[Federal Register Volume 62, Number 28 (Tuesday, February 11, 1997)]
[Rules and Regulations]
[Pages 6114-6121]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3205]
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SOCIAL SECURITY ADMINISTRATION
20 CFR Part 404
RIN 0960-AE31
Cycling Payment of Social Security Benefits
AGENCY: Social Security Administration (SSA).
ACTION: Final rules.
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SUMMARY: Historically, Social Security benefits generally have been
paid on the 3rd of each month. As a result of our ongoing efforts to
improve service to our customers, we are establishing additional days
throughout the month on which Social Security benefits will be paid.
Current beneficiaries are not affected.
EFFECTIVE DATE: These final rules are effective May 1, 1997.
FOR FURTHER INFORMATION CONTACT: Lois Berg, Legal Assistant, Division
of Regulations and Rulings, Social Security Administration, 6401
Security Boulevard, Baltimore, MD 21235, (410) 965-1713. For
information on eligibility, claiming benefits, or coverage of earnings,
call our national toll-free number, 1-800-772-1213.
SUPPLEMENTARY INFORMATION:
Background
The second phase of the National Performance Review (NPR), the
Federal Reinventing Government effort, was announced by the President
and Vice President on December 19, 1994. It was designed to focus
attention on what each agency does, examining its mission and looking
at its programs and functions to see if there are ways to provide
better service to the public and, at the same time, do business in a
more cost-effective manner, i.e., ``make government work better and
cost less.'' Each agency was asked to assemble a team to review its own
programs and functions. SSA's team worked closely with a team of
representatives from NPR and the Office of Management and Budget (OMB)
to develop recommendations for the Vice President's consideration.
On April 11, 1995, the White House formally approved SSA's
reinvention proposals and officially announced them the next day. One
of these proposals was to cycle the payment of benefits.
Recipients of Old-Age, Survivors and Disability Insurance (OASDI)
benefits and Supplemental Security Income (SSI) payments currently are
paid in the first few days of each month. While these specific payment
days have never been required by the Social Security Act (the Act),
which in Secs. 205(i) and 1631(a)(1) commits the time for making
benefit payments to the discretion of the Commissioner of Social
Security, it has been our longstanding administrative practice to make
payment on these days. Monthly benefits are paid to all OASDI
beneficiaries on the same day (generally the 3rd day of each month for
the preceding month) and to all SSI beneficiaries on the same day
(generally the 1st day of each month for which the payment is due).
Over the years, a trend has developed that has resulted in
deterioration of services we provide face-to-face or over the telephone
on and around our payment days. This phenomenon is described fully
below and is of particular concern to us in light of the Agency's
commitment to provide ``world class'' service to our beneficiaries and
customers.
Executive Order 12862, issued on September 11, 1993, mandates that
the standard of quality for services provided to the public for all
government agencies shall be ``customer service equal to the best in
the business.'' This standard has been incorporated into SSA's goal of
providing ``world class'' public service. For example, when you conduct
business with us, we have set as goals that:
When you make an appointment to talk with someone at one
of our field offices, we will serve you within 10 minutes to the
scheduled time.
When you call our toll-free 800 number, you will get
through to it within 5 minutes of your first try.
SSA's current practice of paying 47 million beneficiaries within
the first 3 days of each month results in a large surge of work during
the first week of each month. This surge includes a large number of
visitors to field offices and calls to our toll-free 800 number to
report nonreceipt of a check, question the amount paid, or ask about
other payment-related issues. Approximately
[[Page 6115]]
9 percent of all calls during check week concern nonreceipt, compared
to 3 percent during the rest of the month. As an example of the surge
that occurs around the current payment days, on April 3, 1995,
1,091,282 calls were placed to SSA's 800 number. On April 14, 1995, the
number of calls placed to our 800 number decreased to 229,022.
It is important to beneficiaries and customers to be able to reach
SSA with fewer busy signals, and we have pledged to enable callers to
get through to the 800 number within 5 minutes of their original
attempt. However, in fiscal year (FY) 1994, during peak periods,
customers encountered busy signals on SSA's 800 number 40-63 percent of
the time and had to wait more than 5 minutes to get through about 30
percent of the time. This delay often occurs at a time when it may be
the most critical for the individual to reach us, to report a lost
check, for example. Anyone who experiences a delay in reaching us to
report a lost check also faces a delay in receiving a replacement
check. Since many beneficiaries rely solely on their Social Security
benefits, this can be a real hardship for them.
Our goal is for our customers to have minimal waits for service
when visiting a Social Security field office. Today, SSA does not
always meet this goal. In FY 1994 there were 24 million visitors to our
field offices. While the average wait during check week for individuals
with an appointment was 8 minutes, some individuals with appointments
had to wait over 2 hours. Thirty-two percent of the visitors to our
offices without appointments in FY 1994 (typically people who have
questions related to their payments or who want to report payment
delivery problems) had to wait more than 30 minutes after arriving to
be served. The average wait during check week for individuals without
appointments was 16 minutes, although some individuals without
appointments had to wait over 3 hours. This can be a particular
hardship to those who are elderly or disabled, as well as to people who
might take off from work to come to our offices.
The demographic and resource challenges we will face over the next
25 years will make it even more difficult for us to meet our service-
delivery objectives. Currently, we pay 47 million OASDI and SSI
beneficiaries within the first three days of each month. Due to the
aging of the ``baby boomer'' generation, by the year 2020, we will be
paying about 75 million beneficiaries, a 60 percent increase over
today's beneficiary population. This will place an unprecedented demand
on our benefit delivery system.
We are concerned that, in the next 25 years, with the prospect of
about 75 million beneficiaries all receiving their payments on single
days, there will be a serious deterioration in our service to the
public, and we will not be able to provide the kind of service to which
we are committed. The growth in beneficiary population is expected to
place an even greater strain on SSA's resources at the beginning of the
month. At the same time that the number of SSA customers is growing,
SSA's resources are being reduced. Public Law 103-226 mandates an
overall 12 percent reduction of Federal staffing levels by 1999, and
this will impact SSA's resources. As a result, we are particularly
concerned that we will not be able to cope with the monthly workload
peaks and still maintain our goal of being readily accessible to the
public unless we make significant changes in the way in which we
deliver service.
In the future, the increased number of beneficiaries and customers
plus the mandated reduction of Federal staffing levels will have a real
impact on the public's ability to contact us. This will be especially
hard on individuals during check week (currently the first week in each
month that benefits are paid) when the system will be overloaded. Check
week is the time that beneficiaries often have the most urgent need to
reach us to report nonreceipt or other problems related to their
payment, and to request a replacement check.
Each attempted phone contact by an SSA beneficiary, whether over or
under age 65, may represent a personal crisis due, for example, to
nonreceipt of benefits. Social Security benefits affect, in particular,
nearly all individuals age 65 and over in the United States (U.S.). For
a significant proportion of individuals over age 65, the benefits
represent 90 percent or more of their total income. For these
beneficiaries, nonreceipt is not an abstract concept or statistic. It
may represent the difference between paying rent or mortgage payments
on time or late. It may mean the ability to purchase food. It may
represent lack of gasoline or busfare to get to a medical appointment.
A phone contact or visit may be by a recent widow(er) who is reporting
the death of her/his spouse. One successful telephone call may be all
that is necessary to enable SSA to convert retirement benefits as a
spouse into higher widow(er)'s benefits. An unsuccessful phone contact
could prevent us from holding back payments to the deceased individual
and scheduling benefits to the newly widowed beneficiary. When
individuals are unsuccessful at reaching us by telephone, either they,
or a friend or family member, may take time off from work to come into
a field office. Any additional delay waiting in the field office causes
them to lose even more time from work.
Today, we are attempting to cope with the uneven workload pattern
in order to maintain our level of service through a series of
administrative and management initiatives. For example, at the
beginning of the month, we redeploy staff from other work to handle the
increase in telephone inquiries which sometimes exceeds two million
calls a day. While this practice has been generally successful so far,
it will not continue to be as effective in the future when the number
of beneficiaries increases substantially and our staffing decreases.
We are considering all our options in preparing for this increase
in SSA's workloads and staff reductions and, accordingly, are looking
for ways to reengineer our various processes to allow us to achieve our
world class customer service goals and, at the same time, increase
efficiency and productivity to the maximum extent possible. It is
clear, though, that SSA's goal to achieve a level of world class
customer service cannot be realized unless our workloads are evened
out. This is critical to providing better access to SSA's services for
our beneficiaries and customers.
The release of all OASDI and SSI payments on single days also has
an adverse effect on certain sectors of the economy. Based on meetings
we held with representatives of the banking and business community, the
Department of the Treasury (DT), the Federal Reserve System (FRS) and
the U.S. Postal Service (USPS), it is clear that the large, once-a-
month OASDI and SSI payment files are creating many problems. The
banking and business community, the DT, FRS and the USPS all have to
bear the expense of providing sufficient resources and processing
capacity to deal with OASDI and SSI payments as they flow through the
national payment system at the beginning of the month. This capacity is
not needed throughout the remainder of the month.
Equally significant is the growing operational risk that is
associated with SSA's current payment pattern. Representatives from
several large financial institutions made it clear that when the Social
Security direct deposit payment file becomes available for processing
from FRS, they stop all other business and devote their entire
operation to ensuring the file is processed quickly and accurately.
[[Page 6116]]
Because of the inordinately large number of payments involved, these
institutions must ensure that nothing goes wrong as the file passes
through the national payment system and is deposited into individual
customers' accounts. Any event that adversely affects the operational
capacity of DT, FRS or a large financial institution in the 1 to 4 day
window prior to the 3rd of the month may result in the delay or
nonreceipt of literally millions of Social Security benefit payments
which could create hardship for SSA beneficiaries. Leveling the Social
Security payment files through cycling will help prevent this
operational risk and resulting hardship.
In order to improve our service to the public, both now and in the
future, we will spread the payment of OASDI benefits throughout the
month, rather than continue to make all benefit payments on single days
at the beginning of the month. That is, we will establish several
additional payment days for each month, and pay the full monthly
benefit to some beneficiaries on the first of those payment days, to
other beneficiaries on the second of those payment days, and so forth.
The payment day, or cycle, on which a beneficiary is paid generally
will not be changed, so that if you are paid on the second payment day
in one month you will be paid on the second payment day in each
succeeding month as well. This approach, which we call ``cycling of
payments,'' will level the workload peaks associated with our current
practice of paying all benefits on the same day. Since calls and visits
associated with receipt of the monthly benefit payment will be
distributed throughout the month, rather than concentrated in a few
days, there will be shorter waiting times for assistance and we will be
able to achieve or sustain our world class service to the public.
It is important to note that payment cycling will not change the
way benefits are computed. We will continue to follow the same rules in
determining month of entitlement and the payment amount. People whose
benefits are cycled will receive the same amount they would receive if
they were paid on the 3rd of the month.
The benefits to society of implementing payment cycling are
potentially significant but extremely difficult to estimate. Cycling
will benefit members of the public in that they will have better access
to SSA services, including shorter waiting times in field offices and
when calling the 800 number, as SSA's workloads increase in the future.
Cycling will benefit the business and banking communities in that they
will be better able to utilize their resources throughout the month,
processing Social Security payments on a weekly basis. Cycling will
also reduce the risk involved in processing large once-a-month files.
If we continue to pay all beneficiaries on single days once-a-month,
SSA's service to the public will deteriorate, and the adverse impact
that the once-a-month payments have on the business and financial
community will continue, as will the growing operational risk that goes
along with processing all benefit payments at one time.
After considering how best to implement the reinvention proposal to
cycle the timing of benefit payments, we have decided the following:
1. We will establish three additional payment days throughout the
month (i.e., the second, third and fourth Wednesdays of the month) on
which individuals may be paid. This schedule will alleviate to the
maximum extent possible the current Monday workload peak which is also
now being experienced by SSA's toll-free 800 number and field offices
when the payment day falls on Friday, Saturday, Sunday or Monday, which
occurs more than half of the time.
2. We will implement payment cycling prospectively only for new
OASDI beneficiaries whose claims are filed on or after May 1, 1997.
Payments to current beneficiaries will not be cycled, as they are
already in the established pattern of receiving their benefits on the
third of the month.
In the notice of proposed rulemaking (NPRM) we indicated that we
proposed to implement payment cycling by January 1997. However, we are
delaying implementation because we anticipate heavy workloads between
December 1996 and March 1997 due to recently enacted legislation, and
we believe it would be unwise to begin payment cycling during that
time. The May 1, 1997 implementation date was also selected to allow
SSA, DT and FRS, who share responsibility for delivery of SSA's
payments, sufficient time to complete the essential modifications
required before cycling can begin. Moreover, publishing the final
regulation several months in advance of the implementation date allows
the business and financial community lead time to prepare for cycling.
3. We will assign one of the newly established payment days to each
new OASDI beneficiary based on the date of birth of the person on whose
record entitlement is established (the insured individual). Generally,
new OASDI beneficiaries who receive auxiliary or survivors benefits on
an insured individual's record will be assigned to the payment day
based on the insured individual's date of birth. Insured individuals
born on the 1st through the 10th of the month will be paid on the
second Wednesday of each month. Insured individuals born on the 11th
through the 20th of the month will be paid on the third Wednesday of
each month. Insured individuals born after the 20th of the month will
be paid on the fourth Wednesday of each month. With the few exceptions
described below, no new OASDI beneficiaries will receive payments on
the 3rd of the month.
Individuals who are being paid benefits on one record on the 3rd of
the month, and who become entitled on another record after April 30,
1997 without a break in entitlement, will continue to receive all
benefits on the 3rd of the month.
After April 30, 1997, individuals who become entitled on one record
and later entitled on another record, without a break in entitlement,
will be paid all benefits to which they are entitled no later than
their current payment day. They will not be assigned a later payment
day as long as they remain continuously entitled. We believe this
change from our proposed rule is desirable to ensure that those
individuals who have become accustomed to receiving their payments on a
certain day are not required to wait an additional 1 to 2 weeks for
payment when the second entitlement begins. We have had to establish an
interim process to implement this change until such time as systems
enhancements can fully support a permanent process. Under the interim
process, these individuals will be assigned a payment day based on the
new entitlement situation or, if that is later than the current payment
day, they will be paid on the 3rd of the month. Under the permanent
process, individuals will be assigned whichever payment day is earlier:
the current payment day or the payment day which would be assigned
based on the new entitlement situation.
4. We may accommodate some beneficiaries currently being paid on
the 3rd of the month who voluntarily wish to change to the payment day
that would be selected by the date of birth criteria described above,
in order to accelerate the workload leveling effect of cycling. For
example, we plan to allow them to volunteer to switch if only one
person is being paid on the record or, if there are other beneficiaries
being paid on the same record, all others agree, in writing, to the
change. However, once a volunteer is assigned to a new payment day,
that day will be
[[Page 6117]]
permanent and the person will not be allowed to change back to the 3rd
of the month. We will not allow beneficiaries being paid on one of the
three new days to switch to a different payment day.
5. We will not include persons receiving SSI payments, and persons
concurrently entitled to both OASDI and SSI benefits, in payment
cycling. Since SSI is a needs-based program, we believe we should
continue to pay these individuals as early in the month as possible.
Concurrently entitled individuals who lose eligibility for SSI will
continue to be paid on the 3rd.
6. We will not apply payment cycling to OASDI beneficiaries whose
income is deemed to SSI beneficiaries. The reason is that most deeming
cases involve family members who receive Federal income maintenance
benefits. Those family units should continue to receive payments as
early in the month as possible. Likewise, payment cycling will not
apply to OASDI beneficiaries who, due to their income and/or resources,
are not entitled to SSI but the State in which they live covers their
Medicare premium. The Health Care Financing Administration requested
that these OASDI beneficiaries be paid early in the month.
7. Payment cycling will not apply to beneficiaries living in a
foreign country. For those beneficiaries who will be paid by check
because SSA does not have direct deposit arrangements with the country
in which they reside, foreign check delivery is often unreliable.
However, with one delivery day on the 3rd of the month it is easier to
target when checks should be received than if they were sent four times
throughout the month. Also, since foreign beneficiaries do not have
access to the 800 number or to SSA's field offices in the country where
they reside, these facilities will not be adversely affected if we
continue to pay foreign beneficiaries on the 3rd of the month. The
presence of a foreign address for any beneficiary on a Social Security
record will mean that all beneficiaries on that record will be paid on
the 3rd of the month. The reason is that, for operational purposes, we
are assigning a single payment day for all individuals who receive
benefits on the earnings record of a particular individual. Once a
beneficiary has reported a foreign address and all individuals
receiving benefits on that account are changed to the 3rd of the month,
the payment day for all of them will remain the 3rd of the month even
if the person with the foreign address returns to the U.S. This is to
prevent potential confusion caused by beneficiaries frequently leaving
and entering the U.S.
8. We will notify affected beneficiaries in writing of the
particular monthly payment day that is assigned to them. However, the
assignment of a payment day is not an initial determination and is not
appealable. Beneficiaries have never been able to choose their payment
day and will not be able to choose a payment day under payment cycling
except under very specific and limited circumstances.
Early Consultations
Prior to publishing the NPRM, we conducted 10 focus group meetings
at 5 locations around the country to solicit comments and obtain
reaction from the public to cycling payments throughout the month. Two
meetings were held in each location: one with current beneficiaries age
21 and over and one with future beneficiaries age 21 and over. After we
described our future workload projections and resultant service
delivery deterioration, the vast majority of future beneficiaries with
whom we met said they would not mind being paid later in the month.
We also conducted a series of separate meetings with stakeholders
including representatives from the business community, financial
community, other government agencies and advocacy groups. The
overwhelming consensus of opinion among all stakeholders who
participated was that SSA should implement some form of payment
cycling.
Comments on NPRM
On January 26, 1996, we published proposed regulations in the
Federal Register at 61 FR 2654 and provided a 60-day period for
interested individuals to comment. On February 15, 1996 we held an
informational briefing for representatives of groups and organizations,
and any others, who were interested in attending, to provide details
and to answer questions on how SSA proposed to implement payment
cycling.
In response to the NPRM, we received comments from 17 commenters.
Most of the comments came from financial institutions, financial trade
associations, and State and local human services agencies, as well as
DT. Several comments came from individuals who did not identify
themselves as representing any particular organization or advocacy
group.
The comments on the proposed rules were overwhelmingly favorable.
Fifteen commenters, including both organizations and individuals, fully
supported payment cycling. Only two individuals expressed opinions
against the proposed change. The majority of commenters also agreed
with SSA's decision not to cycle current beneficiaries.
Most of the financial institutions who commented indicated that
payment cycling would help them to provide better customer service on
or around payment days. One also mentioned payment cycling easing
concerns they currently have for the safety of bank employees and
customers on payment days due to the large amount of cash they have on
hand on those days.
One commenter who identified herself as a future beneficiary who
would be covered by payment cycling said she supported it because she
wants SSA to be able to provide the best possible service for current
beneficiaries and for her when she is eligible to file for benefits. A
human services agency that supported payment cycling said it is aware
of the problems clients currently encounter getting through to SSA on
or around payment days. The agency also mentioned cycling as being a
crime deterrent, since it is well known that checks arrive on the 3rd.
Only two commenters from the financial community responded to SSA's
request for information from the business and financial community about
the incremental cost or savings to them. One of these two commenters,
who fully supported payment cycling, said ``* * * gradual enrollment of
beneficiaries and anticipated increase in the number of beneficiaries
make it difficult to determine the costs the banking industry will be
able to avoid as a result of the adoption of this policy.'' This
commenter said, ``In addition to eventual long-term cost savings, there
are also payment system risk reduction effects flowing from this
proposal.'' The other commenter who responded to this request from SSA,
and who also fully supported payment cycling, said since it applies
prospectively to new beneficiaries, it will not reduce their current
expenses and that it is difficult to quantify future savings at this
time.
Some of those who supported payment cycling suggested changes in
some of the specific details about cycling. One of the two individuals
who were not in favor of payment cycling also submitted comments.
Following are summaries of those suggested changes and comments and our
responses to them:
Comment: One commenter said that instead of SSA's toll free 800
number being busy at the beginning of the month (and SSA having the
rest of the month to get caught up with its other work), the toll free
800 number will be consistently busy throughout the month.
[[Page 6118]]
This will make it more difficult for SSA to get caught up with its
work.
Response: In cycling benefit payments, SSA's objective is to
improve public service by reducing the inordinate workload peak that
now occurs when all payments are delivered at the beginning of the
month. By leveling SSA's workload, the public will be able to get a
consistent level of quality service at any time of the month.
It is true that eventually payment cycling will have an effect upon
SSA's workforce. Employees may receive more telephone inquiries and
field office contacts in the last 2 weeks of the month than occur
today. Again, this is the purpose of payment cycling. By leveling
workloads, the public is better served because it consistently has
better access to SSA services. At the same time, SSA is in a position
to make better use of its available resources.
Comment: The same commenter was concerned that there will be
additional work and expense for SSA because someone who now receives
two types of benefits (one on his/her own record and one on a spouse's
record) will now receive two checks. Receiving one check later in the
month will cause more people to call with inquiries about receipt of
the second check. This will also cost SSA more (i.e., the costs
associated with disbursing two checks).
Response: SSA's intent is to pay each entitled beneficiary all
monies due on one day regardless of whether they are dually entitled on
their own work record and that of a spouse. For example, a woman who
receives benefits on her husband's record, but is also entitled on her
own work record, would receive benefits on the payment date assigned
based on her birth date. On that date, she would receive a payment
reflecting the combined amount of her own benefits and the excess due
for the ``wife's benefit.''
Comment: This same commenter was concerned that payment cycling is
more favorable to someone whose birthday is earlier in the month. Some
people will not receive their payment until 3 or 4 weeks after the
month for which they are due, whereas someone whose payment is not
cycled receives it only 3 days after the month for which it is due.
Response: There are two issues mentioned. First, it is true that in
using the method of cycling based on birth dates, individuals born
early in the month receive their benefits earlier each month. But any
formula designed to evenly distribute future beneficiaries' payments
throughout the month (e.g., using the last 2 digits of a person's
social security number) will produce the same result. The birth date
formula was unanimously favored by members of the public who
participated in SSA's focus groups in that it was the easiest for them
to relate to and understand.
Second, this raises an issue of perception. Beneficiaries who are
paid on the second, third and fourth Wednesdays of the month for the
previous month's entitlement may perceive that they are not receiving
the same level of service as someone who is paid on the 3rd of the
month. This was not an issue that concerned participants in SSA's focus
groups. These individuals indicated that because they had not yet begun
receiving Social Security benefits, it was not of concern whether their
future benefits were paid on the 3rd of the month or on the second,
third or fourth Wednesdays because once their payments start, they
would be paid consistently at the same monthly interval. Further, these
same focus group participants recognized that unless SSA did something
to level workloads that now occur at the beginning of the month, their
ability to file a claim, have a question answered or otherwise receive
prompt service was being jeopardized as the Agency's workloads
increased.
Comment: The above commenter also believed it is unfair to pay SSI
recipients and OASDI beneficiaries who qualify for Qualified Medicare
Beneficiary (QMB) payments early in the month while paying all other
OASDI beneficiaries later in the month, particularly since some of
these OASDI beneficiaries miss qualifying for SSI by a small amount. In
a similar vein, another commenter recommended that two additional
groups of individuals be excluded from payment cycling: those living
below 200% of the poverty level and those who would face ``undue
hardship'' if they received their benefits after the 3rd of the month.
Response: SSA can readily identify SSI recipients as those
individuals of limited means. Accordingly, we will exempt anyone who
receives SSI from having their payment cycled. However, we have no
information relating to the economic circumstances of anyone receiving
OASDI benefits to enable us to determine who is of limited means. Even
if we did, we would have to establish a benchmark at some level.
Whatever benchmark SSA established, there would be individuals who fall
just below the mark and those who fall just above the mark. Therefore,
we continue to believe that the use of the SSI means test is
appropriate from both a policy and operational perspective.
We do not believe that creating additional criteria for an ``undue
hardship'' test is necessary. Indeed, people who otherwise would have
been paid on the 3rd of the month will now be paid later in the month
as a result of payment cycling. However, we believe the improved access
to SSA's services for all beneficiaries and customers, as well as the
benefits to the banking and business community which will enable them
to provide better customer service, and the reduction of the risk
involved in processing large once-a-month files outweigh the effects of
being paid later in the month. Moreover, as mentioned by many of the
focus group participants, individuals paid consistently on the second
Wednesday of the month from the inception of their entitlement are
receiving the same level of service as individuals paid on the 3rd of
the month from the inception of their entitlement. In addition, already
limited SSA staff and resources would have to be assigned to administer
an ``undue hardship'' test.
Comment: One commenter thought SSA should assign the payment day
for cycled payments based on something other than the date of birth.
The commenter believed using the date of birth means banks would need
to know the customer's date of birth in order to process customer
inquiries. The commenter also indicated the banking industry does not
know a customer's date of birth and some customers will not give out
that information or do not know it. A suggestion was to use the first
initial of the customer's last name to assign the payment day. However,
another commenter said that using birthdays to determine distribution
``makes a great deal of sense in evening out the workload.'' And still
another commenter suggested giving beneficiaries a sticker showing the
payment day which they could place in a prominent place in their house
so the date would be easily available.
Response: SSA considered a number of options in developing a means
of evenly distributing payments throughout the month. In addition to
the alpha formula suggested in this comment, SSA considered using the
last 2 digits of the individual's Social Security number. Any of these
methods would result in a random distribution of payments. However, the
fact that people's surnames often change makes using the alpha formula
more complex.
SSA selected the birth date formula based on the unanimous
endorsement of this method by those members of the public who
participated in the Agency's focus groups. All participants expressed
their belief that the public would relate best to a formula based on a
person's date of birth.
[[Page 6119]]
To do all it can to minimize potential problems like those cited in
this comment, SSA plans to provide all new beneficiaries with a written
notice informing the individual of his or her assigned payment date.
Included with the written notice will be a pamphlet explaining payment
cycling and a calendar providing the individual with the scheduled
payment dates.
Comment: Several commenters urged SSA to consider requiring all
benefits to be paid by direct deposit.
Response: Since these comments were made, Public Law 104-134, the
Omnibus Consolidated Rescissions and Appropriations Act of 1996, has
been signed. This law requires, with limited exceptions, anyone who
files for government benefits after July 25, 1996, to be paid by direct
deposit. In addition, with certain limited exceptions, the legislation
requires that by 1999, all government benefits be paid by direct
deposit, even for those who began receiving payments before July 26,
1996. However, without payment cycling, SSA and the financial community
will still experience workload surges the first 10 days of the month in
terms of direct deposits all occurring at the same time, calls to SSA
and to the financial institutions concerning crediting of the direct
deposit, the amount of the deposit, or many other issues related to the
benefit, as well as bank customers wanting to make withdrawals as soon
as the direct deposit is made.
Comment: Several commenters thought SSA should schedule the
delivery of cycled benefits on assigned payment dates rather than the
planned Wednesday schedule. They believed this would be less confusing
for customers than having to remember which Wednesday is their payment
day. However, another commenter, a non-profit electronic banking trade
association, said its members supported paying on Wednesdays. The
commenter said many beneficiaries currently become confused about when
they will receive their payments if the 3rd is on a holiday or weekend.
The commenter believed Wednesday payments will clear up this confusion.
Response: SSA gave the payment schedule under cycling a great deal
of consideration. We decided on the Wednesday schedule for the
following reasons:
If the objective of payment cycling is to improve service
by providing the public with better access to SSA through a leveling of
workloads, then Wednesday payments offer the best opportunity to
achieve this. Any fixed date schedule (e.g., the 10th, 17th and 24th of
the month) will fall on a Friday, Saturday, Sunday or Monday 57 percent
of the time. This is likely to exacerbate the workload peaks now
experienced by SSA every Monday;
A Wednesday schedule avoids the problem of having to
adjust payment dates because the date coincides with a Saturday or
Sunday; and
A Wednesday schedule avoids the problem of having to
adjust payment dates because the date coincides with a Federal holiday
to the maximum extent possible.
Again, SSA plans to provide payment schedules to both the financial
community and the public to minimize questions or confusion regarding
the date on which beneficiaries will be paid.
Comment: One commenter said that SSA should clarify how these
payments should be counted for means-tested programs, such as AFDC,
food stamps and AFDC-related Medicaid.
Response: We do not issue rules governing these other programs and
have no authority to decide how our payments should be counted for
those programs. It is not clear, however, that any changes are
necessary. Certainly, SSA will provide any additional guidance to State
and local governments that may be needed about our procedures. As it
has done for the past 56 years, Social Security will continue to pay
future OASDI beneficiaries in the month following the month of
entitlement.
Comment: Two commenters wanted an appeals process available for
those beneficiaries for whom receiving their benefit payment later in
the month creates a hardship.
Response: The payment date has never been appealable and SSA does
not plan to make it appealable or establish a new appeals process. This
decision is based on a number of considerations. First, all individuals
of limited means (i.e., those identified at or below the poverty level
through their entitlement to SSI) will not be affected by payment
cycling. Accordingly, they will receive both their SSI and Social
Security benefits at the beginning of the month.
It is true that people who otherwise would have been paid on the
3rd of the month will now be paid later in the month as a result of
payment cycling. However, we believe the improved access to SSA's
services for all beneficiaries and customers, as well as the benefits
to the banking and business community which will enable them to provide
better customer service, and the reduction of the risk involved in
processing large once-a-month files outweigh the effects of being paid
later in the month. Moreover, SSA's decision reflects the advice given
by members of the public who participated in the Agency's focus groups.
These individuals expressed a strong belief that someone who has not
yet begun to receive Social Security benefits is not disadvantaged if
they receive their payment on any of the assigned Wednesdays from the
outset of their entitlement.
Establishing an appeals process would place an undue administrative
burden on SSA and could defeat the purpose of payment cycling.
Comment: One commenter indicated disapproval of payment cycling but
gave no reasons. Therefore, we cannot respond.
Comment: One commenter said that in some States, individuals can be
eligible for State payment of their Medicare premium under the QMB and
Specified Low Income Medicare Beneficiary programs but not eligible for
Medicaid. Therefore, the commenter said the regulations should be
clarified to make certain that all individuals whose Medicare premium
is paid by the State are excluded from payment cycling.
Response: We are adopting this comment and revising
Sec. 404.1807(c)(4) to clarify that all OASDI beneficiaries whose
Medicare premiums are paid by the State in which they live are excluded
from payment cycling.
Comment: One commenter urged SSA to include current beneficiaries
in payment cycling by splitting current recipients into two groups that
would be processed as two primary cycles and to add new beneficiaries
to two secondary cycles on alternate weeks.
Response: Prior to publishing the NPRM, SSA considered including
current beneficiaries in payment cycling. We rejected this option
because shifting the payment date of one half of current beneficiaries
one week later would disrupt monthly payment arrangements for 22
million current OASDI recipients. Further, without a one-time ``bridge
payment'' (a one-time additional payment which would cover the period
of time from the 3rd of the month to their first payment day) of up to
$3.3 billion, affected beneficiaries would be required to wait more
than 5 weeks between benefit payments during the month of transition.
Without legislation, SSA does not have authority to issue this type of
special adjustment payment. Current beneficiaries who participated in
focus groups were unanimous in their opinion that SSA should not change
the monthly payment patterns of beneficiaries currently on the rolls.
Finally, the majority of
[[Page 6120]]
commenters agreed with SSA's decision not to cycle current
beneficiaries.
Comment: One commenter recommended that SSA launch a comprehensive
educational program to advise all stakeholders of the new payment dates
once adopted.
Response: Individual beneficiaries whose benefits are cycled will
receive an informational pamphlet explaining payment cycling and a
calendar providing them with the scheduled payment dates. Also, SSA is
putting together informational material about payment cycling which
will be made available to financial institutions and businesses to help
them respond to any concerns raised by their customers.
After considering the comments on the proposed regulations, we have
changed Sec. 404.1807(c)(4), as discussed above in the response to the
public comment. Also, upon further consideration, we have decided to
revise Sec. 404.1807(c)(5) to show that individuals who become entitled
on one record and later entitled on another record, without a break in
entitlement, will be paid all benefits to which they are entitled no
later than their current payment day. In addition, we have made several
nonsubstantive changes to the proposed regulations. We are, therefore,
publishing these regulations as final regulations.
Regulatory Procedures
Executive Order 12866
We have determined that these final regulations meet the criteria
for a significant regulatory action under Executive Order 12866.
Therefore, we prepared and submitted to OMB an assessment of the
potential benefits and costs of this regulatory action. This assessment
also contains an analysis of alternative policies we considered and
chose not to adopt. It is available for review by members of the public
by contacting SSA.
Regulatory Flexibility Act
These final regulations affect when Social Security recipients
receive their payments. Recipients are not small entities within the
definition of the Regulatory Flexibility Act. Therefore, these final
regulations will not have a significant impact on a substantial number
of small entities.
Paperwork Reduction Act
These final regulations impose no reporting/recordkeeping
requirements necessitating clearance by OMB.
(Catalog of Federal Domestic Assistance Program Nos. 96.001 Social
Security-Disability Insurance; 96.002 Social Security-Retirement
Insurance; 96.003 Social Security-Special Benefits for Persons Aged
72 and Over; 96.004 Social Security-Survivors Insurance)
List of Subjects in 20 CFR Part 404
Administrative Practice and Procedure, Blind benefits, Old-Age,
Survivors and Disability Benefits; Reporting and recordkeeping
requirements; Social Security.
Dated: January 28, 1997.
Shirley S. Chater,
Commissioner of Social Security.
For the reasons set forth in the preamble, subparts J and S of part
404 of chapter III of title 20 of the Code of Federal Regulations are
amended as set forth below.
PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE
(1950- )
Subpart J--[Amended]
1. The authority citation for subpart J of part 404 continues to
read as follows:
Authority: Secs. 201(j), 205(a), (b), (d)-(h), and (j), 221,
225, and 702(a)(5) of the Social Security Act (42 U.S.C. 401(j), 405
(a), (b), (d)-(h), and (j), 421, 425 and 902(a)(5)); 31 U.S.C.
3720A; sec. 5, Pub. L. 97-455, 96 Stat. 2500 (42 U.S.C. 405 note);
secs. 5, 6 (c)-(e), and 15, Pub. L. 98-460, 98 Stat. 1802 (42 U.S.C.
421 note).
2. Section 404.903 is amended by removing the word ``and'' at the
end of paragraph (q), and by removing the period at the end of
paragraph (r) and adding a semicolon and the word ``and'' in its place,
and adding paragraph (s) to read as follows:
Sec. 404.903 Administrative actions that are not initial
determinations.
* * * * *
(s) The assignment of a monthly payment day (see Sec. 404.1807).
Subpart S--[Amended]
3. The authority citation for subpart S of part 404 is revised to
read as follows:
Authority: Secs. 205 (a) and (n), 207, 702(a)(5), and 708(a) of
the Social Security Act (42 U.S.C. 405 (a) and (n), 407, 902(a)(5)
and 909(a)).
4. Section 404.1805 is amended by revising paragraph (a)(3) to read
as follows:
Sec. 404.1805 Paying benefits.
(a) * * *
(3) The time at which the payment or payments should be made in
accordance with Sec. 404.1807.
* * * * *
5. Section 404.1807 is added to read as follows:
Sec. 404.1807 Monthly payment day.
(a) General. Once we have made a determination or decision that you
are entitled to recurring monthly benefits, you will be assigned a
monthly payment day. Thereafter, any recurring monthly benefits which
are payable to you will be certified to the Managing Trustee for
delivery on or before that day of the month as part of our
certification under Sec. 404.1805(a)(3). Except as provided in
paragraphs (c)(2) through (c)(6) of this section, once you have been
assigned a monthly payment day, that day will not be changed.
(b) Assignment of payment day. (1) We will assign the same payment
day for all individuals who receive benefits on the earnings record of
a particular insured individual.
(2) The payment day will be selected based on the day of the month
on which the insured individual was born. Insured individuals born on
the 1st through the 10th of the month will be paid on the second
Wednesday of each month. Insured individuals born on the 11th through
the 20th of the month will be paid on the third Wednesday of each
month. Insured individuals born after the 20th of the month will be
paid on the fourth Wednesday of each month. See paragraph (c) of this
section for exceptions.
(3) We will notify you in writing of the particular monthly payment
day that is assigned to you.
(c) Exceptions. (1) If you or any other person became entitled to
benefits on the earnings record of the insured individual based on an
application filed before May 1, 1997, you will continue to receive your
benefits on the 3rd day of the month (but see paragraph (c)(6) of this
section). All persons who subsequently become entitled to benefits on
that earnings record will be assigned to the 3rd day of the month as
the monthly payment day.
(2) If you or any other person become entitled to benefits on the
earnings record of the insured individual based on an application filed
after April 30, 1997, and also become entitled to Supplemental Security
Income (SSI) benefits or have income which is deemed to an SSI
beneficiary (per Sec. 416.1160), all persons who are or become entitled
to benefits on that earnings record will be assigned to the 3rd day of
the month as the monthly payment day. We will notify you in writing if
your monthly payment day is being changed to the 3rd of the month due
to this provision.
(3) If you or any other person become entitled to benefits on the
earnings record of the insured individual based on an application filed
after April 30,
[[Page 6121]]
1997, and also reside in a foreign country, all persons who are or
become entitled to benefits on that earnings record will be assigned to
the 3rd day of the month as the monthly payment day. We will notify you
in writing if your monthly payment day is being changed to the 3rd of
the month due to this provision.
(4) If you or any other person become entitled on the earnings
record of the insured individual based on an application filed after
April 30, 1997, and are not entitled to SSI but are or become eligible
for the State where you live to pay your Medicare premium under the
provisions of Sec. 1843 of the Act, all persons who are or become
entitled to benefits on that earnings record will be assigned to the
3rd day of the month as the monthly payment day. We will notify you in
writing if your monthly payment day is being changed to the 3rd of the
month due to this provision.
(5) After April 30, 1997, all individuals who become entitled on
one record and later entitled on another record, without a break in
entitlement, will be paid all benefits to which they are entitled no
later than their current payment day. Individuals who are being paid
benefits on one record on the 3rd of the month, and who become entitled
on another record without a break in entitlement, will continue to
receive all benefits on the 3rd of the month.
(6) If the day regularly scheduled for the delivery of your benefit
payment falls on a Saturday, Sunday, or Federal legal holiday, you will
be paid on the first preceding day that is not a Saturday, Sunday, or
Federal legal holiday.
[FR Doc. 97-3205 Filed 2-10-97; 8:45 am]
BILLING CODE 4190-29-P