[Federal Register Volume 59, Number 126 (Friday, July 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16050]


[[Page Unknown]]

[Federal Register: July 1, 1994]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Social Security Administration
RIN 0960-AB09

20 CFR Part 416

 

Supplemental Security Income for the Aged, Blind, and Disabled; 
What Is Not Income

AGENCY: Social Security Administration, HHS.

ACTION: Final rules.

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SUMMARY: These final rules revise the regulations as to what is 
considered not to be income under the supplemental security income 
(SSI) program in the following instance. The final rules conform SSI 
policy to a number of court rulings that have required the Social 
Security Administration (SSA) to consider Department of Veterans 
Affairs (DVA) payments resulting from unusual medical expenses not to 
be income for SSI purposes. Previously, DVA payments resulting from 
unusual medical expenses were considered needs-based pension or 
compensation payments and, therefore, income for SSI purposes except in 
the Ninth Circuit where SSA's Acquiescence Ruling 86-1(9) applies and 
in the Eleventh Circuit and the State of Indiana where courts have 
invalidated SSI policy. These regulations implement on a national basis 
a treatment of DVA payments resulting from unusual medical expenses 
that generally will be more advantageous to recipients than current 
national policy.

EFFECTIVE DATE: July 1, 1994.

FOR FURTHER INFORMATION CONTACT: Duane Heaton, Legal Assistant, 3-B-1 
Operations Building, 6401 Security Boulevard, Baltimore, MD 21235, 
(410) 965-8470.

SUPPLEMENTARY INFORMATION: These regulations affect the SSI program 
under title XVI of the Social Security Act (the Act), as amended and 
the Medicaid program under title XIX of the Act to the extent that 
Medicaid eligibility is based on title XVI eligibility. The purpose of 
the SSI program is to provide a minimum income level for aged, blind, 
and disabled people who do not have income or resources above levels 
specified in the Act. The regulations change what is considered not to 
be income under the SSI program.
    The DVA considers veterans' unusual medical expenses by deducting 
them from any countable income when computing some needs-based pension 
and compensation payments. (Unusual medical expenses are unreimbursed 
medical expenditures that exceed 5 percent of the applicable maximum 
annual DVA basic payment rate. This rate does not include an aid and 
attendance component.) Unusual medical expenses may result in a higher 
monthly DVA payment, an extra payment, or an increase in a payment. 
These DVA payments were treated as needs-based pension or compensation 
payments and, under Sec. 416.1121(a), as income for SSI purposes.
    In the case of Summy v. Schweiker, 688 F.2d 1233 (1982), the Ninth 
Circuit Court of Appeals held that these additional DVA payments 
represented reimbursement for medical expenses, and, therefore, were 
not income for SSI purposes under Sec. 416.1109(a). This section, which 
exempted third-party reimbursement for medical expenses from income, 
was subsequently revised and now appears at Sec. 416.1103(a). We are 
adding Sec. 416.1103(a)(7), which refers to DVA payments resulting from 
unusual medical expenses, to the list of medical care or services that 
are excluded from the definition of income. By doing this, we are 
recognizing that the nature of such payments is analogous to that of 
other forms of medical care or services that are currently not income 
under Sec. 416.1103(a).
    SSA published Acquiescence Ruling 86-1(9) to apply the Summy 
holding within the Ninth Circuit. Upon publication of these 
regulations, Acquiescence Ruling 86-1(9) will be withdrawn. While the 
regulatory change will generally benefit SSI recipients, it may result 
in reduced benefits or ineligibility for a small number of SSI 
recipients. Under section 1614(f) of the Act, the income and resources 
of spouses and parents who are not eligible for SSI are considered to 
the extent determined by the Secretary as the income and resources of 
their spouses and children who live with them and are eligible for SSI 
benefits. This is known as deeming. We do not count any of the income 
of an ineligible spouse or parent who receives payments from a needs-
based public income maintenance program because to do so would defeat 
the purpose of such a program.
    Presently, DVA payments resulting from unusual medical expenses are 
considered needs-based public income maintenance payments, and we do 
not count under SSI deeming rules any income of an ineligible spouse or 
parent which was counted or excluded in figuring these payments (see 
Sec. 416.1161(a)(2)). Under these final regulations, DVA payments 
resulting from unusual medical expenses will be considered 
reimbursement for medical expenses and not needs-based pension or 
compensation payments. For an individual who receives only such 
payments, receipt of such payments will no longer preclude our counting 
as income to the SSI recipient part of the income of an ineligible 
spouse or parent used in computing such payment.
    Example: Jenny, a disabled child who is eligible for SSI benefits, 
lives with her father, Mr. Morton, who received both a DVA pension 
based on need and a title II Social Security benefit. In determining 
how much income to deem to the child, none of Mr. Morton's title II 
benefit was considered income deemable to Jenny because the DVA had 
already counted Mr. Morton's title II benefit in figuring the amount of 
his DVA needs-based pension payment. In January 1992, Mr. Morton 
reported an increase in his title II benefit to the DVA and the amount 
of the increase precluded him from receiving further DVA pension 
payments. Because no DVA needs-based pension payment was being made, 
Mr. Morton's title II benefit was deemable as income to Jenny, 
resulting in a reduction of her SSI payment. In December 1992, Mr. 
Morton filed an annual report with the DVA reflecting both his title II 
income and evidence of his payment of unusual medical expenses. The DVA 
recomputed his income for the period January 1992 through December 1992 
based on the evidence of unusual medical expenses and issued him a one-
time payment. Under the prior policy, we would recalculate Jenny's SSI 
payment for the period January 1992 through December 1992 in order not 
to deem to Jenny any of Mr. Morton's title II benefit used by the DVA 
in determining a needs-based pension payment. However, under these 
final regulations, for deeming purposes, we will not recalculate 
Jenny's SSI benefit and will continue to consider Mr. Morton's title II 
benefit for the period January 1992 through December 1992 as income 
available to Jenny. The DVA payment resulting from unusual medical 
expenses will no longer be considered a public income-maintenance 
payment so we will not exclude any income used in calculating it, but 
instead we will consider the payment reimbursement for medical expenses 
and not income.
    The above example describes how we will apply the Summy decision 
nationwide under the SSI program. This change in the treatment of DVA 
payments for unusual medical expenses also affects how income is 
determined under the Medicaid program under title XIX of the Act.
    We published a notice of proposed rulemaking (NPRM) on August 24, 
1988 (53 FR 32252). That NPRM included proposed SSA and Health Care 
Financing Administration (HCFA) regulations on the treatment of DVA 
payments for unusual medical expenses under the SSI program as well as 
under the Medicaid program under title XIX of the Act. SSA coordinated 
and combined the NPRM with HCFA because, generally, the Medicaid 
statute uses the methodologies and treatment of income of the cash 
assistance programs such as SSI as the baseline for determining 
eligibility for Medicaid. Thus, in defining income for Medicaid 
eligibility purposes, the SSI treatment of DVA payments for unusual 
medical expenses would usually be applied.
    Based on the public comments and subsequent court decisions, the 
Medicaid portion of the final regulations required further 
consideration. As a result, SSA decided to proceed separately with the 
SSI portion of the final regulations. We based this decision on the 
need to provide uniform national policy in this area. These changes in 
SSI income rules will affect the Medicaid program in those States which 
use SSI income rules in their Medicaid program.

Comments Received Following Publication of the NPRM

    When these regulations were published as an NPRM, interested 
parties were given 60 days to submit comments. We received 13 letters: 
3 from State or local governmental entities, 4 from special interest 
organizations, and 6 from individuals. Several commenters wrote merely 
to support the proposed regulations; one indicated that the proposed 
regulations are unnecessary; and others, while supporting the proposed 
regulations, suggested changes. Many of the commenters addressed issues 
regarding the Medicaid aspects of the NPRM. The issues raised by those 
commenters are not within the purview of these final SSI regulations 
and have been referred to HCFA for appropriate response. We have 
summarized the SSI issues raised by the commenters and responded to 
these comments below.
    Comment: One commenter suggested that the phrase ``pension or 
compensation payments'' is more appropriate than the phrase ``pension 
payments'' which we used in the preamble to the NPRM, because DVA 
Dependency and Indemnity Compensation payments are also increased for 
unusual medical expenses.
    Response: We agree that the phrase ``pension payments'' should be 
clarified to more accurately describe DVA payments. In addition, we 
have emphasized that these payments are based on need by replacing the 
word ``pension'' with the phrase ``needs-based pension or 
compensation'' in the description of the rule change in this preamble.
    Comment: One commenter stated that the Medicaid regulations would 
defeat the purpose of the DVA payments. In support of this statement 
the commenter referred to a September 14, 1978, Federal Register 
document which provides:

    ``Where the SSI program reduces its payments to take into 
account assistance of this type (medical or social) furnished under 
other governmental programs, SSI is, in effect, nullifying or 
frustrating achievement of those other programs' purposes.''

    In referring to the above Federal Register statement, the commenter 
stated that ``this longstanding principle prohibiting the nullification 
of other benefits available to a recipient would be violated (for 
Medicaid purposes) if the DVA reimbursement for unusual medical 
expenses were to be included as income in the post-eligibility 
determination of the recipients' contribution to cost of care.''
    Response: The Federal Register statement to which the commenter has 
referred was made in the context of the SSI program and not the 
Medicaid program. In the context of the SSI program, the SSI program 
provides funds to meet an individual's food, clothing, and shelter 
needs, not medical or social service needs. One of the express purposes 
of these final rules is to revise SSI regulations so as not to count 
certain DVA payments in determining eligibility for and the amount of 
the SSI payments. To the extent the commenter is referencing the 
Medicaid program, this comment has been referred to HCFA for 
appropriate response. Other than the change explained above to the 
preamble to the regulations, we are adopting these SSI regulations as 
proposed.

Regulatory Procedures

Executive Order 12866

    The Office of Management and Budget has reviewed these rules and 
determined they do not meet the criteria for a significant regulatory 
action under E.O. 12866.

Regulatory Flexibility Act

    We certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because they 
affect only individuals. Therefore, a regulatory flexibility analysis 
as provided in Pub. L. 96-354, the Regulatory Flexibility Act, is not 
required.

Paperwork Reduction Act of 1980

    These regulations impose no additional reporting and recordkeeping 
requirements necessitating clearance by the Office of Management and 
Budget.

(Catalog of Federal Domestic Assistance: Program No. 93.807, 
Supplemental Security Income)

List of Subjects in 20 CFR Part 416

    Administrative practice and procedure, Aged, Blind, Disability 
benefits, Public assistance programs, Reporting and recordkeeping 
requirements, Supplemental security income.

    Dated: August 18, 1993.
Lawrence H. Thompson,
Principal Deputy Commissioner of Social Security.
    Approved: August 30, 1993.
Dona E. Shalala,
Secretary of Health and Human Services.
    Note: This document was received by the Office of the Federal 
Register on June 28, 1994.

    For the reasons set out in the preamble, part 416 of Title 20 of 
the Code of Federal Regulations is amended as follows:
    1. The authority citation for subpart K of part 416 continues to 
read as follows:

    Authority: Secs. 1102, 1602, 1611, 1612, 1613, 1614(f), 1621, 
and 1631 of the Social Security Act; 42 U.S.C. 1302, 1381a, 1382, 
1382a, 1382b, 1382c(f), 1382j, and 1383; sec. 211 of Pub. L. 93-66, 
87 Stat. 154.

    2. In Sec. 416.1103, a new paragraph (a)(7) is added to read as 
follows:


Sec. 416.1103  What is not income.

* * * * *
    (a) * * *
    (7) Payments from the Department of Veterans Affairs resulting from 
unusual medical expenses.
* * * * *
[FR Doc. 94-16050 Filed 6-30-94; 8:45 am]
BILLING CODE 4190-29-P