[Federal Register Volume 67, Number 48 (Tuesday, March 12, 2002)]
[Rules and Regulations]
[Pages 11033-11034]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5858]


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

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 416

RIN 0960-AF60


Determining Income Under the Supplemental Security Income 
Program; Student Child Earned Income Exclusion

AGENCY: Social Security Administration.

ACTION: Final rule.

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

SUMMARY: We are revising our rules on deeming of income so that we use 
the same increased earned income exclusion amounts for both eligible 
and ineligible students in Supplemental Security Income (SSI) 
households. Beginning with earned income for January 2001, the monthly 
and yearly SSI student child earned income exclusion (SEIE) amounts 
were increased for eligible children based on final rules published in 
the Federal Register on December 29, 2000. The same increase should 
have been made for ineligible children for purposes of deeming 
calculations, but it was inadvertently not included in the published 
final rules. Under SSA's longstanding rule, the same SEIE amounts have 
applied to the income of both eligible and ineligible children. 
Consistent with the increase made in the final rules published December 
29, 2000, this final rule applies the same increase in the SEIE to 
ineligible children.

EFFECTIVE DATE: This rule is effective on March 12, 2002.

FOR FURTHER INFORMATION CONTACT: Georgia E. Myers, Regulations Officer, 
Office of Process and Innovation Management, L2109 West Low Rise 
Building, Social Security Administration, 6401 Security Boulevard, 
Baltimore, MD 21235-6401, [email protected], (410) 965-3632 or TTY 
(410) 966-5609 for information about these rules. For information on 
eligibility or claiming benefits, call our national toll-free numbers, 
1-800-772-1213 or TTY 1-800-325-0778 or visit our Internet web site, 
Social Security Online, at http://www.ssa.gov.

Electronic Version

    The electronic file of this document is available on the date of 
publication in the Federal Register on the Internet site for the 
Government Printing Office: http://www.access.gpo.gov/su_docs/aces/aces140.html. It is also available on the Internet site for SSA (i.e., 
Social Security Online): http://www.ssa.gov/regulations/. Electronic 
copies of public comments may also be found on this site.

SUPPLEMENTARY INFORMATION: Section 1612 of the Social Security Act (the 
Act) describes the meaning of ``income'' for purposes of the SSI 
program. This section also explains what is excluded from income. 
Section 1612(b)(1) provides an exclusion from earned income 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 for 
gainful employment. The section also provides that the Commissioner may 
prescribe the maximum amount of the exclusion. Prior to January 2001, 
regulations at Secs. 416.1112(c)(3) and 416.1161(c) provided, for a 
child who is a student, an SEIE of up to $400 a month of earned income 
with an annual limit of $1,620.
    If an SSI eligible individual lives in the same household with a 
parent or spouse who does not receive SSI benefits (hereafter referred 
to as an ``ineligible parent'' or ``ineligible spouse''), the 
ineligible parent's or spouse's income may be considered available 
(deemed) to the eligible individual. This concept is called ``deeming'' 
and is provided for in section 1614 of the Act. In determining the 
amount of an ineligible parent's or spouse's income to consider in 
determining the individual's eligibility and benefit amounts, we deduct 
an allocation for other children living in the household who are not 
eligible for SSI benefits (hereafter referred to as ``ineligible 
children'') (see Sec. 416.1160(c)(2)). We reduce the amount of this 
allocation by the amount of the ineligible child's own income (see 
Sec. 416.1161(c)). However, if an ineligible child is a student who is 
working, his or her earned income is reduced by the amount of the SEIE 
exclusion before that income is used to reduce the amount of the 
allocation.
    On December 29, 2000, we published final rules in the Federal 
Register (65 FR 82905) to, among other things, revise 
Sec. 416.1112(c)(3) of our regulations. Effective for earned income 
beginning in January 2001, these revisions increased the maximum 
monthly and yearly SEIE amounts used in determining SSI eligibility and 
payment amounts for student children, and provided for the automatic 
adjustment of the monthly and yearly exclusion amounts each year based 
on increases in the cost of living. Under our longstanding rules, the 
SEIE maximum exclusion amounts have been the same for ineligible 
children as for eligible children. However, the new rules applied the 
new exclusion amounts to eligible children but inadvertently did not 
include ineligible children for deeming calculation purposes. The 
preamble to those rules noted that the prior amounts had been in place 
since 1974, and stated that the change in these amounts was being made 
in response to increases in school expenses since that time. The 
rationale for this increase is equally applicable to ineligible student 
children as for eligible student children.
    This final rule amends the regulations to apply the same increase 
in the SEIE amounts to ineligible children as for eligible children. We 
are now addressing the oversight noted above in order to be consistent 
with our longstanding policy of having the same SEIE amounts for both 
eligible and ineligible children and with the regulatory increase in 
the SEIE amounts already made for eligible children. This final rule 
therefore amends Sec. 416.1161(c) to provide a cross-reference to the 
eligible child regulation in Sec. 416.1112(c)(3) that provides for a 
SEIE in 2001 of up to $1,290 a month with an annual limit of $5,200, 
and automatic adjustments each subsequent year as provided in that 
section. These amounts have increased for calendar year 2002 to $1,320 
and $5,340, respectively.
    The effects of this rule change are most easily understood by 
considering an example. John, an ineligible student, lives with his 
mother and his SSI eligible brother, Mark. In June, July and August of 
2002, John earns $750 each month to defray his school expenses in the 
fall. His mother also works and her earnings are deemed to Mark. As 
part of the deeming computation we deduct from the mother's earnings a 
living allowance allocation of $272 each month for John subject to 
reduction for

[[Page 11034]]

his own income after application of the SEIE. Under the prior rule: The 
maximum monthly SEIE amount of $400 would be subtracted from John's 
earnings ($750-$400=$350), and $350 would be considered in reducing the 
living allowance of ineligible student. Since $350 is more than the 
$272 allocation, there would be no deduction from the mother's earnings 
of a living allowance allocation for John. Under the new rule: The 
maximum monthly SEIE amount of $1,320 exceeds John's monthly earnings 
of $750. Therefore, the SEIE would apply to all of John's earnings, and 
none of those earnings would reduce the living allowance allocation for 
John. Therefore, a living allowance allocation of $272 each month would 
be deducted from the amount of the mother's earnings deemed to Mark.

Regulatory Procedures

    Pursuant to section 702(a)(5) of the Social Security Act, 42 U.S.C. 
902(a)(5), SSA follows the Administrative Procedure Act (APA) 
rulemaking procedures specified in 5 U.S.C. 553 in the development of 
its regulations. The APA provides exceptions to its notice and public 
comment procedures when an agency finds there is good cause for 
dispensing with such procedures on the basis that they are 
impracticable, unnecessary, or contrary to the public interest. We have 
determined that, under 5 U.S.C. 553(b)(B), good cause exists for 
dispensing with the notice and public comment procedures in this case. 
Good cause exists because this rule merely adapts the rules for the 
SEIE that have always been reflected in our regulations for both 
eligible and ineligible student children in order to continue SSA's 
longstanding policy of having the same exclusion amounts apply to both 
eligible and ineligible children. This final rule contains no 
substantive changes of interpretation. Therefore, opportunity for prior 
comment is unnecessary, and we are issuing this as a final rule.
    In addition, we find good cause for dispensing with the 30-day 
delay in the effective date of a substantive rule, provided for by 5 
U.S.C. 553(d). As explained above, we are not making any substantive 
changes in the SEIE provision. However, without these changes, our 
rules will conflict and may mislead the public. Therefore, we find that 
it is in the public interest to make this rule effective upon 
publication.

Executive Order 12866

    The Office of Management and Budget (OMB) has reviewed this final 
rule in accordance with Executive Order (E.O.) 12866.

Regulatory Flexibility Act

    We certify that this final rule will not have a significant 
economic impact on a substantial number of small entities. Therefore, a 
regulatory flexibility analysis as provided in the Regulatory 
Flexibility Act, as amended, is not required.

Paperwork Reduction Act

    This final rule does not contain reporting or recordkeeping 
requirements that require OMB review.

(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: February 26, 2002.
Jo Anne B. Barnhart,
Commissioner of Social Security.

    For the reasons set out in the preamble, we are amending part 416 
of Chapter III of title 20 of the Code of Federal Regulations as 
follows:

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

Subpart K--[Amended]

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

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

    2. Revise the last sentence of Sec. 416.1161(c) to read as follows:


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

* * * * *
    (c) * * * In addition, if the ineligible child is a student (see 
Sec. 416.1861), we exclude his/her earned income subject to the amounts 
set in Sec. 416.1112(c)(3).
* * * * *
[FR Doc. 02-5858 Filed 3-11-02; 8:45 am]
BILLING CODE 4191-02-U