[Federal Register Volume 68, Number 155 (Tuesday, August 12, 2003)]
[Proposed Rules]
[Pages 47877-47881]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20490]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

RIN 0960-AF78


Entitlement and Termination Requirements for Stepchildren

AGENCY: Social Security Administration.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Social Security Administration (SSA) proposes to amend its 
regulations to incorporate the changes to the entitlement and 
termination requirements for stepchild's benefits introduced by the 
Contract with America Advancement Act of 1996. Under the changes, a 
stepchild is considered dependent upon a stepparent for Social Security 
benefit purposes only if he or she receives at least one-half support 
from the stepparent. The fact that a stepchild may be living with a 
stepparent is no longer a basis for a dependency determination. The 
changes also require benefit termination when the stepchild's natural 
parent and stepparent divorce (unless the stepchild has been adopted by 
the stepparent and can qualify for benefits as his or her adopted 
child). We propose to extend the termination requirement to include: A 
divorce that ends the marriage between a stepchild's adoptive parent 
and stepparent; and a prospective annulment that ends the marriage 
between a stepchild's natural or adoptive parent and stepparent. We 
also propose to include in the regulations our longstanding practice of 
terminating a stepchild's benefits when the marriage between the 
stepchild's parent and the stepparent is annulled from the beginning 
(ab initio). These rules would reflect enacted legislation and provide 
accurate and complete guidelines for determining entitlement to 
benefits.

DATES: In order for your comments to be considered, you must submit 
them on or before October 14, 2003.

ADDRESSES: You may give us your comments by using: our Internet site 
facility (i.e., Social Security Online) at http://policy.ssa.gov/
pnpublic.nsf/

[[Page 47878]]

LawsRegs, e-mail to [email protected]; telefax to (410) 966-2830; or 
by letter to the Commissioner of Social Security, P.O. Box 17703, 
Baltimore, Maryland 21235-7703. You may also deliver them to the Office 
of Regulations, Social Security Administration, Room 100 Altmeyer, 6401 
Security Boulevard, Baltimore, Maryland 21235-6401, between 8 a.m. and 
4:30 p.m. on regular business days. Comments are posted on our Internet 
site, or you may inspect them on regular business days by making 
arrangements with the contact person shown in this preamble.
    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.gpoaccess.gov/fr/index.html. It is also available on the Internet 
site for SSA (i.e., Social Security Online) at http://policy.ssa.gov/pnpublic.nsf/LawsRegs.

FOR FURTHER INFORMATION CONTACT: Sherry Pollack, Social Insurance 
Specialist, Office of Income Security Programs, Social Security 
Administration, 153 RRCC, 6401 Security Boulevard, Baltimore, 
MD 21235-6401, [email protected], (410) 965-7915 or TTY (410) 966-
5609 for information about these proposed rules.
    For information on eligibility or filing for 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.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

Background

    Section 104 of the Contract with America Advancement Act of 1996 
(Pub. L. 104-121) changed the entitlement and termination requirements 
for stepchild's benefits under the Social Security Act (the Act).
    Under prior law:
    [sbull] The stepparent's divorce from the stepchild's parent did 
not terminate the stepchild's entitlement to child's benefits; and
    [sbull] A stepchild was considered dependent upon the stepparent if 
the child was either living with or receiving at least one-half support 
from the stepparent at the applicable time under the statute.
    Under the statutory changes:
    [sbull] A stepchild's entitlement to child's benefits on a 
stepparent's record ends with the month the divorce between the child's 
natural parent and stepparent becomes final (unless the stepchild has 
been adopted by the stepparent and can qualify for benefits as his or 
her adopted child); and
    [sbull] To be entitled to child's benefits based on a stepparent's 
record, a child is considered dependent upon the stepparent only if the 
stepparent was providing at least one-half of the child's support at 
the applicable time. ``Living with'' the stepparent is no longer a 
factor in determining stepchild dependency.

One-Half Support as the Sole Basis for a Stepchild's Dependency on a 
Stepparent

    Under section 202(d)(1)(C) of the Act, a stepchild's dependency 
upon the stepparent at a statutorily specified time is a requirement 
for entitlement to benefits on the stepparent's Social Security 
earnings record. Prior to the Contract with America Advancement Act of 
1996, under section 202(d)(4) of the Social Security Act, a stepchild 
was considered dependent upon a stepparent if the stepchild was either 
living with or receiving at least one-half of his or her support from 
the stepparent at the applicable time under the statute. Under the 
legislative amendment to section 202(d)(4) of the Act, in section 
104(a) of the Contract with America Advancement Act, a stepchild is 
considered dependent upon a stepparent only if he or she receives at 
least one-half support from the stepparent. Living with a stepparent is 
no longer a basis for a dependency determination. Consequently, we 
propose to eliminate the reference to the ``living with'' standard from 
our regulation on stepchild dependency, Sec.  404.363 of our 
regulations. Under section 104(a)(2) of the Contract with America 
Advancement Act of 1996, this policy applies to benefits of individuals 
who become entitled to such benefits for months after June 1996.

Extending the Stepchild Benefit Termination Requirement to a Divorce 
Between the Stepchild's Adoptive Parent and Stepparent

    Section 104(b) of the Contract with America Advancement Act of 1996 
amended section 202(d)(1) of the Act to provide for termination of a 
stepchild's benefits upon the divorce of the stepparent and the 
stepchild's natural parent. Section 104(b) did not, however, explicitly 
provide for the termination of a stepchild's benefits upon the divorce 
of the stepparent and the child's adoptive parent. We propose to apply 
the stepchild termination provision upon the divorce of the stepparent 
and the stepchild's natural or adoptive parent. We believe that there 
is a clear basis for this approach.
    A marriage between the child's adoptive parent and the stepparent 
establishes a stepchild relationship for entitlement purposes. Under 
Sec.  404.357, an individual can qualify as the insured's stepchild if 
the child's natural or adoptive parent married the insured. This 
established rule parallels other benefit eligibility provisions of the 
Act that routinely place natural and adoptive parenting on equal 
footing. See, e.g., sections 202(d)(1), 202(d)(3), 202(d)(8), and 
216(e) of the Act. Once a natural or adopted child establishes a right 
to Social Security benefits, benefit termination does not normally 
depend on the child's natural or adopted status. See section 202(d)(1) 
of the Act; see also Sec.  404.352(b). A rule ending stepchild's 
benefits upon divorce only when a natural parent and stepparent divorce 
therefore represents a departure from policies in surrounding statutory 
benefit provisions.
    Apart from using the term ``natural parent,'' the amendments to the 
Social Security Act's stepchild benefit provisions in the Contract with 
America Advancement Act of 1996 similarly reflect the above-described 
parallel treatment of natural and adopted children. Section 104(b)(2) 
of the Contract with America Advancement Act added section 202(d)(10) 
to the Social Security Act. Section 202(d)(10) states that for purposes 
of the new provision requiring termination of stepchild's benefits upon 
the parents' divorce, ``each stepparent shall notify the Commissioner 
of Social Security of any divorce upon such divorce becoming final'' * 
* * This provision by its terms affects ``each'' insured stepparent of 
a stepchild beneficiary. It requires stepparents to inform SSA of ``any 
divorce,'' and not simply divorces from a child's natural parent, thus 
indicating that any divorce by a stepparent is significant for 
stepchild benefit purposes.
    Discussions of the changes to the stepchild benefit rules in the 
legislative history of the Contract with America Advancement Act of 
1996 similarly reflect a preference for equal treatment of natural and 
adopted children. The relevant legislative history involves a 
connection between the dependency test applicable to stepchildren and 
the requirement for stepchild benefit termination upon parental 
divorce. The Contract with America Advancement Act of 1996 changed the 
dependency test in section 202(d)(4) of the Social Security Act by 
making receipt of at least one-half support the sole basis upon which a 
stepchild can be considered dependent upon his or her stepparent. It 
did not, however, change

[[Page 47879]]

the universe of stepchildren to whom the dependency test applies. 
Section 202(d)(4) of the Act applies to all children seeking 
entitlement to benefits as a stepchild. Our regulations set out at 
Sec.  404.363 provide, with respect to the dependency requirement as it 
existed before the enactment of the Contract with America Advancement 
Act of 1996, that stepchild dependency requirements apply to a 
stepchild ``as defined in Sec.  404.357 * * *'', i.e., a child whose 
natural or adopting parent married the insured. The Contract with 
America Advancement Act of 1996 did not alter the effect of this 
language. Therefore, under the law as amended by that Act, and as 
previously, both a natural child and an adopted child of the 
stepparent's spouse must show that the stepparent provided at least 
one-half of the stepchild's support at the applicable time.
    Reports by the House Ways and Means Committee on the 1996 
legislation consistently discuss the above-described stepchild 
dependency rules in the same context as the new provision mandating 
benefit termination when the stepchild's parents divorce. For example, 
a Report on Legislative and Oversight Activity of the Committee on Ways 
and Means during the 104th Congress discusses the change in the 
dependency requirement, which is applicable to all stepchildren. It 
immediately thereafter states, without qualification, that ``[in] cases 
of a subsequent divorce * * * benefits to stepchildren terminate * * 
*'' H.R. Rep. 104-872 at 36, 104th Cong., 2nd Sess. 1997, 1996 WL 
760037 (Leg. Hist.). The legislative history thereby supports the 
conclusion that both the dependency requirement and the termination 
provision apply to the same universe of beneficiaries, i.e., all 
stepchildren. It suggests an intention to equate natural and adopted 
children, as under previous law. Significantly, apart from repeating 
the term ``natural parent'' as found in the statute, it suggests no 
basis for an uncharacteristic statutory rule terminating benefits of 
only the natural children of stepparents' spouses. Limiting the 
termination requirement to situations involving divorces of natural 
parents therefore is not only an unusual departure from previously 
existing law, but is incompatible with the logical structure of the 
relevant 1996 legislative changes as well.
    We view section 104(b) of the Contract with America Advancement Act 
of 1996 in light of the overall changes to stepchild benefit provisions 
of that Act, the legislative history of that Act, and related portions 
of the Social Security Act. When so considered, apart from the use of 
the term ``natural parent,'' the legislation and its legislative 
history provide no indication of an intention to terminate benefits 
only of natural children of the spouses of stepparents upon a divorce. 
Under the most logical reading of the term ``natural parent'' in 
context, it merely distinguishes the other parent involved in a divorce 
from the stepparent, and that is how we interpret the term in issuing 
these regulations.
    We, therefore, propose to add a new paragraph (b)(7) to Sec.  
404.352 of our regulations to apply this policy and would apply it from 
the effective date of the corresponding provision of the Contract with 
America Advancement Act of 1996, section 104(b)(1). Accordingly, under 
section 104(b)(3) of that Act, we propose to apply the policy to final 
divorces of stepparents from adoptive parents occurring after June 
1996.

Extending the Stepchild Benefit Termination Provision to a Prospective 
Annulment of the Marriage Between the Stepparent and the Child's Parent

    Under our proposed regulations, if a voidable marriage between the 
stepparent and the child's natural or adoptive parent is annulled 
prospectively, the stepchild's benefits end with the month in which the 
annulment becomes final. A voidable marriage is flawed at its inception 
and could be declared invalid at any time after inception. However, the 
marriage remains valid until a court declares it invalid. If the 
parties to a voidable marriage do not exercise their legal right to 
annul the marriage, the marriage is binding. When an annulment operates 
prospectively, rather than from the beginning (ab initio), the 
annulment is very similar to divorce, since the marriage ceases to 
exist from the point at which it is annulled. Moreover, if we did not 
terminate stepchild benefits upon a prospective annulment of the parent 
and stepparent's marriage, we would be treating cases involving legally 
flawed marriages ended by annulment more favorably than cases involving 
legally valid marriages ended by divorce. We, therefore, propose to 
include this policy in the new paragraph (b)(7) we would add to Sec.  
404.352 and to apply it from the effective date of the corresponding 
provision of the Contract with America Advancement Act of 1996, section 
104(b)(1). Accordingly, under section 104(b)(3) of that Act, we propose 
to apply the policy to prospective annulments occurring after June 
1996.

Termination of Stepchild's Benefits Upon Annulment Ab Initio of the 
Marriage Between the Stepparent and the Child's Parent

    We also propose to include in new paragraph (b)(7) of Sec.  404.352 
our longstanding position that annulment of a voidable marriage from 
the beginning, or ab initio, terminates stepchild's benefits, and that 
such benefits end with the month before the month in which the 
annulment becomes final. There is support for this position and 
effective date in Folsom v. Pearsall, 245 F.2d 562 (9th Cir. 1957), 
which found that when mother's insurance benefits have been terminated 
due to a voidable remarriage which was later annulled ab initio, 
benefits could be reinstated beginning with the month of the annulment. 
In addition, under section 202 of the Act, when a benefit-terminating 
event (such as death or marriage) occurs, benefits generally end with 
the month before the terminating event. We have always followed this 
pattern regarding termination of stepchild's benefits in cases 
involving ab initio annulments of the parents' marriage. The provision 
of the Contract with America Advancement Act of 1996 ending a 
stepchild's benefits with the month in which the divorce becomes final 
is an exception to the general rule.

Correction of Cross-Reference in Sec.  404.339(a)

    Section 404.339 describes how a person becomes entitled to mother's 
or father's benefits. Section 404.339(a) currently requires that the 
person be the widow or widower of the insured and meet the conditions 
described in Sec.  404.335(a)(1), which refers to a 9-month duration of 
marriage requirement for a widow or widower. This cross-reference is 
incorrect, since it does not include the alternatives to the 9-month 
duration of marriage requirement, which are contained in Sec.  
404.335(a)(2), (a)(3), and (a)(4). We therefore propose to correct the 
cross-reference to refer to Sec.  404.335(a).

Reintroduction of ``Substantially All'' Definition for Dependent 
Grandchild or Stepgrandchild

    Consistent with statutory requirements in section 202(d)(9)(A) of 
the Act, Sec.  404.364 explains when a child applying for benefits as a 
grandchild or stepgrandchild is considered ``dependent'' on the insured 
for benefit purposes. Among the dependency requirements is the rule 
that a grandchild or stepgrandchild must have been both living with and 
receiving at least one-half support from the insured

[[Page 47880]]

for the one-year period before the insured became entitled to old-age 
or disability benefits or died. Under section 202(d)(9)(B) of the Act 
and Sec.  404.364(b) of our regulations, if a grandchild or 
stepgrandchild was born during this one-year period, the living-with 
and support requirements must be met for ``substantially all'' of the 
period beginning on the child's date of birth. Section 404.364(b) 
refers to Sec.  404.362(b)(1)(iii) for a definition of ``substantially 
all.'' However, Sec.  404.362(b)(1)(iii) was inadvertently deleted from 
the regulations. We propose to reintroduce the definition of 
``substantially all'' as subparagraph (c) of Sec.  404.364, using the 
same language that was inadvertently deleted. Under the proposed 
language, the ``substantially all'' requirement is met if, at the 
applicable time, the insured was living with the child and providing at 
least one-half of the child's support; and any period during which the 
grandparent or stepgrandparent was not living with the child and 
providing at least one-half support did not exceed the lesser of 3 
months or one-half of the period beginning with the month of the 
child's birth.

Revision of Headings

    We propose to revise the headings of Sec. Sec.  404.339, 404.363 
and 404.364 to be in plain language format to comply with the 
provisions of Executive Order 12866, as amended by Executive Order 
13258.

Clarity of These Proposed Rules

    Executive Order 12866, as amended by Executive Order 13258, 
requires each agency to write all rules in plain language. In addition 
to your substantive comments on these proposed rules, we invite your 
comments on how to make these proposed rules easier to understand. For 
example:
    [sbull] Have we organized the material to suit your needs?
    [sbull] Are the requirements in the rules clearly stated?
    [sbull] Do the rules contain technical language or jargon that 
isn't clear?
    [sbull] Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rules easier to understand?
    [sbull] Would more (but shorter) sections be better?
    [sbull] What else could we do to make the rules easier to 
understand?

Regulatory Procedures

Executive Order 12866, as Amended by Executive Order 13258

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these proposed regulations do not meet the criteria 
for a significant regulatory action under Executive Order (E.O.) 12866, 
as amended by E.O. 13258. Thus, they were not subject to OMB review.

Regulatory Flexibility Act

    We certify that these proposed rules would not have a significant 
economic impact on a substantial number of small entities because they 
affect only individuals. Thus, a regulatory flexibility analysis as 
provided in the Regulatory Flexibility Act, as amended, is not 
required.

Paperwork Reduction Act

    The proposed regulations impose no reporting or recordkeeping 
requirements requiring OMB clearance.

(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)

List of Subjects in 20 CFR Part 404

    Administrative practice and procedure, Blind, Disability benefits, 
Old-Age, Survivors and Disability Insurance, Reporting and 
Recordkeeping Requirements, Social Security.

    Dated: August 6, 2003.
Jo Anne B. Barnhart,
Commissioner of Social Security.
    For the reasons stated in the preamble, we propose to amend Subpart 
D of part 404 of chapter III of title 20 of the Code of Federal 
Regulations as set forth below.

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

Subpart D--[Amended]

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

    Authority: Secs. 202, 203(a) and (b), 205(a), 216, 223, 225, 
228(a)-(e), and 702(a)(5) of the Social Security Act (42 U.S.C. 402, 
403(a) and (b), 405(a), 416, 423, 425, 428(a)-(e), and 902(a)(5)).

    2. Section 404.339 is amended by revising the heading and paragraph 
(a) to read as follows:


Sec.  404.339  How do I become entitled to mother's or father's 
benefits?

* * * * *
    (a) You are the widow or widower of the insured and meet the 
conditions described in Sec.  404.335(a);
* * * * *
    3. Section 404.352 is amended by adding paragraph (b)(7) to read as 
follows:


Sec.  404.352  When does my entitlement to child's benefits begin and 
end?

* * * * *
* * * * *
    (b) * * *
    (7) With the month in which the divorce between your parent and the 
insured becomes final, if you are entitled to benefits as a stepchild 
and the marriage between your parent and the insured ends in divorce. 
If the marriage between your parent and the insured is annulled 
prospectively, your entitlement to benefits will end with the month in 
which the annulment becomes final. If the marriage between your parent 
and the insured is annulled from the beginning (ab initio), your 
entitlement to benefits will end with the month before the month in 
which the annulment becomes final.
* * * * *
    4. Section 404.363 is revised to read as follows:


Sec.  404.363  When is a stepchild dependent?

    If you are the insured's stepchild, as defined in Sec.  404.357, 
you are considered dependent upon him or her if you were receiving at 
least one-half of your support from him or her at one of these times--
    (a) When you applied;
    (b) When the insured died; or,
    (c) If the insured had a period of disability that lasted until his 
or her death or entitlement to disability or old-age benefits, at the 
beginning of the period of disability or at the time the insured became 
entitled to benefits.
    5. Section 404.364 is revised to read as follows:


Sec.  404.364  When is a grandchild or stepgrandchild dependent?

    If you are the insured's grandchild or stepgrandchild, as defined 
in Sec.  404.358(a), you are considered dependent upon the insured if--
    (a) You began living with the insured before you became 18 years 
old; and,
    (b) You were living with the insured in the United States and 
receiving at least one-half of your support from him for the year 
before he or she became entitled to old-age or disability benefits or 
died; or if the insured had a period of disability that lasted until he 
or she became entitled to benefits or died, for the year immediately 
before the month

[[Page 47881]]

in which the period of disability began. If you were born during the 1-
year period, the insured must have lived with you and provided at least 
one-half of your support for substantially all of the period that 
begins on the date of your birth. The term substantially all is defined 
in paragraph (c) of this section.
    (c) The substantially all requirement will be met if, at one of the 
times in paragraph (b) of this section, the insured was living with you 
and providing at least one-half of your support, and any period during 
which he or she was not living with you and providing one-half of your 
support did not exceed the lesser of 3 months or one-half of the period 
beginning with the month of your birth.

[FR Doc. 03-20490 Filed 8-11-03; 8:45 am]
BILLING CODE 4191-02-P