the party that awarded the subgrant.
    Cash contributions means the grantee's cash outlay, including the 
outlay of money contributed to the grantee or subgrantee by other public 
agencies and institutions, and private organizations and individuals. 
When authorized by Federal legislation, Federal funds received from 
other assistance agreements may be considered as grantee or subgrantee 
cash contributions.
    Contract means (except as used in the definitions for grant and 
subgrant in this section and except where qualified by Federal) a 
procurement contract under a grant or subgrant, and means a procurement 
subcontract under a contract.
    Cost sharing or matching means the value of the third party in-kind 
contributions and the portion of the costs of a federally assisted 
project or program not borne by the Federal Government.
    Cost-type contract means a contract or subcontract under a grant in 
which the contractor or subcontractor is paid on the basis of the costs 
it incurs, with or without a fee.
    Equipment means tangible, nonexpendable, personal property having a 
useful life of more than one year and an acquisition cost of $5,000 or 
more per unit. A grantee may use its own definition of equipment 
provided that such definition would at least include all equipment 
defined in this section.
    Expenditure report means:
    (1) For nonconstruction grants, the SF--269 ``Financial Status 
Report'' (or other equivalent report);
    (2) For construction grants, the SF--271 ``Outlay Report and Request 
for Reimbursement'' (or other equivalent report).
    Federally recognized Indian tribal government means the governing 
body or a governmental agency of any Indian tribe, band, nation, or 
other organized group or community (including any Native village as 
defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat 
688) certified by the Secretary of the Interior as eligible for the 
special programs and services provided by him through the Bureau of 
Indian Affairs.
    Government means a State or local government or a federally 
recognized Indian tribal government.
    Grant means an award of financial assistance, including cooperative 
agreements, in the form of money, or property in lieu of money, by the 
Federal Government to an eligible grantee. The term does not include 
technical assistance that provides services instead of money, or other 
assistance in the form of revenue sharing, loans, loan guarantees, 
interest subsidies, insurance, or direct appropriations. Also, the term 
does not include assistance, such as a fellowship or other lump sum 
award, which the grantee is not required to account for.
    Grantee means the government to which a grant is awarded and which 
is accountable for the use of the funds provided. The grantee is the 
entire legal entity even if only a particular component of the entity is 
designated in the grant award document.
    Local government means a county, municipality, city, town, township, 
local public authority (including any public and Indian housing agency 
under the United States Housing Act of 1937) school district, special 
district, intrastate district, council of governments (whether or not 
incorporated as a nonprofit corporation under state law), any other 
regional or interstate government entity, or any agency or 
instrumentality of a local government.
    Obligations means the amounts of orders placed, contracts and 
subgrants awarded, goods and services received, and similar transactions 
during a given period that will require payment by

[[Page 1157]]

the grantee during the same or a future period.
    OMB means the United States Office of Management and Budget.
    Outlays (expenditures) mean charges made to the project or program. 
They may be reported on a cash or accrual basis. For reports prepared on 
a cash basis, outlays are the sum of actual cash disbursement for direct 
charges for goods and services, the amount of indirect expense incurred, 
the value of in-kind contributions applied, and the amount of cash 
advances and payments made to contractors and subgrantees. For reports 
prepared on an accrued expenditure basis, outlays are the sum of actual 
cash disbursements, the amount of indirect expense incurred, the value 
of in-kind contributions applied, and the new increase (or decrease) in 
the amounts owed by the grantee for goods and other property received, 
for services performed by employees, contractors, subgrantees, 
subcontractors, and other payees, and other amounts becoming owed under 
programs for which no current services or performance are required, such 
as annuities, insurance claims, and other benefit payments.
    Percentage of completion method refers to a system under which 
payments are made for construction work according to the percentage of 
completion of the work, rather than to the grantee's cost incurred.
    Prior approval means documentation evidencing consent prior to 
incurring specific cost.
    Real property means land, including land improvements, structures 
and appurtenances thereto, excluding movable machinery and equipment.
    Share, when referring to SSA's portion of real property, equipment 
or supplies, means the same percentage as SSA's portion of the acquiring 
party's total costs under the grant to which the acquisition costs under 
the grant to which the acquisition cost of the property was charged. 
Only costs are to be counted--not the value of third-party in-kind 
contributions.
    SSA means the Social Security Administration.
    State means any of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency or instrumentality of a 
State exclusive of local governments. The term does not include any 
public and Indian housing agency under United States Housing Act of 
1937.
    Subgrant means an award of financial assistance in the form of 
money, or property in lieu of money, made under a grant by a grantee to 
an eligible subgrantee. The term includes financial assistance when 
provided by contractual legal agreement, but does not include 
procurement purchases, nor does it include any form of assistance that 
is excluded from the definition of grant in this part.
    Subgrantee means the government or other legal entity to which a 
subgrant is awarded and which is accountable to the grantee for the use 
of the funds provided.
    Supplies means all tangible personal property other than equipment 
as defined in this part.
    Suspension means depending on the context, either:
    (1) Temporary withdrawal of the authority to obligate grant funds 
pending corrective action by the grantee or subgrantee or a decision to 
terminate the grant, or
    (2) An action taken by a suspending official in accordance with SSA 
regulations implementing E.O. 12549 to immediately exclude a person from 
participating in grant transactions for a period, pending completion of 
an investigation and such legal or debarment proceedings as may ensue.
    Termination means permanent withdrawal of the authority to obligate 
previously-awarded grant funds before that authority would otherwise 
expire. It also means the voluntary relinquishment of that authority by 
the grantee or subgrantee. ``Termination'' does not include:
    (1) Withdrawal of funds awarded on the basis of the grantee's 
underestimate of the unobligated balance in a prior period;
    (2) Withdrawal of the unobligated balance as of the expiration of a 
grant;
    (3) Refusal to extend a grant or award additional funds, to make a 
competing or noncompeting continuation, renewal, extension, or 
supplemental award; or

[[Page 1158]]

    (4) Voiding of a grant upon determination that the award was 
obtained fraudulently, or was otherwise illegal or invalid from 
inception.
    Terms of a grant or subgrant mean all requirements of the grant or 
subgrant, whether in statute, regulations, or the award document.
    Third party in-kind contributions mean property or services that 
benefit a federally assisted project or program and which are 
contributed by non-Federal third parties without charge to the grantee, 
or a cost-type contractor under the grant agreement.
    Unliquidated obligations for reports prepared on a cash basis mean 
the amount of obligations incurred by the grantee that has not been 
paid. For reports prepared on an accrued expenditure basis, they 
represent the amount of obligations incurred by the grantee for which an 
outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by SSA 
that has not been obligated by the grantee and is determined by 
deducting the cumulative obligations from the cumulative funds 
authorized.



Sec. 437.4  Applicability.

    Subparts A through D of this part do not apply to grants and 
subgrants to governments issued under Federal statutes or regulations 
authorized in accordance with the exception provision of Sec. 437.6, 
nor do they apply to grants and subgrants to State and local 
institutions of higher education or State and local hospitals.



Sec. 437.5  Effect on other issuances.

    All other grants administration provisions of codified program 
regulations, program manuals, handbooks and other nonregulatory 
materials apply to grants and subgrants to governments only to the 
extent they are required by statute, or authorized in accordance with 
the exception provision in Sec. 437.6.



Sec. 437.6  Additions and exceptions.

    (a) For classes of grants and grantees subject to this part, SSA may 
not impose additional administrative requirements except in codified 
regulations published in the Federal Register.
    (b) Exceptions for classes of grants or grantees may be authorized 
only by OMB.
    (c) Exceptions on a case-by-case basis and for subgrantees may be 
authorized by SSA.



                    Subpart B_Pre-Award Requirements



Sec. 437.10  Forms for applying for grants.

    (a) Scope. (1) This section prescribes forms and instructions to be 
used by governmental organizations (except hospitals and institutions of 
higher education operated by a government) in applying for grants. This 
section is not applicable, however, to formula grant programs that do 
not require applicants to apply for funds on a project basis.
    (2) This section applies only to applications to SSA for grants, and 
is not required to be applied by grantees in dealing with applicants for 
subgrants. However, grantees are encouraged to avoid more detailed or 
burdensome application requirements for subgrants.
    (b) Authorized forms and instructions for governmental 
organizations. (1) In applying for grants, applicants must only use 
standard application forms or those prescribed by the SSA with the 
approval of OMB under the Paperwork Reduction Act of 1980.
    (2) Applicants are not required to submit more than the original and 
two copies of preapplications or applications.
    (3) Applicants must follow all applicable instructions that bear OMB 
clearance numbers. SSA may specify and describe the programs, functions, 
or activities that will be used to plan, budget, and evaluate the work 
under a grant. Other supplementary instructions may be issued only with 
the approval of OMB to the extent required under the Paperwork Reduction 
Act of 1980. For any standard form, except the SF--424 facesheet, SSA 
may shade out or instruct the applicant to disregard any line item that 
is not needed.
    (4) When a grantee applies for additional funding (such as a 
continuation or supplemental award) or amends a previously submitted 
application, only the affected pages need be submitted.

[[Page 1159]]

Previously submitted pages with information that is still current need 
not be resubmitted.



Sec. 437.11  State plans.

    (a) Scope. The statutes for some programs require States to submit 
plans before receiving grants. Under regulations implementing Executive 
Order 12372, ``Intergovernmental Review of Federal Programs,'' States 
are allowed to simplify, consolidate and substitute plans. This section 
contains additional provisions for plans that are subject to regulations 
implementing the Executive order.
    (b) Requirements. A State needs to meet only Federal administrative 
or programmatic requirements for a plan that are in statutes or codified 
regulations.
    (c) Assurances. In each plan the State will include an assurance 
that the State shall comply with all applicable Federal statutes and 
regulations in effect with respect to the periods for which it receives 
grant funding. For this assurance and other assurances required in the 
plan, the State may:
    (1) Cite by number the statutory or regulatory provisions requiring 
the assurances and affirm that it gives the assurances required by those 
provisions,
    (2) Repeat the assurance language in the statutes or regulations, or
    (3) Develop its own language to the extent permitted by law.
    (d) Amendments. A State will amend a plan whenever necessary to 
reflect:
    (1) New or revised Federal statutes or regulations or
    (2) A material change in any State law, organization, policy, or 
State agency operation. The State will obtain approval for the amendment 
and its effective date but need submit for approval only the amended 
portions of the plan.



Sec. 437.12  Special grant or subgrant conditions for ``high-risk'' grantees.

    (a) A grantee or subgrantee may be considered ``high risk'' if SSA 
determines that a grantee or subgrantee:
    (1) Has a history of unsatisfactory performance, or
    (2) Is not financially stable, or
    (3) Has a management system which does not meet the management 
standards set forth in this part, or
    (4) Has not conformed to terms and conditions of previous awards, or
    (5) Is otherwise not responsible; and if SSA determines that an 
award will be made, special conditions and/or restrictions will 
correspond to the high-risk condition and will be included in the award.
    (b) Special conditions or restrictions may include:
    (1) Payment on a reimbursement basis;
    (2) Withholding authority to proceed to the next phase until receipt 
of evidence of acceptable performance within a given funding period;
    (3) Requiring additional, more detailed financial reports;
    (4) Additional project monitoring;
    (5) Requiring the grantee or subgrantee to obtain technical or 
management assistance; or
    (6) Establishing additional prior approvals.
    (c) If SSA decides to impose such conditions, SSA's awarding 
official will notify the grantee or subgrantee as early as possible, in 
writing, of:
    (1) The nature of the special conditions/restrictions;
    (2) The reason(s) for imposing them;
    (3) The corrective actions which must be taken before they will be 
removed and the time allowed for completing the corrective actions and
    (4) The method of requesting reconsideration of the conditions/
restrictions imposed.



                    Subpart C_Post-Award Requirements

                        Financial Administration



Sec. 437.20  Standards for financial management systems.

    (a) A State must expend and account for grant funds in accordance 
with State laws and procedures for expending and accounting for its own 
funds. Fiscal control and accounting procedures of the State, as well as 
its subgrantees and cost-type contractors, must be sufficient to--

[[Page 1160]]

    (1) Permit preparation of reports required by this part and the 
statutes authorizing the grant, and
    (2) Permit the tracing of funds to a level of expenditures adequate 
to establish that such funds have not been used in violation of the 
restrictions and prohibitions of applicable statutes.
    (b) The financial management systems of other grantees and 
subgrantees must meet the following standards:
    (1) Financial reporting. Accurate, current, and complete disclosure 
of the financial results of financially assisted activities must be made 
in accordance with the financial reporting requirements of the grant or 
subgrant.
    (2) Accounting records. Grantees and subgrantees must maintain 
records that adequately identify the source and application of funds 
provided for financially-assisted activities. These records must contain 
information pertaining to grant or subgrant awards and authorizations, 
obligations, unobligated balances, assets, liabilities, outlays or 
expenditures, and income.
    (3) Internal control. Effective control and accountability must be 
maintained for all grant and subgrant cash, real and personal property, 
and other assets. Grantees and subgrantees must adequately safeguard all 
such property and must assure that it is used solely for authorized 
purposes.
    (4) Budget control. Actual expenditures or outlays must be compared 
with budgeted amounts for each grant or subgrant. Financial information 
must be related to performance or productivity data, including the 
development of unit cost information whenever appropriate or 
specifically required in the grant or subgrant agreement. If unit cost 
data are required, estimates based on available documentation will be 
accepted whenever possible.
    (5) Allowable cost. Applicable OMB cost principles, SSA program 
regulations, and the terms of grant and subgrant agreements will be 
followed in determining the reasonableness, allowability, and 
allocability of costs.
    (6) Source documentation. Accounting records must be supported by 
such source documentation as cancelled checks, paid bills, payrolls, 
time and attendance records, contract and subgrant award documents, etc.
    (7) Cash management. Procedures for minimizing the time elapsing 
between the transfer of funds from the U.S. Treasury and disbursement by 
grantees and subgrantees must be followed whenever advance payment 
procedures are used. Grantees must establish reasonable procedures to 
ensure the receipt of reports on subgrantees' cash balances and cash 
disbursements in sufficient time to enable them to prepare complete and 
accurate cash transactions reports to SSA. When advances are made by 
letter-of-credit or electronic transfer of funds methods, the grantee 
must make drawdowns as close as possible to the time of making 
disbursements. Grantees must monitor cash drawdowns by their subgrantees 
to assure that they conform substantially to the same standards of 
timing and amount as apply to advances to the grantees.
    (c) SSA may review the adequacy of the financial management system 
of any applicant for financial assistance as part of a preaward review 
or at any time subsequent to award.



Sec. 437.21  Payment.

    (a) Scope. This section prescribes the basic standard and the 
methods under which SSA will make payments to grantees, and grantees 
will make payments to subgrantees and contractors.
    (b) Basic standard. Methods and procedures for payment must minimize 
the time elapsing between the transfer of funds and disbursement by the 
grantee or subgrantee, in accordance with Treasury regulations at 31 CFR 
part 205.
    (c) Advances. Grantees and subgrantees will be paid in advance, 
provided they maintain or demonstrate the willingness and ability to 
maintain procedures to minimize the time elapsing between the transfer 
of the funds and their disbursement by the grantee or subgrantee.
    (d) Reimbursement. Reimbursement is the preferred method when the 
requirements in paragraph (c) of this section are not met. Grantees and 
subgrantees may also be paid by reimbursement for any construction 
grant. Except as otherwise specified in regulation, SSA

[[Page 1161]]

may not use the percentage of completion method to pay construction 
grants. The grantee or subgrantee may use that method to pay its 
construction contractor, and if it does, SSA's payments to the grantee 
or subgrantee will be based on the grantee's or subgrantee's actual rate 
of disbursement.
    (e) Working capital advances. If a grantee cannot meet the criteria 
for advance payments described in paragraph (c) of this section, and SSA 
determines that reimbursement is not feasible because the grantee lacks 
sufficient working capital, SSA may provide cash or a working capital 
advance basis. Under this procedure, SSA will advance cash to the 
grantee to cover its estimated disbursement needs for an initial period 
generally geared to the grantee's disbursing cycle. Thereafter, SSA will 
reimburse the grantee for its actual cash disbursements. The working 
capital advance method of payment may not be used by grantees or 
subgrantees if the reason for using such method is the unwillingness or 
inability of the grantee to provide timely advances to the subgrantee to 
meet the subgrantee's actual cash disbursements.
    (f) Effect of program income, refunds, and audit recoveries on 
payment. (1) Grantees and subgrantees must disburse repayments to and 
interest earned on a revolving fund before requesting additional cash 
payments for the same activity.
    (2) Except as provided in paragraph (f)(1) of this section, grantees 
and subgrantees must disburse program income, rebates, refunds, contract 
settlements, audit recoveries and interest earned on such funds before 
requesting additional cash payments.
    (g) Withholding payments. (1) Unless otherwise required by Federal 
statute, SSA will not withhold payments for proper charges incurred by 
grantees or subgrantees unless--
    (i) The grantee or subgrantee fails to comply with grant award 
conditions or
    (ii) The grantee or subgrantee is indebted to the United States.
    (2) Cash withheld for failure to comply with grant award condition, 
but without suspension of the grant, will be released to the grantee 
upon subsequent compliance. When a grant is suspended, payment 
adjustments will be made in accordance with Sec. 437.43(c).
    (3) SSA will not make payment to grantees for amounts that are 
withheld by grantees or subgrantees from payment to contractors to 
assure satisfactory completion of work. SSA will make payments when the 
grantees or subgrantees actually disburse the withheld funds to the 
contractors or to escrow accounts established to assure satisfactory 
completion of work.
    (h) Cash depositories. (1) Consistent with the national goal of 
expanding the opportunities for minority business enterprises, grantees 
and subgrantees are encouraged to use minority banks (a bank which is 
owned at least 50 percent by minority group members). A list of minority 
owned banks can be obtained from the Minority Business Development 
Agency, Department of Commerce, Washington, DC 20230.
    (2) A grantee or subgrantee must maintain a separate bank account 
only when required by Federal-State agreement.
    (i) Interest earned on advances. Except for interest earned on 
advances of funds exempt under the Intergovernmental Cooperation Act (31 
U.S.C. 6501 et seq.) and the Indian Self-Determination Act (23 U.S.C. 
450), grantees and subgrantees must promptly, but at least quarterly, 
remit interest earned on advances to the Federal agency. The grantee or 
subgrantee may keep interest amounts up to $100 per year for 
administrative expenses.



Sec. 437.22  Allowable costs.

    (a) Limitation on use of funds. Grant funds may be used only for:
    (1) The allowable costs of the grantees, subgrantees and cost-type 
contractors, including allowable costs in the form of payments to fixed-
price contractors; and
    (2) Reasonable fees or profit to cost-type contractors but not any 
fee or profit (or other increment above allowable costs) to the grantee 
or subgrantee.
    (b) Applicable cost principles. For each kind of organization, there 
is a set of Federal principles for determining allowable costs. 
Allowable costs will be determined in accordance with the cost

[[Page 1162]]

principles applicable to the organization incurring the costs. The 
following chart lists the kinds of organizations and the applicable cost 
principles.

------------------------------------------------------------------------
          For the costs of a--               Use the principles in--
------------------------------------------------------------------------
(1) State, local or Indian tribal        OMB Circular A-87.
 government.
(2) Private nonprofit organization       OMB Circular A-122.
 other than an (i) institution of
 higher education, (ii) hospital, or
 (iii) organization named in OMB
 Circular A-122 as not subject to that
 circular.
(3) Educational institutions...........  OMB Circular A-21.
(4) For profit organizationother than a  48 CFR Part 31. Contract Cost
 hospital and an organization named in    Principles and Procedures, or
 OMB Circular A-122 as not subject to     uniform cost accounting
 that circular.                           standards that comply with
                                          cost principles acceptable to
                                          the Federal agency.
------------------------------------------------------------------------



Sec. 437.23  Period of availability of funds.

    (a) General. Where a funding period is specified, a grantee may 
charge to the award only costs resulting from obligations of the funding 
period unless carryover of unobligated balances is permitted, in which 
case the carryover balances may be charged for costs resulting from 
obligations of the subsequent funding period.
    (b) Liquidation of obligations. A grantee must liquidate all 
obligations incurred under the award not later than 90 days after the 
end of the funding period (or as specified in a program regulation) to 
coincide with the submission of the annual Financial Status Report (SF-
269). SSA may extend this deadline at the request of the grantee.



Sec. 437.24  Matching or cost sharing.

    (a) Basic rule. Costs and contributions acceptable. With the 
qualifications and exceptions listed in paragraph (b) of this section, a 
matching or cost sharing requirement may be satisfied by either or both 
of the following:
    (1) Allowable costs incurred by the grantee, subgrantee or a cost-
type contractor under the assistance agreement. This includes allowable 
costs borne by non-Federal grants or by other cash donations from non-
Federal third parties.
    (2) The value of third party in-kind contributions applicable to the 
period to which the cost sharing or matching requirements applies.
    (b) Qualifications and exceptions. (1) Costs borne by other Federal 
grant agreements. Except as provided by Federal statute, a cost sharing 
or matching requirement may not be met by costs borne by another Federal 
grant. This prohibition does not apply to income earned by a grantee or 
subgrantee from a contract awarded under another Federal grant.
    (2) General revenue sharing. For the purpose of this section, 
general revenue sharing funds distributed under 31 U.S.C. 6702 are not 
considered Federal grant funds.
    (3) Cost or contributions counted towards other Federal costs-
sharing requirements. Neither costs nor the values of third party in-
kind contributions may count towards satisfying a cost sharing or 
matching requirement of a grant agreement if they have been or will be 
counted towards satisfying a cost sharing or matching requirement of 
another Federal grant agreement, a Federal procurement contract, or any 
other award of Federal funds.
    (4) Costs financed by program income. Costs financed by program 
income, as defined in Sec. 437.25, may not count towards satisfying a 
cost sharing or matching requirement unless they are expressly permitted 
in the terms of the assistance agreement. (This use of general program 
income is described in Sec. 437.25(g).)
    (5) Services or property financed by income earned by contractors. 
Contractors under a grant may earn income from the activities carried 
out under the contract in addition to the amounts earned from the party 
awarding the contract. No costs of services or property supported by 
this income may count toward satisfying a cost sharing or matching 
requirement unless other provisions of the grant agreement expressly 
permit this kind of income to be used to meet the requirement.
    (6) Records. Costs and third party in-kind contributions counting 
towards satisfying a cost sharing or matching requirement must be 
verifiable from the records of grantees and subgrantee

[[Page 1163]]

or cost-type contractors. These records must show how the value placed 
on third party in-kind contributions was derived. To the extent 
feasible, volunteer services will be supported by the same methods that 
the organization uses to support the allocability of regular personnel 
costs.
    (7) Special standards for third party in-kind contributions. (i) 
Third party in-kind contributions count towards satisfying a cost 
sharing or matching requirement only where, if the party receiving the 
contributions were to pay for them, the payments would be allowable 
costs.
    (ii) Some third party in-kind contributions are goods and services 
that, if the grantee, subgrantee, or contractor receiving the 
contribution had to pay for them, the payments would have been indirect 
costs. Costs sharing or matching credit for such contributions will be 
given only if the grantee, subgrantee, or contractor has established, 
along with its regular indirect cost rate, a special rate for allocating 
to individual projects or programs the value of the contributions.
    (iii) A third party in-kind contribution to a fixed-price contract 
may count towards satisfying a cost sharing or matching requirement only 
if it results in:
    (A) An increase in the services or property provided under the 
contract (without additional cost to the grantee or subgrantee) or
    (B) A cost savings to the grantee or subgrantee.
    (iv) The values placed on third party in-kind contributions for cost 
sharing or matching purposes will conform to the rules in the succeeding 
sections of this part. If a third party in-kind contribution is a type 
not treated in those sections, the value placed upon it shall be fair 
and reasonable.
    (c) Valuation of donated services--(1) Volunteer services. Unpaid 
services provided to a grantee or subgrantee by individuals will be 
valued at rates consistent with those ordinarily paid for similar work 
in the grantee's or subgrantee's organization. If the grantee or 
subgrantee does not have employees performing similar work, the rates 
will be consistent with those ordinarily paid by other employers for 
similar work in the same labor market. In either case, a reasonable 
amount for fringe benefits may be included in the valuation.
    (2) Employees of other organizations. When an employer other than a 
grantee, subgrantee, or cost-type contractor furnishes free of charge 
the services of an employee in the employee's normal line of work, the 
services will be valued at the employee's regular rate of pay exclusive 
of the employee's fringe benefits and overhead costs. If the services 
are in a different line of work, paragraph (c)(1) of this section 
applies.
    (d) Valuation of third party donated supplies and loaned equipment 
or space. (1) If a third party donates supplies, the contribution will 
be valued at the market value of the supplies at the time of donation.
    (2) If a third party donates the use of equipment or space in a 
building but retains title, the contribution will be valued at the fair 
rental rate of the equipment or space.
    (e) Valuation of third party donated equipment, buildings, and land. 
If a third party donates equipment, buildings, or land, and title passes 
to a grantee or subgrantee, the treatment of the donated property will 
depend upon the purpose of the grant or subgrant, as follows:
    (1) Awards for capital expenditures. If the purpose of the grant or 
subgrant is to assist the grantee or subgrantee in the acquisition of 
property, the market value of that property at the time of donation may 
be counted as cost sharing or matching,
    (2) Other awards. If assisting in the acquisition of property is not 
the purpose of the grant or subgrant, paragraphs (e)(2)(i) and (ii) of 
this section apply:
    (i) If approval is obtained from SSA, the market value at the time 
of donation of the donated equipment or buildings and the fair rental 
rate of the donated land may be counted as cost sharing or matching. In 
the case of a subgrant, the terms of the grant agreement may require 
that the approval be obtained from SSA as well as the grantee. In all 
cases, the approval may be given only if a purchase of the equipment or 
rental of the land would be approved as an allowable direct cost.

[[Page 1164]]

If any part of the donated property was acquired with Federal funds, 
only the non-federal share of the property may be counted as cost-
sharing or matching.
    (ii) If approval is not obtained under paragraph (e)(2)(i) of this 
section, no amount may be counted for donated land, and only 
depreciation or use allowances may be counted for donated equipment and 
buildings. The depreciation or use allowances for this property are not 
treated as third party in-kind contributions. Instead, they are treated 
as costs incurred by the grantee or subgrantee. They are computed and 
allocated (usually as indirect costs) in accordance with the cost 
principles specified in Sec. 437.22, in the same way as depreciation or 
use allowances for purchased equipment and buildings. The amount of 
depreciation or use allowances for donated equipment and buildings is 
based on the property's market value at the time it was donated.
    (f) Valuation of grantee or subgrantee donated real property for 
construction/acquisition. If a grantee or subgrantee donates real 
property for a construction or facilities acquisition project, the 
current market value of that property may be counted as cost sharing or 
matching. If any part of the donated property was acquired with Federal 
funds, only the non-federal share of the property may be counted as cost 
sharing or matching.
    (g) Appraisal of real property. In some cases under paragraphs (d), 
(e) and (f) of this section, it will be necessary to establish the 
market value of land or a building or the fair rental rate of land or of 
space in a building. In these cases, SSA may require the market value or 
fair rental value be set by an independent appraiser, and that the value 
or rate be certified by the grantee. This requirement will also be 
imposed by the grantee on subgrantees.



Sec. 437.25  Program income.

    (a) General. Grantees are encouraged to earn income to defray 
program costs. Program income includes income from fees for services 
performed, from the use or rental of real or personal property acquired 
with grant funds, from the sale of commodities or items fabricated under 
a grant agreement, and from payments of principal and interest on loans 
made with grant funds. Except as otherwise provided in SSA regulations, 
program income does not include interest on grant funds, rebates, 
credits, discounts, refunds, etc. and interest earned on any of them.
    (b) Definition of program income. Program income means gross income 
received by the grantee or subgrantee directly generated by a grant 
supported activity, or earned only as a result of the grant agreement 
during the grant period. ``During the grant period'' is the time between 
the effective date of the award and the ending date of the award 
reflected in the final financial report.
    (c) Cost of generating program income. If authorized by SSA 
regulations or the grant agreement, costs incident to the generation of 
program income may be deducted from gross income to determine program 
income.
    (d) Governmental revenues. Taxes, special assessments, levies, 
fines, and other such revenues raised by a grantee or subgrantee are not 
program income unless the revenues are specifically identified in the 
grant agreement or SSA regulations as program income.
    (e) Royalties. Income from royalties and license fees for 
copyrighted material, patents, and inventions developed by a grantee or 
subgrantee is program income only if the revenues are specifically 
identified in the grant agreement or SSA regulations as program income. 
(See Sec. 437.34.)
    (f) Property. Proceeds from the sale of real property or equipment 
will be handled in accordance with the requirements of Sec. 437.31 and 
Sec. 437.32.
    (g) Use of program income. Program income will be deducted from 
outlays that may be both Federal and non-Federal as described in 
paragraphs (g)(1) through (3) of this section, unless SSA regulations or 
the grant agreement specify another alternative (or a combination of the 
alternatives). In specifying alternatives, SSA may distinguish between 
income earned by the grantee and income earned by subgrantees and 
between the sources, kinds, or amounts of income. When SSA authorizes 
the alternatives in paragraphs (g)(2) and (3) of this section, program 
income in excess of any limits

[[Page 1165]]

stipulated will also be deducted from outlays.
    (1) Deduction. Ordinarily program income must be deducted from total 
allowable costs to determine the net allowable costs. Program income 
must be used for current costs unless SSA authorizes otherwise. Program 
income that the grantee did not anticipate at the time of the award must 
be used to reduce SSA and grantee contributions rather than to increase 
the funds committed to the project.
    (2) Addition. When authorized, program income may be added to the 
funds committed to the grant agreement by SSA and the grantee. The 
program income must be used for the purposes and under the conditions of 
the grant agreement.
    (3) Cost sharing or matching. When authorized, program income may be 
used to meet the cost sharing or matching requirement of the grant 
agreement. The amount of the Federal grant award remains the same.
    (h) Income after the award period. There are no Federal requirements 
governing the disposition of program income earned after the end of the 
award period (i.e., until the ending date of the final financial report, 
see paragraph (a) of this section), unless the terms of the agreement or 
SSA regulations provide otherwise.



Sec. 437.26  Non-Federal audit.

    (a) Basic Rule. Grantees and subgrantees are responsible for 
obtaining audits in accordance with the Single Audit Act Amendments of 
1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of 
States, Local Governments, and Non-Profit Organizations.'' The audits 
must be made by an independent auditor in accordance with generally 
accepted government auditing standards covering financial audits.
    (b) Subgrantees. State or local governments, as those terms are 
defined for purposes of the Single Audit Act Amendments of 1996, that 
provide Federal awards to a subgrantee, which expends $300,000 or more 
(or other amount as specified by OMB) in Federal awards in a fiscal 
year, must:
    (1) Determine whether State or local subgrantees have met the audit 
requirements of the Act and whether subgrantees covered by OMB Circular 
A-110, ``Uniform Administrative Requirements for Grants and Agreements 
with Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations,'' have met the audit requirements of the Act. Commercial 
contractors (private for-profit and private and governmental 
organizations) providing goods and services to State and local 
governments are not required to have a single audit performed. State and 
local governments should use their own procedures to ensure that the 
contractor has complied with laws and regulations affecting the 
expenditure of Federal funds;
    (2) Determine whether the subgrantee spent Federal assistance funds 
provided in accordance with applicable laws and regulations. This may be 
accomplished by reviewing an audit of the subgrantee made in accordance 
with the Act, Circular A-110, or through other means (e.g., program 
reviews) if the subgrantee has not had such an audit;
    (3) Ensure that appropriate corrective action is taken within six 
months after receipt of the audit report in instance of noncompliance 
with Federal laws and regulations;
    (4) Consider whether subgrantee audits necessitate adjustment of the 
grantee's own records; and
    (5) Require each subgrantee to permit independent auditors to have 
access to the records and financial statements.
    (c) Auditor selection. In arranging for audit services, grantees and 
subgrantees must follow the rules in Sec. 437.36.

                    Changes, Property, and Subawards



Sec. 437.30  Changes.

    (a) General. Grantees and subgrantees are permitted to rebudget 
within the approved direct cost budget to meet unanticipated 
requirements and may make limited program changes to the approved 
project. However, unless waived by the SSA, certain types of post-award 
changes in budgets and projects require the prior written approval of 
SSA. Approvals are not valid unless they are in writing, and signed

[[Page 1166]]

by at least one of the following SSA officials:
    (1) The responsible SSA Grants Management Officer; or
    (2) The SSA Commissioner or subordinate official with proper 
delegated authority from the Commissioner.
    (b) Relation to cost principles. The applicable cost principles (see 
Sec. 437.22) contain requirements for prior approval of certain types 
of costs. Except where waived, those requirements apply to all grants 
and subgrants even if paragraphs (c) through (f) of this section do not.
    (c) Budget changes. (1) Nonconstruction projects. Except as stated 
in other SSA regulations or an award document, grantees or subgrantees 
must obtain prior approval from SSA whenever any of the following 
changes is anticipated under a nonconstruction award:
    (i) Any revision which would result in the need for additional 
funding.
    (ii) Unless waived by SSA, cumulative transfers among direct cost 
categories, or, if applicable, among separately budgeted programs, 
projects, functions, or activities which exceed or are expected to 
exceed ten percent of the current total approved budget, whenever SSA's 
share exceeds $100,000.
    (iii) Transfer of funds allotted for training allowances (i.e., from 
direct payments to trainees to other expense categories).
    (2) Construction projects. Grantees and subgrantees must obtain 
prior written approval for any budget revision that would result in the 
need for additional funds.
    (3) Combined construction and nonconstruction projects. When a grant 
or subgrant provides funding for both construction and nonconstruction 
activities, the grantee or subgrantee must obtain prior written approval 
from SSA before making any fund or budget transfer from nonconstruction 
to construction or vice versa.
    (d) Programmatic changes. Grantees or subgrantees must obtain the 
prior approval from SSA whenever any of the following actions is 
anticipated:
    (1) Any revision of the scope or objectives of the project 
(regardless of whether there is an associated budget revision requiring 
prior approval).
    (2) Need to extend the period of availability of funds.
    (3) Changes in key persons in cases where specified in an 
application or a grant award. In research projects, a change in the 
project director or principal investigator always requires approval 
unless waived by SSA.
    (4) Under nonconstruction projects, contracting out, subgranting (if 
authorized by law) or otherwise obtaining the services of a third party 
to perform activities that are central to the purposes of the award. 
This approval requirement is in addition to the approval requirements of 
Sec. 437.36 but does not apply to the procurement of equipment, 
supplies, and general support services.
    (5) Providing medical care to individuals under research grants.
    (e) Additional prior approval requirements. SSA may not require 
prior approval for any budget revision that is not described in 
paragraph (c) of this section.
    (f) Requesting prior approval. (1) A request for prior approval of 
any budget revision will be in the same budget format the grantee used 
in its application and must be accompanied by a narrative justification 
for the proposed revision.
    (2) A request for a prior approval under the applicable Federal cost 
principles (see Sec. 437.22) may be made by letter.
    (3) A request by a subgrantee for prior approval must be addressed 
in writing to the grantee. The grantee will promptly review such request 
and must approve or disapprove the request in writing. A grantee may not 
approve any budget or project revision that is inconsistent with the 
purpose or terms and conditions of the Federal grant to the grantee. If 
the revision requested by the subgrantee would result in a change to the 
grantee's approved project that requires Federal prior approval, the 
grantee must obtain SSA's approval before approving the subgrantee's 
request.



Sec. 437.31  Real property.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to real property acquired under a

[[Page 1167]]

grant or subgrant will vest upon acquisition in the grantee or 
subgrantee respectively.
    (b) Use. Except as otherwise provided by Federal statutes, real 
property will be used for the originally authorized purposes as long as 
needed for that purpose, and the grantee or subgrantee may not dispose 
of or encumber its title or other interests.
    (c) Disposition. When real property is no longer needed for the 
originally authorized purpose, the grantee or subgrantee must request 
disposition instructions from SSA. The instructions must provide for one 
of the following alternatives:
    (1) Retention of title. Retain title after compensating SSA. The 
amount paid to SSA is computed by applying SSA's percentage of 
participation in the cost of the original purchase to the fair market 
value of the property. However, in those situations where a grantee or 
subgrantee is disposing of real property acquired with grant funds and 
acquiring replacement real property under the same program, the net 
proceeds from the disposition may be used as an offset to the cost of 
the replacement property.
    (2) Sale of property. Sell the property and compensate SSA. The 
amount due SSA is calculated by applying SSA's percentage of 
participation in the cost of the original purchase to the proceeds of 
the sale after deduction of any actual and reasonable selling and 
fixing-up expenses. If the grant is still active, the net proceeds from 
sale may be offset against the original cost of the property. When a 
grantee or subgrantee is directed to sell property, sales procedures 
must be followed that provide for competition to the extent practicable 
and result in the highest possible return.
    (3) Transfer of title. Transfer title to SSA or to a third-party 
designated/approved by SSA. The grantee or subgrantee must be paid an 
amount calculated by applying the grantee or subgrantee's percentage of 
participation in the purchase of the real property to the current fair 
market value of the property.



Sec. 437.32  Equipment.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to equipment acquired under a grant or subgrant will 
vest upon acquisition in the grantee or subgrantee respectively.
    (b) States. A State will use, manage, and dispose of equipment 
acquired under a grant by the State in accordance with State laws and 
procedures. Other grantees and subgrantees must follow paragraphs (c) 
through (e) of this section.
    (c) Use. (1) Equipment must be used by the grantee or subgrantee in 
the program or project for which it was acquired as long as needed, 
whether or not the project or program continues to be supported by 
Federal funds. When no longer needed for the original program or 
project, the equipment may be used in other activities currently or 
previously supported by a Federal agency.
    (2) The grantee or subgrantee must also make equipment available for 
use on other projects or programs currently or previously supported by 
the Federal Government, providing such use will not interfere with the 
work on the projects or program for which it was originally acquired. 
First preference for other use shall be given to other programs or 
projects supported by SSA. User fees should be considered if 
appropriate.
    (3) Notwithstanding the encouragement in Sec. 437.25(a) to earn 
program income, the grantee or subgrantee may not use equipment acquired 
with grant funds to provide services for a fee to compete unfairly with 
private companies that provide equivalent services, unless specifically 
permitted or contemplated by Federal statute.
    (4) When acquiring replacement equipment, the grantee or subgrantee 
may use the equipment to be replaced as a trade-in or sell the property 
and use the proceeds to offset the cost of the replacement property, 
subject to the approval of SSA.
    (d) Management requirements. Procedures for managing equipment 
(including replacement equipment), whether acquired in whole or in part 
with grant funds, until disposition takes place

[[Page 1168]]

must meet the following minimum requirements:
    (1) Property records must be maintained that include a description 
of the property, a serial number or other identification number, the 
source of property, who holds title, the acquisition date, and cost of 
the property, percentage of Federal participation in the cost of the 
property, the location, use and condition of the property, and any 
ultimate disposition data including the date of disposal and sale price 
of the property.
    (2) A physical inventory of the property must be taken and the 
results reconciled with the property records at least once every two 
years.
    (3) A control system must be developed to ensure adequate safeguards 
to prevent loss, damage, or theft of the property. Any loss, damage, or 
theft will be investigated.
    (4) Adequate maintenance procedures must be developed to keep the 
property in good condition.
    (5) If the grantee or subgrantee is authorized or required to sell 
the property, proper sales procedures must be established to ensure the 
highest possible return.
    (e) Disposition. When original or replacement equipment acquired 
under a grant or subgrant is no longer needed for the original project 
or program or for other activities currently or previously supported by 
SSA or for other projects or programs currently or previously supported 
by the Federal government, disposition of the equipment will be made as 
follows:
    (1) Items of equipment with a current per-unit fair market value of 
less than $5,000 may be retained, sold or otherwise disposed of with no 
further obligation to SSA.
    (2) Items of equipment with a current per unit fair market value in 
excess of $5,000 may be retained or sold and SSA has a right to an 
amount calculated by multiplying the current market value or proceeds 
from sale by SSA's share of the equipment.
    (3) In cases where a grantee or subgrantee fails to take appropriate 
disposition actions, SSA may direct the grantee or subgrantee to take 
excess and disposition actions.
    (f) Federal equipment. In the event a grantee or subgrantee is 
provided federally-owned equipment:
    (1) Title will remain vested in the Federal Government.
    (2) Grantees or subgrantees will manage the equipment in accordance 
with SSA rules and procedures, and submit an annual inventory listing.
    (3) When the equipment is no longer needed, the grantee or 
subgrantee will request disposition instructions from SSA.
    (g) Right to transfer title. SSA may reserve the right to transfer 
title to the Federal Government or a third party named by SSA when such 
a third party is otherwise eligible under existing statutes. Such 
transfers are subject to the following standards:
    (1) The property must be identified in the grant or otherwise made 
known to the grantee in writing.
    (2) SSA will issue disposition instruction within 120 calendar days 
after the end of the Federal support of the project for which it was 
acquired. If SSA fails to issue disposition instructions within the 120 
calendar-day period the grantee must follow paragraph (e) of this 
section.
    (3) When title to equipment is transferred, the grantee will be paid 
an amount calculated by applying the percentage of participation in the 
purchase to the current fair market value of the property.



Sec. 437.33  Supplies.

    (a) Title. Title to supplies acquired under a grant or subgrant will 
vest, upon acquisition, in the grantee or subgrantee respectively.
    (b) Disposition. If there is a residual inventory of unused supplies 
exceeding $5,000 in total aggregate fair market value upon termination 
or completion of the award, and if the supplies are not needed for any 
other federally sponsored programs or projects, the grantee or 
subgrantee must compensate SSA for its share.



Sec. 437.34  Copyrights.

    SSA reserves a royalty-free, nonexclusive, and irrevocable license 
to reproduce, publish or otherwise use, and to authorize others to use, 
for Federal Government purposes:

[[Page 1169]]

    (a) The copyright in any work developed under a grant, subgrant, or 
contract under a grant or subgrant; and
    (b) Any rights of copyright to which a grantee, subgrantee or a 
contractor purchases ownership with grant support.



Sec. 437.35  Subawards to debarred and suspended parties.

    Grantees and subgrantees must not make any award or permit any award 
(subgrant or contract) at any tier to any party which is debarred or 
suspended or is otherwise excluded from or ineligible for participation 
in Federal assistance programs under Executive Order 12549, ``Debarment 
and Suspension.''



Sec. 437.36  Procurement.

    (a) States. When procuring property and services under a grant, a 
State must follow the same policies and procedures it uses for 
procurements from its non-Federal funds. The State must ensure that 
every purchase order or other contract includes any clauses required by 
Federal statutes and executive orders and their implementing 
regulations. Other grantees and subgrantees must follow paragraphs (b) 
through (i) in this section.
    (b) Procurement standards. (1) Grantees and subgrantees must use 
their own procurement procedures which reflect applicable State and 
local laws and regulations, provided that the procurements conform to 
applicable Federal law and the standards identified in this section.
    (2) Grantees and subgrantees must maintain a contract administration 
system that ensures that contractors perform in accordance with the 
terms, conditions, and specifications of their contracts or purchase 
orders.
    (3) Grantees and subgrantees must maintain a written code of 
standards of conduct governing the performance of their employees 
engaged in the award and administration of contracts. No employee, 
officer or agent of the grantee or subgrantee may participate in 
selection, or in the award or administration of a contract supported by 
Federal funds if a conflict of interest, real or apparent, would be 
involved. Such a conflict would arise when:
    (i) The employee, officer or agent,
    (ii) Any member of his immediate family,
    (iii) His or her partner, or
    (iv) An organization which employs, or is about to employ, any such 
persons, has a financial or other interest in the firm selected for 
award. The grantee's or subgrantee's officers, employees or agents may 
neither solicit nor accept gratuities, favors or anything of monetary 
value from contractors, potential contractors, or parties to 
subagreements. Grantee and subgrantees may set minimum rules where the 
financial interest is not substantial or the gift is an unsolicited item 
of nominal intrinsic value. To the extent permitted by State or local 
law or regulations, such standards or conduct must provide for 
penalties, sanctions, or other disciplinary actions for violations of 
such standards by the grantee's and subgrantee's officers, employees, or 
agents, or by contractors or their agents. SSA may in regulation provide 
additional prohibitions relative to real, apparent, or potential 
conflicts of interest.
    (4) Grantee and subgrantee procedures must provide for a review of 
proposed procurements to avoid purchase of unnecessary or duplicative 
items. Consideration should be given to consolidating or breaking out 
procurements to obtain a more economical purchase. Where appropriate, an 
analysis must be made of lease versus purchase alternatives, and any 
other appropriate analysis to determine the most economical approach.
    (5) To foster greater economy and efficiency, grantees and 
subgrantees are encouraged to enter into State and local 
intergovernmental agreements for procurement or use of common goods and 
services.
    (6) Grantees and subgrantees are encouraged to use Federal excess 
and surplus property in lieu of purchasing new equipment and property 
whenever such use is feasible and reduces project costs.
    (7) Grantees and subgrantees are encouraged to use value engineering 
clauses in contracts for construction

[[Page 1170]]

projects of sufficient size to offer reasonable opportunities for cost 
reductions. Value engineering is a systematic and creative analysis of 
each contract item or task to ensure that its essential function is 
provided at the overall lower cost.
    (8) Grantees and subgrantees will make awards only to responsible 
contractors possessing the ability to perform successfully under the 
terms and conditions of a proposed procurement. Consideration must be 
given to such matters as contractor integrity, compliance with public 
policy, record of past performance, and financial and technical 
resources.
    (9) Grantees and subgrantees must maintain records sufficient to 
detail the significant history of a procurement. These records must 
include, but are not necessarily limited to the following: Rationale for 
the method of procurement, selection of contract type, contractor 
selection or rejection, and the basis for the contract price.
    (10) Grantees and subgrantees must use time and materials type 
contracts only--
    (i) After a determination that no other contract is suitable, and
    (ii) If the contract includes a ceiling price that the contractor 
exceeds at its own risk.
    (11) Grantees and subgrantees alone will be responsible, in 
accordance with good administrative practice and sound business 
judgment, for the settlement of all contractual and administrative 
issues arising out of procurements. These issues include, but are not 
limited to source evaluation, protests, disputes, and claims. These 
standards do not relieve the grantee or subgrantee of any contractual 
responsibilities under its contracts. SSA will not substitute its 
judgment for that of the grantee or subgrantee unless the matter is 
primarily a Federal concern. Violations of law will be referred to the 
local, State, or Federal authority having proper jurisdiction.
    (12) Grantees and subgrantees must have protest procedures to handle 
and resolve disputes relating to their procurements and must in all 
instances disclose information regarding the protest to SSA. A protestor 
must exhaust all administrative remedies with the grantee and subgrantee 
before pursuing a protest with SSA. Reviews of protests by SSA Federal 
agency are limited to:
    (i) Violations of Federal law or regulations and the standards of 
this section (violations of State or local law will be under the 
jurisdiction of State or local authorities) and
    (ii) Violations of the grantee's or subgrantee's protest procedures 
for failure to review a complaint or protest. Protests received by SSA 
other than those specified in this paragraph (b)(12) will be referred to 
the grantee or subgrantee.
    (c) Competition. (1) All procurement transactions must be conducted 
in a manner providing full and open competition consistent with the 
standards of this section. Some of the situations considered to be 
restrictive of competition include but are not limited to:
    (i) Placing unreasonable requirements on firms in order for them to 
qualify to do business,
    (ii) Requiring unnecessary experience and excessive bonding,
    (iii) Noncompetitive pricing practices between firms or between 
affiliated companies,
    (iv) Noncompetitive awards to consultants that are on retainer 
contracts,
    (v) Organizational conflicts of interest,
    (vi) Specifying only a ``brand name'' product instead of allowing 
``an equal'' product to be offered and describing the performance of 
other relevant requirements of the procurement, and
    (vii) Any arbitrary action in the procurement process.
    (2) Grantees and subgrantees must conduct procurements in a manner 
that prohibits the use of statutorily or administratively imposed in-
State or local geographical preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. Nothing in this 
section preempts State licensing laws. When contracting for 
architectural and engineering (A/E) services, geographic location may be 
a selection criteria provided its application leaves an appropriate 
number of qualified firms, given the nature and size of the project, to 
compete for the contract.

[[Page 1171]]

    (3) Grantees must have written selection procedures for procurement 
transactions. These procedures must ensure that all solicitations:
    (i) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. Such 
description may not, in competitive procurements, contain features that 
unduly restrict competition. The description may include a statement of 
the qualitative nature of the material, product or service to be 
procured, and when necessary, must set forth those minimum essential 
characteristics and standards to which it must conform if it is to 
satisfy its intended use. Detailed product specifications should be 
avoided if at all possible. When it is impractical or uneconomical to 
make a clear and accurate description of the technical requirements, a 
``brand name or equal'' description may be used as a means to define the 
performance or other salient requirements of a procurement. The specific 
features of the named brand which must be met by offerors must be 
clearly stated; and
    (ii) Identify all requirements that the offerors must fulfill and 
all other factors to be used in evaluating bids or proposals.
    (4) Grantees and subgrantees must ensure that all prequalified lists 
of persons, firms, or products which are used in acquiring goods and 
services are current and include enough qualified sources to ensure 
maximum open and free competition. Also, grantees and subgrantees may 
not preclude potential bidders from qualifying during the solicitation 
period.
    (d) Methods of procurement to be followed--(1) Procurement by small 
purchase procedures. Small purchase procedures are those relatively 
simple and informal procurement methods for securing services, supplies, 
or other property that do not cost more than the simplified acquisition 
threshold fixed at 41 U.S.C. 403(11) (currently set at $100,000). If 
small purchase procedures are used, price or rate quotations must be 
obtained from an adequate number of qualified sources.
    (2) Procurement by sealed bids (formal advertising). Bids are 
publicly solicited and a firm-fixed-price contract (lump sum or unit 
price) is awarded to the responsible bidder whose bid, conforming with 
all the material terms and conditions of the invitation for bids, is the 
lowest in price. The sealed bid method is the preferred method for 
procuring construction, if the conditions in paragraph (d)(2)(i) of this 
section apply.
    (i) In order for sealed bidding to be feasible, the following 
conditions should be present:
    (A) A complete, adequate, and realistic specification or purchase 
description is available;
    (B) Two or more responsible bidders are willing and able to compete 
effectively and for the business; and
    (C) The procurement lends itself to a firm fixed price contract and 
the selection of the successful bidder can be made principally on the 
basis of price.
    (ii) If sealed bids are used, the following requirements apply:
    (A) The invitation for bids must be publicly advertised and bids 
must be solicited from an adequate number of known suppliers, providing 
them sufficient time prior to the date set for opening the bids;
    (B) The invitation for bids, which will include any specifications 
and pertinent attachments, must define the items or services in order 
for the bidder to properly respond;
    (C) All bids must be publicly opened at the time and place 
prescribed in the invitation for bids;
    (D) A firm fixed-price contract award must be made in writing to the 
lowest responsive and responsible bidder. Where specified in bidding 
documents, factors such as discounts, transportation cost, and life 
cycle costs must be considered in determining which bid is lowest. 
Payment discounts will only be used to determine the low bid when prior 
experience indicates that such discounts are usually taken advantage of; 
and
    (E) Any or all bids may be rejected if there is a sound documented 
reason.
    (3) Procurement by competitive proposals. The technique of 
competitive proposals is normally conducted with more than one source 
submitting an offer, and either a fixed-price or cost-reimbursement type 
contract is awarded. It is generally used when conditions are not 
appropriate for the use of

[[Page 1172]]

sealed bids. If this method is used, the following requirements apply:
    (i) Requests for proposals must be publicized and identify all 
evaluation factors and their relative importance. Any response to 
publicized requests for proposals must be honored to the maximum extent 
practical;
    (ii) Proposals must be solicited from an adequate number of 
qualified sources;
    (iii) Grantees and subgrantees must have a method for conducting 
technical evaluations of the proposals received and for selecting 
awardees;
    (iv) Awards must be made to the responsible firm whose proposal is 
most advantageous to the program, with price and other factors 
considered; and
    (v) Grantees and subgrantees may use competitive proposal procedures 
for qualifications-based procurement of architectural/engineering (A/E) 
professional services whereby competitors' qualifications are evaluated 
and the most qualified competitor is selected, subject to negotiation of 
fair and reasonable compensation. The method, where price is not used as 
a selection factor, can only be used in procurement of A/E professional 
services. It cannot be used to purchase other types of services though 
A/E firms are a potential source to perform the proposed effort.
    (4) Procurement by noncompetitive proposals is procurement through 
solicitation of a proposal from only one source, or after solicitation 
of a number of sources, competition is determined inadequate.
    (i) Procurement by noncompetitive proposals may be used only when 
the award of a contract is not feasible under small purchase procedures, 
sealed bids or competitive proposals and one of the following 
circumstances applies:
    (A) The item is available only from a single source;
    (B) The public exigency or emergency for the requirement will not 
permit a delay resulting from competitive solicitation.
    (C) SSA authorizes noncompetitive proposals; or
    (D) After solicitation of a number of sources, competition is 
determined inadequate.
    (ii) Cost analysis, i.e., verifying the proposed cost data, the 
projections of the data, and the evaluation of the specific elements of 
costs and profits, is required.
    (iii) Grantees and subgrantees may be required to submit the 
proposed procurement to SSA for pre-award review in accordance with 
paragraph (g) of this section.
    (e) Contracting with small and minority firms, women's business 
enterprise and labor surplus area firms. (1) The grantee and subgrantee 
must take all necessary affirmative steps to assure that minority firms, 
women's business enterprises, and labor surplus area firms are used when 
possible.
    (2) Affirmative steps include:
    (i) Placing qualified small and minority businesses and women's 
business enterprises on solicitation lists;
    (ii) Assuring that small and minority businesses, and women's 
business enterprises are solicited whenever they are potential sources;
    (iii) Dividing total requirements, when economically feasible, into 
smaller tasks or quantities to permit maximum participation by small and 
minority business, and women's business enterprises;
    (iv) Establishing delivery schedules, where the requirement permits, 
which encourage participation by small and minority business, and 
women's business enterprises;
    (v) Using the services and assistance of the Small Business 
Administration, and the Minority Business Development Agency of the 
Department of Commerce; and
    (vi) Requiring the prime contractor, if subcontracts are to be let, 
to take the affirmative steps listed in paragraphs (e)(2)(i) through (v) 
of this section.
    (f) Contract cost and price. (1) Grantees and subgrantees must 
perform a cost or price analysis in connection with every procurement 
action including contract modifications. The method and degree of 
analysis is dependent on the facts surrounding the particular 
procurement situation, but as a starting point, grantees must make 
independent estimates before receiving bids or proposals. A cost 
analysis must be performed when the offeror is required

[[Page 1173]]

to submit the elements of his estimated cost, e.g., under professional, 
consulting, and architectural engineering services contracts. A cost 
analysis is necessary when adequate price competition is lacking, and 
for sole source procurements, including contract modifications or change 
orders, unless price reasonableness can be established on the basis of a 
catalog or market price of a commercial product sold in substantial 
quantities to the general public or based on prices set by law or 
regulation. A price analysis must be used in all other instances to 
determine the reasonableness of the proposed contract price.
    (2) Grantees and subgrantees must negotiate profit as a separate 
element of the price for each contract in which there is no price 
competition and in all cases where cost analysis is performed. To 
establish a fair and reasonable profit, consideration must be given to 
the complexity of the work to be performed, the risk borne by the 
contractor, the contractor's investment, the amount of subcontracting, 
the quality of its record of past performance, and industry profit rates 
in the surrounding geographical area for similar work.
    (3) Costs or prices based on estimated costs for contracts under 
grants are allowable only to the extent that costs incurred or cost 
estimates included in negotiated prices are consistent with Federal cost 
principles (see Sec. 437.22). Grantees may reference their own cost 
principles that comply with the applicable Federal cost principles.
    (4) The cost plus a percentage of cost and percentage of 
construction cost methods of contracting may not be used.
    (g) SSA review. (1) Grantees and subgrantees must make available, 
upon request of SSA, technical specifications on proposed procurements 
where SSA believes such review is needed to ensure that the item and/or 
service specified is the one being proposed for purchase. This review 
generally must take place prior to the time the specification is 
incorporated into a solicitation document. However, if the grantee or 
subgrantee desires to have the review accomplished after a solicitation 
has been developed, SSA may still review the specifications, with such 
review usually limited to the technical aspects of the proposed 
purchase.
    (2) Grantees and subgrantees must on request make available for SSA 
pre-award review procurement documents, such as requests for proposals 
or invitations for bids, independent cost estimates, etc., when:
    (i) A grantee's or subgrantee's procurement procedures or operation 
fails to comply with the procurement standards in this section; or
    (ii) The procurement is expected to exceed the simplified 
acquisition threshold and is to be awarded without competition or only 
one bid or offer is received in response to a solicitation; or
    (iii) The procurement, which is expected to exceed the simplified 
acquisition threshold, specifies a ``brand name'' product; or
    (iv) The proposed award is more than the simplified acquisition 
threshold and is to be awarded to other than the apparent low bidder 
under a sealed bid procurement; or
    (v) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the simplified acquisition 
threshold.
    (3) A grantee or subgrantee is exempt from the pre-award review in 
paragraph (g)(2) of this section if SSA determines that its procurement 
systems comply with the standards of this section.
    (i) A grantee or subgrantee may request that its procurement system 
be reviewed by SSA to determine whether its system meets these standards 
in order for its system to be certified. Generally, these reviews will 
occur where there is a continuous high-dollar funding, and third-party 
contracts are awarded on a regular basis;
    (ii) A grantee or subgrantee may self-certify its procurement 
system. Such self-certification does not limit SSA's right to survey the 
system. Under a self-certification procedure, SSA may wish to rely on 
written assurances from the grantee or subgrantee that it is complying 
with these standards. A grantee or subgrantee must cite specific 
procedures, regulations, standards, etc., as being in compliance with

[[Page 1174]]

these requirements and have its system available for review.
    (h) Bonding requirements. For construction or facility improvement 
contracts or subcontracts exceeding the simplified acquisition 
threshold, SSA may accept the bonding policy and requirements of the 
grantee or subgrantee provided SSA has made a determination that the 
SSA's interest is adequately protected. If such a determination has not 
been made, the minimum requirements are as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' will consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by law of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (i) Contract provisions. A grantee's and subgrantee's contracts must 
contain provisions in paragraph (i) of this section. SSA is permitted to 
require changes, remedies, changed conditions, access and records 
retention, suspension of work, and other clauses approved by the Office 
of Federal Procurement Policy.
    (1) Administrative, contractual, or legal remedies in instances 
where contractors violate or breach contract terms, and provide for such 
sanctions and penalties as may be appropriate (Contracts more than the 
simplified acquisition threshold).
    (2) Termination for cause and for convenience by the grantee or 
subgrantee including the manner by which it will be effected and the 
basis for settlement (All contracts in excess of $10,000).
    (3) Compliance with Executive Order 11246 of September 24, 1965 
entitled ``Equal Employment Opportunity,'' as amended by Executive Order 
11375 of October 13, 1967 and as supplemented in Department of Labor 
regulations (41 CFR chapter 60) (All construction contracts awarded in 
excess of $10,000 by grantees and their contractors or subgrantees).
    (4) Compliance with the Copeland ``Anti-Kickback'' Act (18 U.S.C. 
874) as supplemented in Department of Labor regulations (29 CFR part 3) 
(All contracts and subgrants for construction or repair).
    (5) Compliance with the Davis-Bacon Act (40 U.S.C. 276a to 276a-7) 
as supplemented by Department of Labor regulations (29 CFR part 5). 
(Construction contracts in excess of $2,000 awarded by grantees and 
subgrantees when required by Federal grant program legislation).
    (6) Compliance with sections 103 and 107 of the Contract Work Hours 
and Safety Standards Act (40 U.S.C. 327-330) as supplemented by 
Department of Labor regulations (29 CFR part 5). (Construction contracts 
awarded by grantees and subgrantees in excess of $2,000, and in excess 
of $2,500 for other contracts which involve the employment of mechanics 
or laborers).
    (7) Notice of SSA requirements and regulations pertaining to 
reporting.
    (8) Notice of SSA requirements and regulations pertaining to patent 
rights with respect to any discovery or invention that arises or is 
developed in the course of or under such contract.
    (9) SSA requirements and regulations pertaining to copyrights and 
rights in data.
    (10) Access by the grantee, the subgrantee, SSA, the Comptroller 
General of the United States, or any of their duly authorized 
representatives to any books, documents, papers, and records of the 
contractor which are directly pertinent to that specific contract for 
the purpose of making audit, examination, excerpts, and transcriptions.
    (11) Retention of all required records for three years after 
grantees or subgrantees make final payments and all other pending 
matters are closed.

[[Page 1175]]

    (12) Compliance with all applicable standards, orders, or 
requirements issued under section 306 of the Clear Air Act (42 U.S.C. 
1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive 
Order 11738, and Environmental Protection Agency regulations (40 CFR 
part 15) (Contracts, subcontracts, and subgrants of amounts in excess of 
$100,000).
    (13) Mandatory standards and policies relating to energy efficiency 
which are contained in the state energy conservation plan issued in 
compliance with the Energy Policy and Conservation Act (Pub. L. 94-163, 
89 Stat. 871).



Sec. 437.37  Subgrants.

    (a) States. States must follow state law and procedures when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. States must:
    (1) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations;
    (2) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statute and regulation;
    (3) Ensure that a provision for compliance with Sec. 437.42 is 
placed in every cost reimbursement subgrant; and
    (4) Conform any advances of grant funds to subgrantees substantially 
to the same standards of timing and amount that apply to cash advances 
by SSA.
    (b) All other grantees. All other grantees must follow the 
provisions of this part which are applicable to awarding agencies when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. Grantees must:
    (1) Ensure that every subgrant includes a provision for compliance 
with this part;
    (2) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations; 
and
    (3) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statutes and regulations.
    (c) Exceptions. By their own terms, certain provisions of this part 
do not apply to the award and administration of subgrants:
    (1) Section 437.10;
    (2) Section 437.11;
    (3) The letter-of-credit procedures specified in Treasury 
Regulations at 31 CFR part 205, cited in Sec. 437.21; and
    (4) Section 437.50.

              Reports, Records, Retention, and Enforcement



Sec. 437.40  Monitoring and reporting program performance.

    (a) Monitoring by grantees. Grantees are responsible for managing 
the day-to-day operations of grant and subgrant supported activities. 
Grantees must monitor grant and subgrant supported activities to assure 
compliance with applicable Federal requirements and that performance 
goals are being achieved. Grantee monitoring must cover each program, 
function or activity.
    (b) Nonconstruction performance reports. SSA may, if it decides that 
performance information available from subsequent applications contains 
sufficient information to meet its programmatic needs, require the 
grantee to submit a performance report only upon expiration or 
termination of grant support. Unless waived by SSA, this report is due 
on the same date as the final Financial Status Report.
    (1) Grantees must submit annual performance reports unless SSA 
requires quarterly or semi-annual reports. However, performance reports 
are not required more frequently than quarterly. Annual reports are due 
90 days after the grant year, quarterly or semi-annual reports are due 
30 days after the reporting period. The final performance report is due 
90 days after the expiration or termination of grant support. If a 
justified request is submitted by a grantee, SSA may extend the due date 
for any performance report. Additionally, requirements for unnecessary 
performance reports may be waived by SSA.

[[Page 1176]]

    (2) Performance reports must contain, for each grant, brief 
information on the following:
    (i) A comparison of actual accomplishments to the objectives 
established for the period. Where the output of the project can be 
quantified, a computation of the cost per unit of output may be required 
if that information will be useful.
    (ii) The reasons for slippage if established objectives were not 
met.
    (iii) Additional pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (3) Grantees will not be required to submit more than the original 
and two copies of performance reports.
    (4) Grantees must adhere to the standards in this section in 
prescribing performance reporting requirements for subgrantees.
    (c) Construction performance reports. For the most part, on-site 
technical inspections and certified percentage-of-completion data are 
relied on heavily by Federal agencies to monitor progress under 
construction grants and subgrants. SSA will require additional formal 
performance reports only when considered necessary, and never more 
frequently than quarterly.
    (d) Significant developments. Events may occur between the scheduled 
performance reporting dates that have significant impact upon the grant 
or subgrant supported activity. In such cases, the grantee must inform 
SSA as soon as the following types of conditions become known:
    (1) Problems, delays, or adverse conditions which will materially 
impair the ability to meet the objective of the award. This disclosure 
must include a statement of the action taken, or contemplated, and any 
assistance needed to resolve the situation.
    (2) Favorable developments that enable meeting time schedules and 
objectives sooner or at less cost than anticipated or producing more 
beneficial results than originally planned.
    (e) Site visits. SSA may make site visits as warranted by program 
needs.
    (f) Waivers, extensions. (1) SSA may waive any performance report 
required by this part if not needed.
    (2) The grantee may waive any performance report from a subgrantee 
when not needed. The grantee may extend the due date for any performance 
report from a subgrantee if the grantee will still be able to meet its 
performance reporting obligations to the Federal agency.



Sec. 437.41  Financial reporting.

    (a) General. (1) Except as provided in paragraphs (a)(2) and (5) of 
this section, grantees may use only the forms specified in paragraphs 
(a) through (e) of this section, and such supplementary or other forms 
as may from time to time be authorized by OMB, for:
    (i) Submitting financial reports to SSA, or
    (ii) Requesting advances or reimbursements when letters of credit 
are not used.
    (2) Grantees need not use the forms prescribed in this section in 
dealing with their subgrantees. However, grantees may not impose more 
burdensome requirements on subgrantees.
    (3) Grantees must follow all applicable standard and supplemental 
Federal agency instructions approved by OMB to the extent required under 
the Paperwork Reduction Act of 1980 for use in connection with forms 
specified in paragraphs (b) through (e) of this section. SSA may issue 
substantive supplementary instructions only with the approval of OMB. 
SSA may shade out or instruct the grantee to disregard any line item 
that SSA finds unnecessary for its decisionmaking purposes.
    (4) Grantees are not required to submit more than the original and 
two copies of forms required under this part.
    (5) SSA may provide computer outputs to grantees to expedite or 
contribute to the accuracy of reporting. SSA may accept the required 
information from grantees in machine usable format or computer printouts 
instead of prescribed forms.
    (6) SSA may waive any report required by this section if not needed.
    (7) SSA may extend the due date of any financial report upon 
receiving a justified request from a grantee.
    (b) Financial Status Report--(1) Form. Grantees must use Standard 
Form 269

[[Page 1177]]

or 269A, Financial Status Report, to report the status of funds for all 
nonconstruction grants and for construction grants when required in 
accordance with paragraph (e)(2)(iii) of this section.
    (2) Accounting basis. Each grantee must report program outlays and 
program income on a cash or accrual basis as prescribed by SSA. If SSA 
requires accrual information and the grantee's accounting records are 
not normally kept on the accrual basis, the grantee will not be required 
to convert its accounting system but must develop such accrual 
information through and analysis of the documentation on hand.
    (3) Frequency. SSA may prescribe the frequency of the report for 
each project or program. However, the report will not be required more 
frequently than quarterly. If SSA does not specify the frequency of the 
report, it must be submitted annually. A final report is required upon 
expiration or termination of grant support.
    (4) Due date. When reports are required on a quarterly or semiannual 
basis, they are due 30 days after the reporting period. When required on 
an annual basis, they are due 90 days after the grant year. Final 
reports are due 90 days after the expiration or termination of grant 
support.
    (c) Federal Cash Transactions Report--(1) Form. (i) For grants paid 
by letter or credit, Treasury check advances or electronic transfer of 
funds, the grantee must submit the Standard Form 272, Federal Cash 
Transactions Report, and when necessary, its continuation sheet, 
Standard Form 272a, unless the terms of the award exempt the grantee 
from this requirement.
    (ii) These reports will be used by SSA to monitor cash advanced to 
grantees and to obtain disbursement or outlay information for each grant 
from grantees. The format of the report may be adapted as appropriate 
when reporting is to be accomplished with the assistance of automatic 
data processing equipment provided that the information to be submitted 
is not changed in substance.
    (2) Forecasts of Federal cash requirements. Forecasts of Federal 
cash requirements may be required in the ``Remarks'' section of the 
report.
    (3) Cash in hands of subgrantees. When considered necessary and 
feasible by SSA, grantees may be required to report the amount of cash 
advances in excess of three days' needs in the hands of their 
subgrantees or contractors and to provide short narrative explanations 
of actions taken by the grantee to reduce the excess balances.
    (4) Frequency and due date. Grantees must submit the report no later 
than 15 working days following the end of each quarter. However, where 
an advance either by letter of credit or electronic transfer of funds is 
authorized at an annualized rate of one million dollars or more, SSA may 
require the report to be submitted within 15 working days following the 
end of each month.
    (d) Request for advance or reimbursement--(1) Advance payments. 
Requests for Treasury check advance payments must be submitted on 
Standard Form 270, Request for Advance or Reimbursement. (This form may 
not be used for drawdowns under a letter of credit, electronic funds 
transfer or when Treasury check advance payments are made to the grantee 
automatically on a predetermined basis.)
    (2) Reimbursements. Requests for reimbursement under nonconstruction 
grants must also be submitted on Standard Form 270. (For reimbursement 
requests under construction grants, see paragraph (e)(1) of this 
section.)
    (3) The frequency for submitting payment requests is treated in 
paragraph (b)(3) of this section.
    (e) Outlay report and request for reimbursement for construction 
programs--(1) Grants that support construction activities paid by 
reimbursement method. (i) Requests for reimbursement under construction 
grants must be submitted on Standard Form 271, Outlay Report and Request 
for Reimbursement for Construction Programs. SSA may, however, prescribe 
the Request for Advance or Reimbursement form, specified in paragraph 
(d) of this section, instead of this form.
    (ii) The frequency for submitting reimbursement requests is 
discussed in paragraph (b)(3) of this section.
    (2) Grants that support construction activities paid by letter of 
credit, electronic

[[Page 1178]]

funds transfer or Treasury check advance. (i) When a construction grant 
is paid by letter of credit, electronic funds transfer or Treasury check 
advances, the grantee must report its outlays to SSA using Standard Form 
271, Outlay Report and Request for Reimbursement for Construction 
Programs. SSA will provide any necessary special instruction. However, 
frequency and due date are governed by paragraphs (b)(3) and (4) of this 
section.
    (ii) When a construction grant is paid by Treasury check advances 
based on periodic requests from the grantee, the advances must be 
requested on the form specified in paragraph (d) of this section.
    (iii) SSA may substitute the Financial Status Report specified in 
paragraph (b) of this section for the Outlay Report and Request for 
Reimbursement for Construction Programs.
    (3) Accounting basis. The accounting basis for the Outlay Report and 
Request for Reimbursement for Construction Programs is governed by 
paragraph (b)(2) of this section.



Sec. 437.42  Retention and access requirements for records.

    (a) Applicability. (1) This section applies to all financial and 
programmatic records, supporting documents, statistical records, and 
other records of grantees or subgrantees that are:
    (i) Required to be maintained by the terms of this part, program 
regulations or the grant agreement, or
    (ii) Otherwise reasonably considered as pertinent to program 
regulations or the grant agreement.
    (2) This section does not apply to records maintained by contractors 
or subcontractors. For a requirement to place a provision concerning 
records in certain kinds of contracts, see Sec. 437.36(i)(10).
    (b) Length of retention period. (1) Except as otherwise provided, 
records must be retained for three years from the starting date 
specified in paragraph (c) of this section.
    (2) If any litigation, claim, negotiation, audit or other action 
involving the records has been started before the expiration of the 3-
year period, the records must be retained until completion of the action 
and resolution of all issues which arise from it, or until the end of 
the regular 3-year period, whichever is later.
    (3) To avoid duplicate recordkeeping, SSA may make special 
arrangements with grantees and subgrantees to retain any records that 
are continuously needed for joint use. SSA will request transfer of 
records to its custody when it determines that the records possess long-
term retention value. When the records are transferred to or maintained 
by SSA, the 3-year retention requirement is not applicable to the 
grantee or subgrantee.
    (c) Starting date of retention period--(1) General. When grant 
support is continued or renewed at annual or other intervals, the 
retention period for the records of each funding period starts on the 
day the grantee or subgrantee submits to SSA its single or last 
expenditure report for that period. However, if grant support is 
continued or renewed quarterly, the retention period for each year's 
records starts on the day the grantee submits its expenditure report for 
the last quarter of the Federal fiscal year. In all other cases, the 
retention period starts on the day the grantee submits its final 
expenditure report. If an expenditure report has been waived, the 
retention period starts on the day the report would have been due.
    (2) Real property and equipment records. The retention period for 
real property and equipment records starts from the date of the 
disposition or replacement or transfer at the direction of SSA.
    (3) Records for income transactions after grant or subgrant support. 
In some cases grantees must report income after the period of grant 
support. Where there is such a requirement, the retention period for the 
records pertaining to the earning of the income starts from the end of 
the grantee's fiscal year in which the income is earned.
    (4) Indirect cost rate proposals, cost allocations plans, etc. This 
paragraph applies to the following types of documents, and their 
supporting records: Indirect cost rate computations or proposals, cost 
allocation plans, and any similar accounting computations of the rate at 
which a particular group of costs is chargeable (such as computer

[[Page 1179]]

usage chargeback rates or composite fringe benefit rates).
    (i) If submitted for negotiation. If the proposal, plan, or other 
computation is required to be submitted to the Federal Government (or to 
the grantee) to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts from the date of 
such submission.
    (ii) If not submitted for negotiation. If the proposal, plan, or 
other computation is not required to be submitted to the Federal 
Government (or to the grantee) for negotiation purposes, then the 3-year 
retention period for the proposal plan, or computation and its 
supporting records starts from end of the fiscal year (or other 
accounting period) covered by the proposal, plan, or other computation.
    (d) Substitution of microfilm. Copies made by microfilming, 
photocopying, or similar methods may be substituted for the original 
records.
    (e) Access to records--(1) Records of grantees and subgrantees. SSA 
and the Comptroller General of the United States, or any of their 
authorized representatives, have the right of access to any pertinent 
books, documents, papers, or other records of grantees and subgrantees 
which are pertinent to the grant, in order to make audits, examinations, 
excerpts, and transcripts.
    (2) Expiration of right of access. The rights of access in this 
section must not be limited to the required retention period but last as 
long as the records are retained.
    (f) Restrictions on public access. The Federal Freedom of 
Information Act (5 U.S.C. 552) does not apply to records. Unless 
required by Federal, State, or local law, grantees and subgrantees are 
not required to permit public access to their records.



Sec. 437.43  Enforcement.

    (a) Remedies for noncompliance. If a grantee or subgrantee 
materially fails to comply with any term of an award, whether stated in 
a Federal statute or regulation, an assurance, in a State plan or 
application, a notice of award, or elsewhere, SSA may take one or more 
of the following actions, as appropriate in the circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the grantee or subgrantee or more severe enforcement 
action by SSA,
    (2) Disallow (that is, deny both use of funds and matching credit 
for) all or part of the cost of the activity or action not in 
compliance,
    (3) Wholly or partly suspend or terminate the current award for the 
grantee's or subgrantee's program,
    (4) Withhold further awards for the program, or
    (5) Take other remedies that may be legally available.
    (b) Hearings, appeals. In taking an enforcement action, SSA will 
provide the grantee or subgrantee an opportunity for such hearing, 
appeal, or other administrative proceeding to which the grantee or 
subgrantee is entitled under any statute or regulation applicable to the 
action involved.
    (c) Effects of suspension and termination. Costs of grantee or 
subgrantee resulting from obligations incurred by the grantee or 
subgrantee during a suspension or after termination of an award are not 
allowable unless SSA expressly authorizes them in the notice of 
suspension or termination or subsequently. Other grantee or subgrantee 
costs during suspension or after termination which are necessary and not 
reasonably avoidable are allowable if:
    (1) The costs result from obligations which were properly incurred 
by the grantee or subgrantee before the effective date of suspension or 
termination, are not in anticipation of it, and, in the case of a 
termination, are noncancellable, and,
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude grantee or subgrantee from being subject to 
``Debarment and Suspension'' under E.O. 12549 (see Sec. 437.35).

[[Page 1180]]



Sec. 437.44  Termination for convenience.

    Except as provided in Sec. 437.43, awards may be terminated in 
whole or in part only as follows:
    (a) By SSA with the consent of the grantee or subgrantee in which 
case the two parties will agree upon the termination conditions, 
including the effective date and in the case of partial termination, the 
portion to be terminated, or
    (b) By the grantee or subgrantee upon written notification to SSA, 
setting forth the reasons for such termination, the effective date, and 
in the case of partial termination, the portion to be terminated. 
However, if, in the case of a partial termination, SSA determines that 
the remaining portion of the award will not accomplish the purposes for 
which the award was made, SSA may terminate the award in its entirety 
under either Sec. 437.43 or paragraph (a) of this section.



                 Subpart D_After-the-Grant Requirements



Sec. 437.50  Closeout.

    (a) General. SSA will close out the award when it determines that 
all applicable administrative actions and all required work of the grant 
have been completed.
    (b) Reports. (1) Within 90 days after the expiration or termination 
of the grant, the grantee must submit all financial, performance, and 
other reports required as a condition of the grant. Upon request by the 
grantee, SSA may extend this timeframe. These may include but are not 
limited to:
    (i) Final performance or progress report.
    (ii) Financial Status Report (SF 269) or Outlay Report and Request 
for Reimbursement for Construction Programs (SF-271) (as applicable).
    (iii) Final request for payment (SF-270) (if applicable).
    (iv) Invention disclosure (if applicable).
    (v) Federally-owned property report:
    (2) In accordance with Sec. 437.32(f), a grantee must submit an 
inventory of all federally owned property (as distinct from property 
acquired with grant funds) for which it is accountable and request 
disposition instructions from SSA of property no longer needed.
    (c) Cost adjustment. SSA will, within 90 days after receipt of 
reports in paragraph (b) of this section, make upward or downward 
adjustments to the allowable costs.
    (d) Cash adjustments. (1) SSA will make prompt payment to the 
grantee for allowable reimbursable costs.
    (2) The grantee must immediately refund to SSA any balance of 
unobligated (unencumbered) cash advanced that is not authorized to be 
retained for use on other grants.



Sec. 437.51  Later disallowances and adjustments.

    The closeout of a grant does not affect:
    (a) SSA's right to disallow costs and recover funds on the basis of 
a later audit or other review;
    (b) The grantee's obligation to return any funds due as a result of 
later refunds, corrections, or other transactions;
    (c) Records retention as required in Sec. 437.42;
    (d) Property management requirements in Sec. 437.31 and Sec. 
437.32; and
    (e) Audit requirements in Sec. 437.26.



Sec. 437.52  Collection of amounts due.

    (a) Any funds paid to a grantee in excess of the amount to which the 
grantee is finally determined to be entitled under the terms of the 
award constitute a debt to the Federal Government. If not paid within a 
reasonable period after demand, SSA may reduce the debt by:
    (1) Making an administrative offset against other requests for 
reimbursements,
    (2) Withholding advance payments otherwise due to the grantee, or
    (3) Other action permitted by law.
    (b) Except where otherwise provided by statutes or regulations, SSA 
will charge interest on an overdue debt in accordance with the Federal 
Claims Collection Standards (4 CFR chapter II). Litigation or the filing 
of any form of appeal does not extend the date from which interest is 
computed.

Subpart E--Entitlement [Reserved]

[[Page 1181]]



PART 438_RESTRICTIONS ON LOBBYING--Table of Contents




                            Subpart A_General

Sec.
438.100 Conditions on use of funds.
438.105 Definitions.
438.110 Certification and disclosure.

                  Subpart B_Activities by Own Employees

438.200 Agency and legislative liaison.
438.205 Professional and technical services.
438.210 Reporting.

            Subpart C_Activities by Other than Own Employees

438.300 Professional and technical services.

                   Subpart D_Penalties and Enforcement

438.400 Penalties.
438.405 Penalty procedures.
438.410 Enforcement.

                          Subpart E_Exemptions

438.500 Secretary of Defense.

                        Subpart F_Agency Reports

438.600 Semi-annual compilation.
438.605 Inspector General report.

Appendix A to Part 438--Certification Regarding Lobbying
Appendix B to Part 438--Disclosure Form to Report Lobbying

    Authority: 5 U.S.C. 301.

    Source: 68 FR 28745, May 27, 2003, unless otherwise noted.



                            Subpart A_General



Sec. 438.100  Conditions on use of funds.

    (a) No appropriated funds may be expended by the recipient of a 
Federal contract, grant, loan, or cooperative agreement to pay any 
person for influencing or attempting to influence an officer or employee 
of SSA, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with any of the following 
covered Federal actions: the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (b) Each person who requests or receives from SSA a Federal 
contract, grant, loan, or cooperative agreement must file with SSA a 
certification, set forth in Appendix A to this part, that the person has 
not made, and will not make, any payment prohibited by paragraph (a) of 
this section.
    (c) Each person who requests or receives from SSA a Federal 
contract, grant, loan, or a cooperative agreement must file with SSA a 
disclosure form, set forth in Appendix B to this part, if such person 
has made or has agreed to make any payment using non-appropriated funds 
(to include profits from any covered Federal action), which would be 
prohibited under paragraph (a) of this section if paid for with 
appropriated funds.
    (d) Each person who requests or receives from SSA a commitment 
providing for the United States to insure or guarantee a loan must file 
with SSA a statement, set forth in Appendix A to this part, whether that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of SSA, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.
    (e) Each person who requests or receives from SSA a commitment 
providing for the United States to insure or guarantee a loan must file 
with SSA a disclosure form, set forth in Appendix B to this part, if 
that person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of SSA, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.



Sec. 438.105  Definitions.

    For purposes of this part:
    Commissioner means the Commissioner of Social Security.
    Covered Federal action means any of the following Federal actions:
    (1) The awarding of any Federal contract;
    (2) The making of any Federal grant;
    (3) The making of any Federal loan;

[[Page 1182]]

    (4) The entering into of any cooperative agreement; and,
    (5) The extension, continuation, renewal, amendment, or modification 
of any Federal contract, grant, loan, or cooperative agreement. Covered 
Federal action does not include receiving from an agency a commitment 
providing for the United States to insure or guarantee a loan. Loan 
guarantees and loan insurance are addressed independently within this 
part.
    Federal contract means an acquisition contract awarded by the Social 
Security Administration, including those subject to the Federal 
Acquisition Regulation (FAR) (48 CFR chapter 1), and any other 
acquisition contract for real or personal property or services not 
subject to the FAR.
    Federal cooperative agreement means a cooperative agreement SSA 
enters into.
    Federal grant means an award of financial assistance in the form of 
money, or property in lieu of money, by the Federal Government or a 
direct appropriation made by law to any person. The term does not 
include technical assistance which provides services instead of money, 
or other assistance in the form of revenue sharing, loans, loan 
guarantees, loan insurance, interest subsidies, insurance, or direct 
United States cash assistance to an individual.
    Federal loan means a loan made by SSA. The term does not include 
loan guarantee or loan insurance.
    Indian tribe and tribal organization have the meaning provided in 
section 4 of the Indian Self-Determination and Education Assistance Act 
(25 U.S.C. 450B). Alaskan Natives are included under the definitions of 
Indian tribes in that Act.
    Influencing or attempting to influence means making, with the intent 
to influence, any communication to or appearance before an officer or 
employee of SSA, a Member of Congress, an officer or employee of 
Congress, or an employee of a Member of Congress in connection with any 
covered Federal action.
    Loan guarantee and loan insurance means SSA's guarantee or insurance 
of a loan made by a person.
    Local government means a unit of government in a State and, if 
chartered, established, or otherwise recognized by a State for the 
performance of a governmental duty, including a local public authority, 
a special district, an intrastate district, a council of governments, a 
sponsor group representative organization, and any other instrumentality 
of a local government.
    Officer or employee of SSA includes the following individuals who 
are employed by an agency:
    (1) An individual who is appointed to a position in the Government 
under title 5, U.S. Code, including a position under a temporary 
appointment;
    (2) A member of the uniformed services as defined in section 101(3), 
title 37, U.S. Code;
    (3) A special Government employee as defined in section 202, title 
18, U.S. Code; and,
    (4) An individual who is a member of a Federal advisory committee, 
as defined by the Federal Advisory Committee Act, title 5, U.S. Code 
appendix 2.
    Person means an individual, corporation, company, association, 
authority, firm, partnership, society, State, and local government, 
regardless of whether such entity is operated for profit or not for 
profit. This term excludes an Indian tribe, tribal organization, or any 
other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    Reasonable compensation means, with respect to a regularly employed 
officer or employee of any person, compensation that is consistent with 
the normal compensation for such officer or employee for work that is 
not furnished to, not funded by, or not furnished in cooperation with 
the Federal Government.
    Reasonable payment means, with respect to professional and other 
technical services, a payment in an amount that is consistent with the 
amount normally paid for such services in the private sector.
    Recipient includes all contractors, subcontractors at any tier, and 
subgrantees at any tier of the recipient of funds received in connection 
with a Federal contract, grant, loan, or cooperative agreement. The term 
excludes

[[Page 1183]]

an Indian tribe, tribal organization, or any other Indian organization 
with respect to expenditures specifically permitted by other Federal 
law.
    Regularly employed means, with respect to an officer or employee of 
a person requesting or receiving a Federal contract, grant, loan, or 
cooperative agreement or a commitment providing for the United States to 
insure or guarantee a loan, an officer or employee who is employed by 
such person for at least 130 working days within one year immediately 
preceding the date of the submission that initiates agency consideration 
of such person for receipt of such contract, grant, loan, cooperative 
agreement, loan insurance commitment, or loan guarantee commitment. An 
officer or employee who is employed by such person for less than 130 
working days within one year immediately preceding the date of the 
submission that initiates agency consideration of such person shall be 
considered to be regularly employed as soon as he or she is employed by 
such person for 130 working days.
    SSA means the Social Security Administration.
    State means a State of the United States, the District of Columbia, 
the Commonwealth of Puerto Rico, a territory or possession of the United 
States, an agency or instrumentality of a State, and a multi-State, 
regional, or interstate entity having governmental duties and powers.



Sec. 438.110  Certification and disclosure.

    (a) Each person must file a certification, and a disclosure form, if 
required, with each submission that initiates SSA consideration of that 
person for:
    (1) Award of a Federal contract, grant, or cooperative agreement 
exceeding $100,000; or
    (2) An award of a Federal loan or a commitment providing for the 
United States to insure or guarantee a loan exceeding $150,000.
    (b) Each person must file a certification, and a disclosure form, if 
required, if he or she receives:
    (1) A Federal contract, grant, or cooperative agreement exceeding 
$100,000; or
    (2) A Federal loan or a commitment providing for the United States 
to insure or guarantee a loan exceeding $150,000, unless such person 
previously filed a certification, and a disclosure form, if required, 
under paragraph (a) of this section.
    (c) Each person must file a disclosure form at the end of each 
calendar quarter in which there occurs any event that requires 
disclosure or that materially affects the accuracy of the information 
contained in any disclosure form previously filed by that person under 
paragraphs (a) or (b) of this section. An event that materially affects 
the accuracy of the information reported includes:
    (1) A cumulative increase of $25,000 or more in the amount paid or 
expected to be paid for influencing or attempting to influence a covered 
Federal action; or
    (2) A change in the person(s) or individual(s) influencing or 
attempting to influence a covered Federal action; or,
    (3) A change in the officer(s), employee(s), or Member(s) contacted 
to influence or attempt to influence a covered Federal action.
    (d) Any person who requests or receives from a person referred to in 
paragraphs (a) or (b) of this section:
    (1) A subcontract exceeding $100,000 at any tier under a Federal 
contract;
    (2) A subgrant, contract, or subcontract exceeding $100,000 at any 
tier under a Federal grant;
    (3) A contract or subcontract exceeding $100,000 at any tier under a 
Federal loan exceeding $150,000; or,
    (4) A contract or subcontract exceeding $100,000 at any tier under a 
Federal cooperative agreement, must file a certification, and a 
disclosure form, if required, to the next tier above.
    (e) All disclosure forms, but not certifications, must be forwarded 
from tier to tier until received by the person referred to in paragraphs 
(a) or (b) of this section. That person must forward all disclosure 
forms to SSA.
    (f) Any certification or disclosure form filed under paragraph (e) 
of this section will be treated as a material representation of fact 
upon which all receiving tiers must rely. All liability

[[Page 1184]]

arising from an erroneous representation will be borne solely by the 
tier filing that representation and will not be shared by any tier to 
which the erroneous representation is forwarded. Submitting an erroneous 
certification or disclosure constitutes a failure to file the required 
certification or disclosure, respectively. If a person fails to file a 
required certification or disclosure, the United States may pursue all 
available remedies, including those authorized by section 1352, title 
31, U.S. Code.
    (g) No reporting is required for an activity paid for with 
appropriated funds if that activity is allowable under either subpart B 
or C of this part.



                  Subpart B_Activities by Own Employees



Sec. 438.200  Agency and legislative liaison.

    (a) The prohibition on the use of appropriated funds, in Sec. 
438.100(a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement if 
the payment is for agency and legislative liaison activities not 
directly related to a covered Federal action.
    (b) For purposes of paragraph (a) of this section, providing any 
information specifically requested by SSA or Congress is allowable at 
any time.
    (c) For purposes of paragraph (a) of this section, the following 
agency and legislative liaison activities are allowable at any time only 
where they are not related to a specific solicitation for any covered 
Federal action:
    (1) Discussing with SSA (including individual demonstrations) the 
qualities and characteristics of the person's products or services, 
conditions or terms of sale, and service capabilities; and,
    (2) Technical discussions and other activities regarding the 
application or adaptation of the person's products or services for SSA's 
use.
    (d) For purposes of paragraph (a) of this section, the following 
agency and legislative liaison activities are allowable only where they 
are prior to formal solicitation of any covered Federal action:
    (1) Providing any information not specifically requested but 
necessary for SSA to make an informed decision about initiation of a 
covered Federal action;
    (2) Technical discussions regarding the preparation of an 
unsolicited proposal prior to its official submission; and,
    (3) Capability presentations by persons seeking awards from SSA 
pursuant to the provisions of the Small Business Act, as amended by 
Public Law 95-507 and other subsequent amendments.
    (e) Only those activities expressly authorized by this section are 
allowable under this section.



Sec. 438.205  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec. 
438.100(a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement or 
an extension, continuation, renewal, amendment, or modification of a 
Federal contract, grant, loan, or cooperative agreement if payment is 
for professional or technical services rendered directly in the 
preparation, submission, or negotiation of any bid, proposal, or 
application for that Federal contract, grant, loan, or cooperative 
agreement or for meeting requirements imposed by or pursuant to law as a 
condition for receiving that Federal contract, grant, loan, or 
cooperative agreement.
    (b) For purposes of paragraph (a) of this section, professional and 
technical services are limited to advice and analysis directly applying 
any professional or technical discipline. For example, drafting of a 
legal document accompanying a bid or proposal by a lawyer is allowable. 
Similarly, technical advice provided by an engineer on the performance 
or operational capability of a piece of equipment rendered directly in 
the negotiation of a contract is allowable. However, communications with 
the intent to influence made by a professional (such as a licensed 
lawyer) or a technical person (such as a licensed accountant) are not 
allowable under this section unless they provide

[[Page 1185]]

advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (c) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (d) Only those services expressly authorized by this section are 
allowable under this section.



Sec. 438.210  Reporting.

    No reporting is required with respect to payments of reasonable 
compensation made to regularly employed officers or employees of a 
person.



            Subpart C_Activities by Other Than Own Employees



Sec. 438.300  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec. 
438.100(a), does not apply in the case of any reasonable payment to a 
person, other than an officer or employee of a person requesting or 
receiving a covered Federal action, if the payment is for professional 
or technical services rendered directly in the preparation, submission, 
or negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) The reporting requirements in Sec. 438.110 (a) and (b) 
regarding filing a disclosure form by each person, if required, do not 
apply with respect to professional or technical services rendered 
directly in the preparation, submission, or negotiation of any 
commitment providing for the United States to insure or guarantee a 
loan.
    (c) For purposes of paragraph (a) of this section, professional and 
technical services are limited to advice and analysis directly applying 
any professional or technical discipline. For example, drafting of a 
legal document accompanying a bid or proposal by a lawyer is allowable. 
Similarly, technical advice provided by an engineer on the performance 
or operational capability of a piece of equipment rendered directly in 
the negotiation of a contract is allowable. However, communications with 
the intent to influence made by a professional (such as a licensed 
lawyer) or a technical person (such as a licensed accountant) are not 
allowable under this section unless they provide advice and analysis 
that directly apply to their professional or technical expertise and 
unless the advice or analysis is rendered directly and solely in the 
preparation, submission or negotiation of a covered Federal action. 
Thus, for example, communications with the intent to influence made by a 
lawyer that do not provide legal advice or analysis directly and solely 
related to the legal aspects of his or her client's proposal, but 
generally advocate one proposal over another are not allowable under 
this section because the lawyer is not providing professional legal 
services. Similarly, communications with the intent to influence made by 
an engineer providing an engineering analysis prior to the preparation 
or submission of a bid or proposal are not allowable under this section 
since the engineer is providing technical services but not directly in 
the preparation, submission or negotiation of a covered Federal action.

[[Page 1186]]

    (d) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (e) Persons other than officers or employees of a person requesting 
or receiving a covered Federal action include consultants and trade 
associations.
    (f) Only those services expressly authorized by this section are 
allowable under this section.



                   Subpart D_Penalties and Enforcement



Sec. 438.400  Penalties.

    (a) Any person who makes an expenditure prohibited by this part is 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each prohibited expenditure.
    (b) Any person who fails to file or amend the disclosure form (see 
Appendix B to this part) to be filed or amended if required by this part 
is subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each failure.
    (c) A filing or amended filing on or after the date on which an 
administrative action for the imposition of a civil penalty is begun 
does not prevent the imposition of such civil penalty for a failure 
occurring before that date. An administrative action begins with respect 
to a failure when an investigating official determines in writing to 
begin an investigation of an allegation of such failure.
    (d) In determining whether to impose a civil penalty, and the amount 
of any such penalty, by reason of a violation by any person, SSA will 
consider the nature, circumstances, extent, and gravity of the 
violation, the effect on the ability of the person to continue in 
business, any prior violations by the person, the degree of culpability 
of the person, the ability of the person to pay the penalty, and any 
other matters that may be appropriate.
    (e) First offenders under paragraphs (a) or (b) of this section are 
subject to a civil penalty of $10,000, absent aggravating circumstances. 
Second and subsequent offenses by persons are subject to an appropriate 
civil penalty between $10,000 and $100,000, as determined by the 
Commissioner or his or her designee.
    (f) Imposition of a civil penalty under this section does not 
prevent the United States from seeking any other remedy that may apply 
to the same conduct that is the basis for the imposition of the civil 
penalty.



Sec. 438.405  Penalty procedures.

    We will impose and collect civil penalties pursuant to the 
provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. 
sections 3803 (except subsection (c)), 3804, 3805, 3806, 3807, 3808, and 
3812, to the extent these provisions are not inconsistent with the 
requirements in this part.



Sec. 438.410  Enforcement.

    The Commissioner of Social Security will take any actions necessary 
to ensure that the provisions in this part are vigorously implemented 
and enforced.



                          Subpart E_Exemptions



Sec. 438.500  Secretary of Defense.

    (a) The Secretary of Defense may exempt, on a case-by-case basis, a 
covered Federal action from the prohibition whenever the Secretary 
determines, in writing, that such an exemption is in the national 
interest. The Secretary shall transmit a copy of each such written 
exemption to Congress immediately after making such a determination.
    (b) The Department of Defense may issue supplemental regulations to 
implement paragraph (a) of this section.



                        Subpart F_Agency Reports



Sec. 438.600  Semi-annual compilation.

    (a) The Commissioner of Social Security will collect and compile the 
disclosure reports (see Appendix B to this part) and, on May 31 and 
November 30 of each year, submit to the Secretary of the Senate and the 
Clerk of the House of Representatives a report containing a compilation 
of the information contained in the disclosure reports

[[Page 1187]]

received during the 6-month period ending on March 31 or September 30, 
respectively, of that year.
    (b) The report, including the compilation, will be available for 
public inspection 30 days after receipt of the report by the Secretary 
and the Clerk.
    (c) Information that involves intelligence matters will be reported 
only to the Select Committee on Intelligence of the Senate, the 
Permanent Select Committee on Intelligence of the House of 
Representatives and the Committee on Appropriations of the Senate and 
the House of Representatives in accordance with procedures agreed to by 
such committees. Such information will not be available for public 
inspection.
    (d) Information that is classified under Executive Order 12356 or 
any successor order will be reported only to the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of the 
House of Representatives (whichever such committees have jurisdiction of 
matters involving such information) and to the Committees on 
Appropriations of the Senate and the House of Representatives in 
accordance with procedures agreed to by such committees. Such 
information will not be available for public inspection.
    (e) The first semi-annual compilation was submitted on May 31, 1990, 
and contains a compilation of the disclosure reports received from 
December 23, 1989 to March 31, 1990.
    (f) Major agencies designated by the Office of Management and Budget 
(OMB) were required to provide machine-readable compilations to the 
Secretary of the Senate and the Clerk of the House of Representatives by 
May 31, 1991. OMB provided detailed specifications in a memorandum to 
these agencies.
    (g) SSA will keep the originals of all disclosure reports in our 
official files.



Sec. 438.605  Inspector General report.

    (a) The Inspector General of Social Security, or other official as 
specified in paragraph (b) of this section, will prepare and submit to 
Congress each year an evaluation of SSA compliance with, and the 
effectiveness of, the requirements in this part. The evaluation may 
include any recommended changes that may be necessary to strengthen or 
improve the requirements.
    (b) The annual report will be submitted at the same time we submit 
our annual budget justification to Congress.
    (c) The annual report will include the following: All alleged 
violations covered by the report, the actions taken by the Commissioner 
in the year covered by the report with respect to those alleged 
violations and alleged violations in previous years, and the amounts of 
civil penalties imposed by SSA in the year covered by the report.

        Appendix A to Part 438--Certification Regarding Lobbying

 Certification for Contracts, Grants, Loans, and Cooperative Agreements

    The undersigned certifies, to the best of his or her knowledge and 
belief, that:
    (1) No Federal appropriated funds have been paid or will be paid, by 
or on behalf of the undersigned, to any person for influencing or 
attempting to influence an officer or employee of an agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (2) If any funds other than Federal appropriated funds have been 
paid or will be paid to any person for influencing or attempting to 
influence an officer or employee of any agency, a Member of Congress, an 
officer or employee of Congress, or an employee of a Member of Congress 
in connection with this Federal contract, grant, loan, or cooperative 
agreement, the undersigned shall complete and submit Standard Form--LLL, 
``Disclosure Form to Report Lobbying,'' in accordance with its 
instructions.
    (3) The undersigned shall require that the language of this 
certification be included in the award documents for all subawards at 
all tiers (including subcontracts, subgrants, and contracts under 
grants, loans, and cooperative agreements) and that all subrecipients 
shall certify and disclose accordingly.
    This certification is a material representation of fact upon which 
reliance was placed when this transaction was made or entered into. 
Submission of this certification is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the

[[Page 1188]]

required certification shall be subject to a civil penalty of not less 
than $10,000 and not more than $100,000 for each such failure.

            Statement for Loan Guarantees and Loan Insurance

    The undersigned states, to the best of his or her knowledge and 
belief, that:
    If any funds have been paid or will be paid to any person for 
influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with this commitment 
providing for the United States to insure or guarantee a loan, the 
undersigned shall complete and submit Standard Form--LLL, ``Disclosure 
Form to Report Lobbying,'' in accordance with its instructions.
    Submission of this statement is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required statement shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

[[Page 1189]]

       Appendix B to Part 438--Disclosure Form to Report Lobbying
[GRAPHIC] [TIFF OMITTED] TR27MY03.000


[[Page 1190]]


[GRAPHIC] [TIFF OMITTED] TR27MY03.001


[[Page 1191]]





PART 439_GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (FINANCIAL 
ASSISTANCE)--Table of Contents




                     Subpart A_Purpose and Coverage

Sec.
439.100 What does this part do?
439.105 Does this part apply to me?
439.110 Are any of my Federal assistance awards exempt from this part?
439.115 Does this part affect the Federal contracts that I receive?

      Subpart B_Requirements for Recipients Other Than Individuals

439.200 What must I do to comply with this part?
439.205 What must I include in my drug-free workplace statement?
439.210 To whom must I distribute my drug-free workplace statement?
439.215 What must I include in my drug-free awareness program?
439.220 By when must I publish my drug-free workplace statement and 
          establish my drug-free awareness program?
439.225 What actions must I take concerning employees who are convicted 
          of drug violations in the workplace?
439.230 How and when must I identify workplaces?

        Subpart C_Requirements for Recipients Who Are Individuals

439.300 What must I do to comply with this part if I am an individual 
          recipient?
439.301 [Reserved]

          Subpart D_Responsibilities of SSA Awarding Officials

439.400 What are my responsibilities as an SSA awarding official?

           Subpart E_Violations of This Part and Consequences

439.500 How are violations of this part determined for recipients other 
          than individuals?
439.505 How are violations of this part determined for recipients who 
          are individuals?
439.510 What actions will the Federal Government take against a 
          recipient determined to have violated this part?
439.515 Are there any exceptions to those actions?

                          Subpart F_Definitions

439.605 Award.
439.610 Controlled substance.
439.615 Conviction.
439.620 Cooperative agreement.
439.625 Criminal drug statute.
439.630 Debarment.
439.635 Drug-free workplace.
439.640 Employee.
439.645 Federal agency or agency.
439.650 Grant.
439.655 Individual.
439.660 Recipient.
439.665 State.
439.670 Suspension.

    Authority: 41 U.S.C. 701 et seq.

    Source; 68 FR 66557, 66579, Nov. 26, 2003, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 439 appear at 68 FR 
66580, Nov. 26, 2003.



                     Subpart A_Purpose and Coverage



Sec. 439.100  What does this part do?

    This part carries out the portion of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701 et seq., as amended) that applies to grants. It also 
applies the provisions of the Act to cooperative agreements and other 
financial assistance awards, as a matter of Federal Government policy.



Sec. 439.105  Does this part apply to me?

    (a) Portions of this part apply to you if you are either--
    (1) A recipient of an assistance award from the SSA; or
    (2) An SSA awarding official. (See definitions of award and 
recipient in Sec. Sec. 439.605 and 439.660, respectively.)
    (b) The following table shows the subparts that apply to you:

------------------------------------------------------------------------
            If you are . . .                    see subparts . . .
------------------------------------------------------------------------
(1) A recipient who is not an            A, B and E.
 individual.
(2) A recipient who is an individual...  A, C and E.
(3) An SSA awarding official...........  A, D and E.
------------------------------------------------------------------------


[[Page 1192]]



Sec. 439.110  Are any of my Federal assistance awards exempt from this part?

    This part does not apply to any award that the SSA Official or 
designee determines that the application of this part would be 
inconsistent with the international obligations of the United States or 
the laws or regulations of a foreign government.



Sec. 439.115  Does this part affect the Federal contracts that I receive?

    It will affect future contract awards indirectly if you are debarred 
or suspended for a violation of the requirements of this part, as 
described in Sec. 439. 510(c). However, this part does not apply 
directly to procurement contracts. The portion of the Drug-Free 
Workplace Act of 1988 that applies to Federal procurement contracts is 
carried out through the Federal Acquisition Regulation in chapter 1 of 
Title 48 of the Code of Federal Regulations (the drug-free workplace 
coverage currently is in 48 CFR part 23, subpart 23.5).



      Subpart B_Requirements for Recipients Other Than Individuals



Sec. 439.200  What must I do to comply with this part?

    There are two general requirements if you are a recipient other than 
an individual.
    (a) First, you must make a good faith effort, on a continuing basis, 
to maintain a drug-free workplace. You must agree to do so as a 
condition for receiving any award covered by this part. The specific 
measures that you must take in this regard are described in more detail 
in subsequent sections of this subpart. Briefly, those measures are to--
    (1) Publish a drug-free workplace statement and establish a drug-
free awareness program for your employees (see Sec. Sec. 439.205 
through 439.220); and
    (2) Take actions concerning employees who are convicted of violating 
drug statutes in the workplace (see Sec. 439.225).
    (b) Second, you must identify all known workplaces under your 
Federal awards (see Sec. 439.230).



Sec. 439.205  What must I include in my drug-free workplace statement?

    You must publish a statement that--
    (a) Tells your employees that the unlawful manufacture, 
distribution, dispensing, possession, or use of a controlled substance 
is prohibited in your workplace;
    (b) Specifies the actions that you will take against employees for 
violating that prohibition; and
    (c) Lets each employee know that, as a condition of employment under 
any award, he or she:
    (1) Will abide by the terms of the statement; and
    (2) Must notify you in writing if he or she is convicted for a 
violation of a criminal drug statute occurring in the workplace and must 
do so no more than five calendar days after the conviction.



Sec. 439.210  To whom must I distribute my drug-free workplace statement?

    You must require that a copy of the statement described in Sec. 
439.205 be given to each employee who will be engaged in the performance 
of any Federal award.



Sec. 439.215  What must I include in my drug-free awareness program?

    You must establish an ongoing drug-free awareness program to inform 
employees about--
    (a) The dangers of drug abuse in the workplace;
    (b) Your policy of maintaining a drug-free workplace;
    (c) Any available drug counseling, rehabilitation, and employee 
assistance programs; and
    (d) The penalties that you may impose upon them for drug abuse 
violations occurring in the workplace.



Sec. 439.220  By when must I publish my drug-free workplace statement 
and establish my drug-free awareness program?

    If you are a new recipient that does not already have a policy 
statement as described in Sec. 439.205 and an ongoing awareness program 
as described in Sec. 439.215, you must publish the statement and 
establish the program by the time given in the following table:

[[Page 1193]]



------------------------------------------------------------------------
                If . . .                          then you . . .
------------------------------------------------------------------------
(a) The performance period of the award  must have the policy statement
 is less than 30 days.                    and program in place as soon
                                          as possible, but before the
                                          date on which performance is
                                          expected to be completed.
(b) The performance period of the award  must have the policy statement
 is 30 days or more.                      and program in place within 30
                                          days after award.
(c) You believe there are extraordinary  may ask the SSA awarding
 circumstances that will require more     official to give you more time
 than 30 days for you to publish the      to do so. The amount of
 policy statement and establish the       additional time, if any, to be
 awareness program.                       given is at the discretion of
                                          the awarding official.
------------------------------------------------------------------------



Sec. 439.225  What actions must I take concerning employees who are convicted 
of drug violations in the workplace?

    There are two actions you must take if an employee is convicted of a 
drug violation in the workplace:
    (a) First, you must notify Federal agencies if an employee who is 
engaged in the performance of an award informs you about a conviction, 
as required by Sec. 439.205(c)(2), or you otherwise learn of the 
conviction. Your notification to the Federal agencies must--
    (1) Be in writing;
    (2) Include the employee's position title;
    (3) Include the identification number(s) of each affected award;
    (4) Be sent within ten calendar days after you learn of the 
conviction; and
    (5) Be sent to every Federal agency on whose award the convicted 
employee was working. It must be sent to every awarding official or his 
or her official designee, unless the Federal agency has specified a 
central point for the receipt of the notices.
    (b) Second, within 30 calendar days of learning about an employee's 
conviction, you must either--
    (1) Take appropriate personnel action against the employee, up to 
and including termination, consistent with the requirements of the 
Rehabilitation Act of 1973 (29 U.S.C. 794), as amended; or
    (2) Require the employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for these purposes 
by a Federal, State or local health, law enforcement, or other 
appropriate agency.



Sec. 439.230  How and when must I identify workplaces?

    (a) You must identify all known workplaces under each SSA award. A 
failure to do so is a violation of your drug-free workplace 
requirements. You may identify the workplaces--
    (1) To the SSA official that is making the award, either at the time 
of application or upon award; or
    (2) In documents that you keep on file in your offices during the 
performance of the award, in which case you must make the information 
available for inspection upon request by SSA officials or their 
designated representatives.
    (b) Your workplace identification for an award must include the 
actual address of buildings (or parts of buildings) or other sites where 
work under the award takes place. Categorical descriptions may be used 
(e.g., all vehicles of a mass transit authority or State highway 
department while in operation, State employees in each local 
unemployment office, performers in concert halls or radio studios).
    (c) If you identified workplaces to the SSA awarding official at the 
time of application or award, as described in paragraph (a)(1) of this 
section, and any workplace that you identified changes during the 
performance of the award, you must inform the SSA awarding official.



        Subpart C_Requirements for Recipients Who Are Individuals



Sec. 439.300  What must I do to comply with this part if I am an individual 
recipient?

    As a condition of receiving an SSA award, if you are an individual 
recipient, you must agree that--
    (a) You will not engage in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance in conducting 
any activity related to the award; and
    (b) If you are convicted of a criminal drug offense resulting from a 
violation occurring during the conduct of any

[[Page 1194]]

award activity, you will report the conviction:
    (1) In writing.
    (2) Within 10 calendar days of the conviction.
    (3) To the SSA awarding official or other designee for each award 
that you currently have, unless Sec. 439.301 or the award document 
designates a central point for the receipt of the notices. When notice 
is made to a central point, it must include the identification number(s) 
of each affected award.



Sec. 439.301  [Reserved]



          Subpart D_Responsibilities of SSA Awarding Officials



Sec. 439.400   What are my responsibilities as an SSA awarding official?

    As an SSA awarding official, you must obtain each recipient's 
agreement, as a condition of the award, to comply with the requirements 
in--
    (a) Subpart B of this part, if the recipient is not an individual; 
or
    (b) Subpart C of this part, if the recipient is an individual.



           Subpart E_Violations of this Part and Consequences



Sec. 439.500  How are violations of this part determined for recipients 
other than individuals?

    A recipient other than an individual is in violation of the 
requirements of this part if the SSA Official or designee determines, in 
writing, that--
    (a) The recipient has violated the requirements of subpart B of this 
part; or
    (b) The number of convictions of the recipient's employees for 
violating criminal drug statutes in the workplace is large enough to 
indicate that the recipient has failed to make a good faith effort to 
provide a drug-free workplace.



Sec. 439.505  How are violations of this part determined for recipients 
who are individuals?

    An individual recipient is in violation of the requirements of this 
part if the SSA Official or designee determines, in writing, that--
    (a) The recipient has violated the requirements of subpart C of this 
part; or
    (b) The recipient is convicted of a criminal drug offense resulting 
from a violation occurring during the conduct of any award activity.



Sec. 439.510  What actions will the Federal Government take against a 
recipient determined to have violated this part?

    If a recipient is determined to have violated this part, as 
described in Sec. 439.500 or Sec. 439.505, the SSA may take one or 
more of the following actions--
    (a) Suspension of payments under the award;
    (b) Suspension or termination of the award; and
    (c) Suspension or debarment of the recipient under 20 CFR Part 436, 
for a period not to exceed five years.



Sec. 439.515  Are there any exceptions to those actions?

    The the Commissioner of SSA may waive with respect to a particular 
award, in writing, a suspension of payments under an award, suspension 
or termination of an award, or suspension or debarment of a recipient if 
the the Commissioner of SSA determines that such a waiver would be in 
the public interest. This exception authority cannot be delegated to any 
other official.



                          Subpart F_Definitions



Sec. 439.605  Award.

    Award means an award of financial assistance by the SSA or other 
Federal agency directly to a recipient.
    (a) The term award includes:
    (1) A Federal grant or cooperative agreement, in the form of money 
or property in lieu of money.
    (2) A block grant or a grant in an entitlement program, whether or 
not the grant is exempted from coverage under the Governmentwide rule 20 
CFR Part 439 that implements OMB Circular A-102 (for availability, see 5 
CFR 1310.3) and specifies uniform administrative requirements.
    (b) The term award does not include:
    (1) Technical assistance that provides services instead of money.
    (2) Loans.
    (3) Loan guarantees.
    (4) Interest subsidies.
    (5) Insurance.

[[Page 1195]]

    (6) Direct appropriations.
    (7) Veterans' benefits to individuals (i.e., any benefit to 
veterans, their families, or survivors by virtue of the service of a 
veteran in the Armed Forces of the United States).



Sec. 439.610  Controlled substance.

    Controlled substance means a controlled substance in schedules I 
through V of the Controlled Substances Act (21 U.S.C. 812), and as 
further defined by regulation at 21 CFR 1308.11 through 1308.15.



Sec. 439.615  Conviction.

    Conviction means a finding of guilt (including a plea of nolo 
contendere) or imposition of sentence, or both, by any judicial body 
charged with the responsibility to determine violations of the Federal 
or State criminal drug statutes.



Sec. 439.620  Cooperative agreement.

    Cooperative agreement means an award of financial assistance that, 
consistent with 31 U.S.C. 6305, is used to enter into the same kind of 
relationship as a grant (see definition of grant in Sec. 439.650), 
except that substantial involvement is expected between the Federal 
agency and the recipient when carrying out the activity contemplated by 
the award. The term does not include cooperative research and 
development agreements as defined in 15 U.S.C. 3710a.



Sec. 439.625  Criminal drug statute.

    Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance.



Sec. 439.630  Debarment.

    Debarment means an action taken by a Federal agency to prohibit a 
recipient from participating in Federal Government procurement contracts 
and covered nonprocurement transactions. A recipient so prohibited is 
debarred, in accordance with the Federal Acquisition Regulation for 
procurement contracts (48 CFR part 9, subpart 9.4) and the common rule, 
Government-wide Debarment and Suspension (Nonprocurement), that 
implements Executive Order 12549 and Executive Order 12689.



Sec. 439.635  Drug-free workplace.

    Drug-free workplace means a site for the performance of work done in 
connection with a specific award at which employees of the recipient are 
prohibited from engaging in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance.



Sec. 439.640  Employee.

    (a) Employee means the employee of a recipient directly engaged in 
the performance of work under the award, including--
    (1) All direct charge employees;
    (2) All indirect charge employees, unless their impact or 
involvement in the performance of work under the award is insignificant 
to the performance of the award; and
    (3) Temporary personnel and consultants who are directly engaged in 
the performance of work under the award and who are on the recipient's 
payroll.
    (b) This definition does not include workers not on the payroll of 
the recipient (e.g., volunteers, even if used to meet a matching 
requirement; consultants or independent contractors not on the payroll; 
or employees of subrecipients or subcontractors in covered workplaces).



Sec. 439.645  Federal agency or agency.

    Federal agency or agency means any United States executive 
department, military department, government corporation, government 
controlled corporation, any other establishment in the executive branch 
(including the Executive Office of the President), or any independent 
regulatory agency.



Sec. 439.650  Grant.

    Grant means an award of financial assistance that, consistent with 
31 U.S.C. 6304, is used to enter into a relationship--
    (a) The principal purpose of which is to transfer a thing of value 
to the recipient to carry out a public purpose of support or stimulation 
authorized by a law of the United States, rather than to acquire 
property or services for the

[[Page 1196]]

Federal Government's direct benefit or use; and
    (b) In which substantial involvement is not expected between the 
Federal agency and the recipient when carrying out the activity 
contemplated by the award.



Sec. 439.655  Individual.

    Individual means a natural person.



Sec. 439.660  Recipient.

    Recipient means any individual, corporation, partnership, 
association, unit of government (except a Federal agency) or legal 
entity, however organized, that receives an award directly from a 
Federal agency.



Sec. 439.665  State.

    State means any of the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, or any territory or 
possession of the United States.



Sec. 439.670  Suspension.

    Suspension means an action taken by a Federal agency that 
immediately prohibits a recipient from participating in Federal 
Government procurement contracts and covered nonprocurement transactions 
for a temporary period, pending completion of an investigation and any 
judicial or administrative proceedings that may ensue. A recipient so 
prohibited is suspended, in accordance with the Federal Acquisition 
Regulation for procurement contracts (48 CFR part 9, subpart 9.4) and 
the common rule, Government-wide Debarment and Suspension 
(Nonprocurement), that implements Executive Order 12549 and Executive 
Order 12689. Suspension of a recipient is a distinct and separate action 
from suspension of an award or suspension of payments under an award.

                        PARTS 440	497 [RESERVED]



PART 498_CIVIL MONETARY PENALTIES, ASSESSMENTS AND RECOMMENDED EXCLUSIONS
--Table of Contents




Sec.
498.100 Basis and purpose.
498.101 Definitions.
498.102 Basis for civil monetary penalties and assessments.
498.103 Amount of penalty.
498.104 Amount of assessment.
498.105 [Reserved]
498.106 Determinations regarding the amount or scope of penalties and 
          assessments.
498.107 [Reserved]
498.108 Penalty and assessment not exclusive.
498.109 Notice of proposed determination.
498.110 Failure to request a hearing.
498.114 Collateral estoppel.
498.115-498.125 [Reserved]
498.126 Settlement.
498.127 Judicial review.
498.128 Collection of penalty and assessment.
498.129 Notice to other agencies.
498.132 Limitations.
498.201 Definitions.
498.202 Hearing before an administrative law judge.
498.203 Rights of parties.
498.204 Authority of the administrative law judge.
498.205 Ex parte contacts.
498.206 Prehearing conferences.
498.207 Discovery.
498.208 Exchange of witness lists, witness statements and exhibits.
498.209 Subpoenas for attendance at hearing.
498.210 Fees.
498.211 Form, filing and service of papers.
498.212 Computation of time.
498.213 Motions.
498.214 Sanctions.
498.215 The hearing and burden of proof.
498.216 Witnesses.
498.217 Evidence.
498.218 The record.
498.219 Post-hearing briefs.
498.220 Initial decision.
498.221 Appeal to DAB.
498.222 Final decision of the Commissioner.
498.223 Stay of initial decision.
498.224 Harmless error.

    Authority: Secs. 702(a)(5), 1129, and 1140 of the Social Security 
Act (42 U.S.C. 902(a)(5), 1320a-8, and 1320b-10).

    Source: 60 FR 58226, Nov. 27, 1995, unless otherwise noted.



Sec. 498.100  Basis and purpose.

    (a) Basis. This part implements sections 1129 and 1140 of the Social 
Security Act (42 U.S.C. 1320a-8 and 1320b-10).
    (b) Purpose. This part provides for the imposition of civil monetary 
penalties and assessments, as applicable, against persons who--

[[Page 1197]]

    (1) Make or cause to be made false statements or representations, or 
omissions of material fact for use in determining any right to or amount 
of benefits under title II or benefits or payments under title XVI of 
the Social Security Act; or
    (2) Misuse certain Social Security program words, letters, symbols, 
and emblems.

[60 FR 58226, Nov. 27, 1995, as amended at 61 FR 18079, Apr. 24, 1996]



Sec. 498.101  Definitions.

    As used in this part:
    Agency means the Social Security Administration.
    Assessment means the amount described in Sec. 498.104, and includes 
the plural of that term.
    Commissioner means the Commissioner of Social Security or his or her 
designees.
    Department means the U.S. Department of Health and Human Services.
    General Counsel means the General Counsel of the Social Security 
Administration or his or her designees.
    Inspector General means the Inspector General of the Social Security 
Administration or his or her designees.
    Material fact means a fact which the Commissioner of Social Security 
may consider in evaluating whether an applicant is entitled to benefits 
under title II or eligible for benefits or payments under title XVI of 
the Social Security Act.
    Penalty means the amount described in Sec. 498.103 and includes the 
plural of that term.
    Person means an individual, organization, agency, or other entity.
    Respondent means the person upon whom the Commissioner or the 
Inspector General has imposed, or intends to impose, a penalty and 
assessment, as applicable.
    Secretary means the Secretary of the U.S. Department of Health and 
Human Services or his or her designees.
    SSA means the Social Security Administration.
    SSI means Supplemental Security Income.

[60 FR 58226, Nov. 27, 1995, as amended at 61 FR 18079, Apr. 24, 1996]



Sec. 498.102  Basis for civil monetary penalties and assessments.

    (a) The Office of the Inspector General may impose a penalty and 
assessment, as applicable, against any person whom it determines in 
accordance with this part--
    (1) Has made, or caused to be made, a statement or representation of 
a material fact for use in determining any initial or continuing right 
to or amount of:
    (i) Monthly insurance benefits under title II of the Social Security 
Act; or
    (ii) Benefits or payments under title XVI of the Social Security 
Act; and
    (2)(i) Knew, or should have known, that the statement or 
representation--
    (A) Was false or misleading; or
    (B) Omitted a material fact; or
    (ii) Made such statement with knowing disregard for the truth.
    (b) The Office of the Inspector General may impose a penalty against 
any person whom it determines in accordance with this part has made use 
of certain Social Security program words, letters, symbols, or emblems 
in such a manner that they knew or should have known would convey, or in 
a manner which reasonably could be interpreted or construed as 
conveying, the false impression that an advertisement or other item was 
authorized, approved, or endorsed by the Social Security Administration, 
or that such person has some connection with, or authorization from, the 
Social Security Administration.
    (1) Civil monetary penalties may be imposed for misuse, as set forth 
in Sec. 498.102(b), of--
    (i) The words ``Social Security,'' ``Social Security Account,'' 
``Social Security Administration,'' ``Social Security System,'' 
``Supplemental Security Income Program,'' or any combination or 
variation of such words; or
    (ii) The letters ``SSA,'' or ``SSI,'' or any other combination or 
variation of such letters; or
    (iii) A symbol or emblem of the Social Security Administration 
(including the design of, or a reasonable facsimile of the design of, 
the Social Security card, the check used for payment of benefits under 
title II, or envelopes or other stationery used by the Social Security 
Administration), or any other

[[Page 1198]]

combination or variation of such symbols or emblems.
    (2) Civil monetary penalties will not be imposed against any agency 
or instrumentality of a State, or political subdivision of a State, that 
makes use of any symbol or emblem, or any words or letters which 
identify that agency or instrumentality of the State or political 
subdivision.
    (c) The use of a disclaimer of affiliation with the United States 
Government, the Social Security Administration or its programs, or any 
other agency or instrumentality of the United States Government, will 
not be considered as a defense in determining a violation of section 
1140 of the Social Security Act.

[60 FR 58226, Nov. 27, 1995, as amended at 61 FR 18079, Apr. 24, 1996]



Sec. 498.103  Amount of penalty.

    (a) Under Sec. 498.102(a), the Office of the Inspector General may 
impose a penalty of not more than $5,000 for each false statement or 
representation.
    (b) Under section Sec. 498.102(b), the Office of the Inspector 
General may impose a penalty of not more than $5,000 for each violation 
resulting from the misuse of Social Security Administration program 
words, letters, symbols, or emblems relating to printed media, and a 
penalty of not more than $25,000 in the case of such misuse related to a 
broadcast or telecast.
    (c) For purposes of paragraph (b) of this section, a violation is 
defined as--
    (1) In the case of a direct mailing solicitation or advertisement, 
each separate piece of mail which contains one or more program words, 
letters, symbols, or emblems related to a determination under Sec. 
498.102(b); and
    (2) In the case of a broadcast or telecast, each airing of a single 
commercial or solicitation related to a determination under Sec. 
498.102(b).

[60 FR 58226, Nov. 27, 1995, as amended at 61 FR 18080, Apr. 24, 1996]



Sec. 498.104  Amount of assessment.

    A person subject to a penalty determined under Sec. 498.102(a) may 
be subject, in addition, to an assessment of not more than twice the 
amount of benefits or payments paid as a result of the statement or 
representation which was the basis for the penalty. An assessment is in 
lieu of damages sustained by the United States because of such statement 
or representation.

[61 FR 18080, Apr. 24, 1996]



Sec. 498.105  [Reserved]



Sec. 498.106  Determinations regarding the amount or scope of penalties 
and assessments.

    (a) In determining the amount or scope of any penalty and 
assessment, as applicable, in accordance with Sec. Sec. 498.103(a) and 
498.104, the Office of the Inspector General will take into account:
    (1) The nature of the statements and representations referred to in 
Sec. 498.102(a) and the circumstances under which they occurred;
    (2) The degree of culpability of the person committing the offense;
    (3) The history of prior offenses of the person committing the 
offense;
    (4) The financial condition of the person committing the offense; 
and
    (5) Such other matters as justice may require.
    (b) In determining the amount of any penalty in accordance with 
Sec. 498.103(b), the Office of the Inspector General will take into 
account--
    (1) The nature and objective of the advertisement, solicitation, or 
other communication, and the circumstances under which they were 
presented;
    (2) The frequency and scope of the violation, and whether a specific 
segment of the population was targeted;
    (3) The prior history of the individual, organization, or entity in 
their willingness or refusal to comply with informal requests to correct 
violations;
    (4) The history of prior offenses of the individual, organization, 
or entity in their misuse of program words, letters, symbols, and 
emblems;
    (5) The financial condition of the individual or entity; and
    (6) Such other matters as justice may require.
    (c) In cases brought under section 1140 of the Social Security Act, 
the use of a disclaimer of affiliation with the United States 
Government, the Social

[[Page 1199]]

Security Administration or its programs will not be considered as a 
mitigating factor in determining the amount of a penalty in accordance 
with Sec. 498.106.

[60 FR 58226, Nov. 27, 1995, as amended at 61 FR 18080, Apr. 24, 1996]



Sec. 498.107  [Reserved]



Sec. 498.108  Penalty and assessment not exclusive.

    Penalties and assessments, as applicable, imposed under this part 
are in addition to any other penalties prescribed by law.

[61 FR 18080, Apr. 24, 1996]



Sec. 498.109  Notice of proposed determination.

    (a) If the Office of the Inspector General seeks to impose a penalty 
and assessment, as applicable, it will serve written notice of the 
intent to take such action. The notice will include:
    (1) Reference to the statutory basis for the proposed penalty and 
assessment, as applicable;
    (2) A description of the false statements, representations, and 
incidents, as applicable, with respect to which the penalty and 
assessment, as applicable, are proposed;
    (3) The amount of the proposed penalty and assessment, as 
applicable;
    (4) Any circumstances described in Sec. 498.106 that were 
considered when determining the amount of the proposed penalty and 
assessment, as applicable; and
    (5) Instructions for responding to the notice, including
    (i) A specific statement of respondent's right to a hearing; and
    (ii) A statement that failure to request a hearing within 60 days 
permits the imposition of the proposed penalty and assessment, as 
applicable, without right of appeal.
    (b) Any person upon whom the Office of the Inspector General has 
proposed the imposition of a penalty and assessment, as applicable, may 
request a hearing on such proposed penalty and assessment.
    (c) If the respondent fails to exercise the respondent's right to a 
hearing within the time permitted under this section, and does not 
demonstrate good cause for such failure before an administrative law 
judge, any penalty and assessment, as applicable, becomes final.

[61 FR 18080, Apr. 24, 1996]



Sec. 498.110  Failure to request a hearing.

    If the respondent does not request a hearing within the time 
prescribed by Sec. 498.109(a), the Office of the Inspector General may 
seek the proposed penalty and assessment, as applicable, or any less 
severe penalty and assessment. The Office of the Inspector General shall 
notify the respondent by certified mail, return receipt requested, of 
any penalty and assessment, as applicable, that has been imposed and of 
the means by which the respondent may satisfy the amount owed.

[61 FR 18080, Apr. 24, 1996]



Sec. 498.114  Collateral estoppel.

    In a proceeding under section 1129 of the Social Security Act that--
    (a) Is against a person who has been convicted (whether upon a 
verdict after trial or upon a plea of guilty or nolo contendere) of a 
Federal or State crime charging fraud or false statements; and
    (b) Involves the same transactions as in the criminal action, the 
person is estopped from denying the essential elements of the criminal 
offense.

[61 FR 18080, Apr. 24, 1996]



Sec. Sec. 498.115-498.125  [Reserved]



Sec. 498.126  Settlement.

    The Inspector General has exclusive authority to settle any issues 
or case, without the consent of the administrative law judge or the 
Commissioner, at any time prior to a final determination. Thereafter, 
the Commissioner or his or her designee has such exclusive authority.



Sec. 498.127  Judicial review.

    Sections 1129 and 1140 of the Social Security Act authorize judicial 
review of any penalty and assessment, as applicable, that has become 
final. Judicial review may be sought by a respondent only in regard to a 
penalty and assessment, as applicable, with respect to which the 
respondent requested a hearing, unless the failure or

[[Page 1200]]

neglect to urge such objection is excused by the court because of 
extraordinary circumstances.

[61 FR 18080, Apr. 24, 1996]



Sec. 498.128  Collection of penalty and assessment.

    (a) Once a determination has become final, collection of any penalty 
and assessment, as applicable, will be the responsibility of the 
Commissioner or his or her designee.
    (b) In cases brought under section 1129 of the Social Security Act, 
a penalty and assessment, as applicable, imposed under this part may be 
compromised by the Commissioner or his or her designee, and may be 
recovered in a civil action brought in the United States District Court 
for the district where the statement or representation referred to in 
Sec. 498.102(a) was made, or where the respondent resides.
    (c) In cases brought under section 1140 of the Social Security Act, 
a penalty imposed under this part may be compromised by the Commissioner 
or his or her designee and may be recovered in a civil action brought in 
the United States district court for the district where, as determined 
by the Commissioner, the:
    (1) Violation referred to in Sec. 498.102(b) occurred; or
    (2) Respondent resides; or
    (3) Respondent has its principal office; or
    (4) Respondent may be found.
    (d) As specifically provided under the Social Security Act, in cases 
brought under section 1129 of the Social Security Act, the amount of a 
penalty and assessment, as applicable, when finally determined, or the 
amount agreed upon in compromise, may also be deducted from:
    (1) Monthly title II or title XVI payments, notwithstanding section 
207 of the Social Security Act as made applicable to title XVI by 
section 1631(d)(1) of the Social Security Act;
    (2) A tax refund to which a person is entitled to after notice to 
the Secretary of the Treasury under 31 U.S.C. Sec. 3720A;
    (3) By authorities provided under the Debt Collection Act of 1982, 
as amended, 31 U.S.C. 3711, to the extent applicable to debts arising 
under the Social Security Act; or
    (4) Any combination of the foregoing.
    (e) Matters that were raised or that could have been raised in a 
hearing before an administrative law judge or in an appeal to the United 
States Court of Appeals under sections 1129 or 1140 of the Social 
Security Act may not be raised as a defense in a civil action by the 
United States to collect a penalty and assessment, as applicable, under 
this part.

[60 FR 58226, Nov. 27, 1995, as amended at 61 FR 18080, Apr. 24, 1996]



Sec. 498.129  Notice to other agencies.

    As provided in section 1129 of the Social Security Act, when a 
determination to impose a penalty and assessment, as applicable, with 
respect to a physician or medical provider becomes final, the Office of 
the Inspector General will notify the Secretary of the final 
determination and the reasons therefore.

[61 FR 18081, Apr. 24, 1996]



Sec. 498.132  Limitations.

    The Office of the Inspector General may initiate a proceeding in 
accordance with Sec. 498.109(a) to determine whether to impose a 
penalty and assessment, as applicable--
    (a) In cases brought under section 1129 of the Social Security Act, 
after receiving authorization from the Attorney General pursuant to 
procedures agreed upon by the Inspector General and the Attorney 
General; and
    (b) Within 6 years from the date on which the violation was 
committed.

[61 FR 18081, Apr. 24, 1996]



Sec. 498.201  Definitions.

    As used in this part--
    ALJ refers to an Administrative Law Judge of the Departmental 
Appeals Board.
    Civil monetary penalty cases refer to all proceedings arising under 
any of the statutory bases for which the Inspector General, Social 
Security Administration has been delegated authority to impose civil 
monetary penalties.

[[Page 1201]]

    DAB refers to the Departmental Appeals Board of the U.S. Department 
of Health and Human Services.

[61 FR 65468, Dec. 13, 1996]



Sec. 498.202  Hearing before an administrative law judge.

    (a) A party sanctioned under any criteria specified in Sec. Sec. 
498.100 through 498.132 may request a hearing before an ALJ.
    (b) In civil monetary penalty cases, the parties to a hearing will 
consist of the respondent and the Inspector General.
    (c) The request for a hearing must be:
    (1) In writing and signed by the respondent or by the respondent's 
attorney; and
    (2) Filed within 60 days after the notice, provided in accordance 
with Sec. 498.109, is received by the respondent or upon a showing of 
good cause, the time permitted by an ALJ.
    (d) The request for a hearing shall contain a statement as to the:
    (1) Specific issues or findings of fact and conclusions of law in 
the notice letter with which the respondent disagrees; and
    (2) Basis for the respondent's contention that the specific issues 
or findings and conclusions were incorrect.
    (e) For purposes of this section, the date of receipt of the notice 
letter will be presumed to be five days after the date of such notice, 
unless there is a reasonable showing to the contrary.
    (f) The ALJ shall dismiss a hearing request where:
    (1) The respondent's hearing request is not filed in a timely manner 
and the respondent fails to demonstrate good cause for such failure;
    (2) The respondent withdraws or abandons respondent's request for a 
hearing; or
    (3) The respondent's hearing request fails to raise any issue which 
may properly be addressed in a hearing under this part.

[61 FR 65468, Dec. 13, 1996]



Sec. 498.203  Rights of parties.

    (a) Except as otherwise limited by this part, all parties may:
    (1) Be accompanied, represented, and advised by an attorney;
    (2) Participate in any conference held by the ALJ;
    (3) Conduct discovery of documents as permitted by this part;
    (4) Agree to stipulations of fact or law which will be made part of 
the record;
    (5) Present evidence relevant to the issues at the hearing;
    (6) Present and cross-examine witnesses;
    (7) Present oral arguments at the hearing as permitted by the ALJ; 
and
    (8) Submit written briefs and proposed findings of fact and 
conclusions of law after the hearing.
    (b) Fees for any services performed on behalf of a party by an 
attorney are not subject to the provisions of section 206 of title II of 
the Social Security Act, which authorizes the Commissioner to specify or 
limit these fees.

[61 FR 65469, Dec. 13, 1996]



Sec. 498.204  Authority of the administrative law judge.

    (a) The ALJ will conduct a fair and impartial hearing, avoid delay, 
maintain order and assure that a record of the proceeding is made.
    (b) The ALJ has the authority to:
    (1) Set and change the date, time, and place of the hearing upon 
reasonable notice to the parties;
    (2) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (3) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding;
    (4) Administer oaths and affirmations;
    (5) Issue subpoenas requiring the attendance of witnesses at 
hearings and the production of documents at or in relation to hearings;
    (6) Rule on motions and other procedural matters;
    (7) Regulate the scope and timing of documentary discovery as 
permitted by this part;
    (8) Regulate the course of the hearing and the conduct of 
representatives, parties, and witnesses;
    (9) Examine witnesses;
    (10) Receive, exclude, or limit evidence;
    (11) Take official notice of facts;

[[Page 1202]]

    (12) Upon motion of a party, decide cases, in whole or in part, by 
summary judgment where there is no disputed issue of material fact; and
    (13) Conduct any conference or argument in person, or by telephone 
upon agreement of the parties.
    (c) The ALJ does not have the authority to:
    (1) Find invalid or refuse to follow Federal statutes or 
regulations, or delegations of authority from the Commissioner;
    (2) Enter an order in the nature of a directed verdict;
    (3) Compel settlement negotiations;
    (4) Enjoin any act of the Commissioner or the Inspector General; or
    (5) Review the exercise of discretion by the Office of the Inspector 
General to seek to impose a civil monetary penalty or assessment under 
Sec. Sec. 498.100 through 498.132.

[61 FR 65469, Dec. 13, 1996]



Sec. 498.205  Ex parte contacts.

    No party or person (except employees of the ALJ's office) will 
communicate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for all parties to participate. This 
provision does not prohibit a person or party from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.

[61 FR 65469, Dec. 13, 1996]



Sec. 498.206  Prehearing conferences.

    (a) The ALJ will schedule at least one prehearing conference, and 
may schedule additional prehearing conferences as appropriate, upon 
reasonable notice to the parties.
    (b) The ALJ may use prehearing conferences to address the following:
    (1) Simplification of the issues;
    (2) The necessity or desirability of amendments to the pleadings, 
including the need for a more definite statement;
    (3) Stipulations and admissions of fact as to the contents and 
authenticity of documents and deadlines for challenges, if any, to the 
authenticity of documents;
    (4) Whether the parties can agree to submission of the case on a 
stipulated record;
    (5) Whether a party chooses to waive appearance at a hearing and to 
submit only documentary evidence (subject to the objection of other 
parties) and written argument;
    (6) Limitation of the number of witnesses;
    (7) The time and place for the hearing and dates for the exchange of 
witness lists and of proposed exhibits;
    (8) Discovery of documents as permitted by this part;
    (9) Such other matters as may tend to encourage the fair, just, and 
expeditious disposition of the proceedings; and
    (10) Potential settlement of the case.
    (c) The ALJ shall issue an order containing the matters agreed upon 
by the parties or ordered by the ALJ at a prehearing conference.

[61 FR 65469, Dec. 13, 1996]



Sec. 498.207  Discovery.

    (a) For the purpose of inspection and copying, a party may make a 
request to another party for production of documents which are relevant 
and material to the issues before the ALJ.
    (b) Any form of discovery other than that permitted under paragraph 
(a) of this section, such as requests for admissions, written 
interrogatories and depositions, is not authorized.
    (c) For the purpose of this section, the term documents includes 
information, reports, answers, records, accounts, papers, memos, notes 
and other data and documentary evidence. Nothing contained in this 
section will be interpreted to require the creation of a document, 
except that requested data stored in an electronic data storage system 
will be produced in a form accessible to the requesting party.
    (d)(1) A party who has been served with a request for production of 
documents may file a motion for a protective order. The motion for 
protective order shall describe the document or class of documents to be 
protected, specify which of the grounds in Sec. 498.207(d)(2) are being 
asserted, and explain how those grounds apply.

[[Page 1203]]

    (2) The ALJ may grant a motion for a protective order if he or she 
finds that the discovery sought:
    (i) Is unduly costly or burdensome;
    (ii) Will unduly delay the proceeding; or
    (iii) Seeks privileged information.
    (3) The burden of showing that discovery should be allowed is on the 
party seeking discovery.

[61 FR 65469, Dec. 13, 1996]



Sec. 498.208  Exchange of witness lists, witness statements and exhibits.

    (a) At least 15 days before the hearing, the parties shall exchange:
    (1) Witness lists;
    (2) Copies of prior written statements of proposed witnesses; and
    (3) Copies of proposed hearing exhibits, including copies of any 
written statements that the party intends to offer in lieu of live 
testimony in accordance with Sec. 498.216.
    (b)(1) Failure to comply with the requirements of paragraph (a) of 
this section may result in the exclusion of evidence or testimony upon 
the objection of the opposing party.
    (2) When an objection is entered, the ALJ shall determine whether 
good cause justified the failure to timely exchange the information 
listed under paragraph (a) of this section. If good cause is not found, 
the ALJ shall exclude from the party's case-in-chief:
    (i) The testimony of any witness whose name does not appear on the 
witness list; and
    (ii) Any exhibit not provided to the opposing party as specified in 
paragraph (a) of this section.
    (3) If the ALJ finds that good cause exists, the ALJ shall determine 
whether the admission of such evidence would cause substantial prejudice 
to the objecting party due to the failure to comply with paragraph (a) 
of this section. If the ALJ finds no substantial prejudice, the evidence 
may be admitted. If the ALJ finds substantial prejudice, the ALJ may 
exclude the evidence, or at his or her discretion, may postpone the 
hearing for such time as is necessary for the objecting party to prepare 
and respond to the evidence.
    (c) Unless a party objects by the deadline set by the ALJ's 
prehearing order pursuant to Sec. 498.206 (b)(3) and (c), documents 
exchanged in accordance with paragraph (a) of this section will be 
deemed authentic for the purpose of admissibility at the hearing.

[61 FR 65470, Dec. 13, 1996]



Sec. 498.209  Subpoenas for attendance at hearing.

    (a) A party wishing to procure the appearance and testimony of any 
individual, whose appearance and testimony are relevant and material to 
the presentation of a party's case at a hearing, may make a motion 
requesting the ALJ to issue a subpoena.
    (b) A subpoena requiring the attendance of an individual may also 
require the individual (whether or not the individual is a party) to 
produce evidence at the hearing in accordance with Sec. 498.207.
    (c) A party seeking a subpoena will file a written motion not less 
than 30 days before the date fixed for the hearing, unless otherwise 
allowed by the ALJ for good cause shown. Such request will:
    (1) Specify any evidence to be produced;
    (2) Designate the witness(es); and
    (3) Describe the address and location with sufficient particularity 
to permit such witness(es) to be found.
    (d) Within 20 days after the written motion requesting issuance of a 
subpoena is served, any party may file an opposition or other response.
    (e) If the motion requesting issuance of a subpoena is granted, the 
party seeking the subpoena will serve the subpoena by delivery to the 
individual named, or by certified mail addressed to such individual at 
his or her last dwelling place or principal place of business.
    (f) The subpoena will specify the time and place at which the 
witness is to appear and any evidence the witness is to produce.
    (g) The individual to whom the subpoena is directed may file with 
the ALJ a motion to quash the subpoena within 10 days after service.
    (h) When a subpoena is served by a respondent on a particular 
individual or particular office of the Office of the Inspector General, 
the OIG may comply by designating any of its representatives to appear 
and testify.

[[Page 1204]]

    (i) In the case of contumacy by, or refusal to obey a subpoena duly 
served upon any person, the exclusive remedy is specified in section 
205(e) of the Social Security Act (42 U.S.C. 405(e)).

[61 FR 65470, Dec. 13, 1996]



Sec. 498.210  Fees.

    The party requesting a subpoena will pay the cost of the fees and 
mileage of any witness subpoenaed in the amounts that would be payable 
to a witness in a proceeding in United States District Court. A check 
for witness fees and mileage will accompany the subpoena when served, 
except that when a subpoena is issued on behalf of the Inspector 
General, a check for witness fees and mileage need not accompany the 
subpoena.

[61 FR 65470, Dec. 13, 1996]



Sec. 498.211  Form, filing and service of papers.

    (a) Form. (1) Unless the ALJ directs the parties to do otherwise, 
documents filed with the ALJ will include an original and two copies.
    (2) Every document filed in the proceeding will contain a caption 
setting forth the title of the action, the case number, and a 
designation of the pleading or paper.
    (3) Every document will be signed by, and will contain the address 
and telephone number of the party or the person on whose behalf the 
document was filed, or his or her representative.
    (4) Documents are considered filed when they are mailed.
    (b) Service. A party filing a document with the ALJ will, at the 
time of filing, serve a copy of such document on every other party. 
Service upon any party of any document will be made by delivering a 
copy, or placing a copy of the document in the United States mail, 
postage prepaid and addressed, or with a private delivery service, to 
the party's last known address. When a party is represented by an 
attorney, service will be made upon such attorney. Proof of service 
should accompany any document filed with the ALJ.
    (c) Proof of service. A certificate of the individual serving the 
document by personal delivery or by mail, setting forth the manner of 
service, will be proof of service.

[61 FR 65470, Dec. 13, 1996]



Sec. 498.212  Computation of time.

    (a) In computing any period of time under this part or in an order 
issued thereunder, the time begins with the day following the act, event 
or default, and includes the last day of the period unless it is a 
Saturday, Sunday or legal holiday observed by the Federal Government, in 
which event it includes the next business day.
    (b) When the period of time allowed is less than 7 days, 
intermediate Saturdays, Sundays and legal holidays observed by the 
Federal Government will be excluded from the computation.
    (c) Where a document has been served or issued by placing it in the 
mail, an additional 5 days will be added to the time permitted for any 
response. This paragraph does not apply to requests for hearing under 
Sec. 498.202.

[61 FR 65470, Dec. 13, 1996]



Sec. 498.213  Motions.

    (a) An application to the ALJ for an order or ruling will be by 
motion. Motions will:
    (1) State the relief sought, the authority relied upon and the facts 
alleged; and
    (2) Be filed with the ALJ and served on all other parties.
    (b) Except for motions made during a prehearing conference or at a 
hearing, all motions will be in writing.
    (c) Within 10 days after a written motion is served, or such other 
time as may be fixed by the ALJ, any party may file a response to such 
motion.
    (d) The ALJ may not grant or deny a written motion before the time 
for filing responses has expired, except upon consent of the parties or 
following a hearing on the motion.
    (e) The ALJ will make a reasonable effort to dispose of all 
outstanding motions prior to the beginning of the hearing.
    (f) There is no right to appeal to the DAB any interlocutory ruling 
by the ALJ.

[61 FR 65470, Dec. 13, 1996]

[[Page 1205]]



Sec. 498.214  Sanctions.

    (a) The ALJ may sanction a person, including any party or attorney, 
for:
    (1) Failing to comply with an order or procedure;
    (2) Failing to defend an action; or
    (3) Misconduct that interferes with the speedy, orderly or fair 
conduct of the hearing.
    (b) Such sanctions will reasonably relate to the severity and nature 
of the failure or misconduct. Such sanction may include--
    (1) In the case of refusal to provide or permit discovery under the 
terms of this part, drawing negative factual inferences or treating such 
refusal as an admission by deeming the matter, or certain facts, to be 
established;
    (2) Prohibiting a party from introducing certain evidence or 
otherwise supporting a particular claim or defense;
    (3) Striking pleadings, in whole or in part;
    (4) Staying the proceedings;
    (5) Dismissal of the action; or
    (6) Entering a decision by default.
    (c) In addition to the sanctions listed in paragraph (b) of this 
section, the ALJ may:
    (1) Order the party or attorney to pay attorney's fees and other 
costs caused by the failure or misconduct; or
    (2) Refuse to consider any motion or other action that is not filed 
in a timely manner.

[61 FR 65471, Dec. 13, 1996]



Sec. 498.215  The hearing and burden of proof.

    (a) The ALJ will conduct a hearing on the record in order to 
determine whether the respondent should be found liable under this part.
    (b) In civil monetary penalty cases under Sec. Sec. 498.100 through 
498.132:
    (1) The respondent has the burden of going forward and the burden of 
persuasion with respect to affirmative defenses and any mitigating 
circumstances; and
    (2) The Inspector General has the burden of going forward and the 
burden of persuasion with respect to all other issues.
    (c) The burden of persuasion will be judged by a preponderance of 
the evidence.
    (d) The hearing will be open to the public unless otherwise ordered 
by the ALJ for good cause.
    (e)(1) A hearing under this part is not limited to specific items 
and information set forth in the notice letter to the respondent. 
Subject to the 15-day requirement under Sec. 498.208, additional items 
or information may be introduced by either party during its case-in-
chief, unless such information or items are inadmissible under Sec. 
498.217.
    (2) After both parties have presented their cases, evidence may be 
admitted on rebuttal as to those issues presented in the case-in-chief, 
even if not previously exchanged in accordance with Sec. 498.208.

[61 FR 65471, Dec. 13, 1996]



Sec. 498.216  Witnesses.

    (a) Except as provided in paragraph (b) of this section, testimony 
at the hearing will be given orally by witnesses under oath or 
affirmation.
    (b) At the discretion of the ALJ, testimony (other than expert 
testimony) may be admitted in the form of a written statement. Any such 
written statement must be provided to all other parties along with the 
last known address of such witness, in a manner that allows sufficient 
time for other parties to subpoena such witness for cross-examination at 
the hearing. Prior written statements of witnesses proposed to testify 
at the hearing will be exchanged as provided in Sec. 498.208.
    (c) The ALJ will exercise reasonable control over the mode and order 
of witness direct and cross examination and evidence presentation so as 
to:
    (1) Make the examination and presentation effective for the 
ascertainment of the truth;
    (2) Avoid repetition or needless waste of time; and
    (3) Protect witnesses from harassment or undue embarrassment.
    (d) The ALJ may order witnesses excluded so that they cannot hear 
the testimony of other witnesses. This does not authorize exclusion of:
    (1) A party who is an individual;
    (2) In the case of a party that is not an individual, an officer or 
employee of

[[Page 1206]]

the party appearing for the entity pro se or designated as the party's 
representative; or
    (3) An individual whose presence is shown by a party to be essential 
to the presentation of its case, including an individual engaged in 
assisting the attorney for the Inspector General.

[61 FR 65471, Dec. 13, 1996]



Sec. 498.217  Evidence.

    (a) The ALJ will determine the admissibility of evidence.
    (b) Except as provided in this part, the ALJ will not be bound by 
the Federal Rules of Evidence, but may be guided by them in ruling on 
the admissibility of evidence.
    (c) Although relevant, evidence may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice, 
confusion of the issues, or by considerations of undue delay or needless 
presentation of cumulative evidence.
    (d) Although relevant, evidence must be excluded if it is privileged 
under Federal law, unless the privilege is waived by a party.
    (e) Evidence concerning offers of compromise or settlement made in 
this action will be inadmissible to the extent provided in Rule 408 of 
the Federal Rules of Evidence.
    (f)(1) Evidence of crimes, wrongs or acts other than those at issue 
in the instant case is admissible in order to show motive, opportunity, 
intent, knowledge, preparation, identity, lack of mistake, or existence 
of a scheme.
    (2) Such evidence is admissible regardless of whether the crimes, 
wrongs or acts occurred during the statute of limitations period 
applicable to the acts which constitute the basis for liability in the 
case, and regardless of whether they were referenced in the IG's notice 
sent in accordance with Sec. 498.109.
    (g) The ALJ will permit the parties to introduce rebuttal witnesses 
and evidence as to those issues raised in the parties' case-in-chief.
    (h) All documents and other evidence offered or taken for the record 
will be open to examination by all parties, unless otherwise ordered by 
the ALJ for good cause.

[61 FR 65471, Dec. 13, 1996]



Sec. 498.218  The record.

    (a) The hearing shall be recorded and transcribed. Transcripts may 
be obtained following the hearing from the ALJ.
    (b) The transcript of testimony, exhibits and other evidence 
admitted at the hearing, and all papers and requests filed in the 
proceeding constitute the record for the decision by the ALJ.
    (c) The record may be inspected and copied (upon payment of a 
reasonable fee) by any person, unless otherwise ordered by the ALJ for 
good cause.

[61 FR 65471, Dec. 13, 1996]



Sec. 498.219  Post-hearing briefs.

    (a) Any party may file a post-hearing brief.
    (b) The ALJ may require the parties to file post-hearing briefs and 
may permit the parties to file reply briefs.
    (c) The ALJ will fix the time for filing briefs, which is not to 
exceed 60 days from the date the parties receive the transcript of the 
hearing or, if applicable, the stipulated record.
    (d) The parties' briefs may be accompanied by proposed findings of 
fact and conclusions of law.

[61 FR 65471, Dec. 13, 1996]



Sec. 498.220  Initial decision.

    (a) The ALJ will issue an initial decision, based only on the 
record, which will contain findings of fact and conclusions of law.
    (b) The ALJ may affirm, deny, increase, or reduce the penalties or 
assessments proposed by the Inspector General.
    (c) The ALJ will issue the initial decision to all parties within 60 
days after the time for submission of post-hearing briefs or reply 
briefs, if permitted, has expired. The decision will be accompanied by a 
statement describing the right of any party to file a notice of appeal 
with the DAB and instructions for how to file such appeal. If the ALJ 
cannot issue an initial decision within the 60 days, the ALJ will

[[Page 1207]]

notify the parties of the reason for the delay and will set a new 
deadline.
    (d) Unless an appeal or request for extension pursuant to Sec. 
498.221(a) is filed with the DAB, the initial decision of the ALJ 
becomes final and binding on the parties 30 days after the ALJ serves 
the parties with a copy of the decision. If service is by mail, the date 
of service will be deemed to be five days from the date of mailing.

[61 FR 65472, Dec. 13, 1996]



Sec. 498.221  Appeal to DAB.

    (a) Any party may appeal the decision of the ALJ to the DAB by 
filing a notice of appeal with the DAB within 30 days of the date of 
service of the initial decision. The DAB may extend the initial 30-day 
period for a period of time not to exceed 30 days if a party files with 
the DAB a request for an extension within the initial 30-day period and 
shows good cause.
    (b) If a party files a timely notice of appeal with the DAB, the ALJ 
will forward the record of the proceeding to the DAB.
    (c) A notice of appeal will be accompanied by a written brief 
specifying exceptions to the initial decision and reasons supporting the 
exceptions, and identifying which finding of fact and conclusions of law 
the party is taking exception to. Any party may file a brief in 
opposition to exceptions, which may raise any relevant issue not 
addressed in the exceptions, within 30 days of receiving the notice of 
appeal and accompanying brief. The DAB may permit the parties to file 
reply briefs.
    (d) There is no right to appear personally before the DAB, or to 
appeal to the DAB any interlocutory ruling by the ALJ.
    (e) No party or person (except employees of the DAB) will 
communicate in any way with members of the DAB on any matter at issue in 
a case, unless on notice and opportunity for all parties to participate. 
This provision does not prohibit a person or party from inquiring about 
the status of a case or asking routine questions concerning 
administrative functions or procedures.
    (f) The DAB will not consider any issue not raised in the parties' 
briefs, nor any issue in the briefs that could have been, but was not, 
raised before the ALJ.
    (g) If any party demonstrates to the satisfaction of the DAB that 
additional evidence not presented at such hearing is relevant and 
material and that there were reasonable grounds for the failure to 
adduce such evidence at such hearing, the DAB may remand the matter to 
the ALJ for consideration of such additional evidence.
    (h) The DAB may remand a case to an ALJ for further proceedings, or 
may issue a recommended decision to decline review or affirm, increase, 
reduce, or reverse any penalty or assessment determined by the ALJ.
    (i) When the DAB reviews a case, it will limit its review to whether 
the ALJ's initial decision is supported by substantial evidence on the 
whole record or contained error of law.
    (j) Within 60 days after the time for submission of briefs or, if 
permitted, reply briefs has expired, the DAB will issue to each party to 
the appeal and to the Commissioner a copy of the DAB's recommended 
decision and a statement describing the right of any respondent who is 
found liable to seek judicial review upon a final decision.

[61 FR 65472, Dec. 13, 1996]



Sec. 498.222  Final decision of the Commissioner.

    (a) Except with respect to any penalty or assessment remanded to the 
ALJ, the DAB's recommended decision, including a recommended decision to 
decline review of the initial decision, shall become the final decision 
of the Commissioner 60 days after the date on which the DAB serves the 
parties to the appeal and the Commissioner with a copy of the 
recommended decision, unless the Commissioner reverses or modifies the 
DAB's recommended decision within that 60-day period. If the 
Commissioner reverses or modifies the DAB's recommended decision, the 
Commissioner's decision is final and binding on the parties. In either 
event, a copy of the final decision will be served on the parties. If 
service is by mail, the date of service will be deemed to be five days 
from the date of mailing.
    (b) There shall be no right to personally appear before or submit 
additional

[[Page 1208]]

evidence, pleadings or briefs to the Commissioner.
    (c)(1) Any petition for judicial review must be filed within 60 days 
after the parties are served with a copy of the final decision. If 
service is by mail, the date of service will be deemed to be five days 
from the date of mailing.
    (2) In compliance with 28 U.S.C. 2112(a), a copy of any petition for 
judicial review filed in any U.S. Court of Appeals challenging a final 
action of the Commissioner will be sent by certified mail, return 
receipt requested, to the SSA General Counsel. The petition copy will be 
time-stamped by the clerk of the court when the original is filed with 
the court.
    (3) If the SSA General Counsel receives two or more petitions within 
10 days after the final decision is issued, the General Counsel will 
notify the U.S. Judicial Panel on Multidistrict Litigation of any 
petitions that were received within the 10-day period.

[61 FR 65472, Dec. 13, 1996]



Sec. 498.223  Stay of initial decision.

    (a) The filing of a respondent's request for review by the DAB will 
automatically stay the effective date of the ALJ's decision.
    (b)(1) After issuance of the final decision, pending judicial 
review, the respondent may file a request for stay of the effective date 
of any penalty or assessment with the ALJ. The request must be 
accompanied by a copy of the notice of appeal filed with the Federal 
court. The filing of such a request will automatically act to stay the 
effective date of the penalty or assessment until such time as the ALJ 
rules upon the request.
    (2) The ALJ may not grant a respondent's request for stay of any 
penalty or assessment unless the respondent posts a bond or provides 
other adequate security.
    (3) The ALJ will rule upon a respondent's request for stay within 10 
days of receipt.

[61 FR 65472, Dec. 13, 1996]



Sec. 498.224  Harmless error.

    No error in either the admission or the exclusion of evidence, and 
no error or defect in any ruling or order or in any act done or omitted 
by the ALJ or by any of the parties is ground for vacating, modifying or 
otherwise disturbing an otherwise appropriate ruling or order or act, 
unless refusal to take such action appears to the ALJ or the DAB to be 
inconsistent with substantial justice. The ALJ and the DAB at every 
stage of the proceeding will disregard any error or defect in the 
proceeding that does not affect the substantial rights of the parties.

[61 FR 65472, Dec. 13, 1996]

                           PART 499 [RESERVED]

[[Page 1209]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  Chapter III Index
  List of CFR Sections Affected

[[Page 1211]]



                    Table of CFR Titles and Chapters




                      (Revised as of April 1, 2004)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2 [Reserved]

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)

[[Page 1212]]

    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
        LV  National Endowment for the Arts (Part 6501)
       LVI  National Endowment for the Humanities (Part 6601)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
     LXVII  Institute of Museum and Library Services (Part 7701)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
    LXXIII  Department of Agriculture (Part 8301)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                      Title 6--Homeland Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 0--99)

[[Page 1213]]

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)

[[Page 1214]]

      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

[[Page 1215]]

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board, Department of 
                Commerce (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board, 
                Department of Commerce (Parts 500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

[[Page 1216]]

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)

[[Page 1217]]

      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  Bureau of Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Bureau of Immigration and Customs Enforcement, 
                Department of Homeland Security (Parts 400--599)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board Regulations (Parts 
                900--999)

[[Page 1218]]

         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)

[[Page 1219]]

      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)

[[Page 1220]]

       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)

[[Page 1221]]

       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)

[[Page 1222]]

        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Part 1501)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

[[Page 1223]]

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)

[[Page 1224]]

       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-70)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10010)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare

[[Page 1225]]

        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)

[[Page 1226]]

       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)

[[Page 1227]]

        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Bureau of Transportation Statistics, Department of 
                Transportation (Parts 1400--1499)
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1599)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)

[[Page 1228]]

         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR

[[Page 1229]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of April 1, 2004)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX

[[Page 1230]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs and Border Protection Bureau              19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII

[[Page 1231]]

  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I, IV, VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                5, III, LXXVII; 14, VI; 
                                                  48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II

[[Page 1232]]

  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5

[[Page 1233]]

  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V; 42, I
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  6, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection Bureau            19, I
  Federal Emergency Management Agency             44, I
  Immigration and Customs Enforcement Bureau      19, IV
  Immigration and Naturalization                  8, I
  Transportation Security Administration          49, XII
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Customs Enforcement Bureau        19, IV
Immigration and Naturalization                    8, I
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V; 42, I
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General

[[Page 1234]]

  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I, XI; 40, 
                                                  IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A

[[Page 1235]]

  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
   Commission
[[Page 1236]]

Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35
Panama Canal Regulations                          35, I
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV

[[Page 1237]]

Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection Bureau            19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 1239]]







                          Index to Chapter III



       Index to Chapter III--Social Security Acquiescence Rulings

    Editorial Note: This listing is provided for information purposes 
only. It is compiled and kept up-to-date by the Social Security 
Administration.

    This listing contains all Acquiescence Rulings (ARs) published in 
the Federal Register under the requirements of 20 CFR 402.35(b)(2) 
during the period from January 11, 1990, through March 5, 2004. The 
listing includes the AR number, title, publication date and the Federal 
Register reference number. (The parenthetical number that follows each 
AR number refers to the United States judicial circuit involved.) This 
notice also lists ARs which were rescinded during this period. In 
addition, SSA has included Federal Register references for three prior 
cumulative AR listing notices.
    SSA believes this publication will assist individuals in finding 
ARs.
    The CFR may not state the circuitwide standard in effect when SSA 
has determined that the holding in a decision of a United States Court 
of Appeals is at variance with SSA's national interpretation.

                          Acquiescence Rulings

    Published cumulative lists of ARs relating to claims under title II 
and title XVI of the Social Security Act and part B of the Black Lung 
Benefits Act were issued for ARs published prior to January 11, 1990.
    1. The first notice announcing 14 ARs, issued during the period from 
January 23, 1986, through April 30, 1986, was published in the Federal 
Register on June 4, 1986 (51 FR 20354).
    2. A second notice announcing 12 additional ARs, issued during the 
period from May 20, 1986, through March 31, 1987, was published in the 
Federal Register on August 7, 1987 (52 FR 29941).
    3. A third notice announcing 11 more ARs, issued during the period 
from May 1, 1987, through November 14, 1988, the withdrawal of one AR 
which was issued earlier, and the withdrawal of one of the ARs issued 
during this period was published in the Federal Register on July 10, 
1990 (55 FR 28302).

    AR 86-2R(2) Rosenberg v. Richardson, 538 F.2d 487 (2d Cir. 1976); 
Capitano v. Secretary of HHS, 732 F.2d 1066 (2d Cir. 1984)--Entitlement 
of a Deemed Widow When a Legal Widow is Entitled on the Same Earnings 
Record--Title II of the Social Security Act.
    Published: June 25, 1992, at 57 FR 28527.
    Note: The original AR for the Second Circuit Court of Appeals' 
holding in Rosenberg and Capitano (AR 86-2(2)), issued January 23, 1986, 
was rescinded and replaced by this revised AR.

    AR 86-18R(5) Woodson v. Schweiker, 656 F.2d 1169 (5th Cir. 1981)--
Interpretation of the Deemed Marriage Provision--Title II of the Social 
Security Act.
    Published: June 25, 1992, at 57 FR 28529 as AR 860918R(5).
    Note: The original AR for the Fifth Circuit Court of Appeals' 
holding in Woodson (AR 86-18(5)), issued May 22, 1986, was rescinded and 
replaced by this revised AR.

    AR 86-19R(11) Woodson v. Schweiker, 656 F.2d 1169 (5th Cir. 1981)--
Interpretation of the Deemed Marriage Provision--Title II of the Social 
Security Act.
    Published: June 25, 1992, at 57 FR 28524.
    Note: The original AR applicable in the Eleventh Circuit for the 
Fifth Circuit Court of Appeals' holding in Woodson (AR 86-19(11)), 
issued May 22, 1986, was rescinded and replaced by this revised AR.

    AR 90-1(9) Paxton v. Secretary of Health and Human Services, 856 
F.2d 1352 (9th Cir. 1988)--Treatment of a Dependent's Portion of an 
Augmented Veterans Benefit Paid Directly To a Veteran--Title XVI of the 
Social Security Act.

[[Page 1240]]

    Published: July 16, 1990, at 55 FR 28946. Rescinded--See section on 
Rescissions in this notice.

    AR 90-2(2) Ruppert v. Bowen, 871 F.2d 1172 (2d Cir. 1989)--
Evaluation of a Rental Subsidy as In-Kind Income for Supplemental 
Security Income (SSI) Benefit Calculation Purposes--Title XVI of the 
Social Security Act.
    Published: July 16, 1990, at 55 FR 28947.

    AR 90-3(4) Smith v. Bowen, 837 F.2d 635 (4th Cir. 1987)--Use of 
Vocational Expert or Other Vocational Specialist in Determining Whether 
a Claimant Can Perform Past Relevant Work--Titles II and XVI of the 
Social Security Act.
    Published: July 16, 1990, at 55 FR 28949.

    AR 90-4(4) Culbertson v. Secretary of Health and Human Services, 859 
F.2d 319 (4th Cir. 1988); Young v. Bowen, 858 F.2d 951 (4th Cir. 1988)--
Waiver of Administrative Finality in Proceedings Involving Unrepresented 
Claimants Who Lack the Mental Competence to Request Administrative 
Review--Titles II and XVI of the Social Security Act.
    Published: July 16, 1990, at 55 FR 28943.

    AR 90-5(2) Kier v. Sullivan, 888 F.2d 244 (2d Cir. 1989), reh'g 
denied, January 22, 1990--Assessment of Residual Functional Capacity in 
Disabled Widows' Cases--Title II of the Social Security Act.
    Published: September 18, 1990, at 55 FR 38400. Rescinded--See 
section on Rescissions in this notice.

    AR 90-6(1) Cassas v. Secretary of Health and Human Services, 893 
F.2d 454 (1st Cir. 1990), reh'g denied, April 9, 1990--Assessment of 
Residual Functional Capacity in Disabled Widows' Cases--Title II of the 
Social Security Act.
    Published: September 18, 1990, at 55 FR 38398. Rescinded--See 
section on Rescissions in this notice.

    AR 90-7(9) Ruff v. Sullivan, 907 F.2d 915 (9th Cir. 1990)--
Assessment of Residual Functional Capacity in Disabled Widows' Cases--
Title II of the Social Security Act.
    Published: September 18, 1990, at 55 FR 38402. Rescinded--See 
section on Rescissions in this notice.

    AR 91-1(5) Lidy v. Sullivan, 911 F.2d 1075 (5th Cir. 1990)--Right to 
Subpoena an Examining Physician for Cross-examination Purposes--Titles 
II and XVI of the Social Security Act.
    Published: December 31, 1991, at 56 FR 67625 as AR 91-X(5).
    Correction Notice Published: May 1, 1992, at 57 FR 18899--AR number 
changed to 91-1(5).

    AR 92-1(3) Mazza v. Secretary of Health and Human Services, 903 F.2d 
953 (3d Cir. 1990)--Order of Effectuation in Concurrent Application 
Cases (Title II/Title XVI).
    Published: January 10, 1992, at 57 FR 1190 as AR 91-X(3).
    Correction Notice Published: May 1, 1992, at 57 FR 18899--AR number 
changed to 92-1(3).

    AR 92-2(6) Difford v. Secretary of Health and Human Services, 910 
F.2d 1316 (6th Cir. 1990), reh'g denied, February 7, 1991--Scope of 
Review on Appeal in a Medical Cessation of Disability Case--Title II of 
the Social Security Act.
    Published: March 17, 1992, at 57 FR 9262.

    AR 92-3(4) Branham v. Heckler, 775 F.2d 1271 (4th Cir. 1985); 
Flowers v. U.S. Department of Health and Human Services, 904 F.2d 211 
(4th Cir. 1990)--What Constitutes a Significant Work-Related Limitation 
of Function.
    Published: March 10, 1992, at 57 FR 8463.

    AR 92-4(11) Bloodsworth v. Heckler, 703 F.2d 1233 (11th Cir. 1983)--
Judicial Review of an Appeals Council Dismissal of a Request for Review 
of an Administrative Law Judge (ALJ) Decision.
    Published: April 8, 1992, at 57 FR 11961.

    AR 92-5(9) Quinlivan v. Sullivan, 916 F.2d 524 (9th Cir. 1990)--
Meaning of the Term ``Against Equity and Good Conscience'' in the Rules 
for Waiver of Recovery of an Overpayment--Titles II and XVI of the 
Social Security Act; Title IV of the Federal Mine Safety and Health Act 
of 1977.
    Published: June 22, 1992, at 57 FR 27783.

    AR 92-6(10) Walker v. Secretary of Health and Human Services, 943 
F.2d 1257 (10th Cir. 1991)--Entitlement to Trial Work Period Before 
Approval of an Award for Benefits and Before Twelve

[[Page 1241]]

Months Have Elapsed Since Onset of Disability--Titles II and XVI of the 
Social Security Act.
    Published: September 17, 1992, at 57 FR 43007.

    AR 92-7(9) Gonzalez v. Sullivan, 914 F.2d 1197 (9th Cir. 1990)--
Effect of Initial Determination Notice Language on the Application of 
Administrative Finality--Titles II and XVI of the Social Security Act.
    Published: September 30, 1992, at 57 FR 45061.

    AR 93-1(4) Branham v. Heckler, 775 F.2d 1271 (4th Cir. 1985); 
Flowers v. U.S. Department of Health and Human Services, 904 F.2d 211 
(4th Cir. 1990)--What Constitutes an Additional and Significant Work-
Related Limitation of Function--Titles II and XVI of the Social Security 
Act.
    Published: April 29, 1993, at 58 FR 25996.
    Note: The original AR for the Fourth Circuit Court of Appeals' 
holding in Branham and Flowers (AR 92-3(4)), issued March 10, 1992, was 
revised to reflect a regulatory change regarding the IQ Listing range. 
There were no other substantive changes to this AR.

    AR 93-2(2) Conley v. Bowen, 859 F.2d 261 (2d Cir. 1988)--
Determination of Whether an Individual With a Disabling Impairment Has 
Engaged in Substantial Gainful Activity Following a Reentitlement 
Period--Title II of the Social Security Act.
    Published: May 17, 1993, at 58 FR 28887.

    AR 93-3(6) Akers v. Secretary of Health and Human Services, 966 F.2d 
205 (6th Cir. 1992)--Attorney's Fees Based in Part on Continued Benefits 
Paid to Social Security Claimants--Title II of the Social Security Act.
    Published: July 29, 1993, at 58 FR 40662.

    AR 93-4(2) Condon and Brodner v. Bowen, 853 F.2d 66 (2d Cir. 1988)--
Attorney's Fees Based in Part on Continued Benefits Paid to Social 
Security Claimants--Title II of the Social Security Act.
    Published: July 29, 1993, at 58 FR 40663.

    AR 93-5(11) Shoemaker v. Bowen, 853 F.2d 858 (11th Cir. 1988)--
Attorney's Fees Based in Part on Continued Benefits Paid to Social 
Security Claimants--Title II of the Social Security Act.
    Published: July 29, 1993, at 58 FR 40665.

    AR 93-6(8) Brewster on Behalf of Keller v. Sullivan, 972 F.2d 898 
(8th Cir. 1992)--Interpretation of the Secretary's Regulation Regarding 
Presumption of Death--Title II of the Social Security Act.
    Published: August 16, 1993, at 58 FR 43369. Rescinded--See section 
on Rescissions in this notice.

    AR 94-1(10) Wolfe v. Sullivan, 988 F.2d 1025 (10th Cir. 1993)--
Contributions To Support re: Posthumous Illegitimate Child--Title II of 
the Social Security Act.
    Published: June 27, 1994, at 59 FR 33003.

    AR 94-2(4) Lively v. Secretary of Health and Human Services, 820 
F.2d 1391 (4th Cir. 1987)--Effect of Prior Disability Findings on 
Adjudication of a Subsequent Disability Claim Arising Under the Same 
Title of the Social Security Act--Titles II and XVI of the Social 
Security Act.
    Published: July 7, 1994, at 59 FR 34849.

    AR 95-1(6) Preslar v. Secretary of Health and Human Services, 14 
F.3d 1107 (6th Cir. 1994)--Definition of Highly Marketable Skills for 
Individuals Close to Retirement Age--Titles II and XVI of the Social 
Security Act.
    Published: May 4, 1995, at 60 FR 22091.

    AR 95-2(9) Hodge v. Shalala, 27 F.3d 430 (9th Cir. 1994)--Workers' 
Compensation--Proration of a Lump-Sum Award for Permanent Disability 
Over the Remainder of an Individual's Working Life Under Oregon Workers' 
Compensation Law--Title II of the Social Security Act.
    Published: July 12, 1995, at 60 FR 35987.

    AR 96-1(6) DeSonier v. Sullivan, 906 F.2d 228 (6th Cir. 1990)--
Method of Application of State Intestate Succession Law in Determining 
Entitlement to Child's Benefits--Title II of the Social Security Act.
    Published: June 3, 1996, at 61 FR 27942.


[[Page 1242]]


    AR 97-1(1) Parisi By Cooney v. Chater, 69 F.3d 614 (1st Cir. 1995)--
Reduction of Benefits Under the Family Maximum In Cases Involving Dual 
Entitlement--Title II of the Social Security Act.
    Published: January 13, 1997, at 62 FR 1792.

    AR 97-2(9) Gamble v. Chater, 68 F.3d 319 (9th Cir. 1995)--Amputation 
of a Lower Extremity--When the Inability to Afford the Cost of a 
Prosthesis Meets the Requirements of Section 1.10C of the Listing of 
Impairments--Titles II and XVI of the Social Security Act.
    Published: January 13, 1997, at 62 FR 1791.

    AR 97-3(11) Daniels on Behalf of Daniels v. Sullivan, 979 F.2d 1516 
(11th Cir. 1992)--Application of a State's Intestacy Law Requirement 
that Paternity be Established During the Lifetime of the Father--Title 
II of the Social Security Act.
    Published: August 4, 1997, at 62 FR 41989.

    AR 97-4(9) Chavez v. Bowen, 844 F.2d 691 (9th Cir. 1988)--Effect of 
a Prior Final Decision That a Claimant is Not Disabled, And of Findings 
Contained Therein, On Adjudication of a Subsequent Disability Claim 
Arising Under the Same Title of the Social Security Act--Titles II and 
XVI of the Social Security Act.
    Published: December 3, 1997, at 62 FR 64038.

    AR 98-1(8) Newton v. Chater, 92 F.3d 688 (8th Cir. 1996)--
Entitlement to Trial Work Period Before Approval of an Award for 
Benefits and Before Twelve Months Have Elapsed Since Onset of 
Disability--Titles II and XVI of the Social Security Act.
    Published: February 23, 1998, at 63 FR 9037.

    AR 98-2(8) Sird v. Chater, 105 F.3d 401 (8th Cir. 1997)--Mental 
Retardation--What Constitutes an Additional and Significant Work-Related 
Limitation of Function--Titles II and XVI of the Social Security Act.
    Published: February 24, 1998, at 63 FR 9279.

    AR 98-3(6) Dennard v. Secretary of Health and Human Services, 907 
F.2d 598 (6th Cir. 1990)--Effect of a Prior Finding of the Demands of 
Past Work on Adjudication of a Subsequent Disability Claim Arising Under 
the Same Title of the Social Security Act--Titles II and XVI of the 
Social Security Act.
    Published: June 1, 1998, at 63 FR 29770.

    AR 98-4(6) Drummond v. Commissioner of Social Security, 126 F.3d 837 
(6th Cir. 1997)--Effect of Prior Findings on Adjudication of a 
Subsequent Disability Claim Arising Under the Same Title of the Social 
Security Act--Titles II and XVI of the Social Security Act.
    Published: June 1, 1998, at 63 FR 29771.

    AR 98-5(8) State of Minnesota v. Apfel, 151 F.3d 742 (8th Cir. 
1998)--Coverage for Employees Under a Federal-State Section 218 
Agreement or Modification and Application of the Student Services 
Exclusion From Coverage to Services Performed by Medical Residents--
Title II of the Social Security Act.
    Published: October 30, 1998, at 63 FR 58444.

    AR 99-1(2) Florez on Behalf of Wallace v. Callahan, 156 F.3d 438 (2d 
Cir. 1998)--Supplemental Security Income--Deeming of Income From a 
Stepparent to a Child When the Natural Parent is Not Living in the Same 
Household--Title XVI of the Social Security Act.
    Published: February 1, 1999, at 64 FR 4923.

    AR 99-2(8) Kerns v. Apfel, 160 F.3d 464 (8th Cir. 1998)--Definition 
of Highly Marketable Skills for Individuals Close to Retirement Age--
Titles II and XVI of the Social Security Act.
    Published: March 11, 1999, at 64 FR 12205.

    AR 99-3(5) McQueen v. Apfel, 168 F.3d 152 (5th Cir. 1999)--
Definition of Highly Marketable Skills for Individuals Close to 
Retirement Age--Titles II and XVI of the Social Security Act.
    Published: May 27, 1999, at 64 FR 28853.

    AR 99-4(11) Bloodsworth v. Heckler, 703 F.2d 1233 (11th Cir. 1983)--
Judicial Review of an Appeals Council Dismissal of a Request for Review 
of an Administrative Law Judge Decision--Titles II and XVI of the Social 
Security Act.
    Published: October 26, 1999, at 64 FR 57687.
    Note: The original AR for the Eleventh Circuit Court of Appeals' 
holding in

[[Page 1243]]

Bloodsworth (AR 92-4(11)), issued April 8, 1992, was revised to delete a 
parenthetical statement and to update the AR's language. These revisions 
were technical corrections only and did not involve any substantive 
changes.

    AR 00-1(4) Albright v. Commissioner of the Social Security 
Administration, 174 F.3d 473 (4th Cir. 1999)--Effect of Prior Disability 
Findings on Adjudication of a Subsequent Disability Claim--Titles II and 
XVI of the Social Security Act.
    Published: January 12, 2000, at 65 FR 1936.

    AR 00-2(7) Hickman v. Apfel, 187 F.3d 683 (7th Cir. 1999)--
Evidentiary Requirements for Determining Medical Equivalence to a Listed 
Impairment--Titles II and XVI of the Social Security Act.
    Published: May 3, 2000, at 65 FR 25783.

    AR 00-3(10) Haddock v. Apfel, 196 F.3d 1084 (10th Cir. 1999)--Use of 
Vocational Expert Testimony and the Dictionary of Occupational Titles 
Under 20 CFR 404.1566, 416.966--Titles II and XVI of the Social Security 
Act.
    Published: June 20, 2000, at 65 FR 38312.

    AR 00-4(2) Curry v. Apfel, 209 F.3d 117 (2d Cir. 2000)--Burden of 
Proving Residual Functional Capacity at Step Five of the Sequential 
Evaluation Process for Determining Disability--Titles II and XVI of the 
Social Security Act.
    Published: September 11, 2000, at 65 FR 54879.

    AR 00-5(6) Salamalekis v. Apfel, 221 F.3d 828 (6th Cir. 2000)--
Entitlement to Trial Work Period Before Approval of an Award of Benefits 
and Before 12 Months Have Elapsed Since the Alleged Onset of 
Disability--Titles II and XVI of the Social Security Act.
    Published: November 15, 2000, at 65 FR 69116.

    AR 01-1(3) Sykes v. Apfel, 228 F.3d 259 (3d Cir. 2000)--Using the 
Grid Rules as a Framework for Decisionmaking When an Individual's 
Occupational Base is Eroded by a Nonexertional Limitation--Titles II and 
XVI of the Social Security Act.
    Published: January 25, 2001, at 66 FR 7829.

    AR 03-1(7) Blakes v. Barnhart, 331 F.3d 565 (7th Cir. 2003)--Cases 
Involving Sections 12.05 and 112.05 of the Listing of Impairments That 
Are Remanded By a Court for Further Proceedings Under Titles II and XVI 
of the Social Security Act.
    Published: December 23, 2003, at 68 FR 74279.

                   Rescissions Without Replacement ARs

    AR 86-1(9) Summy v. Schweiker, 688 F.2d 1233 (9th Cir. 1982)--Third 
party payments for medical care or services--Title XVI of the Social 
Security Act.
    Notice of Rescission Published: July 5, 1994, at 59 FR 34444.

    AR 86-6(3) Aubrey v. Richardson, 462 F.2d 782 (3d Cir. 1972); 
Shelnutt v. Heckler, 723 F.2d 1131 (3d Cir. 1983)--Interpretation of the 
Secretary's Regulation Regarding Presumption of Death--Title II of the 
Social Security Act.
    Notice of Rescission Published: July 14, 1995, at 60 FR 36327.

    AR 86-7(5) Autrey v. Harris, 639 F.2d 1233 (5th Cir. 1981); Wages v. 
Schweiker, 659 F.2d 59 (5th Cir. 1981)--Interpretation of the 
Secretary's Regulation Regarding Presumption of Death--Title II of the 
Social Security Act.
    Notice of Rescission Published: July 14, 1995, at 60 FR 36327.

    AR 86-8(6) Johnson v. Califano, 607 F.2d 1178 (6th Cir. 1979)--
Interpretation of the Secretary's Regulation Regarding Presumption of 
Death--Title II of the Social Security Act.
    Notice of Rescission Published: July 14, 1995, at 60 FR 36327.

    AR 86-9(9) Secretary of Health, Education and Welfare v. Meza, 386 
F.2d 389 (9th Cir. 1966); Gardner v. Wilcox, 370 F.2d 492 (9th Cir. 
1966)--Interpretation of the Secretary's Regulation Regarding 
Presumption of Death--Title II of the Social Security Act.
    Notice of Rescission Published: July 14, 1995, at 60 FR 36327.

    AR 86-10(10) Edwards v. Califano, 619 F.2d 865 (10th Cir. 1980)--
Interpretation of the Secretary's Regulation Regarding Presumption of 
Death--Title II of the Social Security Act.
    Notice of Rescission Published: July 14, 1995, at 60 FR 36327.


[[Page 1244]]


    AR 86-11(11) Autrey v. Harris, 639 F.2d 1233 (5th Cir. 1981)--
Interpretation of the Secretary's Regulation Regarding Presumption of 
Death--Title II of the Social Security Act.
    Notice of Rescission Published: July 14, 1995, at 60 FR 36327.

    AR 86-17(9) Owens v. Schweiker, 692 F.2d 80 (9th Cir. 1982)--Child's 
Benefits--Title II of the Social Security Act.
    Notice of Rescission Published: November 27, 1998, at 63 FR 57727.

    AR 87-1(6) Webb v. Richardson, 472 F.2d 529 (6th Cir. 1972)--
Attorneys' Fees - Single Fee, Not to Exceed 25 Percent of Past-Due 
Benefits, Set by Tribunal Which Ultimately Upholds the Claim--Title II 
of the Social Security Act.
    Notice of Rescission Published: March 3, 1995, at 60 FR 11977.

    AR 87-2(11) Butterworth v. Bowen, 796 F.2d 1379 (11th Cir. 1986)--
The Conditions under which the Appeals Council has the Right to Reopen 
and Revise Prior Decisions--Titles II and XVI of the Social Security 
Act.
    Notice of Rescission Published: August 6, 1998, at 63 FR 36726.

    AR 87-3(9) Hart v. Bowen, 799 F.2d 567 (9th Cir. 1986)--Current 
Market Value of an Installment Sales Contract as an Excess Resource.
    Notice of Rescission Published: February 9, 1995, at 60 FR 7782.

    AR 87-4(8) Iamarino v. Heckler, 795 F.2d 59 (8th Cir. 1986)--
Positive Presumption of Substantial Gainful Activity (SGA) for Sheltered 
Work.
    Notice of Rescission Published: August 10, 2000, at 65 FR 42793.

    AR 87-5(3) Velazquez v. Heckler, 802 F.2d 680 (3d Cir. 1986)--
Consideration of Vocational Factors in Past Work Determinations.
    Notice of Rescission Published: July 16, 1990, at 55 FR 28943.

    AR 88-1(11) Patterson v. Bowen, 799 F.2d 1455 (11th Cir. 1986), 
reh'g denied, February 12, 1987--Use of the Age Factor in the Medical-
Vocational Guidelines in Making Disability Decisions.
    Notice of Rescission Published: May 8, 2000, at 65 FR 18143.

    AR 88-3(7) McDonald v. Bowen, 800 F.2d 153 (7th Cir. 1986), amended 
on reh'g, 818 F.2d 559 (7th Cir. 1987)--Entitlement to Benefits Where a 
Person Returns to Work Less Than 12 Months After Onset of Disability.
    Notice of Rescission Published: June 10, 2002, at 67 FR 39781.

    AR 88-5(1) McCuin v. Secretary of Health and Human Services, 817 
F.2d 161 (1st Cir. 1987)--Reopening by the Appeals Council of Decisions 
of Administrative Law Judges under Titles II and XVI of the Social 
Security Act.
    Notice of Rescission Published: February 23, 1994, at 59 FR 8650.

    AR 88-7(5) Hickman v. Bowen, 803 F.2d 1377 (5th Cir. 1986)--
Evaluation of Loans of In-Kind Support and Maintenance for Supplemental 
Security Income Benefit Calculation Purposes.
    Notice of Rescission Published: September 8, 1992, at 57 FR 40918.

    AR 90-1(9) Paxton v. Secretary of Health and Human Services, 856 
F.2d 1352 (9th Cir. 1988)--Treatment of a Dependent's Portion of an 
Augmented Veterans Benefit Paid Directly To a Veteran--Title XVI of the 
Social Security Act.
    Notice of Rescission Published: November 17, 1994, at 59 FR 59416.

    AR 90-3(4) Smith v. Bowen, 837 F.2d 635 (4th Cir. 1987)--Use of 
Vocational Expert or Other Vocational Specialist in Determining Whether 
a Claimant Can Perform Past Relevant Work--Titles II and XVI of the 
Social Security Act.
    Notice of Rescission Published: August 26, 2003, at 68 FR 51317.

    AR 90-5(2) Kier v. Sullivan, 888 F.2d 244 (2d Cir. 1989), reh'g 
denied, January 22, 1990--Assessment of Residual Functional Capacity in 
Disabled Widows' Cases--Title II of the Social Security Act.
    Notice of Rescission Published: May 22, 1991, at 56 FR 23592.

    AR 90-6(1) Cassas v. Secretary of Health and Human Services, 893 
F.2d 454 (1st Cir. 1990), reh'g denied, April 9, 1990--Assessment of 
Residual Functional Capacity in Disabled Widows' Cases--Title II of the 
Social Security Act.
    Notice of Rescission Published: May 22, 1991, at 56 FR 23591.


[[Page 1245]]


    AR 90-7(9) Ruff v. Sullivan, 907 F.2d 915 (9th Cir. 1990)--
Assessment of Residual Functional Capacity in Disabled Widows' Cases--
Title II of the Social Security Act.
    Notice of Rescission Published: May 22, 1991, at 56 FR 23592.

    AR 92-3(4) Branham v. Heckler, 775 F.2d 1271 (4th Cir. 1985); 
Flowers v. U.S. Department of Health and Human Services, 904 F.2d 211 
(4th Cir. 1990)--What Constitutes a Significant Work-Related Limitation 
of Function.
    Notice of Rescission Published: September 20, 2000, at 65 FR 50784.

    AR 92-6(10) Walker v. Secretary of Health and Human Services, 943 
F.2d 1257 (10th Cir. 1991)--Entitlement to Trial Work Period Before 
Approval of an Award for Benefits and Before Twelve Months Have Elapsed 
Since Onset of Disability--Titles II and XVI of the Social Security Act.
    Notice of Rescission Published: June 10, 2002, at 67 FR 39871.

    AR 93-1(4) Branham v. Heckler, 775 F.2d 1271 (4th Cir. 1985); 
Flowers v. U.S. Department of Health and Human Services, 904 F.2d 211 
(4th Cir. 1990)--What Constitutes an Additional and Significant Work-
Related Limitation of Function--Titles II and XVI of the Social Security 
Act.
    Notice of Rescission Published: September 20, 2000, at 65 FR 50784.

    AR 93-2(2) Conley v. Bowen, 859 F.2d 261 (2d Cir. 1988)--
Determination of Whether an Individual With a Disabling Impairment Has 
Engaged in Substantial Gainful Activity Following a Reentitlement 
Period--Title II of the Social Security Act.
    Notice of Rescission Published: August 10, 2000, at 65 FR 42793.

    AR 93-3(6) Akers v. Secretary of Health and Human Services, 966 F.2d 
205 (6th Cir. 1992)--Attorney's Fees Based in Part on Continued Benefits 
Paid to Social Security Claimants--Title II of the Social Security Act.
    Notice of Rescission Published: April 14, 2000, at 65 FR 20239.

    AR 93-4(2) Condon and Brodner v. Bowen, 853 F.2d 66 (2d Cir. 1988)--
Attorney's Fees Based in Part on Continued Benefits Paid to Social 
Security Claimants--Title II of the Social Security Act.
    Notice of Rescission Published: April 14, 2000, at 65 FR 20239.

    AR 93-5(11) Shoemaker v. Bowen, 853 F.2d 858 (11th Cir. 1988)--
Attorney's Fees Based in Part on Continued Benefits Paid to Social 
Security Claimants--Title II of the Social Security Act.
    Notice of Rescission Published: April 14, 2000, at 65 FR 20239.

    AR 93-6(8) Brewster on Behalf of Keller v. Sullivan, 972 F.2d 898 
(8th Cir. 1992)--Interpretation of the Secretary's Regulation Regarding 
Presumption of Death--Title II of the Social Security Act.
    Notice of Rescission Published: July 14, 1995, at 60 FR 36327.

    AR 94-2(4) Lively v. Secretary of Health and Human Services, 820 
F.2d 1391 (4th Cir. 1987)--Effect of Prior Disability Findings on 
Adjudication of a Subsequent Disability Claim Arising Under the Same 
Title of the Social Security Act--Titles II and XVI of the Social 
Security Act.
    Notice of Rescission Published: January 12, 2000, at 65 FR 1936.

    AR 95-1(6) Preslar v. Secretary of Health and Human Services, 14 
F.3d 1107 (6th Cir. 1994)--Definition of Highly Marketable Skills for 
Individuals Close to Retirement Age--Titles II and XVI of the Social 
Security Act.
    Notice of Rescission Published: May 8, 2000, at 65 FR 18144.

    AR 97-1(1) Parisi By Cooney v. Chater, 69 F.3d 614 (1st Cir. 1995)--
Reduction of Benefits Under the Family Maximum In Cases Involving Dual 
Entitlement--Title II of the Social Security Act.
    Notice of Rescission Published: October 27, 1999, at 64 FR 57919.

    AR 97-2(9) Gamble v. Chater, 68 F.3d 319 (9th Cir. 1995)--Amputation 
of a Lower Extremity--When the Inability to Afford the Cost of a 
Prosthesis Meets the Requirements of Section 1.10C of the Listing of 
Impairments--Titles II and XVI of the Social Security Act.
    Notice of Rescission Published: November 19, 2001, at 66 FR 58047.


[[Page 1246]]


    AR 98-1(8) Newton v. Chater, 92 F.3d 688 (8th Cir. 1996)--
Entitlement to Trial Work Period Before Approval of an Award for 
Benefits and Before Twelve Months Have Elapsed Since Onset of 
Disability--Titles II and XVI of the Social Security Act.
    Notice of Rescission Published: June 10, 2002, at 67 FR 39781.

    AR 98-2(8) Sird v. Chater, 105 F.3d 401 (8th Cir. 1997)--Mental 
Retardation--What Constitutes an Additional and Significant Work-Related 
Limitation of Function--Titles II and XVI of the Social Security Act.
    Notice of Rescission Published: September 20, 2000, at 65 FR 50784.

    AR 99-2(8) Kerns v. Apfel, 160 F.3d 464 (8th Cir. 1998)--Definition 
of Highly Marketable Skills for Individuals Close to Retirement Age--
Titles II and XVI of the Social Security Act.
    Notice of Rescission Published: May 8, 2000, at 65 FR 18144.

    AR 99-3(5) McQueen v. Apfel, 168 F.3d 152 (5th Cir. 1999)--
Definition of Highly Marketable Skills for Individuals Close to 
Retirement Age--Titles II and XVI of the Social Security Act.
    Notice of Rescission Published: May 8, 2000, at 65 FR 18144.

    AR 00-3(10) Haddock v. Apfel, 196 F.3d 1084 (10th Cir. 1999)--Use of 
Vocational Expert Testimony and the Dictionary of Occupational Titles 
Under 20 CFR 404.1566, 416.966--Titles II and XVI of the Social Security 
Act.
    Notice of Rescission Published: December 4, 2000, at 65 FR 75758.

    AR 00-4(2) Curry v. Apfel, 209 F.3d 117 (2d Cir. 2000)--Burden of 
Proving Residual Functional Capacity at Step Five of the Sequential 
Evaluation Process for Determining Disability--Titles II and XVI of the 
Social Security Act.
    Notice of Rescission Published: August 26, 2003, at 68 FR 51317.

    AR 00-5(6) Salamalekis v. Apfel, 221 F.3d 828 (6th Cir. 2000)--
Entitlement to Trial Work Period Before Approval of an Award of Benefits 
and Before 12 Months Have Elapsed Since the Alleged Onset of 
Disability--Titles II and XVI of the Social Security Act.
    Notice of Rescission Published: June 10, 2002, at 67 FR 39781.

[[Page 1247]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations which were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985, and 1986-2000,'' published in 
11 separate volumes.

                                  2001

20 CFR
                                                                   66 FR
                                                                    Page
Chapter III
401.180 (c) added...................................................2809
    Regulation at 66 FR 2809 eff. date delayed to 4-13-01...........9763
402.30 Amended......................................................2809
    Regulation at 66 FR 2809 eff. date delayed to 4-13-01...........9763
403 Added...........................................................2809
    Regulation at 66 FR 2809 eff. date delayed to 4-13-01...........9763
403.120 (c) corrected..............................................14316
404.401--404.480 (Subpart E) Authority citation revised............38906
404.401 (c) revised................................................38906
404.1203 OMB number................................................28836
404.1204 OMB number................................................28836
404.1214 OMB number................................................28836
404.1215 OMB number................................................28836
404.1216 OMB number................................................28836
404.1220 OMB number................................................28836
404.1225 OMB number................................................28836
404.1237 OMB number................................................28836
404.1239 OMB number................................................28836
404.1242 OMB number................................................28836
404.1243 OMB number................................................28836
404.1247 OMB number................................................28836
404.1249 OMB number................................................28836
404.1251 OMB number................................................28836
404.1265 OMB number................................................28836
404.1271 OMB number................................................28836
404.1272 OMB number................................................28836
404.1292 OMB number................................................28836
404.1501--404.1599 (Subpart P) Appendix 1 amended...34362, 58037, 58040, 
                                                     58041, 58044, 58045
    Appendix 2 revised.............................................45166
411 Added..........................................................67420
416.501--416.586 (Subpart E) Authority citation revised............38906
416.570 Amended....................................................38906
416.572 Added......................................................38906
416.590 Added......................................................67081
416.926a (m)(2) and (4) revised....................................58045
416.933 Amended....................................................58046
416.934 (a) and (h) removed; (b) through (g), (i) and (j) 
        redesignated as (a) through (h)............................58046
416.1400--416.1499 (Subpart N) Authority citation revised..........67081
416.1403 (a)(16) and (17) amended; (a)(18) and (19) added..........67081
422.301--422.317 (Subpart D) Authority citation revised............67081
422.301 (b) amended................................................67081
422.305 Heading and (a) amended....................................67081

                                  2002

20 CFR
                                                                   67 FR
                                                                    Page
Chapter III
404.401--404.480 (Subpart E) Regulation at 65 FR 42285 confirmed 
                                                                   20893
404.459 Regulation at 65 FR 42285 confirmed........................20893
404.1501--404.1599 (Subpart P) Appendix 1 amended....20024, 35723, 43538
416.1161 (c) amended...............................................11034
416.570 Amended....................................................38383
416.572 Heading, (a), (b), (c)(2) and (e) revised..................38383

[[Page 1248]]

416.1321--416.1340 (Subpart M) Regulation at 65 FR 42286 confirmed
                                                                   20893
416.1340 Regulation at 65 FR 42286 confirmed.......................20893

                                  2003

20 CFR
                                                                   68 FR
                                                                    Page
Chapter III
402.125 Amended....................................................60295
402.135 Amended....................................................60295
402.180 (a) amended................................................60295
402.190 (a) amended................................................60295
402.195 (a) amended................................................60295
404.201 Revised.....................................................4701
404.277 Revised.....................................................4702
404.304 Revised.....................................................4702
404.310 Revised.....................................................4702
404.311 Revised.....................................................4702
404.312 Revised.....................................................4702
404.313 Revised.....................................................4703
404.315 Heading and (a) introductory text revised...................4704
404.316 (b)(2) revised..............................................4704
404.317 Revised.....................................................4704
404.321 (a) and (c)(1) revised......................................4704
404.335 Revised.....................................................4704
404.336 Revised.....................................................4705
404.337 Revised.....................................................4706
404.338 Revised.....................................................4706
404.352 Revised.....................................................4707
404.401--404.480 (Subpart E) Authority citation revised......4707, 40122
404.401 (b)(5) revised; (b)(6) removed; (b)(7) redesignated as new 
        (b)(6).....................................................40122
404.402 (b)(1)(v) and (vi) amended; (b)(1)(vii) added..............15659
    (a) introductory text, (b)(2) and (d)(4) revised...............40122
404.409 Added.......................................................4707
404.410 Revised.....................................................4708
404.411 Revised.....................................................4709
404.412 Revised.....................................................4710
    Heading and (a)(1) revised.....................................40122
404.413 Revised.....................................................4710
404.421 Revised.....................................................4710
    Heading and (d) revised........................................40122
404.422 Removed....................................................40122
404.423 Amended....................................................40122
404.425 Revised....................................................40122
404.435 (a)(2) revised.............................................40123
404.436 (b) revised; (c), (d) and (e) removed......................40123
404.437 (a) revised................................................40123
404.458 Amended.............................................15659, 40123
404.527 (a) introductory text revised; (b)(1) amended..............74183
404.617 Added......................................................23194
404.621 Revised.....................................................4711
404.623 Revised.....................................................4712
404.900--404.999 (Subpart J) Authority citation revised............74183
404.902 (g) removed................................................40123
404.903 (t) and (u) amended; (v) added.............................74183
404.929 Revised.....................................................5218
    Regulation at 68 FR 5218 confirmed.............................69009
404.936 Revised.....................................................5218
    Regulation at 68 FR 5218 confirmed.............................69009
404.938 Revised.....................................................5219
    Regulation at 68 FR 5219 confirmed.............................69009
404.950 (a) and (e) revised.........................................5219
    Regulation at 68 FR 5219 confirmed.............................69009
404.1501 (g) revised...............................................51161
404.1505 (a) amended...............................................51161
404.1512 Heading and (c) revised; (g) added........................51161
404.1520 (e) and (f) redesignated as (f) and (g); (a), new (f) and 
        (g) revised; new (e) added.................................51161
404.1545 (a) revised...............................................51162
404.1546 Revised...................................................51162
404.1560 Revised...................................................51163
404.1561 Removed...................................................51163
404.1562 Revised...................................................51163
404.1563 (a) amended...............................................51163
404.1569a (a) amended..............................................51163
404.1594 (f)(7) amended............................................51163
404.1596 (b)(2)(i) and (ii) revised; (b)(2)(iii) removed...........40123
404.1501--404.1599 (Subpart P) Appendix 1 amended...........36912, 51693
    Appendix 2 amended.............................................51164
404.2101 Revised...................................................40123
404.2102 Introductory text amended; (f) revised....................40123
404.2103 Amended...................................................40123
404.2109 (c) removed; (d) through (h) redesignated as (c) through 
        (g)........................................................40123
404.2113 Removed...................................................40123
404.2116 (c) removed...............................................40124
404.2117 Introductory text and (f) revised.........................40124
408 Added..........................................................16418

[[Page 1249]]

416.200--416.269 (Subpart B) Authority citation revised............40124
416.200 Amended....................................................53508
416.207 Added......................................................53508
416.213 Removed....................................................40124
416.327 Added......................................................23195
416.421 (a) amended................................................53509
416.590 (a) introductory text revised..............................74184
416.640 (e)(5)(iii) amended........................................53509
416.701-416.732 (Subpart M) Authority citation revised.............40124
416.708 (i) removed................................................40124
416.901 (j) revised................................................51164
416.905 (a) amended................................................51164
416.912 Heading and (c) revised; (g) added.........................51164
416.920 (e) and (f) redesignated as (f) and (g); (a), new (f) and 
        (g) revised; new (e) added.................................51164
416.934 (g) revised; (i) added.....................................51693
416.945 (a) revised................................................51165
416.946 Revised....................................................51165
416.960 Revised....................................................51166
416.961 Removed....................................................51166
416.962 Revised....................................................51166
416.963 (a) amended................................................51166
416.969a (a) amended...............................................51166
416.994 (b)(5)(vi) amended.........................................51167
    (b)(5)(vi) corrected...........................................53219
416.1231 (b)(9) amended............................................53509
416.1242 (d) amended...............................................53509
416.1245 (b)(5) amended............................................53509
416.1247 (b) amended...............................................53509
416.1320 Redesignated from 416.1321................................53509
416.1321--416.1340 (Subpart M) Authority citation revised..........40124
416.1321 Redesignated as 416.1320; new 416.1321 added..............53509
416.1328 Removed...................................................40124
416.1335 Amended...................................................53509
416.1337 (b)(3)(ii) amended........................................53509
416.1403 (a)(18) and (19) amended; (a)(20) added...................74184
416.1429 Revised....................................................5219
    Regulation at 68 FR 5219 confirmed.............................69009
416.1436 Revised....................................................5220
    Regulation at 68 FR 5220 confirmed.............................69009
416.1438 Revised....................................................5220
    Regulation at 68 FR 5220 confirmed.............................69009
416.1450 (a) and (e) revised........................................5221
    Regulation at 68 FR 5221 confirmed.............................69009
416.1618 (d)(3)(i), (ii) and (iv) amended..........................53509
416.1701 Amended...................................................40124
416.1715 Removed...................................................40124
416.2040 (b) revised...............................................40124
416.2201--416.2227 (Subpart V) Authority citation revised..........40124
416.2201 Revised...................................................40124
416.2202 Introductory text amended; (f) revised....................40124
416.2203 Amended...................................................40125
416.2209 (c) removed; (d) through (h) redesignated as (c) through 
        (g)........................................................40125
416.2213 Removed...................................................40125
416.2216 (c) removed...............................................40125
416.2217 Introductory text and (f) revised.........................40125
422.104 Revised....................................................55308
422.107 (a) and (c) revised........................................55308
422.401--422.445 (Subpart E) Added.................................74184
435 Added..........................................................28712
436 Added...................................................66544, 66578
436.440 Added......................................................66579
437 Added..........................................................28729
438 Added..........................................................28745
439 Added...................................................66557, 66579
439.510 (c) amended................................................66580
439.605 (a)(2) amended.............................................66580

                                  2004

   (Regulations published from January 1, 2004 through April 1, 2004)

20 CFR
                                                                   69 FR
                                                                    Page
Chapter III
404.610 Revised......................................................498
404.611 Revised......................................................498
404.1401 Revised....................................................5692
404.1402 Revised....................................................5693
404.1403 Removed....................................................5693
404.1405 Heading and (b) revised....................................5693
404.1413 Revised....................................................5693
422.505 Revised......................................................499


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