[Federal Register Volume 61, Number 186 (Tuesday, September 24, 1996)]
[Rules and Regulations]
[Pages 49962-49964]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24277]


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

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 416

[Regulations No. 16]
RIN 0960-AE22


Income Exclusions in the Supplemental Security Income Program

AGENCY: Social Security Administration.

ACTION: Final rules.

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

SUMMARY: These supplemental security income (SSI) regulations update 
existing regulations to reflect the statutory amendment of the 
exclusion from income of Alaska Longevity Bonus (ALB) payments. They 
also update existing regulations to reflect the statutory exclusion 
from income of hostile fire pay received by an SSI claimant or 
recipient and reflect the current operating procedure of excluding 
hostile fire pay when determining the countable income of an ineligible 
spouse or ineligible parent. In addition, they update existing 
regulations to reflect the current operating procedure of excluding 
impairment-related work expenses, interest on excluded burial funds, 
appreciation in the value of excluded burial arrangements, and interest 
on the value of excluded burial space purchase agreements, when 
determining the countable income of an ineligible spouse or ineligible 
parent.

EFFECTIVE DATE: These regulations are effective October 24, 1996.

FOR FURTHER INFORMATION CONTACT: Regarding this Federal Register 
document--Henry D. Lerner, Legal Assistant, Division of Regulations and 
Rulings, Social Security Administration, 6401 Security Boulevard, 
Baltimore, MD 21235, (410) 965-1762; regarding eligibility or filing 
for benefits--our national toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION: For purposes of the SSI program, income is 
defined in our regulations to mean anything that is received in cash or 
in kind which can be used to meet an individual's needs for food, 
clothing, or shelter. These regulations include certain provisions 
which address items that are excluded from income.

Alaska Longevity Bonus Payments

    Under section 1612(b)(2)(B) of the Social Security Act (the Act), 
ALB payments are excluded from income under certain circumstances.
    Originally, the ALB program made monthly payments to residents of 
Alaska who had attained age 65 and had lived in the State continuously 
for at least 25 years. The SSI income exclusion applied to such 
payments if made under a program established before July 1, 1973. 
However, following a decision by the Alaska State Supreme Court that 
the 25-year residency requirement was unconstitutional, in 1984 the 
State legislature changed the residency requirement to 1 year.
    Concerns were raised that since the revised (1984) ALB program was 
established after July 1, 1973, the controlling date of the original 
section 1612(b)(2)(B) provision, payments made under the revised ALB 
program could no longer be excluded for SSI purposes. Section 2616 of 
Public Law (Pub. L.) 98-369 was enacted on July 18, 1984 to address 
those concerns. Section 2616 amended section 1612(b)(2)(B) of the Act 
in such a way as to:
      Continue the ALB exclusion for persons who, prior to 
October 1985, became eligible for SSI and satisfied the 25-year 
residence requirement of the program as in effect prior to January 1, 
1983; and
      Preclude extending the ALB exclusion to ALB payments 
based on the 1-year residency requirement.
    Current regulations at Secs. 416.1124(c)(7) and 416.1161(a)(12) 
follow the wording of the original statutory exclusion in section 
1612(b)(2)(B) of the Act. Regulations at Sec. 416.1124(c)(7) presently 
provide for excluding from the income of a claimant or recipient 
``[p]eriodic payments made by a State under a program established 
before July 1, 1973, and based solely on your length of residence and 
attainment of age 65 * * *.'' Regulations at Sec. 416.1161(a)(12) 
presently provide for excluding from the income of an ineligible spouse 
or ineligible parent ``[p]eriodic payments made by a State under a 
program established before July 1, 1973, and based solely on duration 
of residence and attainment of age 65 * * *.''
    These regulations change the wording of the above referenced 
regulations so that they conform to the 1984 legislation. The 
regulatory language will not change current operating procedures since 
those procedures already conform to the 1984 legislation.

Hostile Fire Pay

    Although it is unlikely that an active member of the uniformed 
services would apply or be eligible for SSI benefits, some military 
service members have spouses and children who apply for and receive SSI 
benefits.
    Under section 209(d) of the Act, basic pay is the only form of 
compensation to members of the uniformed services that is treated as 
wages for title II purposes. Under section 1612(a)(1) of the Act, 
earned income in the form of wages for SSI purposes is the same as 
wages for the title II annual earnings test.
    Therefore, basic pay is the only form of military compensation that 
is treated as wages, and hence, as earned income, for SSI purposes.
    All other forms of compensation to members of the uniformed 
services are considered unearned income. These other forms of 
compensation include allowances paid in cash for food, clothing, and 
shelter; free food, clothing, and shelter; and special and incentive 
pay.
    One form of special pay is hostile fire pay, which is authorized 
under 37 U.S.C. 310. Hostile fire pay is a type of special pay to a 
service member who, for any month he/she is entitled to basic pay, is:
      Subject to hostile fire or explosion of hostile mines; or
      On duty in an area in which he/she is in imminent danger 
of being exposed to hostile fire or explosion of hostile mines, and
    While on duty in that area, other service members in the same area 
are subject to hostile fire or explosion of hostile mines; or
      Killed, injured, or wounded by hostile fire, explosion of 
a hostile mine, or any other hostile action.
    Section 13733(b) of the Omnibus Budget Reconciliation Act of 1993 
(OBRA), Public Law 103-66, amended section 1612(b) of the Act to 
exclude from income any hostile fire pay received in or after October 
1993.
    Current regulations do not reflect the exclusion from income of 
hostile fire pay for eligible individuals, but hostile fire pay has 
been excluded under SSI operating procedure since October 1, 1993. 
Moreover, under these

[[Page 49963]]

instructions, such pay has been excluded in determining the income of 
ineligible spouses and parents whose income is deemed to eligible 
individuals.
    In addition to adding to the regulations the statutorily required 
exclusion of hostile fire pay from an eligible individual's income, we 
have included the current operating procedure of excluding hostile fire 
pay when determining the countable income of an ineligible spouse or 
ineligible parent. The new inclusion reflects the statutory authority 
granted the Commissioner of Social Security under section 1614(f) (1) 
and (2) of the Act to waive the deeming of income from an ineligible 
spouse or parent to an eligible individual when such deeming is 
determined by the Commissioner of Social Security to be inequitable 
under the circumstances. By specifically singling out hostile fire pay 
for exclusion from an eligible individual's income, Congress expressed 
its intent that receipt of these monies should not have an adverse 
effect on an individual's SSI eligibility or payment amount. This 
intent would not be realized if these monies were deemed to an eligible 
individual. The statutory exclusion of hostile fire pay would have 
little meaning if not applied to ineligible spouses and parents since, 
as noted above, it is unlikely that an active member of the uniformed 
services would be eligible for SSI.

Impairment-Related Work Expenses

    Impairment-related work expenses (IRWE) are expenses for items or 
services which are directly related to enabling a person with a 
disability to work and which are necessarily incurred by that 
individual because of a physical or mental impairment as explained at 
regulations Secs. 404.1576 and 416.976.
    Prior to December 1, 1990, in determining countable income, an 
individual's IRWE were deducted from his/her earned income once 
eligibility was established without using this exclusion. Effective 
December 1, 1990, section 5033 of Public Law 101-508 amended section 
1612(b)(4)(B)(ii) of the Act and liberalized the IRWE exclusion. The 
legislation allows an individual to use the IRWE exclusion to establish 
eligibility.
    Regulations at Sec. 416.1112(c)(6) have been revised to implement 
changes enacted by section 5033 of Public Law 101-508.
    These regulatory revisions were published in the Federal Register 
on August 12, 1994, at 59 FR 41400-41405.
    Regulations at Sec. 416.1161(a) list the types of income that are 
excluded from the income of an ineligible spouse and ineligible parent 
for deeming purposes. IRWE are not included in this list, but IRWE have 
been excluded from the income of ineligible spouses and ineligible 
parents under SSI operating procedures since 1990.
    We have added to the regulations the current operating procedure 
which is to exclude IRWE when determining the countable income of an 
ineligible spouse or ineligible parent for deeming purposes. By 
specifically singling out IRWE for exclusion from an eligible 
individual's income, Congress expressed its intent that receipt of 
these monies should not have an adverse effect on an individual's SSI 
eligibility or payment amount. This intent would not be realized if 
these monies were deemed to an eligible individual. These regulations 
reflect the statutory authority granted the Commissioner of Social 
Security under section 1614(f) (1) and (2) of the Act to waive the 
deeming of income from an ineligible spouse or parent to an eligible 
individual when such deeming is determined by the Commissioner of 
Social Security to be inequitable under the circumstances.

Interest and Appreciation in Value of Excluded Burial Funds and Burial 
Space Purchase Agreements

    Effective November 1, 1982, section 185 of Public Law 97-248 
amended the Act to provide that any interest earned on excluded burial 
funds and any appreciation in the value of excluded burial arrangements 
left to accumulate, may be excluded from income by regulation. 
Effective April 1, 1990, section 8013 of Public Law 101-239 amended the 
Act to provide that interest earned on the value of agreements 
representing the purchase of excluded burial spaces is excluded from 
income if left to accumulate.
    Regulations at Sec. 416.1124(c)(9) implement the exclusion of 
interest earned on excluded burial funds and appreciation in the value 
of excluded burial arrangements, effective November 1, 1982. 
Regulations at Sec. 416.1124(c)(15) implement the exclusion of any 
interest earned on the value of agreements representing the purchase of 
excluded burial spaces, effective April 1, 1990.
    Regulations at Sec. 416.1161(a) (relating to the treatment of 
income of an ineligible spouse or ineligible parent) do not apply these 
exclusions for purposes of deeming income, but both types of interest 
and appreciation have been excluded from the income of ineligible 
spouses and ineligible parents under SSI operating procedure.
    We have added to the regulations the current operating procedure 
which is to exclude interest on burial funds, appreciation in the value 
of burial arrangements, and interest on the value of burial space 
purchase agreements, that are excluded from resources, when determining 
the countable income of an ineligible spouse or ineligible parent. 
These regulations reflect the statutory authority granted the 
Commissioner of Social Security under section 1614(f) (1) and (2) of 
the Act to waive the deeming of income from an ineligible spouse or 
parent to an eligible individual when such deeming is determined by the 
Commissioner of Social Security to be inequitable under the 
circumstances. By specifically singling out these monies for exclusion 
from an eligible individual's income, Congress expressed its intent 
that receipt of these monies should not have an adverse effect on an 
individual's SSI eligibility or payment amount. This intent would not 
be realized if these monies were deemed to an eligible individual.
    We have made a technical change to conform the language of 
Sec. 416.1124(c)(9) to a prior policy change. Effective July 11, 1990, 
changes related to the SSI burial fund exclusion were published in the 
Federal Register at 55 FR 28373-28377. As a result of these changes, 
regulations at Sec. 416.1231(b)(1) were amended to require that 
excluded burial funds be kept separate from all other resources not 
intended for the burial of the individual or spouse. Furthermore, 
Sec. 416.1231(b)(7) was revised to provide that interest earned on 
excluded burial funds and appreciation in the value of excluded burial 
arrangements are excluded from resources if left to accumulate and 
become part of the separate burial fund.
    Current regulations at Sec. 416.1124(c)(9) provide that we will not 
count as income interest earned on excluded burial funds and any 
appreciation in the value of an excluded burial arrangement which are 
left to accumulate and become part of the separately identifiable 
burial fund. We have conformed this regulation to the prior regulatory 
change requiring the burial fund to be separate from other nonburial-
related assets and not merely separately identifiable.
    These regulations were published in the Federal Register (60 FR 
62356) as a notice of proposed rulemaking (NPRM) on December 6, 1995. 
Interested parties were given 60 days to submit comments. Public 
comments were received from an association of funeral directors which 
supported the proposed regulations. We are, therefore, adopting the 
regulations essentially as proposed.

[[Page 49964]]

Regulatory Procedures

Executive Order 12866

    We have consulted with the Office of Management and Budget and 
determined that these rules do not meet the criteria for a significant 
regulatory action under Executive Order 12866.

Regulatory Flexibility Act

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

Paperwork Reduction Act

    These regulations will impose no additional reporting and 
recordkeeping requirements subject to Office of Management and Budget 
clearance.

(Catalog of Federal Domestic Assistance: Program No. 96.006-
Supplemental Security Income)

List of Subjects in 20 CFR Part 416

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

    Approved: September 6, 1996.
Shirley S. Chater,
Commissioner of Social Security.

    For the reasons set out in the preamble, part 416, subpart K, of 
chapter III of title 20 of the Code of Federal Regulations is amended 
as follows:

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

Subpart K--[Amended]

    1. The authority citation for subpart K of part 416 continues to 
read as follows:

    Authority: Secs. 702(a)(5), 1602, 1611, 1612, 1613, 1614(f), 
1621, and 1631 of the Social Security Act (42 U.S.C. 902(a)(5), 
1381a, 1382, 1382a, 1382b, 1382c(f), 1382j, and 1383); sec. 211, 
Pub. L. 93-66, 87 Stat. 154 (42 U.S.C. 1382 note).

    2. Section 416.1124 is amended by removing the ``and'' at the end 
of paragraph (c)(17) and the period at the end of paragraph (c)(18), by 
adding ``; and'' at the end of paragraph (c)(18), by revising 
paragraphs (c)(7) and (c)(9) and adding new paragraph (c)(19) to read 
as follows:


Sec. 416.1124  Unearned income we do not count.

* * * * *
    (c) * * *
    (7) Alaska Longevity Bonus payments made to an individual who is a 
resident of Alaska and who, prior to October 1, 1985: met the 25-year 
residency requirement for receipt of such payments in effect prior to 
January 1, 1983; and was eligible for SSI;
* * * * *
    (9) Any interest earned on excluded burial funds and any 
appreciation in the value of an excluded burial arrangement which are 
left to accumulate and become a part of the separate burial fund. (See 
Sec. 416.1231 for an explanation of the exclusion of burial assets.) 
This exclusion from income applies to interest earned on burial funds 
or appreciation in the value of excluded burial arrangements which 
occur beginning November 1, 1982, or the date you first become eligible 
for SSI benefits, if later;
* * * * *
    (19) Hostile fire pay received from one of the uniformed services 
pursuant to 37 U.S.C. 310.
    3. Section 416.1161 is amended by removing the ``and'' at the end 
of paragraph (a)(21), and removing the period at the end of paragraph 
(a)(22) and adding a semi-colon in its place, and by revising paragraph 
(a)(12) and adding new paragraphs (a)(23), (a)(24) and (a)(25) to read 
as follows:


Sec. 416.1161  Income of an ineligible spouse, ineligible parent, and 
essential person for deeming purposes.

* * * * *
    (a) * * *
    (12) Alaska Longevity Bonus payments made to an individual who is a 
resident of Alaska and who, prior to October 1, 1985: met the 25-year 
residency requirement for receipt of such payments in effect prior to 
January 1, 1983; and was eligible for SSI;
* * * * *
    (23) Hostile fire pay received from one of the uniformed services 
pursuant to 37 U.S.C. 310;
    (24) Impairment-related work expenses, as described in 20 CFR 
404.1576, incurred and paid by an ineligible spouse or parent, if the 
ineligible spouse or parent receives disability benefits under title II 
of the Act; and
    (25) Interest earned on excluded burial funds and appreciation in 
the value of excluded burial arrangements which are left to accumulate 
and become part of separate burial funds, and interest accrued on and 
left to accumulate as part of the value of agreements representing the 
purchase of excluded burial spaces (see Sec. 416.1124(c) (9) and (15)).

[FR Doc. 96-24277 Filed 9-23-96; 8:45 am]
BILLING CODE 4190-29-P