[Federal Register Volume 59, Number 138 (Wednesday, July 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-17401]


[[Page Unknown]]

[Federal Register: July 20, 1994]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Social Security Administration

20 CFR Part 404

RIN 0960-AD72

 

Computing Benefit Amounts, Disposing of Underpayments, Resolving 
Overpayments, and Payment Restriction

AGENCY: Social Security Administration, HHS.

ACTION: Proposed rules.

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

SUMMARY: We are proposing to revise our rules on computation of 
benefits to define the term ``first becomes eligible'' as it relates to 
a pension based on noncovered employment. We are also revising the 
computation rules to provide that we will consider all government 
service used by a pension-paying agency when we determine whether an 
individual first became eligible before 1986 for a pension based on 
noncovered employment. We are also revising our rule on determining 
fault regarding overpayments to state that benefit deductions because 
of net earnings from self-employment are not applicable after an 
individual attains age 70. Additionally, we are revising our rules on 
underpayments to clarify a misleading cross reference. Finally, we are 
updating the list of countries to which benefit payments are withheld 
because of Treasury Department restrictions.

DATES: Your comments will be considered if we receive them no later 
than September 19, 1994.

ADDRESSES: Comments should be submitted in writing to the Commissioner 
of Social Security, Department of Health and Human Services, P.O. Box 
1585, Baltimore, MD 21235, sent by telefax to (410) 966-0869, or 
delivered to the Office of Regulations, Social Security Administration, 
3-B-1 Operations Building, 6401 Security Boulevard, Baltimore, MD 
21235, between 8:00 a.m. and 4:30 p.m. on regular business days. 
Comments received may be inspected during these same hours by making 
arrangements with the contact person shown below.
    The electronic file of this document is available on the Federal 
Bulletin Board (FBB) at 9:00 a.m. on the date of publication in the 
Federal Register. To download the file, modem dial (202) 512-1387. The 
FBB instructions will explain how to download the file and the fee. 
This file is in WordPerfect and will remain on the FBB during the 
comment period.

FOR FURTHER INFORMATION CONTACT: Jack Schanberger, Legal Assistant, 3-
B-1 Operations Building, 6401 Security Boulevard, Baltimore, MD 21235, 
(410) 965-8471 for information about these rules.

SUPPLEMENTARY INFORMATION: Section 215(a)(7) of the Social Security Act 
(the Act) requires us to perform a modified computation of the primary 
insurance amount (the basic benefit amount) of an individual's old-age 
or disability insurance benefit if the individual first becomes 
eligible after 1985 for such a benefit and for a monthly periodic 
payment based on noncovered employment. The modified computation 
affects individuals who are concurrently entitled to such a monthly 
periodic payment and to old-age or disability benefits under title II 
of the Act. It results in a lower primary insurance amount that would 
have been computed if the monthly periodic payment had been considered. 
However, neither the Act nor our regulations at 20 CFR 404.213 define 
the phrase ``first becomes eligible.''
    In defining ``first becomes eligible,'' we have identified two 
interpretations which pertain to the date creditable service is 
acquired. One interpretation is that an individual first becomes 
eligible when he or she has currently acquired enough service to 
qualify for a pension. The other interpretation is that an individual 
first becomes eligible when he or she has acquired enough service to 
qualify for a pension, regardless of when the service was acquired.
    We recently became aware that some individuals have purchased 
credit for prior service, e.g., military service, which could affect 
their eligibility date and allow them to become eligible before 1986 
for a monthly pension based on noncovered employment. Such an 
individual would thus be excluded from the modified computation because 
he or she first became eligible for the monthly pension before 1986. 
There is no restriction in the Act which precludes using purchased 
credit to establish eligibility before 1986 for a monthly pension based 
on noncovered employment and we see no reason not to consider purchased 
credits when deciding whether the modified computation applies.
    We have adopted the interpretation that we will consider all 
applicable service used by the pension-paying agency, regardless of 
when the service was acquired. Under this interpretation, an individual 
``first becomes eligible'' for a monthly periodic payment for the first 
month (including a past month) that the individual meets all the 
requirements for the payment except stopping work or applying for the 
payment. We, therefore, propose to amend Sec. 404.213(a) to include the 
definition of ``first becomes eligible'' and our policy on applicable 
service.
    Regarding underpayments, the current Sec. 404.503(b), which 
reflects section 204(d) of the Act, provides that if an individual dies 
before receiving a title II benefit payment, the underpayment so 
created is payable to a person or persons in an order of priority as 
specified in that section. Paragraph (3) of Sec. 404.503(b) provides 
that if there is no one higher in the order of priority, the 
underpayment may be paid to the ``parent or parents of the deceased 
individual (as defined in Sec. 404.374) entitled to monthly benefit on 
the basis of the same earnings record as was the deceased individual'' 
in the month of death. Under paragraph (6) of Sec. 404.503(b), if there 
is no one higher in the order of priority, the underpayment may be paid 
to the ``parent or parents of the deceased individual (as defined in 
Sec. 404.374) who do not qualify under paragraph (b)(3).''
    Section 404.374 defines ``parent'' as the natural, adoptive, or 
stepparent of an insured person and is based on the statutory 
requirements for eligibility for benefits as the parent of an insured 
worker. However, these stringent criteria are not required for purposes 
of receiving an underpayment. Section 204(d) (3) and (6) of the Act 
require only that the individual be the parent of the deceased 
underpaid beneficiary. The cross reference to Sec. 404.374 in 
Sec. 404.503(b) (3) and (6) results in an unduly restrictive definition 
of a parent who is eligible for an underpayment. We are, therefore, 
proposing to revise Sec. 404.503(b) (3) and (6) so that for purposes of 
eligibility for an underpayment, the definition of ``parent'' in 
Sec. 404.374 is extended to a parent of any deceased individual who was 
entitled to social security benefits.
    Regarding overpayments, we are amending Sec. 404.510, which lists 
the situations where an individual may be considered to be ``without 
fault'' for accepting an incorrect benefit payment. Paragraph (l) of 
that section explains that the overpaid individual may be ``without 
fault'' in causing the overpayment if he or she reasonably believed 
that net earnings from self-employment after attaining age 72 in a 
taxable year would not be cause for deductions from benefits for months 
in the year of attaining age 72 that are before the month of 
attainment. For months after 1982, the age at which social security 
beneficiaries are no longer subject to an earnings test has been 
reduced from age 72 to age 70. This reduction from age 72 to 70 is 
based on section 302 of Pub. L. 95-216 (the Social Security Amendments 
of 1977) which became effective for months after December 1982, as 
provided in section 2204 of Pub. L. 97-35 (the Omnibus Budget 
Reconciliation Act of 1981). We are, therefore, revising 
Sec. 404.510(l) to change age 72 to age 70 for months after December 
1982.
    Our final amendment in these regulations is to delete Albania and 
the German Democratic Republic from the list in Sec. 404.460 of 
countries to which the Department of the Treasury will not send benefit 
checks. On November 7, 1991, The Department of the Treasury removed the 
German Democratic Republic from the Withheld Check List set out in 31 
CFR 211.1 by publishing final rules in the Federal Register at 56 FR 
56931. On September 30, 1992, the Department removed Albania from the 
list by publishing final rules in the Federal Register at 57 FR 44998.

Regulatory Procedures

Executive Order No. 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these rules do not meet the criteria for a 
significant regulatory action under E.O. 12866. Thus, they were not 
subject to OMB review.

Regulatory Flexibility Act

    We certify that these proposed rules will not have a significant 
economic impact on a substantial number of small entities since these 
rules 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

    These proposed rules impose no additional reporting or 
recordkeeping requirements subject to Office of Management and Budget 
clearance.

(Catalog of Federal Domestic Assistance Program Nos. 93.802 Social 
Security-Disability Insurance; 93.803 Social Security-Retirement 
Insurance; 93.805 Social Security-Survivors Insurance)

List of Subjects in 20 CFR Part 404

    Administrative practice and procedure; Blind disability benefits, 
Old-age, Survivors, and Disability Insurance; Reporting and 
recordkeeping requirements; Social Security.

    Dated: May 27, 1994.
Shirley Chater,
Commissioner of Social Security.

    Approved: July 7, 1994.
Donna E. Shalala,
Secretary of Health and Human Services.

    For the reasons set out in the preamble, we are proposing to amend 
Subparts C, E, and F of Part 404 of 20 CFR Chapter III as follows:

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE 
(1950-  )

    1. The authority citation for Subpart C of Part 404 continues to 
read as follows:

    Authority: Secs. 202(a), 205(a), 215, and 1102 of the Social 
Security Act; 42 U.S.C. 402(a), 405(a), 415, and 1302.

    2. Section 404.213 is amended by adding two sentences after the 
first sentence of paragraph (a)(3) to read as follows:


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

    (a) * * *
    (3) * * *
    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. * * *
* * * * *
    3. The authority citation for Subpart E of Part 404 continues to 
read as follows:

    Authority: Secs. 202, 203, 204(a), and (e), 205(a) and (c), 
222(b), 223(e), 224, 227, and 1102 of the Social Security Act; 42 
U.S.C. 402, 403, 404(a) and (e), 405(a) and (c), 422(b), 423(e), 
424, 427, and 1302.

    4. Section 404.460 is amended by revising the list of countries in 
paragraph (c)(3) to read as follows:


Sec. 404.460  Nonpayment of monthly benefits of aliens outside the 
United States.

* * * * *
    (c) * * *
    (3) * * *
    Cuba, Democratic Kampuchea (formerly Cambodia), North Korea, 
Vietnam.
* * * * *
    5. The authority citation for Subpart F of Part 404 continues to 
read as follows:

    Authority: Secs. 204(a)-(d), 205(a), and 1102 of the Social 
Security Act; 31 U.S.C. 3720A; 42 U.S.C. 404(a(c)(1)(iv)(C)-(d), 
405(a), and 1302.

    6. Section 404.503 is amended by revising paragraphs (b)(3) and 
(b)(6) to read as follows:


Sec. 404.503  Underpayments.

* * * * *
    (b) * * *
    (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.
* * * * *
    (6) The parent or parents of the deceased individual, who do not 
qualify under paragraph (b)(3) of this section (of 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. Section 404.510 is amended by revising paragraphs (l) to read as 
follows:


Sec. 404.510  When an individual is ``without fault'' in a deduction-
overpayment.

* * * * *
    (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.
* * * * *
[FR Doc. 94-17401 Filed 7-19-94, 8:45 am]
BILLING CODE 4190-29-M