[Federal Register Volume 60, Number 28 (Friday, February 10, 1995)]
[Rules and Regulations]
[Pages 8140-8153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3369]



      

[[Page 8139]]

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Part X





Department of Health and Human Services





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Social Security Administration



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20 CFR Parts 404 and 416



Benefit Reforms for Individuals Disabled Based on Drug Addiction or 
Alcoholism; Interim Final Rule

  Federal Register / Vol. 60, No. 28 / Friday, February 10, 1995 / 
Rules and Regulations  
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[[Page 8140]] 


DEPARTMENT OF HEALTH AND HUMAN SERVICES

Social Security Administration

20 CFR Parts 404 and 416

[Regulations Nos. 4 and 16]
RIN 0960-AD96


Federal Old-Age, Survivors, and Disability Insurance and 
Supplemental Security Income for the Aged, Blind, and Disabled; Benefit 
Reforms for Individuals Disabled Based on Drug Addiction or Alcoholism

AGENCY: Social Security Administration, HHS.

ACTION: Interim final rules with request for comments.

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SUMMARY: The Social Security Independence and Program Improvements Act 
of 1994 contains provisions affecting the payment of benefits under 
titles II and XVI of the Social Security Act (the Act) to individuals 
whose drug addiction or alcoholism is a contributing factor material to 
the determination of disability. These interim final rules implement 
certain provisions related to limitations on benefit payments and the 
nonpayment and termination of benefits to these individuals.

DATES: These interim final rules are effective on March 1, 1995. To be 
sure that your comments are considered, we must receive them no later 
than April 11, 1995.

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) 966-2830, or 
delivered to the Division of Regulations and Rulings, 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 hours by 
making arrangements with the contact person shown below.

FOR FURTHER INFORMATION CONTACT: Regarding this Federal Register 
document--Richard M. Bresnick, Legal Assistant, Division of Regulations 
and Rulings, Social Security Administration, 6401 Security Boulevard, 
Baltimore, MD 21235, (410) 965-1758; regarding eligibility or filing 
for benefits--our national toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION:

History

    In 1972, Public Law (Pub. L.) 92-603 established the supplemental 
security income (SSI) program under title XVI of the Act. Aside from 
disability for children under age 18 and blindness, the Act provided 
the same definition of disability for individuals under title XVI as it 
does under title II. However, the SSI program included special 
provisions for disabled persons medically determined to be drug addicts 
or alcoholics. As implemented, those provisions applied to individuals 
whose drug addiction or alcoholism (DAA) was a contributing factor 
material to the determination that they were disabled (disabled based 
on DAA). The SSI provisions stated that an individual determined to be 
disabled based on DAA could receive SSI benefits only if he or she 
underwent appropriate treatment for the substance addiction when it was 
available and received payments through a representative payee.
    The 1972 legislation also required the Secretary of Health and 
Human Services (the Secretary) to provide for the monitoring and 
testing of these individuals to assure compliance with treatment and to 
determine how the imposition of the treatment requirement contributes 
to the achievement of program purposes. The Secretary also was required 
to submit an annual report to Congress on the treatment and compliance 
of affected SSI recipients.
    Prior to the passage of the Social Security Independence and 
Program Improvements Act of 1994, Pub. L. 103-296, enacted on August 
15, 1994, there were no special program rules for Social Security 
beneficiaries whose medically determined drug addiction or alcoholism 
was a contributing factor material to the determination of disability.

New Legislation

    The amendments made to the Act by section 201 of Pub. L. 103-296 
introduced several new requirements and limitations for SSI recipients 
disabled based on DAA and applied similar requirements and limitations 
to Social Security beneficiaries disabled based on DAA, as well. These 
requirements and limitations are, in part, intended to discourage 
individuals from using Social Security or SSI benefits to support an 
addiction, as well as encourage the treatment and rehabilitation of 
individuals disabled based on DAA.
    Section 201(a) of Pub. L. 103-296 contains the title II provisions 
related to DAA and section 201(b) contains the corresponding SSI 
provisions. The new requirements and changes under both programs for 
individuals disabled based on DAA include:
     Paying benefits to a representative payee;
     A preference for selecting certain types of organizational 
payees, inclusion of certain State and local government agencies as 
qualified organizations, making permanent the provision authorizing 
certain qualified organizations to collect a fee from beneficiaries for 
whom they serve as representative payees, and increasing the upper 
limit of the fee that organizational payees can charge persons disabled 
based on DAA;
     Requiring both Social Security and SSI recipients who are 
disabled based on DAA to undergo appropriate substance abuse treatment, 
if available;
     Suspending benefits for months in which there is a failure 
to comply with appropriate, available treatment and requiring that 
individuals must demonstrate compliance with that treatment for a 
specified period of time before payments can resume;
     Terminating benefits after 12 consecutive months of 
suspension for noncompliance (the individual may reapply and receive 
disability benefits based on DAA for the remainder of the 36-month 
limit described below);
     Monitoring and testing of individuals to assure 
compliance;
     Establishing at least one referral and monitoring agency 
(RMA) in every State to identify appropriate treatment placements, to 
refer individuals disabled based on DAA to treatment and to monitor 
compliance with such treatment;
     Paying past-due benefits in installments, with a limited 
exception for individuals with outstanding debts related to housing who 
are at a high risk of homelessness;
     A 36-month limit on the payment of benefits beginning with 
the March 1995 payment month, with some differences between the title 
II and SSI programs as to how the months are counted (months of 
suspension will not be counted in the 36 months for either program);
     A ``sunset date'' of September 2004 for the 36-month limit 
on the payment of benefits;
     Continued Social Security benefit payments to auxiliaries 
after a disabled wage earner's benefits are suspended for failure to 
comply with treatment requirements or when entitlement is terminated 
after the 36 months, as long as the wage earner continues to be 
disabled; [[Page 8141]] 
     Continuation of beneficiary status for purposes of 
Medicare and Medicaid coverage during periods of suspense for 
noncompliance and after eligibility or entitlement is terminated after 
36 months of benefits are paid, as long as the individual remains 
disabled.
    Many of these provisions are effective for benefits payable for 
months beginning March 1, 1995. Implementing regulations for certain 
statutory provisions must be issued by February 11, 1995, 180 days 
after enactment, and are included in these interim final rules. For 
those statutory provisions not requiring final regulations by February 
1995, principally those concerning representative payment, we will 
publish a separate notice of proposed rulemaking (NPRM) in the Federal 
Register.
    These interim final regulations affect all disabled individuals 
whose drug addiction or alcoholism is a contributing factor material to 
the determination of disability, including those who were found 
eligible for title II or SSI benefits before March 1, 1995. By March 1, 
1995, the Social Security Administration (SSA) will have sent notices 
to these individuals of the changes in the Act which affect them, as 
required by section 201 of Pub. L. 103-296. At the same time, SSA also 
will have sent notices to the representative payees of these 
individuals who have them.

Congressional Direction to Consult With Experts

    Section 201 of Pub. L. 103-296 directed the Secretary to consult 
with drug and alcohol treatment professionals in formulating 
regulations defining appropriate treatment for individuals subject to 
the new provisions and establishing guidelines for the review and 
evaluation of compliance and progress. On August 24-25, 1994, SSA 
convened a meeting in Hunt Valley, Maryland of substance abuse 
treatment professionals from across the nation to gain their individual 
views on devising the new and revised regulations. During this meeting, 
a wide range of substance abuse-related topics was discussed, but the 
focus was on the legislative requirements to treat and monitor this 
disabled population. In addition, SSA has written directly to numerous 
professional organizations, individual treatment professionals, public 
advocacy organizations, RMAs, and others with knowledge of substance 
abuse-related issues seeking their views on treatment and compliance 
questions and issues to gain balanced input on general contemporary 
treatment philosophies.
    On October 17, 1994, SSA published in the Federal Register a Notice 
of Intent with Request for Comments (59 FR 52380) to solicit public 
comments about the legislative requirements imposed by Pub. L. 103-296 
and the regulations SSA is required to promulgate. The comment period 
closed on November 16, 1994.
    The comments we have received from all of these varied sources have 
proved to be invaluable in revising the rules relating to individuals 
under a disability when drug addiction or alcoholism is a contributing 
factor material to the determination of disability.

What the Experts and Other Public Commenters Told Us

    We solicited the views of experts in the field of substance abuse 
treatment, as required by Pub. L. 103-296. We received valuable input 
from treatment professionals and administrators at the August 24-25 
meeting and subsequently received written comments from many of the 
attendees. While we were interested in receiving the views of the 
experts and other members of the public on all issues related to the 
DAA provisions, we sought specific input from the discussions and the 
Notice of Intent published October 17, 1994, on the following issues:
     The definition of ``appropriate'' treatment for DAA;
     The definition of when treatment is ``available'';
     How to define and evaluate ``progress'' in treatment;
     How to evaluate ``compliance'' with treatment;
     The frequency with which RMAs should monitor an 
individual's compliance with his/her treatment plan;
     The definition of ``good cause'' for an individual's 
failure to comply with the treatment requirements; and
     The costs and benefits to be realized from the provisions.
    In response to the Notice of Intent, we received comments from 56 
individuals and groups. Commenters from State and local governments 
ranged from State RMAs to Social Service Agencies, Medicaid Agencies, 
and county government offices. Two national associations of directors 
of State governmental entities also provided comments. In addition, 
several treatment facilities, legal services organizations, and 
individual attorneys commented on the Notice of Intent.
    We have carefully considered all of the comments in developing 
these interim final regulations.

Appropriate Treatment

    Most commenters defined appropriate substance abuse treatment as a 
continuum of services to individuals with alcohol and other drug 
problems. Many commenters believed that appropriate treatment is that 
which serves the individual's needs in the least restrictive setting 
consistent with an individualized treatment plan. A significant number 
of commenters expressed the view that appropriate treatment can be 
defined only on an individualized basis by treatment professionals 
since there is no one modality that will work for every client disabled 
based on DAA. Accordingly, various commenters advised SSA to refrain 
from promulgating specific regulatory guidelines. Rather, they 
suggested that the determination of ``appropriate'' treatment should be 
within the purview of treatment professionals, circumscribed by very 
general guidelines provided by SSA. Many commenters stated that client 
participation in 12-step programs such as Alcoholics Anonymous is not, 
in and of itself, appropriate treatment. While such programs may be 
part of an overall treatment plan, because of their nature, they are 
not treatment.

Available Treatment

    Many commenters believed that the definition of ``availability'' of 
substance abuse treatment should be a broadly inclusive definition to 
assure that the client can in fact avail himself or herself of 
appropriate treatment. Many commenters offered a list of factors that 
should be used in determining availability of treatment: location of 
the facility, availability and affordability of transportation, child 
care, the client's general health, particular condition and 
circumstances, language and cultural appropriateness.
    There was a division among commenters as to whether one component 
of ``available'' should be whether the treatment was without cost to 
the client. Some commenters were of the view that treatment must be 
without cost in order to be ``available.'' Others thought that the 
client should be required to make some investment in the treatment 
program by paying for some or all of the cost of treatment, depending 
upon the type of treatment and the client's circumstances.

Evaluating Progress in Treatment

    Generally, commenters posited that it would be difficult to 
construct one definition or method by which to measure individuals' 
progress in treatment. A large organization of State 
[[Page 8142]] program administrators and others commented that no 
universally accepted tool existed to measure individuals' progress in 
substance abuse treatment. Due to the lack of a universally acceptable 
tool to measure progress, other commenters were of the view that 
treatment professionals should evaluate whether progress is made 
according to very general rules set out by SSA. A few commenters 
provided suggestions for some of the elements in the measurement of 
progress, including abstinence from alcohol and drug use, a reduction 
in the use of emergency medical services, an increase in educational or 
vocational rehabilitation activities, and avoidance of criminal 
activity.

Evaluating Compliance With Treatment

    The commenters favored general rather than specific rules governing 
compliance with the treatment requirements. Several commenters were of 
the view that compliance means that an individual follows his or her 
individual treatment plan. Accordingly, the treatment professional is 
in the best position to evaluate compliance. One legal services 
organization was concerned that SSA retain the ultimate responsibility 
for determining compliance. One aspect of compliance is the issue of 
requiring alcohol and drug testing. A few commenters recommended that 
SSA mandate drug tests for beneficiaries in treatment. Several 
commenters, including one of the large national organizations of State 
administrators, advised against mandatory drug testing. In their view, 
the need for and frequency of drug testing should be determined by the 
treatment professional in accordance with an individualized treatment 
plan. Concern was expressed about the cost of mandatory drug testing 
and inaccuracies inherent in drug testing results.

Good Cause for Failure to Comply With Treatment

    Many commenters supported an expansive list of factors that would 
be considered ``good cause'' for noncompliance with the treatment 
requirements, such as medical problems, lack of transportation, or 
personal or family tragedies. Some commenters thought that the 
treatment provider was in the best position to evaluate if the client 
had ``good cause'' for noncompliance. A minority of commenters 
supported a very restrictive definition because of their concern that 
``good cause'' factors could be manipulated by individuals in 
treatment.

Costs and Benefits

    Few commenters provided information on the potential costs and 
benefits of the provisions. Commenters provided a range of estimated 
costs for drug testing expenses.

Other Comments

    Many commenters expressed concerns regarding a number of 
operational issues which are not the subject of these regulations. 
Although these concerns are not regulatory issues, they have been 
considered carefully in the development of our operating procedures.

Explanation of Revisions

    These interim final regulations amend Secs. 404.315, 404.316, 
404.321, 404.332, 404.335, 404.337, 404.350, 404.352, 404.402, 404.902, 
416.202, 416.213, 416.262, 416.265, 416.535, 416.542, 416.558, 416.601, 
416.610, 416.935, 416.936, 416.937, 416.938, 416.939, 416.1123, 
416.1326, 416.1331, 416.1335, 416.1402 and 416.1725 and create new 
Secs. 404.470, 404.480, 404.1535, 404.1536, 404.1537, 404.1538, 
404.1539, 404.1540, 404.1541, 416.544, 416.940 and 416.941 to reflect 
the statutory changes.
    Section 404.315 is revised to add a new paragraph explaining the 
prohibition against reentitlement to disability benefits based on DAA 
after receiving 36 months of disability benefits on the basis of that 
impairment.
    Sections 404.316 and 404.321 have been amended to include an 
explanation of the 36-month benefit limit and the termination of 
benefits for 12 consecutive months of noncompliance in cases in which 
drug addiction or alcoholism is a contributing factor material to the 
determination of disability.
    Section 404.332 is revised to state that, if the insured person is 
disabled based on DAA and benefits terminate because of noncompliance 
with treatment or because of the 36-month benefit limit, benefits to 
the spouse will continue, provided the insured person remains disabled.
    Section 404.335 provides that, if benefits to a widow(er) who is 
disabled based on DAA are terminated after 36 months of benefits, that 
person cannot become entitled again to widow(er)'s benefits if drug 
addiction or alcoholism is a contributing factor material to the later 
determination of disability.
    Section 404.337 explains that, if the widow(er)'s entitlement to 
benefits is based on DAA, benefits will terminate after 12 consecutive 
months of suspension for noncompliance with treatment or, unless 
otherwise disabled without regard to drug addiction or alcoholism, 
after having received 36 months of payment.
    Section 404.350 is revised to state that, if the entitlement of a 
disabled child age 18 or over whose disability was based on DAA 
terminates because of the 36-month benefit limit, the child may not be 
entitled again to benefits based on a disability if drug addiction or 
alcoholism is a contributing factor material to the later determination 
of disability.
    Section 404.352 states that, if the disability of a disabled child 
age 18 or over is based on DAA and his or her benefits have been 
suspended for a period of 12 consecutive months for failure to comply 
with treatment, those benefits will terminate with the month following 
the 12-month period of suspension. Likewise, if, after receiving 36 
months of benefits based on DAA, the child would not otherwise be 
disabled without regard to drug addiction or alcoholism, benefits based 
on disability will be terminated with the month following the 36th 
month of payment. If the disabled child is receiving benefits on the 
record of a wage earner whose disability was based on DAA and benefits 
to the wage earner end because of noncompliance with treatment or 36 
months of benefits have been paid, benefits to the child will continue, 
provided the insured person would have remained entitled to benefits 
but for the operation of this provision.
    Section 404.402 is revised to include nonpayments because of drug 
addiction or alcoholism in the list of deductions, reductions, and 
adjustment events which are considered before computing any applicable 
reduction for the family maximum.
    Sections 404.470 and 416.1725 explain the nonpayment ramifications 
for beneficiaries disabled based on DAA who fail to comply with the 
rules regarding available treatment for drug addiction or alcoholism. 
Benefits will be suspended beginning with the first month after we 
notify the individual of a determination of noncompliance with the 
treatment requirements. Benefits will be terminated after 12 
consecutive months of suspension for noncompliance.
    Sections 404.480 and 416.544 explain that past-due benefits must be 
paid in installments. Accrued unpaid benefits must be paid in 
installments so that the total monthly payment including the 
installment generally does not exceed two times the monthly benefit 
amount. These sections also explain the exception to the limitation if 
the [[Page 8143]] beneficiary has unpaid housing debts which put him or 
her at high risk of homelessness. We consider an individual to be at 
high risk of homelessness if continued nonpayment of housing expenses 
is likely to result in the individual losing a place to live. We also 
consider an individual who is already homeless to be among those at 
high risk of homelessness.
    Section 404.902 is revised to expand the list of administrative 
actions that are initial determinations to include determinations about 
drug addiction or alcoholism.
    Sections 404.1535 and 416.935 explain the process by which a 
determination is made that drug addiction or alcoholism is a 
contributing factor material to the determination of disability.
    Sections 404.1536 and 416.936 explain the treatment requirements 
and the consequences of noncompliance with these requirements for 
individuals disabled based on DAA. For consistency between programs, 
especially for individuals who receive concurrent title II and SSI 
benefits, we extend to title II beneficiaries the current SSI policy 
that individuals referred for treatment generally are not expected to 
pay for the treatment.
    Sections 404.1537 and 416.937 explain what we mean by appropriate 
treatment for these individuals and give examples of appropriate 
treatment modalities.
    Sections 404.1538 and 416.938 explain what we mean by approved 
institutions or facilities for providing the appropriate treatment.
    Sections 404.1539 and 416.939 describe the factors we will consider 
in determining the availability of treatment.
    Sections 404.1540 and 416.940 explain how we intend to assess 
compliance with prescribed treatment, including measuring progress with 
the treatment.
    Based upon our contact with treatment professionals and 
administrators, we deemed it best that our regulations not attempt to 
provide exhaustive guidelines for determining what constitutes 
appropriate treatment and definitive methods of measuring progress. 
These particular concepts are inherent parts of the treatment program, 
which must be developed by the treatment professional for each 
individual. Thus, in these regulatory sections, we have provided broad 
rather than narrow guidelines in these areas.
    Sections 404.1541 and 416.941 delineate the functions and 
responsibilities of the RMAs. The RMAs' duties include making treatment 
referrals and monitoring compliance with prescribed treatment. The 
contractual agreements with the RMAs will set forth their functions and 
responsibilities in much more detail.
    In carrying out their functions and responsibilities, the RMAs will 
work closely with State alcohol and other drug abuse agencies, which 
often are the focal point for the delivery of publicly funded services 
to SSI beneficiaries.
    Section 416.202 has been revised to reflect the new provision that 
an individual disabled based on DAA is not eligible for SSI benefits if 
he or she has previously received 36 months of Social Security benefits 
when treatment was available or 36 months of SSI benefits based on DAA.
    Section 416.213 is revised to state that an individual disabled 
based on DAA who refuses or does not follow available and appropriate 
treatment for drug addiction or alcoholism will not receive SSI 
benefits until he or she has demonstrated compliance with treatment 
requirements for the period specified in the revised rules in 
Sec. 416.1326. The section also explains in detail the eligibility 
requirement that an individual cannot receive SSI benefits on the basis 
of disability based on DAA if he or she has already received 36 months 
of SSI or Social Security benefits on the same basis. The section 
contains references to other SSI and Social Security regulatory 
sections which explain how the 36 months are calculated for each of 
those programs.
    Sections 416.262 and 416.265 have been revised to explain that 
individuals who are disabled based on DAA may be eligible for SSI 
payments, including special SSI cash benefits, and special SSI 
eligibility status for a total of 36 months.
    Section 416.535 is revised to include cross-references to the SSI 
regulatory sections which state the rules on the installment payment of 
past-due benefits for individuals who are disabled based on DAA.
    Section 416.542 is revised to explain that, if an underpaid 
recipient disabled based on DAA is alive, the amount of any 
underpayments due the recipient will be paid to his or her 
representative payee. No underpayments may be paid to the recipient.
    Section 416.558 is revised by adding to paragraph (a) a reference 
to the new Sec. 416.544, and by adding a new paragraph (c) to explain 
that, whenever a decision is made about the amount of any benefits due 
for a past period that should be paid in installments, the written 
notice which is sent to the individual and the individual's 
representative payee will also explain the amount of the installment 
payment and when an increased initial installment payment may be made.
    The last sentence of paragraph (b)(1) of Sec. 416.601 and paragraph 
(a)(3) of Sec. 416.610 are revised to update the language referring to 
an individual ``medically determined to be a drug addict or an 
alcoholic.'' We now refer to individuals for whom ``drug addiction or 
alcoholism is a contributing factor material to the determination of 
disability.'' This does not change the meaning in any way; it merely 
makes the terminology consistent with that used throughout these 
regulations.
    Paragraph (d) of Sec. 416.1123, which discusses how we count 
retroactive monthly Social Security benefits as unearned income, is 
revised to address the counting of such benefits when they are paid in 
installments. New installment requirements for past-due benefits for 
individuals disabled based on DAA are explained in Sec. 416.544. 
Because of those requirements, SSA generally will be precluded from 
paying at one time all past-due benefits remaining after reimbursing a 
State for interim assistance (when appropriate). Paragraph (d)(2) 
explains that the total of retroactive Social Security benefits paid in 
installments to individuals disabled based on DAA which is countable 
income after the rules in paragraph (d)(1) are applied will be counted 
as unearned income only in the first month they are paid.
    In enacting section 201 of Pub. L. 103-296, Congress evidenced no 
intent to change the manner in which past-due Social Security benefits 
are counted for SSI purposes, but instead intended to reduce the 
likelihood that the past-due benefits would be used by the beneficiary 
in a way that would support continuing substance abuse. By counting 
retroactive benefits paid in installments as if received in a lump sum 
in the first month of payment, the SSI recipient will be at risk of 
losing SSI (and possibly Medicaid) eligibility for at most 1 month 
because of the receipt of those benefits, as is now the case. The 
alternative method of counting these past-due benefits--month by month 
as the installments are received--would result, in many cases, in the 
loss of eligibility for both SSI and Medicaid for the entire period 
during which the installments are paid. A loss of eligibility for 
Medicaid could severely limit the accessibility of treatment for drug 
addiction or alcoholism and thus undermine the intent of the 
legislation. Accordingly, these regulations make no change in the way 
past-due benefits are counted for SSI purposes; past-due benefits will 
continue to be counted as [[Page 8144]] if received in a lump sum even 
when received in installments.
    Section 416.1326 has been revised to explain that SSI benefits for 
individuals disabled based on DAA will be suspended for noncompliance 
with treatment requirements effective the first month after 
notification of noncompliance. Suspension of SSI benefits will continue 
until the recipient demonstrates compliance with treatment for 
specified periods; a minimum of 2 months, 3 months, and 6 months, 
respectively, for the first, second, and third and additional 
determinations of noncompliance. Suspension of benefits for 12 
consecutive months, for any reason, will result in termination of 
benefits.
    Section 416.1331, which addresses termination of disability 
benefits, has been revised. New paragraph (c) discusses termination 
after 12 months of suspension for noncompliance. New paragraph (d) 
describes the limit of 36 months on benefits and that this limit is no 
longer effective for benefits for months beginning after September 
2004. New paragraph (e) explains what months are counted in determining 
the 36 months of benefits.
    Section 416.1335, which discusses termination due to continuous 
suspension for ineligibility, has been amended by changing the language 
to explain that SSI benefits will be terminated after 12 months of 
suspension, even when some or all of the suspension months are due to 
suspense for noncompliance, as defined in Sec. 416.1326.
    Paragraph (d) of Sec. 416.1402 is revised to update the language 
referring to an individual ``determined to be a drug addict or an 
alcoholic.'' We now refer to an individual for whom ``drug addiction or 
alcoholism is a contributing factor material to the determination of 
disability.'' This does not change the meaning in any way; it merely 
makes the terminology consistent with that in the new legislation and 
used throughout these regulations.

Regulatory Procedures

    The Department of Health and Human Services, even when not required 
by statute, as a matter of policy generally follows the Administrative 
Procedure Act (APA) NPRM and public comment procedures specified in 5 
U.S.C. 553 in the development of its regulations. The APA provides 
exceptions to its notice and comment procedures when an agency finds 
that there is good cause for dispensing with such procedures on the 
basis that they are impracticable, unnecessary, or contrary to the 
public interest. In the case of these interim final rules, we have 
determined that under 5 U.S.C. 553(b)(B), good cause exists for waiving 
the NPRM procedures.
    Pub. L. 103-296 was signed into law on August 15, 1994. Sections 
201(a)(3)(E)(i) and 201(b)(3)(E)(i) of Pub. L. 103-296 require the 
Secretary to issue regulations necessary to carry out those amendments 
made by section 201 which are the subject of these interim final rules 
by February 11, 1995. In addition, the legislation requires that the 
Secretary consult with drug and alcohol treatment professionals in 
developing certain aspects of these regulations with regard to defining 
appropriate substance abuse treatment and establishing guidelines to 
review and evaluate compliance with treatment and measures of progress. 
Accordingly, to undertake the required consultation process and also 
issue these rules as an NPRM would have delayed issuance of final rules 
until well past the statutory deadline of February 11, 1995. In light 
of these constraints, we solicited public comments on the regulations 
needed to implement certain aspects of this new legislation by 
publishing a Notice of Intent with Request for Comments on October 17, 
1994 (59 FR 52380), and allowed adequate time to give the comments 
received in response to that notice our full consideration.
    In addition, publishing interim final regulations will permit the 
timely and effective implementation of the new provisions for 
recipients whose drug addiction or alcoholism is a contributing factor 
material to the determination of disability. Such implementation may 
allow some recipients to get into available treatment for their 
addictions sooner. This will benefit both the recipients and the public 
at large.
    In light of the Congressional mandate that we issue regulations 
needed to carry out these statutory provisions no later than February 
11, 1995, we believe that, under the APA, good cause exists for waiver 
of the prior notice procedures since issuance of proposed rules would 
be impracticable and contrary to the public interest. While we are 
issuing these rules as interim final regulations, we are interested in 
receiving public comments regarding the substance of these interim 
rules.

Executive Order 12866

    These interim final rules reflect and implement most of the 
provisions of sections 201(a) and 201(b) of Pub. L. 103-296. The Office 
of Management and Budget (OMB) has reviewed these interim final rules 
and determined that they meet the criteria for a significant regulatory 
action under E.O. 12866. Therefore, we prepared and submitted to OMB, 
separately from the interim final rules, an assessment of the potential 
costs and benefits of this regulatory action. This document also 
contains an analysis of alternative policies we considered and chose 
not to adopt. This assessment is available for review by members of the 
public.

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 individuals' eligibility for program benefits under the Social 
Security Act. Therefore, a regulatory flexibility analysis as provided 
in Pub. L. 96-354, the Regulatory Flexibility Act, is not required.

Paperwork Reduction Act

    These interim final rules contain information collection 
requirements in Secs. 404.480, 404.1540, 404.1541, 416.544, 416.940, 
and 416.941. As required by the Paperwork Reduction Act of 1980, we 
will submit a copy of these information collection requirements to OMB 
for its review. Organizations and individuals desiring to submit 
comments on these information collection requirements should direct 
them to the Office of Information and Regulatory Affairs, OMB, New 
Executive Office Building, Room 3208, Washington, D.C. 20503, 
Attention: Desk Officer for HHS. The public reporting burden for the 
collections of information in Secs. 404.480 and 416.544 is estimated to 
average 4 minutes per response. The burden for Secs. 404.1540, 
404.1541, 416.940, and 416.941 is estimated to average 5 minutes per 
response for one form for each beneficiary annually, and 10 minutes per 
response for another form for each beneficiary monthly. These include 
the time it will take to read the instructions, gather the necessary 
facts, and provide the information. For Secs. 404.480 and 416.544 we 
expect approximately 2,400 beneficiaries or recipients to provide 
responses and estimate the total annual burden to be 160 hours. For 
Secs. 404.1540, 404.1541, 416.940, and 416.941 we expect responses from 
treatment providers through approximately 52 RMAs on behalf of 
approximately 184,000 beneficiaries or recipients and estimate the 
total annual burden to be 395,600 hours. If you have any comments or 
suggestions on these estimates, write to the Social Security 
Administration, Attention: Reports Clearance Officer, 1-A-21 Operations 
Building, 6401 [[Page 8145]] Security Boulevard, Baltimore, MD 21235.

(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; 93.807, 
Supplemental Security Income)

List of Subjects

20 CFR Part 404

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

20 CFR Part 416

    Administrative practice and procedure, Aged, Blind, Disability 
benefits, Public assistance programs, Supplemental Security Income 
(SSI), Reporting and recordkeeping requirements.

    Dated: December 22, 1994.
Shirley S. Chater,
Commissioner of Social Security.

    Approved: February 2, 1995.
Donna E. Shalala,
Secretary of Health and Human Services.

    For the reasons set forth in the preamble, part 404, subparts D, E, 
J, and P of chapter III of title 20 of the Code of Federal Regulations 
are amended as set forth below.

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

    1. The authority citation for subpart D of part 404 is revised to 
read as follows:

    Authority: Secs. 202, 203(a) and (b), 205(a), 216, 223, 225, 
228(a) through (e), and 1102 of the Social Security Act; 42 U.S.C. 
402, 403 (a) and (b), 405(a), 416, 423, 425, 428(a) through (e), and 
1302.

    2. Section 404.315 is amended by redesignating the introductory 
test as paragraph (a) and adding a heading to it, redesignating former 
paragraphs (a) through (d) as paragraphs (a)(1) through (a)(4), and 
adding a new paragraph (b) to read as follows:


Sec. 404.315  Who is entitled to disability benefits.

    (a) General. * * *
* * * * *
    (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.
    3. Section 404.316 is amended by adding paragraphs (e) and (f) to 
read as follows:


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

* * * * *
    (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.
    4. Section 404.321 is amended by adding paragraph (d) to read as 
follows:


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

* * * * *
    (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.
    5. Section 404.332 is amended by adding a sentence to the end of 
paragraph (b)(5) to read as follows:


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

* * * * *
    (b) * * *
    (5) * * * 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. Section 404.335 is amended by removing the word ``and'' at the 
end of paragraph (c)(2), adding the word ``and'' after the semicolon at 
the end of paragraph (c)(3), and adding a new paragraph (c)(4) to read 
as follows:


Sec. 404.335  Who is entitled to widow's or widower's benefits.

* * * * *
    (c) * * *
* * * * *
    (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(er)'s benefits is not 
based on a disability where drug addiction or alcoholism is a 
contributing factor material to the determination of disability.
* * * * *
    7. Section 404.337 is amended by adding a new sentence at the end 
of paragraph (b)(2) to read as follows: [[Page 8146]] 


Sec. 404.337  When widow's and widower's benefits begin and end.

* * * * *
    (2) * * * If your widow's or widower's benefit is based on a 
finding that drug addiction or alcoholism is a contributing factor 
material to the determination of disability as described in 
Sec. 404.1535, your entitlement to benefits will terminate 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 periods you may 
have had, unless you are otherwise disabled without regard to drug 
addiction or alcoholism.
* * * * *
    8. Section 404.350 is amended by redesignating the introductory 
text as paragraph (a) and adding a heading to it, redesignating former 
paragraphs (a) through (e) as paragraphs (a)(1) through (a)(5), and 
adding a new paragraph (b) to read as follows:


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

    (a) General. * * *
* * * * *
    (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).
    9. Section 404.352 is amended by adding a new sentence to the end 
of paragraph (b)(3), redesignating paragraphs (c) and (d) as paragraphs 
(d) and (e), and adding a new paragraph (c) to read as follows:


Sec. 404.352  When child's benefits begin and end.

* * * * *
    (b) * * *
    (3) * * * 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 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.
    (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), your benefits also will 
terminate under the following conditions:
    (1) If your benefits have been suspended for a period of 12 
consecutive months for failure to comply with treatment, your benefits 
will terminate 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, your benefits will terminate with the month following 
such 36-month payment period unless you are otherwise disabled without 
regard to drug addiction or alcoholism.
* * * * *
    10. The authority citation for subpart E of part 404 is revised to 
read as follows:

    Authority: Secs. 202, 203, 204(a) and (e), 205(a) and (c), 
222(b), 223(e), 224, 225, 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, 425, 427, and 1302.

    11. Section 404.402 is amended by revising paragraph (a), 
introductory text, to read as follows:


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

    (a) Deductions, Reductions, Adjustment. Deductions because of 
earnings or work (see Secs. 404.415 and 404.417); failure to have a 
child ``in her care'' (see Sec. 404.421); refusal to accept 
rehabilitation services (see Sec. 404.422); as a penalty for failure to 
timely report noncovered work outside the United States, failure by a 
woman to report that she no longer has a child ``in her care,'' or 
failure to timely report earnings (see Secs. 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:
* * * * *
    12. A new Sec. 404.470 is added to read as follows:


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.
    13. A new Sec. 404.480 is added to read as follows:


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 
[[Page 8147]] 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 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) 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) 
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) 
will be treated as underpayments in accordance with Sec. 404.503(b).
    14. The authority citation for subpart J of part 404 is revised to 
read as follows:

    Authority: Secs. 201(j), 205(a), (b), and (d) through (h), 
221(d), 225, and 1102 of the Social Security Act; 31 U.S.C. 3720A; 
42 U.S.C. 401(j), 405(a), (b), and (d) through (h), 421(d), 425, and 
1302; sec. 5 of Pub. L. 97-455, 96 Stat. 2500; sec. 6 of Pub. L. 98-
460, 98 Stat. 1802.

    15. Section 404.902 is amended by revising paragraph (o), 
redesignating paragraphs (p) through (v) as paragraphs (q) through (w), 
and adding a new paragraph (p) to read as follows:


Sec. 404.902  Administrative actions that are initial determinations.

* * * * *
    (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;
* * * * *
    16. The authority citation for subpart P of part 404 is revised to 
read as follows:

    Authority: Secs. 202, 205(a), (b), and (d) through (h), 216(i), 
221(a) and (i), 222(c), 223, 225, and 1102 of the Social Security 
Act; 42 U.S.C. 402, 405 (a), (b), and (d) through (h), 416(i), 
421(a) and (i), 422(c), 423, 425, and 1302.

    17. A new Sec. 404.1535 is added to read as follows:


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 addiction or alcoholism and 
we will find that your drug addiction or alcoholism is not a 
contributing factor material to the determination of disability.
    18. A new Sec. 404.1536 is added to read as follows:


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 [[Page 8148]] 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.
    19. A new Sec. 404.1537 is added to read as follows:


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.
    20. A new Sec. 404.1538 is added to read as follows:


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.
    21. A new Sec. 404.1539 is added to read as follows:


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.
    22. A new Sec. 404.1540 is added to read as follows:


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.
    23. A new Sec. 404.1541 is added to read as follows:


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 [[Page 8149]] 
    (d) Promptly reporting to us any individual's failure to comply 
with treatment requirements as well as failure to achieve progress 
through the treatment.
    For the reasons set forth in the preamble, part 416, subparts B, E, 
F, I, K, M, N, and Q of chapter III of title 20 of the Code of Federal 
Regulations are amended as set forth below.

PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND 
DISABLED

    24. The authority citation for subpart B of part 416 continues to 
read as follows:

    Authority: Secs. 1102, 1110(b), 1602, 1611, 1614, 1615(c), 
1619(a), 1631, and 1634 of the Social Security Act; 42 U.S.C. 1302, 
1310(b), 1381a, 1382, 1382c, 1382d(c), 1382h(a), 1383, and 1383c; 
secs. 211 and 212 of Pub. L. 93-66, 87 Stat. 154 and 155; sec. 
502(a) of Pub. L. 94-241, 90 Stat. 268; and sec. 2 of Pub. L. 99-
643, 100 Stat. 3574.

    25. Section 416.202 is amended by redesignating paragraph (e) as 
paragraph (f) and adding a new paragraph (e) to read as follows:


Sec. 416.202  Who may get SSI benefits.

* * * * *
    (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.
* * * * *
    26. Section 416.213 is revised to read as follows:


Sec. 416.213  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. 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.
    27. Section 416.262 is amended by removing the word ``and'' at the 
end of paragraph (c), redesignating paragraph (d) as paragraph (e), and 
adding a new paragraph (d) to read as follows:


Sec. 416.262  Eligibility requirements for special SSI cash benefits.

* * * * *
    (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
* * * * *
    28. Section 416.265 is amended by revising paragraph (a) to read as 
follows:


Sec. 416.265  Requirements for the special SSI eligibility status.

* * * * *
    (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;
* * * * *
    29. The authority citation for subpart E of part 416 is revised to 
read as follows:

    Authority: Secs. 1102, 1601, 1602, 1611(c), and (e), and 1631(a) 
through (d) and (g) of the Social Security Act; 42 U.S.C. 1302, 
1381, 1381a, 1382 (c) and (e), and 1383 (a) through (d) and (g).

    30. Section 416.535 is amended by redesignating paragraphs (b) and 
(c) as paragraphs (d) and (e) and adding a new paragraph (b) to read as 
follows:


Sec. 416.535  Underpayments and overpayments.

* * * * *
    (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 Secs. 416.542 and 
416.543 and the additional rule described in Sec. 416.544 applies.
* * * * *
    31. Section 416.542 is amended by revising paragraph (a) to read as 
follows:


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.
    (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.
* * * * *
    32. A new Sec. 416.544 is added to read as follows: [[Page 8150]] 


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).
    33. Section 416.558 is amended by revising paragraph (a) and adding 
a new paragraph (c) to read as follows:


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 Secs. 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.
* * * * *
    (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.
    34. The authority citation for subpart F of part 416 continues to 
read as follows:

    Authority: Secs. 1102 and 1631(a)(2) and (d)(1) of the Social 
Security Act; 42 U.S.C. 1302 and 1383(a)(2) and (d)(1).

    35. Section 416.601 is amended by revising the last sentence of 
paragraph (b)(1) to read as follows:


Sec. 416.601  Introduction.

* * * * *
    (b) Policy used to determine whether to make representative 
payment. * * * 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.
* * * * *
    36. Section 416.610 is amended by revising paragraph (a)(3) to read 
as follows:


Sec. 416.610  When payment will be made to a representative payee.

    (a) * * *
    (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.
* * * * *
    37. The authority citation for subpart I of part 416 is revised to 
read as follows:

    Authority: Secs. 1102, 1611, 1614(a), 1619, 1631 (a), (c), and 
(d)(1), and 1633 of the Social Security Act; 42 U.S.C. 1302, 1382, 
1382c(a), 1382h, 1383 (a), (c), and (d)(1), and 1383b; secs. 2, 5, 
6, and 15 of Pub. L. 98-460, 98 Stat. 1794, 1801, 1802, and 1808.

    38. Section 416.935 is revised to read as follows: [[Page 8151]] 


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.
    39. Section 416.936 is revised to read as follows:


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.
    40. Section 416.937 is revised to read as follows:


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.
    41. Section 416.938 is revised to read as follows:


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.
    42. Section 416.939 is revised to read as follows:


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--
    (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.
    43. A new Sec. 416.940 is added to read as follows:


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 [[Page 8152]] 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.
    44. A new Sec. 416.941 is added to read as follows:


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.
    45. 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.

    46. Section 416.1123 is amended by revising paragraph (d) to read 
as follows:


Sec. 416.1123  How we count unearned income.

* * * * *
    (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 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.
* * * * *
    47. The authority citation for subpart M of part 416 continues to 
read as follows:

    Authority: Secs. 1102, 1611 through 1615, 1619, and 1631 of the 
Social Security Act; 42 U.S.C. 1302, 1382 through 1382d, 1382h, and 
1383.

    48. Section 416.1326 is revised to read as follows:


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.
    49. Section 416.1331 is amended by adding new paragraphs (c), (d), 
and (e) to read as follows:


Sec. 416.1331  Termination of your disability or blindness payments.

* * * * *
    (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 [[Page 8153]] 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.
    50. Section 416.1335 is revised to read as follows:


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 either from the start of the first month you are no longer 
receiving your cash benefits (see Sec. 416.1321(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.
    51. The authority citation for subpart N of part 416 continues to 
read as follows:

    Authority: Secs. 1102, 1631, and 1633 of the Social Security 
Act; 42 U.S.C. 1302, 1383, and 1383b.

    52. Section 416.1402 is amended by revising paragraph (d) to read 
as follows:


Sec. 416.1402  Administrative actions that are initial determinations.

* * * * *
    (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;
* * * * *
    53. The authority citation for subpart Q of part 416 is revised to 
read as follows:

    Authority: Secs. 1102, 1611(e)(3), 1615, and 1631 of the Social 
Security Act; 42 U.S.C. 1302, 1382(e)(3), 1382d, and 1383.

    54. Section 416.1725 is revised to read as follows:


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.

[FR Doc. 95-3369 Filed 2-9-95; 8:45 am]
BILLING CODE 4190-29-P