[Federal Register Volume 60, Number 43 (Monday, March 6, 1995)]
[Proposed Rules]
[Pages 12166-12178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5171]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Social Security Administration
20 CFR Parts 404 and 416
[Regs. No. 4 and 16]
RIN 0960-AB73
Determining Disability and Blindness; Substantial Gainful
Activity Guides
AGENCY: Social Security Administration, HHS.
ACTION: Proposed rules.
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SUMMARY: These proposed rules reflect amendments to the Social Security
Act (the Act) concerning the trial work period and the disability
insurance reentitlement period. The proposed rules also clarify certain
standards we use to determine whether work is substantial gainful
activity and whether an individual is entitled to a trial work period,
thereby further explaining how we determine disability under titles II
and XVI of the Act.
DATES: To be sure that your comments are considered, we must receive
them no later than May 5, 1995.
ADDRESSES: Comments should be telefaxed to (410) 966-0869 or submitted
in writing to the Commissioner of Social Security, Department of Health
and Human Services, P.O. Box 1585, Baltimore, MD 21235, or delivered to
the Office of Regulations, Social Security Administration, 3-B-1
Operations Building, 6401 Security Boulevard, Baltimore, MD 21235,
between 8 a.m. and 4:30 p.m. on regular business days. Comments may be
inspected during these same hours by making arrangements with the
contact person shown below.
[[Page 12167]] FOR FURTHER INFORMATION CONTACT: Sandy Bond, Office of
Regulations, Social Security Administration, 6401 Security Boulevard,
Baltimore, MD 21235, (410) 965-1794.
SUPPLEMENTARY INFORMATION: We propose to revise Secs. 404.1573(c) and
416.973(c) to explain in greater detail what we mean by work under
special conditions that take into account an individual's impairments.
We have added information found in Social Security Ruling 84-25 to
clarify these regulatory provisions.
We propose to amend Secs. 404.1574(a) and 416.974(a) to add an
expanded description of how we determine whether work performed by an
employee is substantial gainful activity, what we mean by subsidized
work, and how we determine the value of a subsidy. We explain in more
detail: (1) How earnings may show that an employee has done substantial
gainful activity; (2) what we consider in determining the amount an
employee earns; (3) how we use information from an employer as to
whether wages have been subsidized; (4) how we determine the value of
subsidized earnings when the value has not been explained adequately by
the employer; (5) how we determine the amount of any subsidy that may
be provided by organizations that employ individuals with handicaps;
and (6) how we evaluate earnings received by persons working in a
sheltered or special environment. The changes we are proposing to these
regulations reflect Social Security Ruling 83-33.
These proposed rules also clarify how we evaluate earnings from
work in sheltered workshops. Under Secs. 404.1574(b)(4) and
416.974(b)(4) of our current and proposed regulations, a person working
in a sheltered workshop ordinarily will be found not to be doing
substantial gainful activity when his or her average monthly earnings
are not greater than the specified amounts that ordinarily show that a
worker who is not in a sheltered workshop situation is engaging in
substantial gainful activity. The average monthly earnings amount
currently specified is $500 per month for years after 1989. These
sections of the current regulations do not provide rules for evaluating
sheltered workshop earnings above the specified average monthly
earnings amount because it is our policy that sheltered workshop
earnings that exceed the specified average monthly earnings amount must
be evaluated under Secs. 404.1574(b)(2) and 416.974(b)(2) in the same
way as non-sheltered workshop earnings. We propose to amend
Secs. 404.1574(b)(4) and 416.974(b)(4) to state this policy explicitly.
Our current regulations also specify a lower amount (currently $300
per month for earnings in calendar years after 1989) below which
earnings outside a sheltered workshop will ordinarily show that an
individual has not engaged in substantial gainful activity. Non-
sheltered workshop earnings that are above these amounts but below the
upper substantial gainful activity threshold amounts, that is, between
$300 and $500 per month for calendar years after 1989, are ordinarily
evaluated on a more case-by-case basis. However, there is no such
middle ground for evaluating earnings from sheltered workshop
employment on a more case-by-case basis because we do not impose
separate, lower amounts on sheltered workshop employees as we have done
for employees outside of sheltered workshops. If sheltered workshop
earnings exceed the upper substantial gainful activity threshold
amounts, we ordinarily consider the individual to have engaged in
substantial gainful activity. A Federal circuit court decision,
Iamarino v. Bowen, 795 F.2d 59 (8th Cir. 1986), has interpreted our
regulations differently. In Iamarino, the court held that because our
regulations provide a middle ground for evaluating non-sheltered
workshop earnings between specified upper and lower limits, we also
must provide a middle ground for evaluating sheltered workshop earnings
and not presume substantial gainful activity when sheltered workshop
earnings exceed the upper substantial gainful activity threshold
amounts. Because this was not the intent of our regulations, we propose
to revise Secs. 404.1574(b)(4) and 416.974(b)(4) to clarify our policy
on this point. At the same time we are proposing a minor editorial
correction to the heading of paragraph 404.1574(b)(6) to change the
word ``of'' to the word ``or.''
We also propose to add new paragraphs 404.1574(d) and 416.974(d)
and to revise paragraph 404.1592(b) to provide that volunteer work done
under programs mentioned in the Domestic Volunteer Service Act of 1973
or the Small Business Act shall not be considered in determining
whether an individual has performed substantial gainful activity or
services in the trial work period. This exclusion is currently stated
in Social Security Ruling 84-24 and is required by 42 U.S.C. 5044 and
15 U.S.C. 637.
We also propose to add new Secs. 404.1574a and 416.974a to explain
how we average earnings or self-employment income to determine if a
person has been performing substantial gainful activity and the periods
used for averaging. These amendments are based upon Social Security
Ruling 83-35 and do not represent a change in policy.
We propose revisions to Secs. 404.1575(a) and 416.975(a) to explain
the order in which we will apply the three tests used to determine
whether self-employed persons have engaged in substantial gainful
activity. We also propose to expand the discussion in Secs. 404.1575(c)
and 416.975(c) of what we mean by substantial income for purposes of
determining whether a self-employed person has engaged in substantial
gainful activity. These revisions are based upon Social Security Ruling
83-34 and do not represent a change in policy.
We are also proposing to add to Secs. 404.1574, 404.1575, 416.974,
and 416.975 an explanation, now found in Social Security Ruling 84-25,
of how we evaluate periods of brief work activity to determine if they
should be considered unsuccessful work attempts. The proposed rules on
an unsuccessful work attempt provide, consistent with Social Security
Ruling 84-25, that we will not consider work performed at the
substantial gainful activity level for more than six months to be an
unsuccessful work attempt regardless of why it ended or why earnings
were reduced to below the substantial gainful activity earnings level.
We propose to amend Secs. 404.1574, 404.1575, 416.974, and 416.975 to
explain when we will find that substantial work activity that is
discontinued or reduced below a specified level is an unsuccessful work
attempt. If there is an unsuccessful work attempt, we disregard, for
substantial gainful activity determination purposes, brief work
attempts that do not demonstrate sustained substantial gainful
activity. The criteria for an unsuccessful work attempt differ
depending on whether the work effort is for a duration of three months
or less or for a duration of between three and six months. These
proposed amendments to the regulations on unsuccessful work attempts
reflect Social Security Ruling 84-25.
In addition, we propose to add to Sec. 404.1584(d) the substantial
gainful activity earnings guidelines for evaluating the work activity
of blind persons under title II for the years 1983 through 1994.
We propose to revise the last sentence of current Sec. 404.1592(b)
to clarify that we generally do not consider work which is done without
remuneration to be ``services'' for purposes of determining when the
trial work period has ended if it is done merely as therapy
[[Page 12168]] or training or if it is work usually done in a daily
routine around the house or in self-care.
We propose revisions to Sec. 404.1592(d) to explain, consistent
with Social Security Ruling 82-52, that a trial work period may not be
awarded when a claimant performs work demonstrating the ability to
engage in substantial gainful activity within 12 months after the
alleged onset of disability and prior to an award of benefits. These
revisions, which do not represent a change in policy, are based upon
our interpretation of the duration requirement of section 223(d)(1)(A)
of the Act and will clarify the issues raised by the courts in McDonald
v. Bowen, 800 F.2d 153 (7th Cir. 1986), amended on rehearing, 818 F.2d
559 (7th Cir. 1987) and Walker v. Secretary of Health and Human
Services, 943 F.2d 1257 (10th Cir. 1991).
The trial work period is a period during which a person who becomes
entitled to title II benefits may test his or her ability to work and
still be considered disabled. Under section 222(c)(3) of the Act, the
trial work period begins with the month an individual ``becomes
entitled'' to title II disability benefits and it generally ends after
9 months of work whether or not the 9 months are consecutive. Section
222(c) provides that work performed during the trial work period may
not be considered in determining whether ``disability has ceased''
during that period.
In order to be found disabled under section 223(d)(1)(A), an
individual must be unable to engage in substantial gainful activity by
reason of a medically determinable physical or mental impairment which
can be expected to result in death or ``which has lasted or can be
expected to last for a continuous period of not less than 12 months.''
(Emphasis added.) Under our longstanding interpretation of this
provision as reflected in Social Security Ruling 82-52, the duration
requirement to establish disability will be found not to have been met
and a disability claim denied based on evidence that, within 12 months
of the onset of an impairment which prevented substantial gainful
activity and prior to an award of benefits, the impairment no longer
prevents substantial gainful activity. Under these circumstances, it is
not necessary to determine whether earlier in the 12-month period the
impairment was expected to prevent the performance of substantial
gainful activity for 12 months. We determine whether an impairment is
expected to prevent substantial gainful activity for 12 months only
when the claim is being adjudicated within 12 months of onset and the
evidence shows that the impairment currently prevents substantial
gainful activity. We believe that Congress provided that disability can
be found based on an impairment which ``can be expected to last'' 12
months simply to provide a means for the Social Security Administration
to adjudicate disability claims without having to wait 12 months from
the alleged onset of disability, rather than to permit claims to be
allowed in the face of evidence that the claimant's impairment did not
prevent substantial gainful activity for 12 continuous months.
Because section 222(c) provides that a trial work period shall
begin with the month in which a person becomes entitled to title II
disability benefits, a claimant who does not become entitled to
disability benefits cannot receive a trial work period. Under our
interpretation of the duration requirement, a person cannot be found to
be under a disability if he or she performs work demonstrating the
ability to perform substantial gainful activity within 12 months of
onset and prior to an award of benefits. Because the person cannot
become entitled to disability benefits in this situation, there can be
no trial work period. On the other hand, if a claimant returns to work
prior to an award of benefits, but more than 12 months from onset, the
duration requirement may be satisfied, the claimant may become entitled
to benefits, and the work may be protected by the trial work period
even though the work began prior to an award of benefits.
We propose to revise Sec. 404.1592(d)(2) by deleting the rule
stating that an individual is not entitled to a trial work period if he
or she is receiving disability insurance benefits in a second period of
disability for which a waiting period was not required. We are also
proposing to revise Sec. 404.1592(e) to show that the trial work period
ends when 9 service months are completed within a consecutive 60-month
rolling period. Prior to a statutory change, the trial work period
would end after 9 service months no matter when they were completed.
These two proposed changes reflect section 5112 of Public Law (Pub. L.)
101-508 which took effect on January 1, 1992.
We are proposing to make minor wording changes to
Sec. 404.1592(d)(1) to establish consistency with the wording in
Sec. 404.1592(d)(2)(i). This rewording does not represent a change in
our policy concerning who is entitled to a trial work period.
We are also proposing to add a new Sec. 404.1592(d)(2)(iv) to
clarify our policy, consistent with current Sec. 404.1592(e), that an
individual is not entitled to a trial work period if he or she
demonstrates an ability to engage in substantial gainful activity level
work at any time after the onset of the impairment(s) which prevented
the individual from engaging in substantial gainful activity but before
the month he or she files an application for disability benefits.
We are also proposing to amend Sec. 404.1592a to clarify that the
earnings averaging and unsuccessful work attempt concepts do not apply
in determining whether to pay benefits for any month during or after
the reentitlement period after disability has been determined to have
ceased because of the performance of substantial gainful activity.
Those concepts do apply during and after the reentitlement period in
determining whether disability has ceased due to the performance of
substantial gainful activity. This amendment reflects and clarifies
Social Security Ruling 83-35 and Social Security Ruling 84-25. This
amendment also will clarify the averaging methodology issue raised by
the court in Conley v. Bowen, 859 F.2d 261 (2d Cir. 1988). These
proposed rules also provide cross-references to Sec. 404.1592a in the
explanations of the averaging and unsuccessful work attempts concepts
contained in Secs. 404.1574(c), 404.1574a, and 404.1575(d).
These proposed regulations also reflect section 9010 of Pub. L.
100-203 which extended, as of January 1, 1988, the reentitlement period
from 15 months to 36 months. During this extended reentitlement period,
the title II benefits of a disabled individual whose benefits are
stopped because of substantial gainful activity can be reinstated
without the need to file a new application if his or her work falls
below the substantial gainful activity level. These statutory changes
are reflected in proposed amendments to Secs. 404.321, 404.325 and
404.1592a.
Public Law 99-643 made a number of changes in the way we handle
supplemental security income cases under title XVI of the Act when a
disabled person, eligible for supplemental security income benefits,
works. Certain supplemental security income recipients who work despite
otherwise disabling impairments and begin to earn amounts that would
ordinarily represent substantial gainful activity will not have their
earnings considered when determining whether they continue to be
disabled. Pursuant [[Page 12169]] to section 4 of Pub. L. 99-643, the
trial work period and the reentitlement period no longer apply in title
XVI disability cases, and we are accordingly proposing to delete
Secs. 416.973(f), 416.976(f)(2), 416.992, 416.992a, and
416.994(b)(3)(v), (b)(5)(i), the first paragraph of (b)(6)(i),
(b)(6)(i)(D), and (b)(6)(ii) from the regulations and to amend
Secs. 416.901(m), 416.991, and 416.1331(a) by removing references to
the trial work period and reentitlement period. A substantial gainful
activity test is still necessary to establish an individual's initial
eligibility for SSI benefits based on disability under title XVI.
Regulatory Procedures
Paperwork Reduction Act
These regulations contain reporting requirements in
Secs. 404.1574(a)(3) and 416.974(a)(3). We would normally seek approval
of these requirements (under the Paperwork Reduction Act) from the
Office of Management and Budget (OMB). We are not doing so in this
situation because we already have clearance from the OMB to collect
this information using form SSA-3033 (OMB No. 0960-0483).
The public reporting burden for this collection of information is
estimated to average 15 minutes per response. This includes the time it
will take to read the instructions, gather the necessary facts, and
provide the information. We expect approximately 12,500 employers to
complete form SSA-3033 annually, and estimate the total burden to be
3,125 hours. If you have any comments or suggestions on this estimate,
write to the Social Security Administration, ATTN: Reports Clearance
Officer, 1-A-21 Operations Building, Baltimore, Maryland 21235, and to
the Office of Management and Budget, Paperwork Reduction Project (0960-
0483), Washington, DC 20503.
Regulatory Flexibility Act
We certify that these proposed regulations, if promulgated, will
not have a significant economic impact on a substantial number of small
entities because they primarily affect individuals who are applying for
or receiving title II or title XVI benefits because of disability or
blindness.
Executive Order 12866
OMB has reviewed these rules and determined they do not meet the
criteria for a significant regulatory action under E.O. 12866.
(Catalog of Federal Domestic Assistance Program No. 93.802, Social
Security-Disability Insurance; No. 93.807, Supplemental Security
Income.)
List of Subjects in 20 CFR Part 404
Administrative practice and procedure, Death benefits, Disability
benefits, Old-Age, Survivors and Disability Insurance.
List of Subjects in 20 CFR Part 416
Administrative practice and procedure, Aged, blind, disability
benefits, Public assistance programs, Supplemental security income.
Dated: September 6, 1994.
Shirley S. Chater,
Commissioner of Social Security.
Approved: November 22, 1994.
Donna E. Shalala,
Secretary of Health and Human Services.
Parts 404 and 416 of chapter III of title 20 of the Code of Federal
Regulations are proposed to be amended as follows:
PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE
(1950- )
1. The authority citation for subpart D of Part 404 continues to
read as follows:
Authority: Secs. 202, 203(a) and (b), 205(a), 216, 223, 228(a)-
(e), and 1102 of the Social Security Act; 42 U.S.C. 402, 403(a) and
(b), 405(a), 416, 423, 428(a)-(e), and 1302.
2. Section 404.321 is amended by revising paragraph (c)(3) to read
as follows:
Sec. 404.321 When a period of disability begins and ends.
* * * * *
(c) * * *
(3) If you perform substantial gainful activity during the
reentitlement period described in Sec. 404.1592a, the last month for
which you received benefits.
3. Section 404.325 is revised to read as follows:
Sec. 404.325 The termination month.
If you do not have a disabling impairment, your termination month
is the third month following the month in which your impairment is not
disabling even if it occurs during the trial work period or the
reentitlement period. If you continue to have a disabling impairment
and complete 9 months of trial work, your termination month will be the
third month following the earliest month you perform substantial
gainful activity or are determined able to perform substantial gainful
activity; however, in no event will the termination month under these
circumstances be earlier than the first month after the end of the
reentitlement period described in Sec. 404.1592a.
Example: You complete your trial work period in December 1988.
You are then working at the substantial gainful activity level and
continue to do so throughout the 36 months following completion of
your trial work period and thereafter. Your termination month will
be January 1992, which is the 37th month--that is, the first month
in which you performed substantial gainful activity after the 36th
month following your trial work period.
Example: You complete your trial work period in December 1988
but you are not able to work at the substantial gainful activity
level until March 1992, 3 months after the last month of your
reentitlement period. Your termination month will be June 1992--that
is, the third month after the earliest month you performed
substantial gainful activity.
4. The authority citation for subpart P of Part 404 continues to
read as follows:
Authority: Secs. 202, 205(a), (b), and (d)-(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)-(h), 416(i), 421(a) and (i),
422(c), 423, 425, and 1302; sec. 505(a) of Pub. L. 96-265, 94 Stat.
473; secs 2(d)(2), 5, 6, and 15 of Pub. L. 98-460, 98 Stat. 1797,
1801, 1802, and 1808; sec. 10103 of Pub. L. 101-239, 103 Stat. 2472.
5. Section 404.1573 is amended by revising paragraph (c) to read as
follows:
Sec. 404.1573 General information about work activity.
* * * * *
(c) If your work is done under special conditions. Even though the
work you are doing is done under special conditions that take into
account your impairment, such as work done in a sheltered workshop or
as a patient in a hospital, it may still show that you have the
necessary skills and ability to work at the substantial gainful
activity level. Also, if you are forced to stop or reduce your work
because of the removal of special conditions that were related to your
impairment and essential to your work, we may find that your work does
not show that you are able to do substantial gainful activity. Examples
of the special conditions that may relate to your impairment include
situations in which--
(1) You required and received special assistance from other
employees in performing your work;
(2) You were allowed to work irregular hours or take frequent rest
periods;
(3) You were provided with special equipment or were assigned work
especially suited to your impairment;
(4) You were able to work only because of specially arranged
circumstances, for example, other persons helped you prepare for or get
to and from your work;
(5) You were permitted to work at a lower standard of productivity
or efficiency than other employees; or [[Page 12170]]
(6) You were given the opportunity to work, despite your
impairment, because of family relationship, past association with your
employer, or your employer's concern for your welfare.
* * * * *
6. Section 404.1574 is amended by redesignating current paragraph
(a)(3) as (a)(6); revising paragraphs (a)(1), (a)(2), newly designated
(a)(6), (b)(1), and (b)(4) and the heading of paragraph (b)(6); and
adding new paragraphs (a)(3) through (a)(5), (c), and (d) to read as
follows:
Sec. 404.1574 Evaluation guides if you are an employee.
(a) * * *
(1) Your earnings may show you have done substantial gainful
activity. In evaluating an employee's work activity for substantial
gainful activity purposes, our primary consideration is the earnings
that are derived from the work activity. The amount of your earnings
from work you have done may show that you have engaged in substantial
gainful activity. Generally, if you worked for substantial earnings, we
will find that you are able to do substantial gainful activity.
However, the fact that your earnings were not substantial will not
necessarily show that you are not able to do substantial gainful
activity. We generally consider work that you are forced to stop or to
reduce below the substantial gainful activity level after a short time
because of your impairment to be an unsuccessful work attempt. Your
earnings from an unsuccessful work attempt will not show that you are
able to do substantial gainful activity. We use the criteria in
paragraph (c) of this section to determine if the work you did was an
unsuccessful work attempt.
(2) We consider only the amounts you earn. When we decide whether
your earnings show that you have done substantial gainful activity, we
do not consider any income that is not directly related to your
productivity. When your earnings exceed the reasonable value of the
work you perform, we consider only that part of your pay which you
actually earn. If your earnings are being subsidized, we do not
consider the amount of the subsidy when we determine if your earnings
show that you have done substantial gainful activity. We consider your
work to be subsidized if the true value of your work, when compared
with the same or similar work done by unimpaired persons, is less than
the actual amount of earnings paid to you for your work. For example,
when a handicapped person does simple tasks under close and continuous
supervision, our determination of whether that person has done
substantial gainful activity will not be based only on the amount of
the wages paid. We will first determine whether the person received a
subsidy; that is, we will determine whether the person was being paid
more than the reasonable value of the actual services performed. We
will then subtract the value of the subsidy from the person's gross
earnings to determine the earnings we will use to determine if he or
she has done substantial gainful activity. Paragraphs (a)(3), (a)(4),
(a)(5), and (a)(6) of this section explain how we determine the amounts
of subsidies.
(3) Evidence of subsidy from your employer. We will first ask your
employer to tell us if your wages have been subsidized and, if so, the
amount of the subsidy. Your employer may set a specific amount as the
reasonable value of your services. If the wages you receive exceed the
reasonable value of the actual services you performed, we will regard
the excess as a subsidy rather than earnings. Any of the following
circumstances may indicate the existence of a subsidy:
(i) You work in sheltered employment.
(ii) Childhood disability is involved.
(iii) You have a mental impairment.
(iv) There is a marked discrepancy between the amount of your pay
and the value of your services.
(v) You receive an unusual degree of help from others to do your
work.
(vi) Your impairment indicates you would need an unusual degree of
help from others.
(vii) You are involved in a government-sponsored job training and
employment program.
(4) When your employer does not tell us the value of your subsidy.
If your earnings are subsidized and your employer does not set the
amount of the subsidy, or does not adequately explain how the subsidy
was determined, we will use the following criteria to determine the
amount of your subsidy:
(i) In most instances, we will determine the amount of your subsidy
by comparing the time, energy, skills, and responsibility involved in
your services with the time, energy, skills, and responsibility
involved in the performance of the same or similar work by unimpaired
individuals in your community. We will estimate the proportionate value
of your services according to the prevailing pay scale for your work.
(ii) In other instances, it may be possible for us to determine the
approximate extent of your subsidy based upon other indications of your
productivity, such as your need for an unusual degree of supervision or
assistance in the performance of simple tasks, the length of time you
need to do simple tasks, or how efficiently you are able to do simple
tasks.
(5) Subsidies in organizations that hire the handicapped. If you
work for an organization that hires the handicapped and the
organization either operates at a loss or receives charitable
contributions or government aid, this does not necessarily establish
that your work is subsidized. Our determination of whether or not you
receive a subsidy, and the amount of any subsidy you may receive, will
depend upon your productivity rather than the financial condition of
your employer's business.
(6) If you are working in a sheltered or special environment. If
you are working in a sheltered workshop, you may or may not be earning
the amounts you are being paid. The fact that the sheltered workshop or
similar facility is operating at a loss or is receiving some charitable
contributions or governmental aid does not establish that you are not
earning all you are being paid. Because persons in military service
being treated for severe impairments usually continue to receive full
pay, we evaluate their work activity in a therapy program or while on
limited duty by comparing it with similar work in the civilian work
force or on the basis of reasonable worth of the work, rather than on
the actual amount of the earnings.
(b) Earnings guidelines.--(1) General. If you are an employee, we
first consider the criteria in paragraph (a) of this section and
Sec. 404.1576, and then the guides in paragraphs (b)(2), (3), (4), (5),
and (6) of this section. When we review your earnings to determine if
you have been performing substantial gainful activity, we will subtract
the value of any subsidized earnings (see paragraph (a)(2) of this
section) and the reasonable cost of any impairment-related work
expenses from your gross earnings (see Sec. 404.1576). The resulting
amount is the amount we use to determine if you have done substantial
gainful activity. We will generally average your earnings for
comparison with the earnings guidelines in paragraphs (b)(2), (3), (4),
and (6) of this section. See Sec. 404.1574a for our rules on averaging
earnings.
(2) * * *
(3) * * *
(4) If you work in a sheltered workshop. If you work in a sheltered
workshop or a comparable facility especially set up for severely
impaired persons, we ordinarily will consider that your earnings from
this work show that you have engaged in substantial gainful activity if
the guides in paragraph (b)(2) of this section are met.
[[Page 12171]] Earnings less than those indicated in paragraph (b)(2)
of this section will ordinarily show that you have not engaged in
substantial gainful activity without the need to consider the other
information discussed in paragraph (b)(6) of this section even if those
earnings are more than those indicated in paragraph (b)(3) of this
section.
(5) * * *
(6) Earnings that are not high or low enough to show whether you
engaged in substantial gainful activity. * * *
(c) The unsuccessful work attempt.--(1) General. Ordinarily, work
you have done will not show that you are able to do substantial gainful
activity if, after working for a period of 6 months or less, you were
forced by your impairment to stop working or to reduce the amount of
work you do so that your earnings from such work fall below the
substantial gainful activity earnings level in paragraph (b)(3) of this
section and you meet the conditions described in paragraphs (c)(2),
(3), (4), and (5), of this section. The unsuccessful work attempt
criteria do not apply in determining whether payment should be made for
any month(s) during or after the reentitlement period that occurs after
the month disability has been determined to have ceased because of the
performance of substantial gainful activity. The reentitlement period
is explained in Sec. 404.1592a.
(2) Event that must precede an unsuccessful work attempt. There
must be a significant break in the continuity of your work before we
will consider you to have begun a work attempt that later proved
unsuccessful. Your work must have been discontinued or reduced below
the substantial gainful activity earnings level because of your
impairment or because of the removal of special conditions that were
essential to the further performance of your work. We explain what we
mean by special conditions in Sec. 404.1573(c). We will consider your
prior work to be ``discontinued'' if you were out of work at least 30
consecutive days. We will also consider your prior work to be
``discontinued'' if, because of your impairment, you were forced to
change to another type of work or another employer.
(3) If you worked 3 months or less. We will consider work of 3
months or less which ended, or was reduced below the substantial
gainful activity earnings level, because of your impairment or due to
the removal of special conditions which took into account your
impairment and permitted you to work to be an unsuccessful work
attempt.
(4) If you worked between 3 and 6 months. We will consider work
that lasted longer than 3 months to be an unsuccessful work attempt if
it ended, or was reduced below the substantial gainful activity
earnings level, within 6 months because of your impairment and--
(i) You were frequently absent from work because of your
impairment;
(ii) Your work was unsatisfactory because of your impairment;
(iii) Your work was performed during a period of temporary
remission of your impairment; or
(iv) Your work was done under special conditions that were
essential to your performance and these conditions were removed.
(5) If you worked more than 6 months. We will not consider work you
performed at the substantial gainful activity earnings level for more
than 6 months to be an unsuccessful work attempt regardless of why it
ended or was reduced below the substantial gainful activity earnings
level.
(d) Work activity in certain volunteer programs. If you work as a
volunteer in certain programs administered by the Federal government
under the Domestic Volunteer Service Act of 1973 or the Small Business
Act, any payments you receive from these programs will not be counted
as earnings when we determine whether you are engaging in substantial
gainful activity. These payments may include a minimal stipend,
payments for supportive services such as housing, supplies and
equipment, an expense allowance, or reimbursement of out-of-pocket
expenses. We will also disregard the services you perform as a
volunteer in applying any of the substantial gainful activity tests
discussed in paragraph (b)(6) of this section. This exclusion from the
substantial gainful activity provisions will apply only if you are a
volunteer in a program explicitly mentioned in the Domestic Volunteer
Service Act of 1973 or the Small Business Act. Programs explicitly
mentioned in those Acts include Volunteers in Service to America,
University Year for ACTION, Special Volunteer Programs, Retired Senior
Volunteer Program, Foster Grandparent Program, Service Corps of Retired
Executives, and Active Corps of Executives. Volunteer work you perform
in other programs or any nonvolunteer work you may perform is not
excluded under this paragraph. Also, your work will not be excluded if
you work for one of the specified programs but are not a volunteer. For
civilians in certain government-sponsored job training and employment
programs, we evaluate the work activity on a case-by-case basis under
the substantial gainful activity earnings test. In programs such as
these, subsidies often occur. The value of any subsidy must be
subtracted and the remainder used to determine if you have done
substantial gainful activity. See paragraphs (a)(2)-(6) of this
section.
7. A new Sec. 404.1574a is added to read as follows:
Sec. 404.1574a When and how we will average your earnings.
(a) If your work as an employee or as a self-employed person was
continuous without significant change in work patterns or earnings, and
there has been no change in the substantial gainful activity earnings
levels, your earnings will be averaged over the entire period of work
requiring evaluation to determine if you have done substantial gainful
activity. See Sec. 404.1592a for information on the reentitlement
period.
(b) If you work over a period of time during which the substantial
gainful activity earnings levels change, we will average your earnings
separately for each period in which a different substantial gainful
activity earnings level applies.
(c) If there is a significant change in your work pattern or
earnings during the period of work requiring evaluation, we will
average your earnings over each separate period of work to determine if
any of your work efforts were substantial gainful activity.
(d) Earnings will not be averaged in determining whether payment
should be made for any month(s) during or after the reentitlement
period that occurs after the month disability has been determined to
have ceased because of the performance of substantial gainful activity.
See Sec. 404.1592a for information on the reentitlement period. The
following example illustrates what we mean by a significant change in
the work pattern of an employee.
Example: Mary Holmes began receiving disability insurance
benefits in March 1986. In January 1988 she began selling magazines
by telephone solicitation, with minimum time being expended, for
which she received $125 monthly. In this manner, Mrs. Holmes used up
her trial work period during the months of January 1988 through
September 1988. It was determined, however, that she had not engaged
in substantial gainful activity during her trial work period. Her
reentitlement period began October 1988. In December 1988, Mrs.
Holmes discontinued her telephone solicitation work to take a course
in secretarial skills. In January 1990, she began work as a part-
time temporary secretary in a banking firm. Mrs. Holmes worked 20
hours a week, without any subsidy or impairment-related work
expenses, at beginner rates. She earned $285 per month in January
1990 and February 1990. In March 1990 she had increased her
secretarial skills to journeyman level and was assigned as a part-
time private secretary to [[Page 12172]] one of the vice-presidents
of the banking firm. Mrs. Holmes' earnings increased to $525 per
month effective March 1990. It was determined that she was engaging
in substantial gainful activity in March 1990. A finding of
disability cessation was made effective March 1990. Earnings for the
period January 1990 and February 1990 were not averaged with the
period beginning March 1990, because a significant change in
earnings and work activity had taken place and made the two periods
unrepresentative of each other. Thus, the earnings of January 1990
and February 1990 could not be averaged with those of March 1990 to
reduce March 1990 earnings below the substantial gainful activity
level. After disability has been determined to have ceased because
of the performance of substantial gainful activity, her earnings
cannot be averaged in determining whether payment should be made for
any month during or after the reentitlement period. From March 1990
(the month of cessation) on, all of Mrs. Holmes' work activity would
then be evaluated on a month-by-month basis.
8. Section 404.1575 is amended by revising paragraphs (a) and (c)
and adding a new paragraph (d) to read as follows:
Sec. 404.1575 Evaluation guides if you are self-employed.
(a) If you are a self-employed person. We will consider your
activities and their value to your business to decide whether you have
engaged in substantial gainful activity if you are self-employed. We
will not consider your income alone because the amount of income you
actually receive may depend upon a number of different factors, such as
capital investment and profit sharing agreements. We will generally
consider work that you were forced to stop or reduce below substantial
gainful activity after 6 months or less because of your impairment as
an unsuccessful work attempt. See paragraph (d) of this section. We
will evaluate your work activity based on the value of your services to
the business regardless of whether you receive an immediate income for
your services. We determine whether you have engaged in substantial
gainful activity by applying three tests. If you have not engaged in
substantial gainful activity under test one, tests two and three must
be considered. The tests are as follows:
(1) Test One: You have engaged in substantial gainful activity if
you render services that are significant to the operation of the
business and receive a substantial income from the business. Paragraphs
(b) and (c) of this section explain what we mean by significant
services and substantial income for purposes of this test.
(2) Test Two: You have engaged in substantial gainful activity if
your work activity, in terms of factors such as hours, skills, energy
output, efficiency, duties, and responsibilities, is comparable to that
of unimpaired individuals in your community who are in the same or
similar businesses as their means of livelihood.
(3) Test Three: You have engaged in substantial gainful activity if
your work activity, although not comparable to that of unimpaired
individuals, is clearly worth the amount shown in Sec. 404.1574(b)(2)
when considered in terms of its value to the business, or when compared
to the salary that an owner would pay to an employee to do the work you
are doing.
(b) * * *
(c) What we mean by substantial income. Your normal business
expenses are deducted from your gross income to determine net income.
Once net income is determined, we deduct the reasonable value of any
significant amount of unpaid help furnished by your spouse, children,
or others. Miscellaneous duties which ordinarily would not have
commercial value would not be considered significant. We deduct
impairment-related work expenses that have not already been deducted in
determining your net income. Impairment-related work expenses are
explained in Sec. 404.1576. We deduct unincurred business expenses paid
for you by another individual or agency. An unincurred business expense
occurs when a sponsoring agency or another person incurs responsibility
for the payment of certain business expenses, e.g., rent, utilities, or
purchases and repair of equipment, or provides you with equipment,
stock, or other material for the operation of your business. We deduct
soil bank payments if they were included as farm income. That part of
your income remaining after we have made all applicable deductions
represents the actual value of work performed. The resulting amount is
the amount we use to determine if you have done substantial gainful
activity. We will generally average your income for comparison with the
earnings guidelines in Secs. 404.1574(b)(2) and 404.1574(b)(3). See
Sec. 404.1574a for our rules on averaging of earnings. We will consider
this amount to be substantial if--
(1) It averages more than the amounts described in
Sec. 404.1574(b)(2); or
(2) It averages less than the amounts described in
Sec. 404.1574(b)(2) but it is either comparable to what it was before
you became severely impaired or is comparable to that of unimpaired
self-employed persons in your community who are in the same or a
similar business as their means of livelihood.
(d) The unsuccessful work attempt.--(1) General. Ordinarily, work
you have done will not show that you are able to do substantial gainful
activity if, after working for a period of 6 months or less, you were
forced by your impairment to stop working or to reduce the amount of
work you do so that you are no longer performing substantial gainful
activity and you meet the conditions described in paragraphs (d)(2),
(3), (4), and (5) of this section. The unsuccessful work attempt
criteria do not apply in determining whether payment should be made for
any month(s) during or after the reentitlement period that occurs after
the month disability has been determined to have ceased because of the
performance of substantial gainful activity. The reentitlement period
is explained in Sec. 404.1592a.
(2) Event that must precede an unsuccessful work attempt. There
must be a significant break in the continuity of your work before we
will consider you to have begun a work attempt that later proved
unsuccessful. Your work must have been discontinued or reduced below
substantial gainful activity because of your impairment or because of
the removal of special conditions related to the impairment which
permitted you to work. Examples of such special conditions may include
any significant amount of unpaid help furnished by your spouse,
children, or others, or unincurred business expenses, as described in
paragraph (c) of this section, paid for you by another individual or
agency. We will consider your prior work to be discontinued if you were
out of work at least 30 consecutive days, or if, because of your
impairment, you were forced to change to another type of work.
(3) If you worked 3 months or less. We will consider work of 3
months or less to be an unsuccessful work attempt if it ended, or was
reduced below substantial gainful activity, because of your impairment
or because of the removal of special conditions related to the
impairment which permitted you to work.
(4) If you worked between 3 and 6 months. We will consider work
that lasted longer than 3 months to be an unsuccessful work attempt if
it ended, or was reduced below substantial gainful activity, within 6
months because of your impairment or because of the removal of special
conditions related to the impairment which permitted you to work and--
(i) You were frequently unable to work because of your impairment;
[[Page 12173]]
(ii) Your work was unsatisfactory because of your impairment;
(iii) Your work was performed during a period of temporary
remission of your impairment; or
(iv) Your work was done under special conditions that were
essential to your performance and these conditions were removed.
(5) If you worked more than 6 months. We will not consider work you
performed at the substantial gainful activity level for more than 6
months an unsuccessful work attempt regardless of why it ended or was
reduced below substantial gainful activity.
9. Section 404.1584 is amended by revising paragraph (d) to read as
follows:
Sec. 404.1584 Evaluation of work activity of blind people.
* * * * *
(d) Evaluation of earnings. The law provides a different earnings
test for substantial gainful activity of people who are blind. We will
not consider that you are able to engage in substantial gainful
activity on the basis of earnings unless your monthly earnings average
more than $334 in 1978; $375 in 1979; $417 in 1980; $459 in 1981; $500
in 1982; $550 in 1983; $580 in 1984; $610 in 1985; $650 in 1986; $680
in 1987; $700 in 1988; $740 in 1989; $780 in 1990; $810 in 1991; $850
in 1992; $880 in 1993; and $930 in 1994. (Sections 404.1574(a)(2),
404.1575(c), and 404.1576 are applicable in determining the amount of
your earnings.) Thereafter, an increase in the substantial gainful
activity amount will depend on increases in the cost of living. For
work activity performed in taxable years before 1978, the earnings
considered enough to show an ability to do substantial gainful activity
are the same for blind people as for others.
10. Section 404.1592 is amended by revising the last sentence of
paragraph (b), adding a sentence to paragraph (b), and revising
paragraphs (d) and (e) to read as follows:
Sec. 404.1592 The trial work period.
(a) * * *
(b) * * * We generally do not consider work done without
remuneration to be ``services'' if it is done merely as therapy or
training or if it is work usually done in a daily routine around the
house or in self-care. Work as a volunteer in the Federal programs
described in Sec. 404.1574(d) is not considered in determining whether
you have performed services in the trial work period.
* * * * *
(d) Who is and is not entitled to a trial work period. (1) You are
generally entitled to a trial work period if you are receiving
disability insurance benefits, child's benefits based on disability, or
widow's or widower's or surviving divorced spouse's benefits based on
disability.
(2) You are not entitled to a trial work period if--
(i) You are entitled to a period of disability but not to
disability insurance benefits, child's benefits based on disability, or
widow's or widower's or surviving divorced spouse's benefits based on
disability; or
(ii) You perform work demonstrating the ability to engage in
substantial gainful activity during any required waiting period for
benefits; or
(iii) You perform work demonstrating the ability to engage in
substantial gainful activity within 12 months of the onset of the
impairment(s) which prevented you from performing substantial gainful
activity and before the date of the decision awarding you disability
benefits; or
(iv) You perform work demonstrating the ability to engage in
substantial gainful activity at any time after the onset of the
impairment(s) which prevented you from engaging in substantial gainful
activity but before the month you file your application for disability
benefits.
(e) When the trial work period begins and ends. The trial work
period begins with the month in which you become entitled to disability
insurance benefits, to child's benefits based on disability or to
widow's, widower's, or surviving divorced spouse's benefits based on
disability. It cannot begin before the month in which you file your
application for benefits and for widows, widowers, and surviving
divorced spouses, it cannot begin before December 1, 1980. It ends with
the close of whichever of the following calendar months is the earlier:
(1) The 9th month (whether or not the months have been consecutive)
in which you have performed services if that 9th month is prior to
January 1992; or
(2) The 9th month (whether or not the months have been consecutive
and whether or not the previous eight months of services were prior to
January 1992) in which you have performed services within a rolling 60-
month period if that 9th month is after December 1991; or
(3) The month in which new evidence, other than evidence relating
to any work you did during the trial work period, shows that you are
not disabled, even though you have not worked a full 9 months. We may
find that your disability has ended at any time during the trial work
period if the medical or other evidence shows that you are no longer
disabled. See Sec. 404.1594 for information on how we decide whether
your disability continues or ends.
11. Section 404.1592a is amended by revising paragraphs (a) and
(b)(2) to read as follows:
Sec. 404.1592a The reentitlement period.
(a) General. The reentitlement period is an additional period after
9 months of trial work during which you may continue to test your
ability to work if you have a disabling impairment. You will not be
paid benefits for any month after the second month following the month
disability ceased due to substantial gainful activity in this period in
which you do substantial gainful activity and you will be paid benefits
for months in which you do not do substantial gainful activity. (See
Secs. 404.316, 404.337, 404.352 and 404.401a.) If anyone else is
receiving monthly benefits based on your earnings record, that
individual will not be paid benefits for any month for which you cannot
be paid benefits during the reentitlement period. If your benefits are
stopped because you do substantial gainful activity they may be started
again without a new application and a new determination of disability
if you discontinue doing substantial gainful activity during this
period. In determining, for reentitlement benefit purposes, whether you
do substantial gainful activity in a month, we consider only your work
in or earnings for that month; we do not consider the average amount of
your work or earnings over a period of months. When disability has been
ceased because of the performance of substantial gainful activity, the
unsuccessful work attempt criteria and averaging concepts do not apply
in determining whether payments should be made for any particular month
during or after the reentitlement period that occurs after the month
disability ceased. The unsuccessful work attempt criteria and averaging
concepts do apply during and after the reentitlement period in
determining whether disability has ceased because of the performance of
substantial gainful activity.
(b) * * *
(1) * * *
(2)(i) The last day of the 15th month following the end of your
trial work period if you were not entitled to benefits after December
1987; or
(ii) The last day of the 36th month following the end of your trial
work [[Page 12174]] period if you were entitled to benefits after
December 1987 or if the 15-month period described in paragraph
(b)(2)(i) of this section had not elapsed as of January 1988. (See
Secs. 404.316, 404.337, and 404.352 for when your benefits end.)
* * * * *
PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND AND
DISABLED
1. The authority citation for subpart I of part 416 continues to
read as follows:
Authority: Secs. 1102, 1614(a), 1619, 1631(a), (c) and (d)(1),
and 1633 of the Social Security Act; 42 U.S.C. 1302, 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.
2. Section 416.901 is amended by revising paragraph (m) to read as
follows.
Sec. 416.901 Scope of subpart.
* * * * *
(m) Our rules on when disability or blindness continues and stops
are contained in Secs. 416.986 and 416.988 through 416.998. We explain
what your responsibilities are in telling us of any events that may
cause a change in your disability or blindness status and when we will
review to see if you are still disabled. We also explain how we
consider the issue of medical improvement (and the exceptions to
medical improvement) in determining whether you are still disabled.
3. Section 416.973 is amended by revising paragraph (c) and
removing paragraph (f) to read as follows:
Sec. 416.973 General information about work activity.
(a) * * *
(b) * * *
(c) If your work is done under special conditions. Even though the
work you are doing is done under special conditions that take into
account your impairment, such as work done in a sheltered workshop or
as a patient in a hospital, it may still show that you have the
necessary skills and ability to work at the substantial gainful
activity level. Also, if you are forced to stop or reduce your work
because of the removal of special conditions that were related to your
impairment and essential to your work, we may find that your work does
not show that you are able to do substantial gainful activity. Examples
of the special conditions that may relate to your impairment include
situations in which--
(1) You required and received special assistance from other
employees in performing your work;
(2) You were allowed to work irregular hours or take frequent rest
periods;
(3) You were provided with special equipment or were assigned work
especially suited to your impairment;
(4) You were able to work only because of specially arranged
circumstances, such as where other persons helped you prepare for or
get to and from your work;
(5) You were permitted to work at a lower standard of productivity
or efficiency than other employees; or
(6) You were given the opportunity to work, despite your
impairment, because of family relationship, past association with your
employer, or your employer's concern for your welfare.
* * * * *
4. Section 416.974 is amended by redesignating current paragraph
(a)(3) as (a)(6); revising paragraphs (a)(1), (a)(2), newly designated
(a)(6), (b)(1), and (b)(4); and adding new paragraphs (a)(3) through
(a)(5), (c), and (d) to read as follows:
Sec. 416.974 Evaluation guides if you are an employee.
(a) * * *
(1) Your earnings may show you have done substantial gainful
activity. In evaluating an employee's work activity for substantial
gainful activity purposes, our primary consideration is the earnings
that are derived from the work activity. The amount of your earnings
from work you have done may show that you have engaged in substantial
gainful activity. Generally, if you worked for substantial earnings, we
will find that you are able to do substantial gainful activity.
However, the fact that your earnings were not substantial will not
necessarily show that you are not able to do substantial gainful
activity. We generally consider work that you are forced to stop or to
reduce below the substantial gainful activity level after a short time
because of your impairment to be an unsuccessful work attempt. Your
earnings from an unsuccessful work attempt will not show that you are
able to do substantial gainful activity. We use the criteria in
paragraph (c) of this section to determine if the work you did was an
unsuccessful work attempt.
(2) We consider only the amounts you earn. When we decide whether
your earnings show that you have done substantial gainful activity, we
do not consider any income that is not directly related to your
productivity. When your earnings exceed the reasonable value of the
work you perform, we consider only that part of your pay which you
actually earn. If your earnings are being subsidized, we do not
consider the amount of the subsidy when we determine if your earnings
show that you have done substantial gainful activity. We consider your
work to be subsidized if the true value of your work, when compared
with the same or similar work done by unimpaired persons, is less than
the actual amount of earnings paid to you for your work. For example,
when a handicapped person does simple tasks under close and continuous
supervision, our determination of whether that person has done
substantial gainful activity will not be based only on the amount of
the wages paid. We will first determine whether the person received a
subsidy; that is, we will determine whether the person was being paid
more than the reasonable value of the actual services performed. We
will then subtract the value of the subsidy from the person's gross
earnings to determine the earnings we will use to determine if he or
she has done substantial gainful activity. Paragraphs (a)(3), (a)(4),
(a)(5), and (a)(6) of this section explain how we determine the amounts
of subsidies.
(3) Evidence of subsidy from your employer. We will first ask your
employer to tell us if your wages have been subsidized and, if so, the
amount of the subsidy. Your employer may set a specific amount as the
reasonable value of your services. If the wages you receive exceed the
reasonable value of the actual services you performed, we will regard
the excess as a subsidy rather than earnings. Any of the following
circumstances may indicate the existence of a subsidy:
(i) You work in sheltered employment.
(ii) Childhood disability is involved.
(iii) You have a mental impairment.
(iv) There is a marked discrepancy between the amount of your pay
and the value of your services.
(v) You receive an unusual degree of help from others to do your
work.
(vi) Your impairment indicates you would need an unusual degree of
help from others.
(vii) You are involved in a government-sponsored job training and
employment program.
(4) When your employer does not tell us the value of your subsidy.
If your earnings are subsidized and your employer does not set the
amount of the subsidy, or does not adequately explain how the subsidy
was determined, we will use the following criteria to determine the
amount of your subsidy:
(i) In most instances, we will determine the amount of your subsidy
by comparing the time, energy, skills, and responsibility involved in
your services with the time, energy, skills, [[Page 12175]] and
responsibility involved in the performance of the same or similar work
by unimpaired individuals in your community. We will estimate the
proportionate value of your services according to the prevailing pay
scale for your work.
(ii) In other instances, it may be possible for us to determine the
approximate extent of your subsidy based upon other indications of your
productivity, such as your need for an unusual degree of supervision or
assistance in the performance of simple tasks, the length of time you
need to do simple tasks, or how efficiently you are able to do simple
tasks.
(5) Subsidies in organizations that hire the handicapped. If you
work for an organization that hires the handicapped and the
organization either operates at a loss or receives charitable
contributions or government aid, this does not necessarily establish
that your work is subsidized. Our determination of whether or not you
receive a subsidy, and the amount of any subsidy you may receive, will
depend upon your productivity rather than the financial condition of
your employer's business.
(6) If you are working in a sheltered or special environment. If
you are working in a sheltered workshop, you may or may not be earning
the amounts you are being paid. The fact that the sheltered workshop or
similar facility is operating at a loss or is receiving some charitable
contributions or governmental aid does not establish that you are not
earning all you are being paid. Because persons in military service
being treated for severe impairments usually continue to receive full
pay, we evaluate their work activity in a therapy program or while on
limited duty by comparing it with similar work in the civilian work
force or on the basis of reasonable worth of the work, rather than on
the actual amount of the earnings.
(b) Earnings guidelines.--(1) General. If you are an employee, we
first consider the criteria in paragraph (a) of this section and
Sec. 416.976, and then the guides in paragraphs (b) (2), (3), (4), (5),
and (6) of this section. When we review your earnings to determine if
you have been performing substantial gainful activity, we will subtract
the value of any subsidized earnings (see paragraph (a)(2) of this
section) and the reasonable cost of any impairment-related work
expenses from your gross earnings (see Sec. 416.976). The resulting
amount is the amount we use to determine if you have done substantial
gainful activity. We will generally average your earnings for
comparison with the earnings guidelines in paragraphs (b) (2), (3),
(4), and (6) of this section. See Sec. 416.974a for our rules on
averaging earnings.
(2) * * *
(3) * * *
(4) If you work in a sheltered workshop. If you work in a sheltered
workshop or a comparable facility especially set up for severely
impaired persons, we ordinarily will consider that your earnings from
this work show that you have engaged in substantial gainful activity if
the guides in paragraph (b)(2) of this section are met. Earnings less
than those indicated in paragraph (b)(2) of this section will
ordinarily show that you have not engaged in substantial gainful
activity without the need to consider the other information discussed
in paragraph (b)(6) of this section even if those earnings are more
than those indicated in paragraph (b)(3) of this section.
(5) * * *
(6) * * *
(c) The unsuccessful work attempt.--(1) General. Ordinarily, work
you have done will not show that you are able to do substantial gainful
activity if, after working for a period of 6 months or less, you were
forced by your impairment to stop working or to reduce the amount of
work you do so that your earnings from such work fall below the
substantial gainful activity earnings level in paragraph (b)(3) of this
section and you meet the conditions described in paragraphs (c) (2),
(3), (4), and (5), of this section.
(2) Event that must precede an unsuccessful work attempt. There
must be a significant break in the continuity of your work before we
will consider you to have begun a work attempt that later proved
unsuccessful. Your work must have been discontinued or reduced below
the substantial gainful activity earnings level because of your
impairment or because of the removal of special conditions that were
essential to the further performance of your work. We explain what we
mean by special conditions in Sec. 416.973(c). We will consider your
prior work to be ``discontinued'' if you were out of work at least 30
consecutive days. We will also consider your prior work to be
``discontinued'' if, because of your impairment, you were forced to
change to another type of work or another employer.
(3) If you worked 3 months or less. We will consider work of 3
months or less which ended, or was reduced below the substantial
gainful activity earnings level, because of your impairment or due to
the removal of special conditions which took into account your
impairment and permitted you to work, to be an unsuccessful work
attempt.
(4) If you worked between 3 and 6 months. We will consider work
that lasted longer than 3 months to be an unsuccessful work attempt if
it ended, or was reduced below the substantial gainful activity
earnings level, within 6 months because of your impairment and--
(i) You were frequently absent from work because of your
impairment;
(ii) Your work was unsatisfactory because of your impairment;
(iii) Your work was performed during a period of temporary
remission of your impairment; or
(iv) Your work was done under special conditions that were
essential to your performance and these conditions were removed.
(5) If you worked more than 6 months. We will not consider work you
performed at the substantial gainful activity earnings level for more
than 6 months to be an unsuccessful work attempt regardless of why it
ended or was reduced below the substantial gainful activity earnings
level.
(d) Work activity in certain volunteer programs. If you work as a
volunteer in certain programs administered by the Federal government
under the Domestic Volunteer Service Act of 1973 or the Small Business
Act, any payments you receive from these programs will not be counted
as earnings when we determine whether you are engaging in substantial
gainful activity. These payments may include a minimal stipend,
payments for supportive services such as housing, supplies and
equipment, an expense allowance, or reimbursement of out-of-pocket
expenses. We will also disregard the services you perform as a
volunteer in applying any of the substantial gainful activity tests
discussed in paragraph (b)(6) of this section. This exclusion from the
substantial gainful activity provisions will apply only if you are a
volunteer in a program explicitly mentioned in the Domestic Volunteer
Service Act of 1973 or Small Business Act. Programs explicitly
mentioned in these Acts include Volunteers in Service to America,
University Year for ACTION, Special Volunteer Programs, Retired Senior
Volunteer Program, Foster Grandparent Program, Service Corps of Retired
Executives, and Active Corps of Executives. Volunteer work you perform
in other programs or any nonvolunteer work you may perform is not
excluded under this paragraph. Also, your work will not be excluded if
you work for one of the specified programs but are not a volunteer. For
civilians in certain government-sponsored job training and employment
programs, we evaluate the work activity on a case-by-case basis
[[Page 12176]] under the substantial gainful activity earnings test. In
programs such as these, subsidies often occur. The value of any subsidy
must be subtracted and the remainder used to determine if you have done
substantial gainful activity. See paragraphs (a)(2)-(6) of this
section.
5. A new section 416.974a is added to read as follows:
Sec. 416.974a When and how we will average your earnings.
(a) To determine your initial eligibility for benefits, we will
average any earnings you make during the month you file for benefits
and any succeeding months to determine if you are doing substantial
gainful activity. If your work as an employee or as a self-employed
person was continuous without significant change in work patterns or
earnings, and there has been no change in the substantial gainful
activity earnings levels, your earnings will be averaged over the
entire period of work requiring evaluation to determine if you have
done substantial gainful activity.
(b) If you work over a period of time during which the substantial
gainful activity earnings levels change, we will average your earnings
separately for each period in which a different substantial gainful
activity earnings level applies.
(c) If there is a significant change in your work pattern or
earnings during the period of work requiring evaluation, we will
average your earnings over each separate period of work to determine if
any of your work efforts were substantial gainful activity.
6. Section 416.975 is amended by revising paragraphs (a) and (c)
and adding a new paragraph (d) to read as follows:
Sec. 416.975 Evaluation guides if you are self-employed.
(a) If you are a self-employed person. We will consider your
activities and their value to your business to decide whether you have
engaged in substantial gainful activity if you are self-employed. We
will not consider your income alone because the amount of income you
actually receive may depend upon a number of different factors, such as
capital investment and profit sharing agreements. We will generally
consider work that you were forced to stop or reduce to below
substantial gainful activity after 6 months or less because of your
impairment as an unsuccessful work attempt. See paragraph (d) of this
section. We will evaluate your work activity based on the value of your
services to the business regardless of whether you receive an immediate
income for your services. We determine whether you have engaged in
substantial gainful activity by applying three tests. If you have not
engaged in substantial gainful activity under test one, tests two and
three must be considered. The tests are as follows:
(1) Test One: You have engaged in substantial gainful activity if
you render services that are significant to the operation of the
business and receive a substantial income from the business. Paragraphs
(b) and (c) of this section explain what we mean by significant
services and substantial income for purposes of this test.
(2) Test Two: You have engaged in substantial gainful activity if
your work activity, in terms of factors such as hours, skills, energy
output, efficiency, duties, and responsibilities, is comparable to that
of unimpaired individuals in your community who are in the same or
similar businesses as their means of livelihood.
(3) Test Three: You have engaged in substantial gainful activity if
your work activity, although not comparable to that of unimpaired
individuals, is clearly worth the amount shown in Sec. 416.974(b)(2)
when considered in terms of its value to the business, or when compared
to the salary that an owner would pay to an employee to do the work you
are doing.
(b) * * *
(c) What we mean by substantial income. Your normal business
expenses are deducted from your gross income to determine net income.
Once net income is determined, we deduct the reasonable value of any
significant amount of unpaid help furnished by your spouse, children,
or others. Miscellaneous duties which ordinarily would not have
commercial value would not be considered significant. We deduct
impairment-related work expenses that have not already been deducted in
determining your net income. Impairment-related work expenses are
explained in Sec. 416.976. We deduct unincurred business expenses paid
for you by another individual or agency. An unincurred business expense
occurs when a sponsoring agency or another person incurs responsibility
for the payment of certain business expenses, e.g., rent, utilities, or
purchases and repair of equipment, or provides you with equipment,
stock, or other material for the operation of your business. We deduct
soil bank payments if they were included as farm income. That part of
your income remaining after we have made all applicable deductions
represents the actual value of work performed. The resulting amount is
the amount we use to determine if you have done substantial gainful
activity. We will generally average your income for comparison with the
earnings guidelines in Secs. 416.974(b)(2) and 416.974(b)(3). See
Sec. 416.974a for our rules on averaging of earnings. We will consider
this amount to be substantial if--
(1) It averages more than the amounts described in
Sec. 416.974(b)(2); or
(2) It averages less than the amounts described in
Sec. 416.974(b)(2) but it is either comparable to what it was before
you became severely impaired or is comparable to that of unimpaired
self-employed persons in your community who are in the same or a
similar business as their means of livelihood.
(d) The unsuccessful work attempt. (1) General. Ordinarily, work
you have done will not show that you are able to do substantial gainful
activity if, after working for a period of 6 months or less, you were
forced by your impairment to stop working or to reduce the amount of
work you do so that you are no longer performing substantial gainful
activity and you meet the conditions described in paragraphs (d) (2),
(3), (4), and (5) of this section.
(2) Event that must precede an unsuccessful work attempt. There
must be a significant break in the continuity of your work before we
will consider you to have begun a work attempt that later proved
unsuccessful. Your work must have been discontinued or reduced below
substantial gainful activity because of your impairment or because of
the removal of special conditions related to the impairment which
permitted you to work. Examples of such special conditions may include
any significant amount of unpaid help furnished by your spouse,
children, or others, or unincurred business expenses, as described in
paragraph (c) of this section, paid for you by another individual or
agency. We will consider your prior work to be discontinued if you were
out of work at least 30 consecutive days, or if, because of your
impairment, you were forced to change to another type of work.
(3) If you worked 3 months or less. We will consider work of 3
months or less to be an unsuccessful work attempt if it ended, or was
reduced below substantial gainful activity, because of your impairment
or because of the removal of special conditions related to the
impairment which permitted you to work.
(4) If you work between 3 and 6 months. We will consider work that
lasted longer than 3 months to be an unsuccessful work attempt if it
ended, or was reduced below substantial [[Page 12177]] gainful
activity, within 6 months because of your impairment or because of the
removal of special conditions related to the impairment which permitted
you to work and--
(i) You were frequently unable to work because of your impairment;
(ii) Your work was unsatisfactory because of your impairment;
(iii) Your work was performed during a period of temporary
remission of your impairment; or
(iv) Your work was done under special conditions that were
essential to your performance and these conditions were removed.
(5) If you worked more than 6 months. We will not consider work you
performed at the substantial gainful activity level for more than 6
months an unsuccessful work attempt regardless of why it ended or was
reduced below substantial gainful activity.
Sec. 416.976 [Amended]
7. Section 416.976 is amended by removing paragraph (f)(2) and by
redesignating paragraphs (f)(3) through (f)(6) as paragraphs (f)(2)
through (f)(5), respectively.
Sec. 416.991 [Amended]
8. Section 416.991 is amended and by removing the parenthetical
sentence immediately preceding the example.
Sec. 416.992 [Removed and Reserved]
9. Section 416.992 is removed and reserved.
Sec. 416.992a [Removed and Reserved]
10. Section 416.992a is removed and reserved.
11. Section 416.994 is amended by removing paragraph (b)(3)(v) and
revising paragraphs (b)(5) and (b)(6) to read as follows:
Sec. 416.994 How we will decide whether your disability continues or
ends, disabled adults.
* * * * *
(b) * * *
(5) Evaluation steps. To assure that disability reviews are carried
out in a uniform manner, that a decision of continuing disability can
be made in the most expeditious and administratively efficient way, and
that any decisions to stop disability benefits are made objectively,
neutrally, and are fully documented, we will follow specific steps in
reviewing the question of whether your disability continues. Our review
may cease and benefits may be continued at any point if we determine
there is sufficient evidence to find that you are still unable to
engage in substantial gainful activity. The steps are:
(i) Step 1. Do you have an impairment or combination of impairments
which meets or equals the severity of an impairment listed in appendix
1 of subpart P of part 404 of this chapter? If you do, your disability
will be found to continue.
(ii) Step 2. If you do not, has there been medical improvement as
defined in paragraph (b)(1)(i) of this section? If there has been
medical improvement as shown by a decrease in medical severity, see
step 3 in paragraph (b)(5)(iii) of this section. If there has been no
decrease in medical severity, there has been no medical improvement.
(See step 4 in paragraph (b)(5)(iv) of this section.)
(iii) Step 3. If there has been medical improvement, we must
determine whether it is related to your ability to do work in
accordance with paragraphs (b)(1)(i) through (b)(1)(iv) of this
section; i.e., whether or not there has been an increase in the
residual functional capacity based on the impairment(s) that was
present at the time of the most recent favorable medical determination.
If medical improvement is not related to your ability to work, see step
4 in paragraph (b)(5)(iv) of this section. If medical improvement is
related to your ability to do work, see step 5 in paragraph (b)(5)(v)
of this section.
(iv) Step 4. If we found at step 2 in paragraph (b)(5)(ii) of this
section that there has been no medical improvement or if we found at
step 3 in paragraph (b)(5)(iii) of this section that the medical
improvement is not related to your ability to work, we consider whether
any of the exceptions in paragraphs (b)(3) and (b)(4) of this section
apply. If none of them apply, your disability will be found to
continue. If one of the first group of exceptions to medical
improvement applies, see step 5 in paragraph (b)(5)(v) of this section.
If an exception from the second group of exceptions to medical
improvements applies, your disability will be found to have ended. The
second group of exceptions to medical improvement may be considered at
any point in this process.
(v) Step 5. If medical improvement is shown to be related to your
ability to do work or if one of the first group of exceptions to
medical improvement applies, we will determine whether all your current
impairments (in combination) are severe (see Sec. 416.921). This
determination will consider all your current impairments and the impact
of the combination of these impairments on your ability to function. If
the residual functional capacity assessment in step 3 in paragraph
(b)(5)(iii) of this section shows significant limitation of your
ability to do basic work activities, see step 6 in paragraph (b)(5)(vi)
of this section. When the evidence shows that all your current
impairments in combination do not significantly limit your physical or
mental abilities to do basic work activities, these impairments will
not be considered severe in nature. If so, you will no longer be
considered to be disabled.
(vi) Step 6. If your impairment(s) is severe, we will assess your
current ability to engage in substantial gainful activity in accordance
with Sec. 416.961. That is, we will assess your residual functional
capacity based on all your current impairments and consider whether you
can still do work you have done in the past. If you can do such work,
disability will be found to have ended.
(vii) Step 7. If you are not able to do work you have done in the
past, we will consider one final step. Given the residual functional
capacity assessment and considering your age, education, and past work
experience, can you do other work? If you can, disability will be found
to have ended. If you cannot, disability will be found to continue.
(6) The month in which we will find you are no longer disabled. If
the evidence shows that you are no longer disabled, we will find that
your disability ended in the following month--
(i) The month the evidence shows that you are no longer disabled
under the rules set out in this section, and you were disabled only for
a specified period of time in the past;
(ii) The month the evidence shows that you are no longer disabled
under the rules set out in this section, but not earlier than the month
in which we mail you a notice saying that the information we have shows
that you are not disabled;
(iii) The month in which you return to full-time work, with no
significant medical restrictions and acknowledge that medical
improvement has occurred, and we expected your impairment(s) to improve
(see Sec. 416.991);
(iv) The first month in which you fail without good cause to follow
prescribed treatment, when the rule set out in paragraph (b)(4)(iv) of
this section applies;
(v) The first month in which you were told by your physician that
you could return to work provided there is no substantial conflict
between your physician's and your statements regarding your awareness
of your capacity for work and the earlier date is supported by
substantial evidence; or [[Page 12178]]
(vi) The first month in which you failed without good cause to do
what we asked, when the rule set out in paragraph (b)(4)(ii) of this
section applies.
* * * * *
12. The authority citation for Subpart M of Part 416 continues to
read as follows:
Authority: Secs. 1102, 1611-1615, 1619 and 1631 of the Social
Security Act; 42 USC 1302, 1382-1382d, 1382h, 1383.
13. Section 416.1331 is amended by revising paragraph (a) to read
as follows:
Sec. 416.1331 Termination of your disability or blindness payments.
(a) General. The last month for which we can pay you benefits based
on disability is the second month after the first month in which you
are determined to no longer have a disabling impairment (described in
Sec. 416.911). (See Sec. 416.1338 for an exception to this rule if you
are participating in an appropriate vocational rehabilitation program,
and Sec. 416.261 for an explanation of special benefits to which you
may be entitled.) The last month for which we can pay you benefits
based on blindness is the second month after the month in which your
blindness ends (see Sec. 416.986 for when blindness ends). You must
meet the income, resources, and other eligibility requirements to
receive any of the benefits described in this paragraph. We will also
stop payment of your benefits if you have not cooperated with us in
getting information about your disability or blindness.
* * * * *
[FR Doc. 95-5171 Filed 3-3-95; 8:45 am]
BILLING CODE 4190-29-P