[Federal Register Volume 65, Number 251 (Friday, December 29, 2000)]
[Rules and Regulations]
[Pages 82905-82912]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-33271]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404 and 416

[Regulations No. 4 and 16]
RIN 0960-AF12


Old-Age, Survivors, and Disability Insurance and Supplemental 
Security Income for the Aged, Blind, and Disabled; Substantial Gainful 
Activity Amounts; ``Services'' for Trial Work Period Purposes--Monthly 
Amounts; Student Child Earned Income Exclusion

AGENCY: Social Security Administration.

ACTION: Final rules.

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SUMMARY: We are revising the rules to automatically adjust each year, 
based on any increases in the national average wage index, the average 
monthly earnings guideline we use to determine whether work done by 
persons with impairments other than blindness is substantial gainful 
activity; provide that we will ordinarily find that an employee whose 
average monthly earnings are not greater than the ``primary substantial 
gainful activity amount,'' has not engaged in substantial gainful 
activity without considering other information beyond the employee's 
earnings; increase the minimum amount of monthly earnings and the 
minimum number of self-employed work hours in month that we consider 
shows that a person receiving title II Social Security benefits based 
on disability is performing or has performed ``services'' during a 
trial work period, and automatically adjust the earnings amount each 
year thereafter; increase the maximum monthly and yearly Student Earned 
Income Exclusion amounts we use in determining Supplemental Security 
Income (SSI) Program eligibility and payment amounts for student 
children, and automatically adjust the monthly and yearly exclusion 
amounts each year thereafter.
    We are revising these rules as part of our efforts to encourage 
individuals with disabilities to test their ability to work and keep 
working. We expect that these changes will provide greater incentives 
for many beneficiaries to attempt to work or, if already working, to 
continue to work or increase their work effort.

EFFECTIVE DATE: These rules are effective January 29, 2001.

FOR FURTHER INFORMATION CONTACT: For information specifically about 
these final rules, contact Ray Marzoli, Office of Employment Support 
Programs, Social Security Administration, 6401 Security Boulevard, 
Baltimore, MD 21235-6401, (410) 965-9826 or TTY (410) 966-6210. For 
information about eligibility or filing for benefits, call our national 
toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit our 
Internet web site, Social Security Online, www.ssa.gov.

SUPPLEMENTARY INFORMATION:

Background

    The Social Security and the SSI programs (titles II and XVI of the 
Social Security Act (the Act)) provide benefits to disabled and blind 
individuals. Disability is generally defined under both programs as, 
``* * * inability to engage in any substantial gainful activity by 
reason of any medically determinable physical or mental impairment * * 
*.'' The Medicare and Medicaid programs (titles XVIII and XIX of the 
Act) provide related medical benefits to disabled and blind 
individuals.
    We published a notice of proposed rulemaking (NPRM) in the Federal 
Register on August 11, 2000 (65 FR 49208). We are including all of the 
proposals contained in the NPRM in these final rules, which are 
discussed in detail below. We are including one additional change in 
response to several comments we received about the NPRM.
    For a detailed discussion of how we calculate annual automatic 
adjustments that affect Social Security benefits, see our notice 
regarding cost-of-living increases and other determinations for the 
year 2001 that was published in the Federal Register for October 24, 
2000 (65 FR 63663). We are required by statute to publish in the 
Federal Register every October an updated version of this notice. 
Future versions will include the annual adjustments provided under 
these final rules.

The Substantial Gainful Activity Amount

    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 profit is realized. Sections 223(d)(4)(A) and 
1614(a)(3)(E)

[[Page 82906]]

of the Act require the Commissioner to prescribe by regulations the 
criteria for determining when earnings demonstrate ability to engage in 
substantial gainful activity for a person who has an impairment other 
than blindness.
    In evaluating initial claims for disability, we make a 
determination whether an applicant for either Social Security benefits 
or SSI benefits is engaging in substantial gainful activity. We find 
applicants not to be disabled if they are working and performing 
substantial gainful activity, regardless of their medical condition. In 
addition, after an individual becomes entitled to title II Social 
Security benefits based on disability, we consider whether a person's 
earnings demonstrate the ability to engage in substantial gainful 
activity in determining ongoing entitlement to disability benefits. (We 
do not use substantial gainful activity as a measure for continuing 
eligibility for SSI benefits.) Since July 1999, if an individual's 
average monthly earnings were more than $700, we would ordinarily 
consider that the person engaged in substantial gainful activity. This 
earnings guideline level applies to all employees including those in 
sheltered workshops or comparable facilities and, in certain 
circumstances, to the self-employed.
    We use earnings guidelines to evaluate a person's work activity to 
determine whether the work activity is substantial gainful activity 
and, therefore, whether that person may be considered disabled under 
the law. We are revising our rules to provide for annual indexing of 
this level after reassessing the current earnings guidelines as part of 
our effort to improve incentives to encourage individuals with 
disabilities to work. A consistent method of adjusting substantial 
gainful activity earnings guidelines will benefit applicants and 
beneficiaries in future years. The national average wage index is a 
measure of wage growth and, therefore, provides a logical basis for 
adjusting the earnings guidelines used to indicate ability to work. 
Indexing ensures that the substantial gainful activity amount is a 
uniformly representative indicator over time of an individual's ability 
to work.
    Under the revised rules, we will adjust annually the substantial 
gainful activity amount for people with impairments other than 
blindness. Beginning January 2001, the guideline will be the larger of 
the previous year's amount or an increased amount based on the Social 
Security national average wage index (see section 209(k)(1) of the 
Act). The annual adjusted guideline will apply to earnings from work 
activity in months beginning with the month in which the adjusted 
guideline goes into effect. This means that the first increased amount 
will apply to earnings in months after December 2000.
    Under this revised rule, the substantial gainful activity amount 
will never be lower than the previous year's amount. However, there may 
be years when no increase results from the calculation.
    Under the calculation provided by this revised rule, we determine 
the ratio of the national average wage index for 1999 ($30,469.84) to 
that for 1998 ($28,861.44), which is 1.0557283, and multiply it by the 
calendar year 2000 monthly-earnings guideline amount of $700, yielding 
the amount of $739.01. This $739.01 amount is rounded to the nearest 
multiple of $10, which is $740. Because $740 is larger than the 
corresponding 2000 amount of $700, the new earnings guideline is $740. 
This amount is effective for months of work activity beginning January 
2001. Beginning 2002, the guideline will be the larger of $740, or the 
$700 amount multiplied by the ratio of the national average wage index 
for 2000 to that for 1998 rounded to the nearest multiple of $10. Any 
new amount that goes into effect January 2002 will be used only to 
evaluate earnings from work activity in months beginning with January 
2002.

The ``Secondary Substantial Gainful Activity Amount''

    Since January 1990, if an employee's earnings from work activities 
averaged less than $300 a month, we generally would have considered 
that that employee had not been engaging in substantial gainful 
activity. We referred to this $300 earnings guideline as the 
``secondary substantial gainful activity amount'' to distinguish it 
from the ``primary substantial gainful activity amount'' discussed in 
the previous section.
    We would not have further evaluated work activity below the 
secondary substantial gainful activity amount unless there was evidence 
to the contrary showing that the person might have been engaging in 
substantial gainful activity (e.g., an employee might be in a position 
to defer or suppress earnings). We would have examined further the work 
activity of employees who earned between these two levels (the primary 
and secondary substantial gainful activity levels) because the rules 
provided that such earnings were neither high nor low enough to 
determine if substantial gainful activity existed. Additional evidence 
would have been developed. (A different rule applied to individuals 
employed in sheltered workshops or comparable facilities. For these 
people, earnings not greater than the primary substantial gainful 
activity amount ordinarily would establish that the work was not 
substantial gainful activity.)
    Because our experience suggests that the secondary substantial 
gainful activity amount has not been as useful a tool as we would have 
liked, we are discontinuing its use. With this rule change, we 
ordinarily will consider that an employee is not engaging in 
substantial gainful activity if his or her earnings are equal to or 
less than the primary substantial gainful activity amount ($740 for 
months beginning January 2001). We will perform additional development 
beyond looking at earnings only when circumstances indicate that such 
an employee may be engaging in substantial gainful activity or might be 
in a position to defer or suppress earnings. This change does not 
affect our evaluation guidelines for the self-employed.
    Our experience suggests that few applicants and beneficiaries will 
be affected by this change because few employees have been found to 
have performed substantial gainful activity on the basis of these 
secondary rules unless they were also in a position to defer or 
suppress earnings. Discontinuing these complex secondary guidelines 
will help simplify our rules and facilitate public understanding of the 
Social Security disability program as well as improve our work 
efficiency.

Services for the Trial Work Period

    The trial work period is a work incentive. During the trial work 
period, a title II beneficiary may test his or her ability to work and 
still be considered disabled. We do not consider services performed 
during the trial work period as showing that the disability has ended 
until services have been performed in at least 9 months (not 
necessarily consecutive) in a rolling 60-month period.
    Section 222(c)(2) of the Act provides that, for purposes of the 
trial work period, ``the term `services' means activity (whether legal 
or illegal) which is performed for remuneration or gain or is 
determined by the Commissioner of Social Security to be of a type 
normally performed for remuneration or gain.'' As established in 
regulations, Sec. 404.1592(b), we have considered any month in which an 
employee earns more than $200 from his or her work to be a month of 
services for the trial work period.
    We are increasing the monthly amount of earnings we consider to be

[[Page 82907]]

``services'' in a trial work period from $200 to $530 for earnings in 
months beginning January 2001. Beginning 2002, and for each year 
thereafter, we will adjust this amount to the higher of the previous 
year's amount or an increased amount based on the Social Security 
national average wage index. We are making these changes as part of our 
effort to improve incentives to encourage individuals with disabilities 
to work.
    Although the dollar amount that ordinarily represents substantial 
gainful activity was increased from $500 to $700 in 1999, the $200 
amount that represents a month of trial work period services has 
remained the same since 1990. Beneficiaries have been faced with 
exhausting months of a trial work period while earning as little as 
$200 a month, even on an intermittent basis. As a result, when 
beneficiaries were finally able to reach a higher earnings level, they 
may have already used up many or all of their 9 months of trial work. 
Increasing the trial work period services amount to $530 should allow 
more beneficiaries with disabilities to more realistically test their 
ability to work and will likely lead to work at levels closer to or at 
substantial gainful activity.
    Automatic indexing will allow the trial work period services amount 
to be a uniformly representative indicator over time of a trial work 
attempt. We will calculate the adjustments in essentially the same 
manner as we will for increasing the substantial gainful activity 
amount. The trial work period amount will never be lower than the 
previous year's amount. However, there may be years when no increase 
results from the calculation.
    The legislative history of the trial work period provision 
indicates that Congress did not intend to link the trial work period 
level to the amount that constitutes substantial gainful activity. 
Congress enacted the trial work period as part of the Social Security 
Amendments of 1960. The accompanying House Ways and Means Committee 
report states, ``Your committee intends that any months in which a 
disabled person works for gain, or does work of a nature generally 
performed for gain, be counted as a month of trial work. Thus the 
services rendered in a month need not constitute substantial gainful 
activity in order for the month to be counted as part of the trial-work 
effort.'' H.R. Rep. No. 86-1799, at 13 (1960). This change we are 
making maintains the distinction between the trial work period services 
amount and the substantial gainful activity amount intended by Congress 
while providing disabled beneficiaries with greater incentives to test 
their ability to work.
    Several comments we received from the public about our proposed 
changes stated that we did not sufficiently address trial work period 
issues for the self-employed. We revisited that issue and, as a result 
of our analysis, in our final rules, we are increasing the number of 
hours of self-employed work in a business in a month that we will 
consider shows that the self-employed person performed services in that 
month. Since 1990, even if a self-employed person had earnings of $200 
or less in a month, we would consider that services were performed in 
that month if the person worked more than 40 hours in the business. 
Under this revised rule, if a self-employed person has earnings that 
are equal to or less than the dollar threshold for services, we will 
consider that services were performed if the self-employed person works 
more than 80 hours in a month in his or her business. This change will 
encourage beneficiaries with disabilities to more realistically test 
their ability to work with respect to self-employment activities.

The Student Earned Income Exclusion

    Section 1612 of the Social Security Act establishes the definition 
of ``income'' for purposes of the SSI program. This section also states 
what is excluded from income. Section 1612(b)(1) provides an exclusion 
from earned income, subject to the limitations (as to amount or 
otherwise) prescribed by the Commissioner, for a child who is a student 
regularly attending a school, college, or university, or a course of 
vocational or technical training designed to prepare him or her for 
gainful employment. With this section, Congress recognized that 
students with disabilities incur special expenses to go to school. 
Under our prior regulations, those SSI child beneficiaries who are 
students have been able to exclude up to $400 a month of earned income 
with an annual limit of $1,620. By being excluded, this earned income 
has no effect on eligibility or cash benefit amounts under the SSI 
program. These monthly and annual amounts have been in place since 1974 
when the SSI program began.
    In response to increases in school expenses since that time, we are 
revising these amounts as part of our effort to help SSI child 
beneficiaries who are students finance their school attendance and 
encourage them to work. We are increasing the earned income exclusion 
amount, beginning with earned income for January 2001, to $1,290 a 
month with an annual limit of $5,200. We also will make automatic 
adjustments to these amounts each year thereafter to the higher of the 
previous year's amounts or increased amounts based on the changes in 
cost-of-living.
    The cost-of-living adjustments will ensure that the amounts account 
for price inflation. We will use a similar method to that currently 
used to calculate annual cost-of-living adjustments in the SSI program 
Federal benefit rates. The only differences are that this new 
calculation will use the calendar year 2001 amounts as the base amounts 
and any increases in these amounts will be rounded up to the nearest 
$10. These amounts will never be lower than the previous year's 
amounts. However, there may be years when no increases result from the 
calculation.

Public Comments

    We received almost 600 comments in response to our proposals. 
Commenters included many advocates for people with disabilities, State 
and local government entities, attorneys, employees from SSA field 
offices, two members of Congress, and private citizens. The comments we 
received were overwhelmingly in support of the proposals. About 40% 
also included substantive assessments of the proposals or related 
suggestions. We have summarized these comments, grouped them by 
subject, and discuss them below.
    Comment: Of the 600 comments received, only 13 expressed opinions 
not in favor of the proposals. Of those not in favor, three believed 
that the current SGA, TWP service months, and student earned income 
exclusion amounts were adequate to encourage someone who has a 
disability to work. One thought that the changes were too liberal and 
would have the effect of changing the various benefits paid by the 
Social Security Administration into another welfare system. Another 
thought that encouraging people who have a disability to work 
themselves off the rolls is not in their best interests. Rather than 
helping, this commenter stated that working would eventually cause 
these individuals to become destitute because, without their cash and 
medical benefits, these individuals would not be able to earn enough 
consistently to adequately provide for themselves. One other thought 
that liberalizing work incentives further would be useless. This 
commenter viewed work incentives as a failure because beneficiaries can 
control their earnings so as not to come off the rolls. Seven others 
thought the proposals

[[Page 82908]]

would adversely affect the solvency of the Social Security trust funds 
or the U.S. treasury funds.
    Response: We appreciate the fact that virtually all the commenters 
favored the proposal. The Office of the Chief Actuary for SSA estimates 
that the costs of these proposals are negligible. As such, these 
changes should not affect the trust funds or the government's 
expenditures, or promote a welfare system. Advocates for the disabled 
have long argued that people with disabilities want to work, but to do 
so they must be provided necessary accommodations and safeguards for 
their cash benefits and health coverage. The provisions of the Ticket 
to Work and Work Incentives Improvement Act of 1999, in conjunction 
with prior work incentives, should provide additional safeguards to 
prevent any dire consequences resulting from people with disabilities 
attempting to work. We believe these changes will provide another 
important step to ensuring these needs are met and thus will promote 
work efforts.
    Comment: Almost all of the other comments that included substantive 
assessments or suggestions stated that the SGA amount should be indexed 
using a base amount higher than $700. Many stated that a figure of $900 
or an amount equal to that used for statutorily blind individuals for 
SGA purposes, $1,170, should be used.
    Response: The Act provides that the Commissioner is to prescribe by 
regulation the criteria for determining when earnings demonstrate the 
ability to engage in SGA for the non-blind. Thus, we designed the SGA 
guidelines as a way of measuring an individual's ability to work and 
not as a measure of an individual's need for income. The historical 
relationship between the SGA amount and average wage growth was roughly 
consistent between 1961 (when the SGA guideline was first issued by 
regulation) and 1980. In 1990, we raised the SGA amount to $500 from 
$300 to coincide to some degree with the growth of the average wage 
during the 1980s. The increase in the SGA amount in July 1999 to $700 
approximately corresponded to the increase in the average wage since 
1990. Indexing this SGA amount to average wage growth by regulation 
maintains the historical relationship.
    Before 1977, section 223(d) of the Act authorized the Commissioner 
to prescribe the level of earnings that demonstrate SGA for all title 
II applicants and beneficiaries and all title XVI applicants. In 1977, 
Congress amended the Act to provide a different criterion for setting 
the SGA level for people who are blind. Congress consciously made this 
distinction between people who are blind and those with impairments 
other than blindness. The House and Senate conference report 
accompanying the Social Security amendments of 1977 clearly stated that 
a different SGA amount was being established for blind persons, and 
that the conferees did not intend that the amount be applied to people 
with impairments other than blindness.
    Comment: Many commenters suggested that, since we proposed 
increasing the monthly earnings amount that we consider to be 
``services'' during the trial work period, we consider making services 
for purposes of the trial work period (TWP) an amount equal to the SGA 
level, $700. Two commented that despite the proposed increase in the 
service amount to $530, it is still much too low for persons with 
blindness whose SGA amount is $1,170.
    Response: As we noted earlier, the legislative history of the trial 
work period provision makes it clear that Congress did not intend to 
link the trial work period level to the amount that constitutes SGA. 
The change we proposed maintains the distinction between the trial work 
period services amount and the substantial gainful activity amount as 
Congress intended while still providing beneficiaries with disabilities 
a more realistic opportunity to test their ability to work. Although 
Congress provided a different criterion for determining the SGA for 
individuals who are blind, Congress did not provide different criteria 
for the blind for determining service months for the TWP.
    Comment: A few commenters stated that we did not address TWP 
service months with respect to self-employed beneficiaries. One 
suggested increasing the number of hours from 40 to 60, while another 
suggested doubling the hours.
    Response: As we stated earlier, we revisited the issue in response 
to these comments. As a result of our analysis, we are increasing the 
minimum number of self-employed hours that we consider shows a person 
has performed services from more than 40 to more than 80 hours a month.
    Comment: Two commenters suggested that the TWP and SGA should vary 
according to type of impairment particularly those types of 
impairments, such as chronic fatigue and immune dysfunction syndrome 
and severe mental illness, that make sustained work efforts very 
difficult. Persons with these conditions fear losing benefits as the 
result of sporadic work. One suggested that we use net rather than 
gross wages for purposes of TWP and SGA.
    Response: The issues addressed by these comments are outside the 
scope of these specific rules changes. We will consider these comments 
regarding possible future regulatory or legislative changes.
    Comment: A number of commenters suggested that we stop using the 
TWP and SGA to evaluate the work activity of beneficiaries. Some 
recommended that we use an earnings offset formula to reduce cash 
benefits gradually as earnings rise (similar to the earned income 
exclusion currently under title XVI). Several others suggested that 
there should be no earnings limits for beneficiaries with disabilities 
similar to beneficiaries who have reached full retirement age, 
currently age 65. Another suggested that the TWP should be 9 
consecutive months of work since sporadic work of a couple of months, 
now and then, in a 60-month period should not count against an 
indicator intended to measure the ability to sustain competitive work.
    Response: These suggested changes would require new legislation and 
we cannot implement them by regulation alone. Sections 302 and 303 of 
the Ticket to Work and Work Incentives Improvement Act of 1999 provide 
for our conducting a demonstration project to test an earnings-offset 
formula for title II beneficiaries who try to work.
    Comment: Several commenters suggested that we eliminate the age 
restriction for the SSI student earned income exclusion. A few other 
commenters urged us to consider changes to the SSI eligibility rules, 
such as increasing the resource limit ($2,000 for an individual or 
$3,000 for a couple).
    Response: These suggested changes also would require new 
legislation and we cannot implement them by regulation alone.
    Comment: Numerous commenters stated that our efforts have been poor 
with respect to tracking income and earnings. They believe that this 
deficiency will become more apparent as more people take advantage of 
these changes and the provisions of the Ticket to Work and Work 
Incentives Improvement Act of 1999, allowing more overpayments to occur 
which can derail the work efforts of our beneficiaries.
    Response: A number of initiatives are underway to improve the 
accuracy and timely reporting of earnings. We are improving and 
extending our interfacing capabilities with federal, state and local 
databases to gather earnings information quickly and correctly. These 
efforts are being implemented incrementally, with

[[Page 82909]]

careful attention to the privacy concerns of our beneficiaries. In 
addition, we are in the process of establishing a corps of specially 
trained staff who can facilitate the gathering of such information. We 
are currently testing this position, the employment support 
representative, in 32 sites around the country.
    Comment: Many commenters stated that we should improve our 
collaboration with other federal agencies so that our programs and 
services complement other federal programs.
    Response: While this suggestion addresses an area outside the scope 
of these specific rule changes, we have been working with other federal 
agencies, principally in joint committees and task forces, to better 
mesh our programs and services to theirs.
    Comment: One commenter urged us to improve the process for homeless 
people to apply for disability benefits.
    Response: This suggestion is outside the scope of these specific 
rule changes. Unrelated to these rule changes, however, we have 
undertaken recently several initiatives to improve our application 
processes.
    Comment: One commenter stated that our proposals were difficult to 
understand and that examples are needed.
    Response: We will be mindful of the need to provide more examples 
in future proposals.

Final Regulations

    We are revising Secs. 404.1574(b)(2) and (4), and 416.974(b)(2) and 
(4) to adjust annually the earnings guidelines that we use to determine 
whether a non-blind employee is engaged in substantial gainful 
activity. Beginning January 2001, the guideline will be the higher of 
the previous year's amount or an increased amount based on the Social 
Security national average wage index. Under this revised rule, the 
monthly earnings guideline will increase from $700 to $740 for 2001. 
(This standard also applies to the self-employed in certain 
circumstances by cross-references that have been and continue to be 
present in Secs. 404.1575 and 416.975.)
    We also are revising Secs. 404.1574(b)(3) and (6), and 
416.974(b)(3) and (6) to provide, effective for months of work activity 
beginning January 2001, that we will ordinarily find that an employee 
whose average monthly earnings are equal to or less than the ``primary 
substantial gainful activity amount'' set forth in Secs. 404.1574(b)(2) 
and 416.974(b)(2) has not engaged in substantial gainful activity 
without considering other information beyond the employee's earnings. 
We also are making conforming changes to Secs. 404.1574(b)(4) and 
416.974(b)(4).
    We also are revising Sec. 404.1592 to increase from $200 to $530 
the minimum amount of monthly earnings above which we consider shows 
that a person is performing or has performed ``services'' for counting 
trial work period months, effective for months of earnings beginning 
January 2001. We will adjust the amount annually to the higher of the 
previous year's amount or an increased amount based on the Social 
Security national average wage index, beginning January 2002. Also, 
effective January 2001, for a self-employed person with earnings equal 
to or less than the dollar threshold for services, we are increasing 
the number of hours of self-employed work in a business each month that 
we will consider shows services are performed from more than 40 hours 
to more than 80 hours.
    We also are revising Sec. 416.1112(c)(3) to increase the maximum 
amount of the student earned income exclusion to $1,290 a month, not to 
exceed $5,200 per year, effective for earned income beginning January 
2001. We also will adjust these amounts annually to the higher of the 
previous year's amounts or increased amounts calculated in essentially 
the same manner as the annual cost-of-living adjustments to the SSI 
Program federal benefit rates, beginning January 2002. This calculation 
will use the 2001 amounts as the base amounts and any increases in 
these amounts will be rounded to the nearest $10.

Electronic Version

    The electronic file of this document is available on the Internet 
at www.access.gpo.gov/nara. This document also is available on our 
Internet web site, Social Security Online, www.ssa.gov.

Regulatory Procedures

Paperwork Reduction Act

    These regulations impose no new reporting/recordkeeping 
requirements necessitating clearance by the Office of Management and 
Budget (OMB).

Executive Order 12866

    Based on the costs associated with these final rules, the Social 
Security Administration has determined that they do not require an 
assessment of costs and benefits to society per Executive Order 12866 
because they do not meet the definition of a ``significant regulatory 
action.'' These final rules also do not meet the definition of a 
``major rule'' under 5 U.S.C. 801ff because the Social Security 
Administration's budget baseline assumes that substantial gainful 
activity amounts will keep pace with growth in average wages, and other 
provisions do not result in costs that exceed the threshold for what 
constitutes a ``major rule.'' In addition, the Social Security 
Administration has determined, as required under the aforementioned 
statute, that these regulations do not create any unfunded mandates for 
State or local entities under sections 202-205 of the Unfunded Mandates 
Act of 1995. OMB has reviewed these final rules.
    We have also determined that these rules meet the plain language 
requirement of Executive Order 12866 and the President's memorandum of 
June 1, 1998.

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 title XVI benefits because of blindness or disability, and States 
which administer the Medicaid program and/or pay supplemental benefits 
to SSI eligible individuals.

    (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.

    Dated: November 9, 2000.
Kenneth S. Apfel,
Commissioner of Social Security.

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

[[Page 82910]]

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 paragraphs (b)(2), 
(b)(3), (b)(4), and (b)(6) to read as follows:


Sec. 404.1574  Evaluation guides if you are an employee.

* * * * *
    (b) * * *
    (2) Earnings that will ordinarily show that you have engaged in 
substantial gainful activity. We will consider that your earnings from 
your work activity as an employee (including earnings from sheltered 
work, see paragraph (b)(4) of this section) show that you engaged in 
substantial gainful activity if:
    (i) Before January 1, 2001, they averaged more than the amount(s) 
in Table 1 of this section for the time(s) in which you worked.
    (ii) Beginning January 1, 2001, and each year thereafter, they 
average more than the larger of:
    (A) The amount for the previous year, or
    (B) An amount adjusted for national wage growth, calculated by 
multiplying $700 by the ratio of the national average wage index for 
the year 2 calendar years before the year for which the amount is being 
calculated to the national average wage index for the year 1998. We 
will then round the resulting amount to the next higher multiple of $10 
where such amount is a multiple of $5 but not of $10 and to the nearest 
multiple of $10 in any other case.

                                 Table 1
------------------------------------------------------------------------
                                                                 Your
                                                               monthly
                        For months:                            earnings
                                                               averaged
                                                              more than:
------------------------------------------------------------------------
In calendar years before 1976..............................         $200
In calendar year 1976......................................          230
In calendar year 1977......................................          240
In calendar year 1978......................................          260
In calendar year 1979......................................          280
In calendar years 1980-1989................................          300
January 1990-June 1999.....................................          500
July 1999-December 2000....................................          700
------------------------------------------------------------------------

    (3) Earnings that will ordinarily show that you have not engaged in 
substantial gainful activity. If your earnings for months beginning 
January, 2001, are equal to or less than the amount(s) determined under 
paragraph (b)(2)(ii) of this section for the year(s) in which you work, 
we will generally consider that the earnings from your work as an 
employee will show that you have not engaged in substantial gainful 
activity. If your earnings for months before January, 2001, were less 
than the amount(s) in Table 2 of this section for the year(s) in which 
you worked, we will generally consider that the earnings from your work 
as an employee will show that you have not engaged in substantial 
gainful activity.

                                 Table 2
------------------------------------------------------------------------
                                                                 Your
                                                               monthly
                        For months:                            earnings
                                                               averaged
                                                              less than:
------------------------------------------------------------------------
In calendar years before 1976..............................         $130
In calendar year 1976......................................          150
In calendar year 1977......................................          160
In calendar year 1978......................................          170
In calendar year 1979......................................          180
In calendar years 1980-1989................................          190
In calendar years 1990-2000................................          300
------------------------------------------------------------------------

    (4) Before January 1, 2001, if you worked in a sheltered workshop. 
Before January 1, 2001, if you worked in a sheltered workshop or a 
comparable facility especially set up for severely impaired persons, we 
will ordinarily consider that your earnings from this work show that 
you have engaged in substantial gainful activity if your earnings 
averaged more than the amounts in table 1 of paragraph (b)(2) of this 
section. Average monthly earnings from a sheltered workshop or a 
comparable facility that are equal to or less than those amounts 
indicated in table 1 of paragraph (b)(2) of this section will 
ordinarily show that you have not engaged in substantial gainful 
activity without the need to consider other information, as described 
in paragraph (b)(6) of this section, regardless of whether they are 
more or less than those indicated in paragraph (b)(3) of this section. 
When your earnings from a sheltered workshop or comparable facility are 
equal to or less than those amounts indicated in table 1 of paragraph 
(b)(2), we will consider the provisions of paragraph (b)(6) of this 
section only if there is evidence showing that you may have engaged in 
substantial gainful activity. For work performed in a sheltered 
workshop in months beginning January 2001, the rules of paragraph 
(b)(2), (3), and (6) apply the same as they do to any other work done 
by an employee.
* * * * *
    (6) Earnings that are not high enough to ordinarily show that you 
engaged in substantial gainful activity.
    (i) Before January 1, 2001, if your average monthly earnings were 
between the amounts shown in paragraphs (b)(2) and (3) of this section, 
we will generally consider other information in addition to your 
earnings (see paragraph (b)(6)(iii) of this section). This rule 
generally applies to employees who did not work in a sheltered workshop 
or a comparable facility, although we may apply it to some people who 
work in sheltered workshops or comparable facilities (see paragraph 
(b)(4) of this section).
    (ii) Beginning January 1, 2001, if your average monthly earnings 
are equal to or less than the amounts determined under paragraph (b)(2) 
of this section, we will generally not consider other information in 
addition to your earnings unless there is evidence indicating that you 
may be engaging in substantial gainful activity or that you are in a 
position to defer or suppress your earnings.
    (iii) Examples of other information we may consider include, 
whether--
    (A) Your work is comparable to that of unimpaired people in your 
community who are doing the same or similar occupations as their means 
of livelihood, taking into account the time, energy, skill, and 
responsibility involved in the work, and
    (B) Your work, although significantly less than that done by 
unimpaired people, is clearly worth the amounts shown in paragraph 
(b)(2) of this section, according to pay scales in your community.
* * * * *
    3. Section 404.1592 is amended by revising paragraph (b) to read as 
follows:


Sec. 404.1592  The trial work period.

* * * * *
    (b) What we mean by services. When used in this section, services 
means any activity (whether legal or illegal), even though it is not 
substantial gainful activity, which is done in employment or self-
employment for pay or profit, or is the kind normally done for pay or 
profit. We generally do not consider work done without remuneration to 
be services if it is done merely as therapy or training or if it is 
work usually done in a daily routine around the house or in self-care. 
We will not consider work you have done as a volunteer in the federal 
programs described in section 404.1574(d) in determining whether you 
have performed services in the trial work period.
    (1) If you are an employee. We will consider your work as an 
employee to be services if:

[[Page 82911]]

    (i) Before January 1, 2002, your earnings in a month were more than 
the amount(s) indicated in Table 1 for the year(s) in which you worked.
    (ii) Beginning January 1, 2002, your earnings in a month are more 
than an amount determined for each calendar year to be the larger of:
    (A) Such amount for the previous year, or
    (B) An amount adjusted for national wage growth, calculated by 
multiplying $530 by the ratio of the national average wage index for 
the year 2 calendar years before the year for which the amount is being 
calculated to the national average wage index for 1999. We will then 
round the resulting amount to the next higher multiple of $10 where 
such amount is a multiple of $5 but not of $10 and to the nearest 
multiple of $10 in any other case.
    (2) If you are self-employed. We will consider your activities as a 
self-employed person to be services if:
    (i) Before January 1, 2002, your net earnings in a month were more 
than the amount(s) indicated in Table 2 of this section for the year(s) 
in which you worked, or the hours you worked in the business in a month 
are more than the number of hours per month indicated in Table 2 for 
the years in which you worked.
    (ii) Beginning January 1, 2002, you work more than 80 hours a month 
in the business, or your net earnings in a month are more than an 
amount determined for each calendar year to be the larger of:
    (A) Such amount for the previous year, or
    (B) An amount adjusted for national wage growth, calculated by 
multiplying $530 by the ratio of the national average wage index for 
the year 2 calendar years before the year for which the amount is being 
calculated to the national average wage index for 1999. We will then 
round the resulting amount to the next higher multiple of $10 where 
such amount is a multiple of $5 but not of $10 and to the nearest 
multiple of $10 in any other case.

                         Table 1.--For Employees
------------------------------------------------------------------------
                                                               You earn
                         For months                           more than
------------------------------------------------------------------------
In calendar years before 1979..............................          $50
In calendar years 1979-1989................................           75
In calendar years 1990-2000................................          200
In calendar year 2001......................................          530
------------------------------------------------------------------------


                     Table 2.--For the Self-Employed
------------------------------------------------------------------------
                                     Your net
                                     earnings      Or you work in the
            For months               are more      business more than
                                       than
------------------------------------------------------------------------
In calendar years before 1979....          $50  15 hours.
In calendar years 1979-1989......           75  15 hours.
In calendar years 1990-2000......          200  40 hours.
In calendar year 2001............          530  80 hours.
------------------------------------------------------------------------

* * * * *

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 paragraphs (b)(2), 
(b)(3), (b)(4) and (b)(6) to read as follows:


Sec. 416.974  Evaluation guides if you are an employee.

* * * * *
    (b) * * *
    (2) Earnings that will ordinarily show that you have engaged in 
substantial gainful activity. We will consider that your earnings from 
your work activity as an employee (including earnings from sheltered 
work, see paragraph (b)(4) of this section) show that you engaged in 
substantial gainful activity if:
    (i) Before January 1, 2001, they averaged more than the amount(s) 
in Table 1 of this section for the time(s) in which you worked.
    (ii) Beginning January 1, 2001, and each year thereafter, they 
average more than the larger of:
    (A) The amount for the previous year, or
    (B) An amount adjusted for national wage growth, calculated by 
multiplying $700 by the ratio of the national average wage index for 
the year 2 calendar years before the year for which the amount is being 
calculated to the national average wage index for the year 1998. We 
will then round the resulting amount to the next higher multiple of $10 
where such amount is a multiple of $5 but not of $10 and to the nearest 
multiple of $10 in any other case.

                                 Table 1
------------------------------------------------------------------------
                                                                 Your
                                                               monthly
                        For months:                            earnings
                                                               averaged
                                                              more than:
------------------------------------------------------------------------
In calendar years before 1976..............................         $200
In calendar year 1976......................................          230
In calendar year 1977......................................          240
In calendar year 1978......................................          260
In calendar year 1979......................................          280
In calendar years 1980-1989................................          300
January 1990-June 1999.....................................          500
July 1999-December 2000....................................          700
------------------------------------------------------------------------

    (3) Earnings that will ordinarily show that you have not engaged in 
substantial gainful activity. If your earnings for months beginning 
January, 2001, are equal to or less than the amount(s) determined under 
paragraph (b)(2)(ii) of this section for the year(s) in which you work, 
we will generally consider that the earnings from your work as an 
employee will show that you have not engaged in substantial gainful 
activity. If your earnings for month before January, 2001, were less 
than the amount(s) in Table 2 of this section for the year(s) in which 
you worked, we will generally consider that the earnings from your work 
as an employee will show that you have not engaged in substantial 
gainful activity.

                                 Table 2
------------------------------------------------------------------------
                                                                 Your
                                                               monthly
                        For months:                            earnings
                                                               averaged
                                                              less than:
------------------------------------------------------------------------
In calendar years before 1976..............................         $130
In calendar year 1976......................................          150
In calendar year 1977......................................          160
In calendar year 1978......................................          170
In calendar year 1979......................................          180
In calendar years 1980-1989................................          190
In calendar years 1990-2000................................          300
------------------------------------------------------------------------


[[Page 82912]]

    (4) Before January 1, 2001, if you worked in a sheltered workshop. 
Before January 1, 2001, if you worked in a sheltered workshop or a 
comparable facility especially set up for severely impaired persons, we 
will ordinarily consider that your earnings from this work show that 
you have engaged in substantial gainful activity if your earnings 
averaged more than the amounts in the table in paragraph (b)(2) of this 
section. Average monthly earnings from a sheltered workshop or a 
comparable facility that are equal to or less than those amounts 
indicated in table 1 of paragraph (b)(2) of this section will 
ordinarily show that you have not engaged in substantial gainful 
activity without the need to consider other information, as described 
in paragraph (b)(6) of this section, regardless of whether they are 
more or less than those indicated in paragraph (b)(3) of this section. 
When your earnings from a sheltered workshop or comparable facility are 
equal to or less than those amounts indicated in table 1 of paragraph 
(b)(2), we will consider the provisions of paragraph (b)(6) of this 
section only if there is evidence showing that you may have engaged in 
substantial gainful activity. For work performed in a sheltered 
workshop in months beginning January 2001, the rules of paragraphs 
(b)(2), (3), and (6) apply the same as they do to any other work done 
by an employee.
* * * * *
    (6) Earnings that are not high enough to ordinarily show that you 
engaged in substantial gainful activity.
    (i) Before January 1, 2001, if your average monthly earnings were 
between the amounts shown in paragraphs (b)(2) and (3) of this section, 
we will generally consider other information in addition to your 
earnings (see paragraph (b)(6)(iii) of this section). This rule 
generally applies to employees who did not work in a sheltered workshop 
or a comparable facility, although we may apply it to some people who 
work in sheltered workshops or comparable facilities (see paragraph 
(b)(4) of this section).
    (ii) Beginning January 1, 2001, if your average monthly earnings 
are equal to or less than the amounts determined under paragraph (b)(2) 
of this section, we will generally not consider other information in 
addition to your earnings unless there is evidence indicating that you 
may be engaging in substantial gainful activity or that you are in a 
position to defer or suppress your earnings.
    (iii) Examples of other information we may consider include, 
whether--
    (A) Your work is comparable to that of unimpaired people in your 
community who are doing the same or similar occupations as their means 
of livelihood, taking into account the time, energy, skill, and 
responsibility involved in the work, and
    (B) Your work, although significantly less than that done by 
unimpaired people, is clearly worth the amounts shown in paragraph 
(b)(2) of this section, according to pay scales in your community.
* * * * *
    3. The authority citation for Subpart K of Part 416 continues to 
read as follows:

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

    4. Section 416.1112 is amended by revising paragraph (c)(3) to read 
as follows:


Sec. 416.1112  Earned income we do not count.

* * * * *
    (c) * * *
    (3) If you are a blind or disabled child who is a student regularly 
attending school as described in Sec. 416.1861:
    (i) For earned income beginning January 1, 2002, monthly and yearly 
maximum amounts that are the larger of:
    (A) The monthly and yearly amounts for the previous year, or
    (B) Monthly and yearly maximum amounts increased for changes in the 
cost-of-living, calculated in the same manner as the Federal benefit 
rates described in Sec. 416.405, except that we will use the calendar 
year 2001 amounts as the base amounts and will round the resulting 
amount to the next higher multiple of $10 where such amount is a 
multiple of $5 but not of $10 and to the nearest multiple of $10 in any 
other case.
    (ii) For earned income before January 1, 2002, the amounts 
indicated in Table 1 of this section.

                                 Table 1
------------------------------------------------------------------------
                                                               But not
                                                              more than
                  For months                     Up to per       in a
                                                   month       calendar
                                                                 year
------------------------------------------------------------------------
In calendar years before 2001.................         $400       $1,620
In calendar year 2001.........................        1,290        5,200
------------------------------------------------------------------------

[FR Doc. 00-33271 Filed 12-28-00; 8:45 am]
BILLING CODE 4191-02-U