[Federal Register Volume 64, Number 30 (Tuesday, February 16, 1999)]
[Proposed Rules]
[Pages 7559-7561]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3677]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404 and 416

[Regulations No. 4 and 16]
RIN 0960-AE98


Old-Age, Survivors, and Disability Insurance and Supplemental 
Security Income for the Aged, Blind, and Disabled; Substantial Gainful 
Activity Amounts

AGENCY: Social Security Administration.

ACTION: Notice of proposed rulemaking.

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SUMMARY: These proposed rules would raise from $500 to $700 the average 
monthly earnings guidelines used to determine whether work done by 
persons with impairments other than blindness is substantial gainful 
activity (SGA) for purposes of Social Security disability benefits 
provided under title II of the Social Security Act (the Act) and 
Supplemental Security Income (SSI) benefits based on disability under 
title XVI of the Act. (Eligibility for benefits under titles II and XVI 
also confers eligibility for related Medicare and Medicaid benefits 
under titles XVIII and XIX of the Act.) We propose to revise this level 
as part of efforts to encourage individuals with disabilities to 
attempt to work, and to provide an updated indicator of when earnings 
demonstrate the ability to engage in SGA. The proposed increase 
reflects our assessment of the amount which roughly corresponds to wage 
growth since the last increase in 1990.

DATES: In order to be considered, we must receive your comments on the 
specific proposal to increase the amount of the earnings guidelines, by 
March 18, 1999.

    Note: Under the heading ``Additional Items,'' we ask for more 
general suggestions concerning work incentive provisions and how 
best to review and revise guidelines in the future. We will accept 
these suggestions until April 19, 1999.

ADDRESSES: Comments should be submitted in writing to the Commissioner 
of Social Security, P.O. Box 1585, Baltimore, MD 21235; sent by telefax 
to (410) 966-2830; sent by E-mail to ``[email protected]''; or 
delivered to the Office of Process and Innovation Management, Social 
Security Administration, L2109 West Low Rise, 6401 Security Boulevard, 
Baltimore, MD 21235, between 8:00 a.m. and 4:30 p.m. on regular 
business days. Comments may be inspected during these same hours by 
making arrangements with the contact person shown below.

FOR FURTHER INFORMATION CONTACT: Jack Baumel, Office of Disability, 
Social Security Administration, 6401 Security Boulevard, Baltimore, 
Maryland 21235, (410) 965-9834 or TTY (410) 966-6210.

SUPPLEMENTARY INFORMATION:

Background

    Under 20 CFR 404.1572 and 416.972, the term ``substantial gainful 
activity'' means work activity that involves significant physical or 
mental effort and that is done for pay or profit. Work activity is 
gainful if it is the kind of work usually performed for pay or profit, 
whether or not a profit is realized. Sections 223(d)(4)(A) and 
1614(a)(3)(E) of the Act require the Commissioner to prescribe by 
regulations the criteria for determining when earnings demonstrate an 
individual's ability to engage in SGA.
    These proposed rules would increase the amount in the monthly 
earnings guidelines used in determining whether an individual's work 
activities demonstrate that he or she is able to perform SGA. Under the 
current guidelines in Secs. 404.1574 and 416.974, if a person claiming 
title II or title XVI benefits or receiving title II benefits based on 
disability had earnings from work activities as an employee (including 
as an employee of a sheltered workshop or comparable facility) that 
averaged more than $500 a month, we would ordinarily consider that the 
person had engaged in SGA. Under the proposed rules, the $500 amount 
would be raised to $700 per month.
    The amount of average monthly earnings that ordinarily demonstrates 
SGA has not been increased since January 1, 1990. We are revising this 
level now after reassessing the current guidelines as part of our 
effort to improve incentives to encourage individuals with disabilities 
to attempt to work. We believe that the increase in the amount of 
earnings that constitutes SGA would provide an updated indicator of 
when earnings demonstrate the ability to engage in SGA and would be a 
significant improvement to the existing work incentive provisions.

Proposed Regulations

    We propose to revise Secs. 404.1574(b) (2) and (4), and 416.974(b) 
(2) and (4) to increase from $500 to $700 the earnings guidelines that 
we use to determine whether a non-blind employee is engaging in SGA. 
(This standard would also be applied to the self-employed in certain 
circumstances by cross-references now present in Secs. 404.1575 and 
416.975.) We have not raised the SGA earnings amount for approximately 
nine years. We are proposing to raise the SGA level now to $700, which 
roughly corresponds to wage growth since the last increase in 1990.

Additional Items

    While these proposed rules would make specific increases to the 
amount of earnings that will ordinarily show that a person has engaged 
in SGA, we will, at a future point, consider making other changes in 
this area as well. Therefore, we invite the public to provide us with 
general suggestions for changes which might be desirable in related 
provisions (e.g., the trial work period services amount, and the 
earnings level that ordinarily demonstrates that an individual has not 
engaged in SGA). We also request suggestions reviewing and revising SGA 
guidelines in the future. Please note that, in order to be considered, 
we must receive comments on the specific provisions in these proposed 
rules by March 18, 1999. However, we will accept general suggestions on 
the ``additional items'' mentioned in this paragraph if they are 
received by April 19, 1999.

[[Page 7560]]

Electronic Version

    The electronic file of this document is available on the Federal 
Bulletin Board (FBB) at 9:00 A.M. on the date of publication in the 
Federal Register. To download the file, modem dial 202-512-1387. The 
FBB instructions will explain how to download the file and the fee. 
This file is in WordPerfect and will remain on the FBB during the 
comment period.

Regulatory Procedures

Justification for 30-day Comment Period

    Executive Order 12866 states that, in most cases, an agency should 
provide a 60-day period for comments on its proposed rules. We 
ordinarily provide a 60-day period. However, for these proposed rules 
we are providing a 30-day comment period. As these proposed rules would 
increase the scope of disability eligibility for Old-age, Survivors and 
Disability Insurance and SSI benefits, as well as for related Medicare 
and Medicaid benefits, we believe it is in the public interest to 
proceed quickly to advance this change. In this way, this important 
change could have an impact at the earliest date practicable. However, 
it remains important to us to consider public comments on the proposal. 
Therefore, we are establishing a 30-day comment period.

Paperwork Reduction Act

    These regulations impose no new reporting/record-keeping 
requirements necessitating clearance by OMB.

Executive Order 12866

Regulatory Impact Analysis
    Introduction--Based on the costs associated with these proposed 
rules, the Social Security Administration has determined that they 
require an assessment of costs and benefits to society per Executive 
Order 12866 because they meet the definition of a ``significant 
regulatory action.'' These proposed rules also meet the definition of a 
``major rule'' under 5 U.S.C. 801ff., and this assessment also fulfills 
the requirements of those provisions as well. In addition, SSA has 
determined, as required under the aforementioned statute, that these 
regulations do not create any unfunded mandates for State or local 
entities pursuant to sections 202-205 of the Unfunded Mandates Act of 
1995. The Office of Management and Budget has reviewed this proposed 
rule.
    Executive Order 12866 includes in its definition of a ``significant 
regulatory action'' one which generates a major increase in costs for 
the Federal government. Accordingly, a discussion follows of the effect 
of the regulations and general information on estimated costs and 
benefits to society.
    Nature of the Program--Benefits to disabled and blind individuals 
are provided under title II and title XVI of the Act. Disability is 
defined under both programs as, ``* * * inability to engage in any 
substantial gainful activity by reason of any medically determinable 
physical or mental impairment * * *.'' Related medical benefits to 
disabled and blind individuals are provided under title XVIII and title 
XIX of the Act.
    We use earnings guidelines to evaluate a person's work activity to 
determine whether the work activity is SGA and therefore whether that 
person may be considered disabled under the law. While this is only one 
of the tests used to determine disability, it is a critical threshold 
in disability evaluation. We evaluate the work activity of persons 
claiming or receiving disability benefits under title II of the Act and 
that of persons claiming benefits because of a disability under title 
XVI of the Act. These proposed regulations would increase the amounts 
of those earnings guidelines. We have not raised the SGA earnings 
amount for approximately nine years. We are proposing to raise it now 
to approximate wage growth during that time.
    Intended Effect--We expect that the increase in the amount of 
earnings that constitute SGA would provide a greater incentive for many 
beneficiaries to attempt to work or, if already working, to continue to 
work or increase their work effort. Hundreds of thousands of 
beneficiaries already work and could be advantaged by the proposed 
revisions. For these individuals, as well as those not now working, the 
proposed revisions could enhance their potential to participate in the 
workforce, and, as a consequence, improve their economic well-being by 
increasing their income through earnings.
    In addition, the increase would permit some individuals with 
disabilities who have earnings in excess of the current regulatory 
limit ($500) but less than the amount in these proposed rules ($700), 
to receive benefits. We estimate that by 2004, an additional 27,000 
individuals who would not otherwise be receiving benefits will do so as 
a result of these changes. This estimate is based on analyses of the 
earnings distributions of a representative sample of disabled 
individuals.
    The following chart provides the estimated increases in Old-age, 
Survivors and Disability Insurance payments, Federal SSI payments, 
Medicare benefits, and Federal share of Medicaid benefits due to the 
proposed increase in the SGA amount to $700 in 1999, for fiscal years 
1999-2004. (Amounts are in millions.)

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                                                                       Fiscal year
                                                    ------------------------------------------------ Total, 1999-
                                                      1999    2000    2001    2002    2003    2004       2004
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OASDI..............................................      10      30      55      75     100     120          390
SSI................................................      15      20      25      25      30      30          145
Medicare...........................................      10      20      30      50      60      80          250
Medicaid...........................................      40      60      70      75      90     100          435
                                                    ------------------------------------------------------------
    Subtotal, all programs.........................      75     130     180     225     280     330        1220
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Notes:
\1\ Totals may not equal sum of rounded components.
\2\ Above estimates based on the assumptions underlying the President's FY 2000 Budget, including the SSA
  Actuary's normal assumption of an SGA amount increasing with average wages.
\3\ Estimates for Medicare and Medicaid provided by the Office of the Actuary in the Health Care Financing
  Administration (HCFA).

    In addition, since States share in the costs of financing Medicaid, 
States will have some costs associated with the proposed increase in 
the SGA as well. These costs are estimated by HCFA to be (in millions):

[[Page 7561]]



----------------------------------------------------------------------------------------------------------------
                                                                       Fiscal year
                                                    ------------------------------------------------ Total, 1999-
                                                      1999    2000    2001    2002    2003    2204       2004
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Medicaid State Share...............................      30      45      55      55      70      75          330
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    Although the costs are significant, we consider these changes as 
necessary improvements to existing work incentives. The costs of these 
regulations would be paid for through programmatic and regulatory 
changes.

Regulatory Flexibility Act

    We certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because they 
primarily affect individuals who are applying for or receiving title II 
or applying for title XVI benefits because of disability, and States 
which administer the Medicaid program.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social 
Security-Disability Insurance; 96.002, Social Security-Retirement 
Insurance; 96.004, Social Security-Survivors Insurance; 96.006, 
Supplemental Security Income)

List of Subjects

20 CFR Part 404

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

20 CFR Part 416

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

    Dated: February 10, 1999.
Kenneth S. Apfel,
Commissioner of Social Security.

    For the reasons stated in the preamble, the Social Security 
Administration proposes to amend parts 404 and 416 of chapter III of 
title 20 of the Code of Federal Regulations as follows:

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

    1. The authority citation for subpart P of part 404 continues to 
read as follows:

    Authority: Secs. 202, 205(a), (b), and (d)-(h), 216(i), 221(a) 
and (i), 222(c), 223, 225, and 702(a)(5) of the Social Security Act 
(42 U.S.C. 402, 405(a), (b), and (d)-(h), 416(i), 421(a) and (i), 
422(c), 423, 425, and 902(a)(5)); sec. 211(b), Pub. L. 104-193, 110 
Stat. 2105, 2189.

    2. Section 404.1574 is amended by revising paragraph (b)(2)(vi) and 
(b)(2)(vii), adding a new paragraph (b)(2)(viii), revising paragraphs 
(b)(4)(vi) and (b)(4)(vii) and adding a new paragraph (b)(4)(viii) to 
read as follows:


Sec. 404.1574  Evaluation guides if you are an employee.

* * * * *
    (b) * * *
    (2) * * *
    (vi) Your earnings averaged more than $300 a month in calendar 
years after 1979 and before 1990;
    (vii) Your earnings averaged more than $500 a month after calendar 
year 1989 and before (insert first day of the month beginning after 30 
days following date of publication of the final rules in the Federal 
Register); or
    (viii) Your earnings averaged more than $700 a month after (insert 
date that is one day earlier than date shown at the end of paragraph 
(b)(2)(vii) of this section).
* * * * *
    (4) * * *
    (vi) Your average earnings are not greater than $300 a month in 
calendar years after 1979 and before 1990;
    (vii) Your average earnings are not greater than $500 a month after 
calendar year 1989 and before (insert first day of the month beginning 
after 30 days following date of publication of the final rules in the 
Federal Register); or
    (viii) Your average earnings are not greater than $700 a month 
after (insert date that is one day earlier than date shown at the end 
of paragraph (b)(4)(vii) of this section).
* * * * *

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

    1. The authority citation for Subpart I of Part 416 continues to 
read as follows:

    Authority: Secs. 702(a)(5), 1611, 1614, 1619, 1631(a), (c) and 
(d)(1), and 1633 of the Social Security Act (42 U.S.C. 902(a)(5), 
1382, 1382c, 1382h, 1383(a), (c) and (d)(1), and 1383b); secs. 4(c) 
and 5, 6(c)-(e), 14(a) and 15, Pub. L. 98-460, 98 Stat. 1794, 1801, 
1802, and 1808 (42 U.S.C. 421 note, 423 note, 1382h note).

    2. Section 416.974 is amended by revising paragraph (b)(2)(vi) and 
(b)(2)(vii), adding a new paragraph (b)(2)(viii), revising paragraphs 
(b)(4)(vi) and (b)(4)(vii) and adding a new paragraph (b)(4)(viii) to 
read as follows:


Sec. 416.974  Evaluation guides if you are an employee.

* * * * *
    (b) * * *
    (2) * * *
    (vi) Your earnings averaged more than $300 a month in calendar 
years after 1979 and before 1990;
    (vii) Your earnings averaged more than $500 a month after calendar 
year 1989 and before (insert first day of the month beginning after 30 
days following date of publication of the final rules in the Federal 
Register); or
    (viii) Your earnings averaged more than $700 a month after (insert 
date that is one day earlier than date shown at the end of paragraph 
(b)(2)(vii) of this section).
* * * * *
    (4) * * *
    (vi) Your average earnings are not greater than $300 a month in 
calendar years after 1979 and before 1990;
    (vii) Your average earnings are not greater than $500 a month after 
calendar year 1989 and before (insert first day of the month beginning 
after 30 days following date of publication of the final rules in the 
Federal Register); or
    (viii) Your average earnings are not greater than $700 a month 
after (insert date that is one day earlier than date shown at the end 
of paragraph (b)(4)(vii) of this section).
* * * * *
[FR Doc. 99-3677 Filed 2-12-99; 8:45 am]
BILLING CODE 4190-29-P