[Federal Register Volume 62, Number 108 (Thursday, June 5, 1997)]
[Rules and Regulations]
[Pages 30747-30751]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14614]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 416

[Regulations No. 16]
RIN 0960-AD65


Supplemental Security Income for the Aged, Blind, and Disabled; 
Reliable Information Which Is Currently Available for Determining 
Benefit Amounts in the Supplemental Security Income Program

AGENCY: Social Security Administration (SSA).

ACTION: Final rules.

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SUMMARY: The Social Security Act (the Act) provides that if the 
Commissioner of Social Security determines that reliable information is 
currently available concerning the income of an individual, the 
Commissioner may use that information to determine an individual's 
current month's supplemental security income (SSI) benefit amount. This 
method of determining SSI benefit amounts is an exception to the use of 
income from a prior month, known as retrospective monthly accounting 
(RMA). These rules provide that the Commissioner, in exercising his or 
her discretionary authority, has determined that no reliable 
information exists which is currently available for determining SSI 
benefit amounts for a current month using any method other than RMA.

EFFECTIVE DATE: These rules are effective July 7, 1997.

FOR FURTHER INFORMATION CONTACT: Henry D. Lerner, Legal Assistant, 
Division of Regulations and Rulings, Social Security Administration, 
6401 Security Blvd., Baltimore, MD 21235, (410) 965-1762 for 
information about

[[Page 30748]]

these rules. For information on eligibility or claiming benefits, call 
our national toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION: In accordance with the orders of the United 
States District Court for the Central District of California in the 
case of Newman, et al. v. Shalala, No. CV 89-04028 SVW (October 20, 
1993), and the United States Court of Appeals for the Ninth Circuit in 
Newman v. Chater, 87 F.3d 358 (1996), we are providing rules concerning 
reliable information for determining benefits in the SSI program 
pursuant to section 1611(c)(4) of the Act. A different district court, 
in Gould v. Sullivan, 819 F. Supp. 685 (S.D. Ohio 1992), ordered us to 
propose a rule concerning section 1611(c)(4) of the Act. On March 16, 
1993, we published a notice of proposed rulemaking (NPRM) in the 
Federal Register (58 FR 14191) with a correction notice published in 
the Federal Register (58 FR 26383) on May 3, 1993. The NPRM provided 60 
days in which the public could comment on the proposed rules. The 
district court in Newman also ordered us to propose a rule concerning 
section 1611(c)(4) with a 60-day comment period. The Newman district 
court found that the NPRM we published in March 1993 complied with this 
aspect of the order. Further, the Newman district court directed us to 
publish in the Federal Register a final rule concerning 1611(c)(4). In 
these cases, the Commissioner had argued that unless he identified 
reliable information which is currently available and which he intended 
to use as an exception to the usual RMA rules, the publication of 
regulations is not necessary. This position was upheld on July 27, 1994 
by the United States Court of Appeals for the Sixth Circuit in Gould v. 
Shalala, 30 F.3d 714 (1994) when the district court's decision was 
reversed. The circuit court agreed that the publication of regulations 
is not necessary under section 1611(c)(4) of the Act. However, on June 
25, 1996, the United States Court of Appeals for the Ninth Circuit in 
Newman v. Chater, 87 F.3d 358 (1996), affirmed the district court 
decision directing us to publish a final rule in the Federal Register. 
In light of the directive in Newman to publish a final rule, we are 
publishing these rules explaining that we have determined that no 
reliable information exists for determining SSI benefits. The NPRM 
which was published pursuant to the district court's decision in Gould 
provided 60 days in which the public could comment on the proposed 
rules. That period has run, and we have received public comments to 
which we will now respond.
    Previously, we published final regulations on November 26, 1985 (50 
FR 48563), implementing various provisions in section 1611(c) of the 
Act. Section 1611(c)(1) of the Act, the RMA provision, provides that an 
individual's eligibility for SSI benefits is to be determined based on 
income, resources, and other relevant characteristics from the current 
month. The SSI benefit amount for a month is to be determined on the 
basis of income and other characteristics in the first or, if the 
Commissioner so chooses, the second month preceding the month of 
eligibility. The final regulations provided that generally the income 
and other characteristics in the second month preceding the month of 
eligibility are to be used for determining the amount of SSI benefits.
    Section 1611(c)(3) of the Act provides that an increase in Social 
Security (title II) benefits over the amount payable for the first 
preceding month, or at the Commissioner's election, the second 
preceding month, will be counted in determining the amount of an SSI 
benefit for the first month or, at the Commissioner's election, the 
second month in which there is an SSI benefit increase due to a cost-
of-living adjustment (COLA) made under section 1617 of the Act. The 
final regulations, published November 26, 1985 (50 FR 48563), provided 
for counting an increase from a COLA or recomputation in Social 
Security benefits for January and February as income in the month 
received to determine the SSI benefit amounts for January and February.
    Section 1611(c)(4)(A) of the Act provides that if the Commissioner 
determines, at his or her discretion, that reliable information is 
currently available about an individual's income and other 
circumstances for a month, the Commissioner, at his or her discretion, 
may determine the SSI benefit amount for that month on the basis of 
that information rather than based on income and other characteristics 
from the first or second prior month as required under RMA pursuant to 
section 1611(c)(1) of the Act. This is known as the ``reliable 
information exception'' to the RMA provision. If the Commissioner 
determines that reliable information is currently available and he or 
she further determines that he or she may use it to affect the current 
SSI benefit amount, section 1611(c)(4)(B) requires the Commissioner to 
issue regulations prescribing the circumstances in which the 
information may be used to determine the SSI benefit amount. However, 
under section 1611(c)(4), the Commissioner, at his or her discretion, 
may continue to use RMA even if he or she identifies reliable 
information which is currently available.
    With respect to recipients, the optional computation under section 
1611(c)(4)(A) of the Act would, in comparison to RMA, be advantageous 
in some circumstances and disadvantageous in others. Consider, for 
illustrative purposes only, what would happen if the Commissioner were 
to determine that all title II income information is reliable and 
currently available and is to be used to determine the current month's 
benefit.
    Title II income above $20 serves to reduce the SSI benefit dollar-
for-dollar. A reduction in the ongoing title II benefit amount will 
result in an increase in the SSI benefit, and, conversely, an increase 
in the title II benefit will result in a reduction in the SSI benefit. 
Under RMA, the effects of changes in title II income other than COLA or 
recomputation increases are generally delayed 2 months. For example, an 
SSI recipient who is receiving title II mother's benefits and whose 
benefits terminate because she no longer has a child in her care would 
continue to receive a reduced SSI benefit for 2 months after the 
termination of the title II income. Conversely, an SSI recipient who 
becomes entitled to a title II mother's benefit will continue to 
receive an unreduced SSI benefit for 2 months after the title II 
benefit begins, and her SSI benefit would not be reduced until the 
third month following title II entitlement.
    Under the current month accounting approach, title II income would 
affect the SSI benefit as of the month the income is received. The 
mother whose title II benefit terminates would receive increased SSI in 
the month following termination. The SSI recipient who subsequently 
becomes entitled to a title II benefit would have her SSI benefit 
reduced effective with the month she begins receiving the title II 
benefit.
    Statistically valid sample data indicate that using current month 
accounting for title II income would be disadvantageous to more SSI 
recipients than it would be advantageous. Of the approximately 99,400 
recipients whose title II income started or stopped in the 12 months 
ending with June 1996 and who continued to receive SSI benefits, 78.3 
percent would have received less in total SSI benefits under current 
month accounting and 21.7 percent would have received more. Of the 
approximately 131,000 recipients whose countable title II income 
increased or decreased in those 12 months and who

[[Page 30749]]

continued to receive SSI benefits, 71.3 percent would have received 
less in total SSI benefits using current month accounting, while 28.7 
percent would have received more.
    For purposes of RMA, we are defining ``reliable information'' in 
these final regulations as payment information maintained on a computer 
system of records by the government agency determining the payments 
(e.g., Department of Veterans Affairs, the Office of Personnel 
Management for Federal civil service information, and the Railroad 
Retirement Board). Because this is actual payment information which is 
verified by the custodial agency, it is correct virtually all the time. 
We define the term ``currently available information'' as information 
that is available to the Commissioner within the time required for us 
to compute and issue a correct SSI benefit for the month the 
information is pertinent.
    When we published the regulations on November 26, 1985 (50 FR 
48563), to reflect various provisions of section 1611(c) of the Act, we 
discussed the section 1611(c)(4) exception (50 FR 48565) using the 
following language:

    These regulations do not include a rule to determine a current 
month's benefit based on reliable information which is currently 
available. The Secretary has this matter under consideration, and is 
not exercising this authority at this time.

    After publication of the final rules, we examined information 
regarding other Federal and State benefit programs to determine whether 
these sources could provide us reliable information which is currently 
available to be used for determining SSI benefit amounts. The following 
explains what we determined as a result of this examination.
    We maintain computer interfaces only with some Federal agencies, 
such as the Department of Veterans Affairs, the Office of Personnel 
Management for Federal civil service information, and the Railroad 
Retirement Board. We receive this benefit information through computer 
interface after these other agencies prepare their payment tapes for 
the Treasury Department to use in issuing benefit checks or making 
electronic deposits. These interfaces provide us with information with 
respect to income and other circumstances. We use this information to 
maintain and update the SSI records for eligible individuals.
    The Privacy Act, 5 U.S.C. 552a(p), requires that if the computer 
match data would cause SSA to take an adverse action against an 
individual (i.e., to reduce, suspend, terminate or deny payments), SSA 
must notify the individual of our findings, including the data and 
their source, and defer the adverse action until the expiration of any 
time period established for the program by statute or regulation for 
the individual to respond to the notice (10 days in the SSI program) to 
give the individual the opportunity to challenge the accuracy of the 
data. Because of the time required for the receipt of the data and 
individual notification and appeal rights, data we receive from these 
other agencies in January, for example, cannot adversely affect an 
individual's payment until March at the earliest. Thus, based on our 
definition, we cannot consider even timely computer interface 
information from other agencies to be currently available for 
determining the SSI benefit amount.
    In addition to the computer interfaces with other agencies, we 
maintain a computer interface with title II records within SSA. The 
title II interface does not require special electronic matching and is 
not subject to the Privacy Act requirements discussed above. Pursuant 
to sections 1611(c)(2) and 1611(c)(3), we determine the SSI benefit 
amount for a month based on certain income received in that month.
    However, our regulations provide, based on Goldberg versus Kelly, 
397 U.S. 254 (1970), that before SSA can reduce, suspend or terminate 
an SSI payment, we must issue a written notice to the individual 
informing him or her of the event and providing the opportunity to 
appeal. If an adverse change is posted on an SSI claimant's record 
after the 10th day of the month, due to computer system constraints, we 
are unable to reduce the SSI payment for the next month. This creates 
an overpayment for the individual. Because of the advance notice 
requirements and systems limitations, only changes posted to the SSI 
record by the 10th of the month before the payment month affect the 
payment. Because of the various increases and decreases in title II 
benefits occurring throughout the month, approximately one-half of the 
changes are posted by the 10th of the month before the payment month. 
For the other one-half of the cases involving changes, the information 
is not currently available for SSA's system to make timely changes in 
order to avoid causing an overpayment or an underpayment. It would be 
inequitable to treat title II income differently in the computation of 
an SSI payment based on when in the month the income was received 
because such differing treatment could lead to different SSI benefit 
amounts for two individuals with identical title II income in a 
particular month.
    Based on the foregoing review and examination of computer interface 
information, the Commissioner has determined that no information exists 
which is reliable and currently available to use in computing SSI 
benefit amounts pursuant to section 1611(c)(4). Therefore, the 
regulations explain that the Commissioner is exercising his or her 
discretion by declining to determine the SSI benefit amount for a 
current month using a method other than RMA, as allowed under section 
1611(c)(4) of the Act.
    We are amending Sec. 416.420 to define the terms ``reliable 
information'' and ``currently available information'' and to state that 
the Commissioner has determined that there exists no reliable 
information which is currently available to use for determining SSI 
benefit amounts under section 1611(c)(4).
    As noted above, these regulations were published in the Federal 
Register (58 FR 14191) on March 16, 1993, as an NPRM with a correction 
notice published in the Federal Register (58 FR 26383) on May 3, 1993. 
Interested individuals were given 60 days to submit comments. Comments 
were received from three attorneys in response to the NPRM.

Discussion of Comments

    A summary of the comments and our responses follow. For ease of 
reference, we have grouped the comments according to the issues raised.
    Comment: Two commenters disagreed with our definition of reliable, 
which limits reliable information to benefit payment information 
maintained on a computer-based system of records by the government 
agency determining the payments. One commenter stated that in other 
areas we make determinations based on information provided by the 
recipients. Another commenter stated that SSA should have conducted 
studies to compare the accuracy of data received by electronic tapes, 
telephone, or paper.
    Response: These commenters ignore the crucial distinction between 
the way information is used under normal RMA processing and the way its 
use is contemplated under this exception to RMA. Under RMA, SSA 
generally has two months' lead time to verify and process reported 
changes in income, including information provided by recipients and 
claimants before such changes affect the payment. We are required to 
verify this information by section 1631(e) of the Act. Under the 
exception which provides for current month accounting, such changes 
would

[[Page 30750]]

affect the payment immediately, with no opportunity for prior 
verification. Therefore, application of more stringent criteria to 
ensure the reliability of that information is appropriate.
    Because the data would be applied immediately to the computation of 
benefit amounts without additional verification, necessary components 
of ``reliability'' are that the data be obtained from the original 
source agency and that it be obtained in such a way that the 
Commissioner can be confident that no alteration has taken place. Also, 
given the number of SSI recipients for which we must calculate benefit 
amounts monthly, and the potential for frequent fluctuation of benefit 
payment information, a computerized system of information is the most 
accurate, accessible and efficient system for purposes of large numbers 
of calculations. These considerations buttress the definition of 
``reliable'' contained in the NPRM and demonstrate its reasonable, not 
arbitrary, nature.
    Comment: Two commenters stated that our definition of ``currently 
available'' is flawed because it ignores the ``reality'' of how benefit 
computations are made. The commenters correctly note that many SSI 
benefit computations, particularly those which result from a recent 
application for SSI, are made for payment months in the past as well as 
current payment months. Therefore, the commenters state, reliable 
information is currently available, and should be used, when these 
retroactive benefit calculations are made.
    Response: Were we to adopt this approach, we would then have two 
different sets of computation rules depending upon whether we were 
computing current or retroactive payments. Consequently, it would be 
possible for two individuals with identical income in the same months 
to be due different benefit amounts, depending on when their payments 
were calculated. Such an approach would be inequitable.
    Comment: Addressing specifically the question of AFDC income (which 
was processed under RMA rules from 1982 until April 1988, at which time 
Congress, under section 9106 of Pub. L. 100-203, specifically mandated 
current month accounting for this income), one commenter states ``. . . 
the Commissioner is aware that the AFDC income ceases as a matter of 
law when the recipient becomes eligible for SSI.''
    Response: Local procedures developed in various States and counties 
to meet local needs and conditions govern the interactions of local SSA 
field offices and the State AFDC agency in communicating when SSI is to 
begin and AFDC is to terminate. The State AFDC agency must tell SSA 
when the AFDC terminates. This may be accomplished via written or 
telephone communication. This is not a fail-safe process, and periodic 
reminder items have been issued to field offices when we become aware 
of errors. Therefore, we believe that this information does not fit our 
definition of ``reliable'' or ``currently available'' for purposes of a 
procedure of current month accounting that would rely upon fast, 
accurate transmission of data.
    Comment: One commenter asserts that the proposed rule is 
inconsistent with SSA's other practices, that the terms ``reliable'' 
and ``currently available'' are not used elsewhere in the regulations, 
and that we have used an unreasonably constricted sense of the concepts 
which the terms represent.
    Response: Because section 1611(c)(4) provides an exception to the 
usual method of calculating SSI benefit amounts, the terminology is 
unique to that provision. Therefore, these terms would not be used in 
our regulations other than in a regulation concerning the section 
1611(c)(4) exception to RMA. We do not find an inconsistency between 
the proposed rule and SSA's other practices as the reliable information 
exception to RMA is not addressed elsewhere in our regulations. 
Finally, for the reasons we explained in responses to comments 
discussed previously, we do not believe we have used an unreasonably 
constricted sense of the concepts of ``reliable'' and ``current 
available'' information.
    Comment: One commenter also questions why, if current month 
accounting is not possible, the Commissioner does not implement one-
month retrospective accounting under section 1611(c)(4).
    Response: The Commissioner has discretion to use one-month 
retrospective accounting under section 1611(c)(1) and would not need to 
implement section 1611(c)(4) to do so.
    Comment: One commenter discusses the statistical data presented in 
the proposed rule as it pertains to the reliable information exception. 
The commenter states that this information was not produced during the 
course of litigation, including cases in Ohio and California, regarding 
section 1611(c)(4).
    Response: While the statistical data was not requested by any of 
the plaintiffs in the various lawsuits, it was presented by the 
Government in the Newman case. Moreover, this statistical data is 
relevant to the regulations process. The data in the proposed rule, as 
well as the updated data in these final rules, indicates the treatment 
of title II income information as an exception to RMA would be 
disadvantageous to more SSI recipients than it would be advantageous. 
Under RMA, changes in the SSI benefit due to changes in countable 
income are delayed for two months (except for cost-of-living 
increases). It is far more likely that an SSI recipient will begin 
receiving, or have an increase in, his or her Social Security benefit 
(and consequently would receive an advantage under RMA rather than 
under current month accounting), than it is that his or her Social 
Security benefit will terminate or be reduced.
    Comment: One commenter states that SSA, by not implementing this 
exception to RMA, is missing an opportunity to improve the accounting 
system's responsiveness to current need.
    Response: Congress' intent in instituting RMA was to reduce the 
number of incorrect payments which were being made under the previous 
method of quarterly prospective accounting. RMA allows for income 
changes that are reported promptly to be taken into account in 
determining subsequent payments rather than requiring SSI benefit 
amounts to be determined on the basis of income anticipated by the 
recipient in the payment month under a current month accounting method. 
Because the current month's payment is computed based on income from 
two months ago, if that income changes there is obviously a lag in 
adjustment of the SSI benefit to the new income level, but this benefit 
calculation process generally is less prone to error. If Congress had 
intended instantaneous benefit adjustments in any substantial manner 
rather than as a limited discretionary exception, Congress would have 
enacted current month accounting.
    For the reasons discussed above, we are adopting these rules 
essentially as proposed.

Regulatory Procedures

Executive Order 12866

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

Paperwork Reduction Act

    These regulations impose no new reporting or recordkeeping 
requirements subject to OMB clearance.

[[Page 30751]]

Regulatory Flexibility Act

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

(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).

    Dated: May 27, 1997.
John J. Callahan,
Acting Commissioner of Social Security.

    Subpart D of part 416 of chapter III of title 20 of the Code of 
Federal Regulations is amended as follows:

PART 416--[AMENDED]

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

    Authority: Secs. 702(a)(5), 1611(a), (b), (c), and (e), 1612, 
1617, and 1631 of the Social Security Act (42 U.S.C. 902(a)(5), 
1382(a), (b), (c), and (e), 1382a, 1382f, and 1383).

    2. Section 416.420 is amended by revising paragraph (a) and 
redesignating paragraph (c) as paragraph (d) and adding a new paragraph 
(c) to read as follows:


Sec. 416.420  Determination of benefits; general.

* * * * *
    (a) General rule. We use the amount of your countable income in the 
second month prior to the current month to determine how much your 
benefit amount will be for the current month. We have determined that 
no reliable information exists which is currently available to compute 
benefits on a current basis as is explained in paragraph (c) of this 
section. However, if you have been receiving an SSI benefit and 
receiving a Social Security insurance benefit and the latter is 
increased on the basis of the cost-of-living adjustment or because your 
benefit is recomputed, we will compute the amount of your SSI benefit 
for January, the month of an SSI benefit increase, by including in your 
income the amount by which your Social Security benefit in January 
exceeds the amount of your Social Security benefit in November. 
Similarly, we will compute the amount of your SSI benefit for February 
by including in your income the amount by which your Social Security 
benefit in February exceeds the amount of your Social Security benefit 
in December.

    Example 1. Mrs. X's benefit amount is being determined for 
September (the current month). Mrs. X's countable income in July is 
used to determine the benefit amount for September.
    Example 2. Mr. Y's SSI benefit amount is being determined for 
January (the current month). Mr. Y has Social Security income of 
$100 in November, $100 in December, and $105 in January. We find the 
amount by which his Social Security income in January exceeds his 
Social Security income in November ($5) and add that to his income 
in November to determine the SSI benefit amount for January.
* * * * *
    (c) Reliable information which is currently available for 
determining benefits. The Commissioner has determined that no reliable 
information exists which is currently available to use in determining 
benefit amounts.
    (1) Reliable information. For purposes of this section ``reliable 
information'' means payment information that is maintained on a 
computer system of records by the government agency determining the 
payments (e.g., Department of Veterans Affairs, Office of Personnel 
Management for Federal civil service information and the Railroad 
Retirement Board).
    (2) Currently available information. For purposes of this section 
``currently available information'' means information that is available 
at such time that it permits us to compute and issue a correct benefit 
for the month the information is pertinent.
* * * * *
[FR Doc. 97-14614 Filed 6-4-97; 8:45 am]
BILLING CODE 4190-29-P